MONTERREY, MEXICO — Higher consumption of corn products, in addition to stable ongoing growth in the company’s “better-for-you” product line, supported sales performance at Gruma USA in the second quarter of fiscal 2022.
Operating income at Gruma USA in the second quarter ended June 30 totaled $92.2 million, up 7.3% from $85.9 million in the same period a year ago. Net sales increased 20% to $755.2 million from $628.7 million, while sales volume rose 5%.
“In the US, overall demand has proven to be very resilient thus far despite the high levels of inflation,” Adolfo Fritz, investor relations officer at Gruma, said during a July 21 conference call with analysts. “A wide array of product offerings in the US has enabled us to benefit from the different dynamics taking place within each of the markets we cater to. Growth has been boosted by corn product demand in addition to demand for top-end Mission products such as Better For You brand, whose growth has been stable compared to previous years, and we’re not currently seeing any significant trade-downs within our SKUs (stock-keeping units) overall. In fact, demand is very strong in both the retail and foodservice tortilla segments, particularly in the Northeast, all of which prompted tortilla volumes to increase by single digits in the US.
“In our corn flour business, consumers pulled back on dining out in the face of rising prices, and industrial clients moving away from direct corn purchases increased demand for corn flour significantly as it is a core ingredient for everyday meals and corn products. This helped expand our volumes sold in this segment by single digits as well. Combined, both business lines supported a 5% volume growth and a 20% revenue growth in the US for the quarter.”
Gruma said operating margin at Gruma USA fell 150 basis points during the second quarter to 12.2% from 13.7%. Meanwhile, cost of sales as a percentage of net sales improved to 60.6% from 57.3% in the second quarter, resulting mostly from meaningful growth in costs relative to the second quarter of fiscal 2021, Gruma said.
Outside the United States, Mr. Fritz said Gruma has experienced “explosive momentum” in the retail channel within its European subsidiary since the first quarter of fiscal 2021. While income was down on the back of extraordinary items in the quarter, sales surged 33% to $113.4 million.
“This quarter helps to further underscore this performance as tortilla volumes soared 17% relative to a year ago and supported not only by the retail channel in this division, but also by the foodservice channel, which presented a steady growth, altogether a very positive outlook of the channels,” he said of operations in Europe.
Gruma said it incurred $67 million in capital expenditures during the second quarter. During the quarter, the company allocated expenditures to construction and capacity expansion of a new tortilla plant in Indiana; upgrades at its tortilla plant in Dallas in preparation for capacity expansion; capacity expansion at its tortilla plant in Australia; and general upgrades and maintenance across the company, particularly at GIMSA.Overall, majority net income at Gruma SAB de CV in the second quarter was $68.3 million, down 11% from $77 million a year ago. EBITDA was $186.6 million, virtually unchanged from $186.7 million, while sales rose 19% to $1.34 billion from $1.13 billion.