Bimbo’s bottom line fuelled by strong frontline execution to feed North America amid pandemic
According to Daniel Servitje, chairman and CEO of the Mexican bakery giant, the extraordinary results achieved during the period were only possible because of the strong commitment and the determination of its teams on the front lines.
“We are benefiting from being a global and diversified company and participating in a resilient industry as most of our revenues are in hard currency and volume has been impressive in most of our markets, especially in North America,” he told investors in a conference call.
“This growth, along with a significant margin expansion, was driven by increased demand from the COVID-19 pandemic and strong frontline execution guided by our measure to feed North America and keep our frontline associates safe.”
Grupo Bimbo reported net sales for a second quarter of $86,411m, an increase of 19.9%. Operating income increased almost 60% due to the 29% increase of its adjusted EDIBTDA. The margin expanded by 130 basis points. Total debt increased by MXN16.5 billion, mainly attributable to the depreciation of the Mexican peso and the prepaid $400m from its committed revolver line of credit.
Servitje noted the e-commerce channel more than doubled and volume growth was “extraordinary” across the retail channel – grocery, mass merchandisers and club – gaining market share across the bread, buns and rolled breakfast, sweet baked goods and snacks categories. Unsurprisingly, the QSR, food service and convenience channel were impacted by the pandemic, “but as lockdowns start to ease trends for these businesses have been gradually improving week over week”.
In Latin America, the 13.3% sales increase was due to strong performance in Brazil and Bimbo’s Latin Central division, while in EAA, sales grew by 10.4% as a result of FX rates benefit and good growth in the bread and buns category throughout the region, helped by the new consumption patterns.
The company finally received the green light to acquire the Paterna plant from Cerealto Siro Foods in Valencia, Spain in the quarter. The plant produces sliced bread and buns for Mercadona, under the Hacendado brand.
Grupo Bimbo adjusted its outlook for the year, forecasting to close with a low double-digit growth rate in terms of sales and mid to high-teens growth rate for adjusted EBITDA.
“The pandemic is far from over and we are cautious that we will continue to face challenges, including the economic slowdown and potential devaluation of some currencies. However, we believe that we are well-positioned to continue to navigate in this extreme circumstance system,” added Diego Gaxiola, Bimbo’s CFO.
“Thanks to our well-diversified portfolio categories, markets, channels, the relevance of our brands, our operating business model, our solid financial position and the extraordinary commitment of our associates.”