U.S. sales grow at Gruma; company to up corn flour capacity

by Jeff Gelski
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MONTERREY, MEXICO – Gruma S.A. de C.V. posted fiscal year sales growth of 13% for its U.S. subsidiary, Gruma Corp., and also gave updates on its capital expenditure program on Feb. 21.

Gruma Corp. sales of NP16,121 million ($1,470 million) for the fiscal year ended Dec. 31, 2006, were up from NP14,327 million ($1,307 million) in the previous fiscal year. Operating income, however, dropped 22% to NP948 million from NP1,215 million.

Gruma S.A. de C.V. expects its capital expenditure program to be about $250 million in 2007 with financing coming from its internal cash generation and additional sales of Banorte shares throughout the year. Most of the investment will be used for additional production capacity and upgrades in Gruma Corp.; additional corn flour capacity in GIMSA, another subsidiary, to supply Gruma Corp. in the U.S. West region; and a new plant in Australia to integrate current facilities.

The capital expenditure program also will include additional corn flour capacity in Central America and an entry to a commercialization and distribution process in Central America. Gruma S.A. de C.V. invested $70 million in its capital expenditure program in the fourth quarter of 2006.

Companywide, Monterrey-based Gruma S.A. de C.V. reported sales growth of 10% in the year ended Dec. 31, 2006, to NP30,644 million from NP27,863 million in the previous fiscal year. Net income improved 13% to NP1,568 million from NP1,393 million. Earnings per share improved 11% to NP3.04 from NP2.74. Debt increased 8% in the year to $600 million.

In the fourth quarter, sales volume fell 1% for Gruma S.A. de C.V. despite net sales increasing 7% to NP8,226 million. The fourth-quarter sales increase came after Gruma Corp. implemented price increases in the first quarter and the third quarter. Gruma Corp. reported fourth-quarter sales growth of 7% to NP4,223 million. Gruma Corp. fourth-quarter sales volume dropped 3%, but the fourth quarter of fiscal year 2005 had one more selling week than the fourth quarter of 2006.

For the fiscal year, GIMSA had sales growth of 9% to NP7,388 million. Molinera de Mexico had sales growth of 1% to NP477 million, but Gruma Venezuela saw fiscal year sales decline 3% to NP3,129 million.

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