Gruma sales, earnings rise

Gruma sales, earnings rise

The weakness of the peso, sales growth at corn flour business Gimsa and price increases introduced to reflect higher raw material costs have helped boost tortilla manufacturing giant Gruma's net sales.
 
The Mexican tortilla titan, whose brands include Mission and Guerrero, has announced double-digit growth in the second quarter of the year, with net sales up by 14% to MXN14.28bn, operating profit and EBITDA increasing by 19% to MXN2.19bn and 18% to MXN2.64bn respectively, and majority net income soaring by 31%.
 
Non-Mexican operations fared best, with sales and EBITDA representing 74% and 71% of the consolidated figures.
 
The cost of sales as a percentage of net sales has improved, to 61.8% from 62%, driven largely by improved performances at Gruma USA and Gruma Centroamerica.
 
The company, the world's biggest tortilla producer,  also has reduced its debt burden, down by 3% in the year to $704m
 
Gruma invested US$79 million in the past quarter, most of which was earmarked for the new tortilla plant in Dallas, and the expansion of a corn flour plant in Indiana.  The company also increased its silo capacity in Ukraine, its new plant in Russia and expanded its plants in England and Spain, all of which increased the company's capital expenditure. In Asia, the construction of a tortilla plant in Malaysia and the re-opening of a corn flour plant also added to the bill.
 
Sales volumes were slightly down by 1% at Gruma USA, though corn flour sales increased by 3% boosted by share gains through better quality and service and increased sales.
 
However, the tortilla business was down by 3%, largely as a result of the company's decision to stop supplying some sku's in food service in order to focus on higher margin products. In addition, foodservice sales volumes were also adversely affected by the weaker performances of some customers.
 
At Gimsa, sales volumes increased by 8%, largely down to the increased penetration of corn flour among tortilla makers, especially in central Mexico, and higher sales in the US.  Net sales, meanwhile, grew by 11% down to higher sales volumes and price increases.
 
Lower corn flour sales in Honduras affected business at Gruma Centroamerica, where volumes were down by 11% to 47,000 metric tons, while net sales increased 6% to 1,075 million mainly due to the depreciation of the peso.