Mexico-based bakery giant Grupo Bimbo saw its sales climb more than 11% in the first half of 2017, helped by growth at home and recent M&A, but said restructuring costs weighed on its earnings.
The owner of brands, including Bimbo, Little Bites and New York Bakery Co reported a 6.4% fall in operating income and a 23.9% slide in net majority income for the six months to the end of June.
Grupo Bimbo’s first-half net sales reached MXN131.2bn (US$7.39bn), up 11.1% year-on-year. The company’s net sales in Mexico rose 11.7%, with the group reporting higher volumes “across most categories and channels”.
In North America, Grupo Bimbo’s net sales were up 6.9%, boosted by exchange rates and by “growth” in its branded business. However, Grupo Bimbo said “pressure” on its non-branded and frozen businesses, as well as in the premium category, weighed on sales volumes, which led to a 1% dip in sales when measured in dollars.
In Latin America, Grupo Bimbo’s net sales climbed 9.1%, mainly reflecting favourable exchange rates. The net sales from the company’s Europe, Asia and Africa unit jumped 79.5%, largely driven by the contribution from recent acquisitions in Iberia, India and Morocco.
Grupo Bimbo’s operating income reached MXN8.18bn in the first half of 2017, compared to MXN8.74bn a year earlier. The business pointed to integration and restructuring costs. The company cited plant closures in Morocco and the US, as well as restructuring moves in Argentina, Chile and Brazil.
Financing costs and a higher effective tax rate further weighed on Grupo Bimbo’s net majority income, which stood at MXN2.49bn, versus MXN3.28bn in the first half of 2016.