With loss, Gruma shares tumbled
October 31, 2008
by Josh Sosland
MEXICO CITY — Shares of Gruma S.A.B. de C.V. tumbled this week following a trading ban by the Mexican Stock Exchange lasting seven full market days. Trading resumed Oct. 29, the day after Gruma issued financial results. American Depository Shares fell as low as $1.58 per share on the New York Stock Exchange when trading resumed, down 89% from the 52-week high of $14.86 and down 49% from the $3.11 price when trading was halted Oct. 17. Shares subsequently partly recovered and were selling at $2.50 a share in early Oct. 31 activity. Detailing its financial results, Gruma said it sustained a loss of 1,707 million pesos ($133 million) in the quarter ended Sept. 30, versus net income of MP724 million in third quarter 2007. The loss was attributed to the company’s currency derivative instruments. Gruma "had derivative positions valued at negative $788 million," contributing to a third-quarter net loss of 1.76 billion pesos ($135.4 million), the company said. Bloomberg News cited a Mexico City analyst saying Gruma may need to sell its 8.8% stake in Grupo Financiero Banorte, Monterrey, to cover the loss. Reviewing results of Gruma Corp. in the United States, the company said corn flour sales volume declined in the quarter because of price increases during the quarter and lower rates of immigration from Mexico. Higher ingredient costs adversely affected profit margins, and operating income as a percentage of net sales decreased to 1.5% from 5.1%, the company said. Total U.S. operating income tumbled 67% to 75 million pesos ($5.9 million).