Bimbo's U.S. income dips when wheat prices rise

by Jeff Gelski
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MEXICO CITY – Wheat flour prices rose in the fourth quarter and adversely affected gross margins, leading to a decrease of more than 13% in U.S. operating income for Grupo Bimbo S.A.B. de C.V. in the fiscal year ended Dec. 31. Operating income of NP206 million ($19.1 million) compared with NP238 million in the previous fiscal year.

Bimbo’s U.S. sales rose to NP16,565 million from NP15,826 million, which marked a 4.7% increase in peso terms and a 7.3% increase in dollar terms. The most important brands in its portfolio experienced sales growth, Bimbo said.

In the fourth quarter, U.S. operating income fell more than 88% to NP9 million, which compared with NP77 million in the previous year’s fourth quarter. Fourth-quarter U.S. sales rose more than 5% to NP4,224 million from NP4,015 million.

Rising wheat flour prices in the fourth quarter had a negative 1.7 percentage point impact on the U.S. gross margin for the quarter, Bimbo said.

"In the United States, the increase in the price of wheat flour was more rapid and steep than anticipated," the company said.

The company was able to limit the decline on the effect on the margin to 0.3 percentage points because of price increases implemented throughout the year, improvements in labor and indirect production costs, and the reallocation of production capacity to more profitable stock-keeping units (SKUs).

Companywide, Mexico City-based Grupo Bimbo S.A.B. de C.V. reported net majority income of NP984 million for the fiscal year, a decrease of 6% from the previous fiscal year. Net sales rose 8% to NP72,294 million.

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