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Grupo Bimbo doubles full-year profits, pulls in historical EBIDTA

By Kacey Culliney+

24-Feb-2014
Last updated the 24-Feb-2014 at 16:34 GMT

Grupo Bimbo CEO said its strong 2013 results put the firm on 'very solid footing' going into 2014
Grupo Bimbo CEO said its strong 2013 results put the firm on 'very solid footing' going into 2014

Grupo Bimbo doubled its net profit for 2013 and totted up its highest ever EBIDTA – improvements that defined what its CEO described as a ‘pivotal’ year.

The Mexican bread major pulled in 4.4bn pesos ($33.1m) in net profit for the full year, up from 2bn pesos ($15m) in 2012. Earnings Before interest, tax, depreciation and amortization (EBITDA) for the full year was 17.3bn pesos ($1.3bn).

Speaking to analysts in Grupo Bimbo’s full year earnings call last Friday 21, company CEO Daniel Servitje said that the EBIDTA was the highest ever generated in the company’s history and described 2013 as a “pivotal” year for the company.

He said the company accelerated the integration of major acquisitions and located record capital expenditure to modernize Bimbo’s manufacturing base – actions that positioned the company on “very solid footing going into 2014”.

Macroeconomic improvements, Canada Bread buy

The CEO said the company was optimistic about some trends, such as signs of macroeconomic improvement in several of the company’s key markets, where there had previously been an extended period of weak recovery.

He also said the company had high hopes for operations in the US that would be driven by further synergies and continued waste reduction efforts. Last year, Grupo Bimbo committed $1bn to a heavy US investment strategy to grow its market presence by 2015.

For the company’s full year 2013 results, Servitje said that US business had done particularly well. He said that Bimbo Bakeries USA had “cycled the impact of the Hostess exit” and sales of its overall sweet baked goods category, particularly Sara Lee snack cakes, had risen.

Referencing the recent announcement to acquire Canada Bread for C$1.83bn , he said Grupo Bimbo would start to see positive impacts once the transaction closed and was consolidated.

At the time the acquisition was announced, the CEO said Canada Bread would take Bimbo into an “attractive market”.

“Canada Bread brings a remarkable portfolio of market leading brands that complement our global business, as well as a track record of highly profitable performance,” he said.

However, Euromonitor analyst Svetlana Uduslivaia said the Mexican firm would have its work cut out driving growth in Canada’s saturated and competitive bread market .

Healthy NPD to tackle challenges

While there were lots of issues that would trend well for Grupo Bimbo in 2014, Servitje said the year would not be without its difficulties.

“To be fair, there are also some challenges we’ll need to address, such as the special tax on production and services in Mexico that will affect part of our portfolio. To address that, we’ll enhance our marketing and sales efforts on the consumer-facing side while we’ll be targeting savings opportunities,” the CEO said.

Grupo Bimbo would dedicate R&D and new product development (NPD) efforts in 2014 towards healthy products which would help maintain sales performance in the long-term across all regions, not just Mexico, he said.

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