Milling & Baking News - March 12, 2019 - 15

Financial Results

Servitje says Bimbo gaining share
in key segments of U.S. market

bakingbusiness.com / world-grain.com

our supply chain optimization initiative."
Fred Penny, president of Bimbo
Bakeries USA, said management is
pleased with fourth-quarter results.
"We were successful this year in
managing the inflationary headwinds through a combination of

'We were successful this year in managing
the inflationary headwinds through a
combination of pricing, favorable mix and our
productivity efforts.'

- Fred Penny,
Bimbo Bakeries USA

pricing, favorable mix and our productivity efforts," he said. "And
looking forward, we really have
to continue to do the same thing. I
think the commodity and other inflation headwinds are going to continue from what we see today. In fact,
they may be a bit more significant
in certain input costs. And so we're
going to have to continue to look for
additional pricing efficiencies and

GRUPO BIMBO S.A.B. DE C.V.

MEXICO CITY - Even after raising
prices, Grupo Bimbo S.A.B. de C.V.
built market share in the United
States in the fourth quarter ended
Dec. 31, 2018, said Daniel Servitje,
Bimbo's chief executive officer.
"We implemented price increases and experienced growth in our
strategic brands such as Sara Lee
bread, Entenmann's Little Bites and
Barcel snacks," he said in a Feb. 22
conference call. "We achieved market share gains in the sweet baked
goods and mainstream bread categories in the U.S. as well as in the
bread and snacks categories in Canada. However, these results continued to be pressured by the decline
in the private label category."
As previously reported, 2018 operating income in North America
was 5,100 million pesos ($285 million), down 34% from 7,701 million
in 2017. Sales were 143,848 million
pesos ($7,425 million), up 4.5%
from 137,662 million. In the fourth
quarter, operating income in North
America was 2,101 million pesos
($109 million), up 14% from 1,841
million in October-December 2017.
Sales were 38,630 million pesos
($1,987 million), up 6% from 36,295
million.
Bimbo's adjusted EBITDA margin
in North America expanded 90 basis
points in the fourth quarter.
"This was achieved by the topline growth, along with the benefits from past investments, such
as the V.S.P. (voluntary separation
program) in the U.S. and the organizational restructuring initiative
in Canada, which more than offset
the commodity, energy and transportation pressure as well as restructuring expenses in part related
to the closure of the Madison, Wis.,
plant in the U.S. and an impairment
charge related to some trademarks
due to a strategic portfolio rationalization initiative to drive growth
and profitability in our core to topperforming brands," Mr. Servitje
said. "Looking ahead, we expect
continued inflation pressure from
commodities, energy and transportation in the region. To offset
this, we will leverage our revenue
growth management processes to
drive efficiencies in promotional
strategies, improve our product mix
and increase productivity through

one is immune from the inflationary pressures that are out there. So
everybody has to deal with them as
best as they can."
Capital investment decisions
at Grupo Bimbo are not driven by
considerations of what may drive
the company's share price higher
in the near term, Mr. Servitje said,
responding to an analyst question.
Instead, such decisions reflect management's impressions of how the

trade promotion efficiencies and,
obviously, continue to work hard,
which the team has done a great job
of this year on driving wastes out of
our business and driving productivity across the supply chain."
Asked whether other baking companies also have raised prices, Mr.
Penny offered an indirect response.
"If you look at Nielsen and I.R.I.
data, you would see pricing movement in certainly most of the categories we participate in," he said. "No

moves will "affect the performance
of our business in the future," he
said.
"We will continue with this path
whenever we see opportunities to
create that stronger, more sustainable business whenever and whatever it happens," he said. "And
that's why we announced these
three closures of U.S. bakeries this
year, and that's why we are consolidating our business in Beijing
into one more efficient plant. And
we will continue to look on whenever we see opportunities to do that,
even though they might not bring us
positive numbers in the next quarter
or this year."
Grupo Bimbo net majority income
in 2018 was 5,808 million pesos ($302
million), up 25% from 4,630 million
in 2017. Net sales were 288,266 million pesos ($14,983 million), up 8%
from 267,515 million.
In the fourth quarter, net majority income was 2,515 million pesos
($131 million), up sharply from 427
million in the same period a year
earlier. Sales were 76,309 million
pesos ($3,966 million), up 8% from
70,931 million.
Mr. Servitje said Bimbo ended the
year with record sales, gross profit, operating income and adjusted
EBITDA.
Bimbo shares trading on the Mexican Bolsa moved solidly higher
Feb. 22 following the release of the
financial results the previous evening. The Bimbo stock price closed
at 37.65 pesos on Feb. 22, up 1.83 pesos, or 5%, from the close of 35.82 a
day earlier. MBN
Milling & Baking News

March 12, 2019 / 15

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Milling & Baking News - March 12, 2019

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