Milling & Baking News - November 5, 2019 - 12

Financial Results

B.B.U. sales climb behind demand
for sweet baked goods and snacks
MEXICO CITY - North American
sales at Grupo Bimbo S.A.B. de C.V.
in the third quarter ended Sept. 30
totaled 37,569 million pesos ($1,968
million), up 3.4% from 36,327 million pesos in the same period a year
earlier.
"Net sales increased 3.4% driven
by good performance in the sweet
baked goods and snacks categories in
the U.S. as well as strong volume and
market share gains in Canada," Daniel
Servitje, chairman and chief executive
officer, said during an Oct. 25 conference call with analysts. "We also benefit from new product launches, such
as Arnold, Brownberry and Oroweat
No Added Nonsense, which is a smart
clean label initiative in the premium
bread category.
"This increase was partially offset
by the continued compression in the
private label category, our own portfolio simplification strategy and a
flooding in a plant in Canada, which
occurred in Q2 and is now behind us,
but impacted both Q2 and Q3."
Operating income of Bimbo Bakeries USA in the third quarter was 1,684
million pesos ($88.2 million), down
15% from 1,989 million pesos during the third quarter last year. In the
current year, the company took a $48
million non-cash charge related to the

adjustment of the company's multiemployer pension plan liability, reflecting current interest rate levels.
Adjusted EBITDA for the North
American division in the third quarter
was 4,117 million pesos ($215.6 million), up 14% from 3,611 million
pesos in 2018. The adjusted
EBITDA margin for North
America widened 110 basis
points to 11%, versus 9.9% in
the third quarter last year.
Profitability was boosted
in part due to the efficiencies gained from past
restructuring initiatives,
improved portfolio mix
from growth of strategic
brands and snacks and
trade spend optimization,
Bimbo said.
Net majority income of
Grupo Bimbo during the
quarter was 1,940 million
pesos ($101.6 million),
up nearly 7% from 1,815
GRUPO BIMBO
million pesos in the third
quarter last year. Aggregate sales were
74,965 million pesos ($3,926 million),
up 3.2% from 72,646 million pesos a
year earlier.
During the quarter, Grupo Bimbo
signed an agreement to acquire a plant
in Spain that produces sliced bread and

Mondelez eyes new belVita lines
to capture breakfast opportunity
DEERFIELD, ILL. - Mondelez International, Inc. may broaden the belVita
biscuit brand into new forms, including bars, to capture a bigger share of the
breakfast market, said Dirk Van de Put,
chairman and chief executive officer.
"It's a brand that's performing quite
well, and it's mid-single-digit growth
at the moment, doing quite well, particularly in the U.S.," Mr. Van de Put
said during an Oct. 29 earnings call.
"Our evolution for belVita is to offer
it in more different forms going into
soft-baked, for instance, going potentially to bars and gradually expand
the range of belVita to make it a full
breakfast offering not only in the U.S.
but around the world and potentially
also take the brand into mid-morning
snacking, which could also be very
interesting. And I think the brand has
the credentials not only from a brand12 / November 5, 2019

Milling & Baking News

ing perspective but also from the active ingredients to make that happen.
That's really our focus for the breakfast occasion for us."
Mondelez is adopting a more agile
approach to innovation, Mr. Van de

Put said. A recent example was the
creation of CaPao, a plant-based snack
made with juice from cacaofruit pulp
in collaboration with Barry Callebaut. Mr. Van de Put said the product
was developed "in record time" and
launched with limited distribution in
test markets.
"This sort of an approach is very different from the innovation approach

buns for Mercadona, the largest retailer
in Spain under the brand Hacendado.
"Once authorized, this acquisition will further strengthen our business in the country, complementing
our customer reach to better serve
more consumers," Mr. Servitje said.
"The transaction is conditional upon
review by the Competition and
Markets Commission."
Grupo Bimbo also acquired
Mr. Bagels in the United
Kingdom. Mr. Bagels operates a small plant producing
fresh and frozen bagels.
Through the third quarter of fiscal 2019 Grupo
Bimbo has invested $440
million in capital expenditures. As a result, the company expects to be in the
low range of its estimated
range of $700 million to
$750 million for the full
year. The company also
bought back almost 40
million shares during the
third quarter as part of its
share buyback program.
The company said its
total debt was 102 billion
pesos on Sept. 30, versus 89.8 billion
nine months earlier. The company's
average debt maturity was 13.8 years
with an average interest rate of 6%.
Of the total, 59% was denominated in
U.S. dollars, 36% in pesos and 5% in
Canadian dollars. MBN
that we had in the past," he said.
Net earnings attributable to Mondelez International for the third quarter ended Sept. 30 totaled $1,423 million, equal to 98c per share on the common stock, up 19% from $1,194 million, or 81c, in the prior-year period.
Net revenues climbed 1.1% to $6,355
million from $6,288 million. Excluding
the impact of acquisitions, divestitures
and currency rate fluctuations, net
revenues increased 4.2%.
In North America, net revenues
grew 2.5% on an organic basis to
$1,823 million in the quarter, said Luca
Zaramella, executive vice-president
and chief financial officer.
"We grew share in biscuits as Oreo,
Ritz and belVita all delivered strong results," Mr. Zaramella said. "Improved
commercial execution and innovation,
share gains in alternative channels
and more consistency in supply chain
helped drive these results. We remain
committed to sustaining our improved
performance in the region." MBN
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Milling & Baking News - November 5, 2019

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