Grupo Bimbo operating at full capacity given ‘great demand’ for baked goods

By Gill Hyslop contact

- Last updated on GMT

Grupo Bimbo operating at full capacity given ‘great demand’ for baked goods

Related tags: Grupo bimbo, coronavirus, earnings report

The Mexican bakery giant saw increased demand for its baked goods – especially in the last two weeks of March – as consumers stocked up for the coronavirus lockdown.

In the first quarter, Bimbo posted a 7% growth in sales to MXN 74,4bn ($3.05bn), and an 11.4 % increase in adjusted EBITDA to MXN 8,8bn, with a margin expansion of 50 basis points.

“Many of our plants and distribution routes are operating at full capacity given the great demand for bread, buns, sweet bagels, cookies and tortillas, mainly in the modern channel,”​ Daniel Servitje, chairman and CEO, told analysts.

“We are unwavering in our determination to successfully navigate the challenge of these complex times and we have the resilience and agility to do so.

“Our company has a great responsibility to feed and serve people all over the globe and a greater opportunity than ever before to live our beliefs, to demonstrate our purpose and to fulfil our mission, to put delicious and nutritious baked goods and snacks in the hands of all.”

Servitje said the company’s QSR and food service businesses have been under significant pressure, but this represents less than 10% of its consolidated sales.

In manufacturing, we are prioritizing high-volume, fast moving SKUs to optimize production capacity. And we are increasing our capacity where needed.

“Our QSR plants are operating well below their total capacity with four of them closed due to country lockdowns and lack of demand,”​ he said, noting the company’s Wuhan plant in China – which was closed in January – has recently been reopened.

As such, the company is prioritising high-volume, fast moving SKUs to optimise production capacity.

“We are increasing our presence in those channels with higher demand such as the modern channel, balancing the decline in the other channels like QSR and food service.

“For instance, we recently reopened our Hazleton, Pennsylvania, bakery in the US. Production lines that provide basic food to families, mainly bread, are operating at full capacity to meet consumer needs.”

He added this could not have been possible without the commitment of the company’s more than 134,000 associates.

“We specially thank our bakery, distribution centre and sales centre associates for their extraordinary efforts in baking, distributing and delivering our products to all the stores so that we can continue to feed our consumers.

“As the virus has spread around the world, we have taken steps to ensure the safety of our associates and we are putting in place plans to ensure the continuity of our operations.”

Solid performance in all regions

In North America, sales increased 9.8% to MXN 36.05bn, with the mainstream bread, buns, snacks and sweet baked goods categories all outperforming across this region. New product launches such as Thomas’ Pick Me Ups and mini croissants also contributed to growth.

In Mexico, sales increased 6.2% to MXN 27.21bn, driven primarily by bread, sweet baked goods, tortillas and cookies.

In Latin America, the 3.8% sales increase to MXN 6.93bn was attributable to mainly Brazil, Peru and Paraguay.

In EAA, sales increased 1.8% to MXN 6.58bn on the back of strong performance of the company’s package branded business.

“Finally, while we all remain focused on executing through these rapidly evolving situation, I would like to reaffirm our commitment to our consumers, customers, associates, suppliers and communities and more importantly, to emphasise that our long term strategy has not changed,”​ said Servitje.

“We continue to closely monitor the current situation and we remain flexible, enabling us to pivot to best serve all our stakeholders and to maximise our opportunity in the markets.”

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