MEXICO CITY — In a quarter chock-full of major news at the corporate level, the North American business of Grupo Bimbo SAB de CV experienced softer unit sales, though with pockets of growth in certain categories.

During the quarter Bimbo announced Rafael Pamias will succeed Daniel Servitje as chief executive officer on May 1, with Servitje transitioning to the position of executive chair.  In the earnings announcement, Grupo Bimbo announced what Servitje called “bolt-on acquisitions” in Romania, Turkey, Tunisia and Costa Rica, expanding the company’s presence to 35 countries. He also detailed the “installation of next-generation distribution centers” in the United States as part of a long-term transformation of the business.

Operating income of the North America business of Grupo Bimbo in the first quarter ended March 31 was 1.39 billion pesos ($82 million), down 50% from 2.77 billion in the first quarter of 2023. Net sales were 41.01 billion pesos ($2.4 billion), down 13% from 47.25 billion the year before.

Excluding the effects of foreign exchange swings (the value of the peso moved higher in the quarter versus the US dollar, but has fallen steeply since), net sales in North America fell 4%. The decrease was attributed by Bimbo to a challenging comparison with the first quarter of last year, a “weaker consumption environment,” and the company exiting some non-branded business. Mitigating factors included volume improvements in select categories — sweet baked foods, cookies and salty snacks. Thomas’ breakfast bread and Entenmann’s Little Bites were among products highlighted by the company.

Diego Gaxiola, chief financial officer of Grupo Bimbo, said, “North America had a soft start to the year given a challenging environment, as expected.”

Similarly, in an April 22 call with analysts, Servitje said the results were consistent with what the company shared in its most recent earnings call.

“After several years of heightened demand, higher inflation impacting the consumer and the elimination of SNAP benefits in the US, consumption has been constrained along with the shift to value,” he said. “We also have a tough base of comparison.”

He said sales in the first quarter of 2023 jumped more than 15%, and since then Bimbo has been optimizing its portfolio through “complexity reduction and some non-branded exits.” He said the moves enable improved efficiency and the company’s supply chain effectiveness, affecting its sales volume.

He said the company is watching its promotional activity carefully to remain competitive and “enable the right price/volume equation.”

“Our promotional activities continue to drive consumer engagement and market penetration, and we anticipate modest sequential improvement in volume throughout the remainder of this year,” Servitje said.

Servitje went on to discuss a multiyear restructuring that the company previously referenced only briefly.

“To provide some context, since the acquisitions of George Weston (2009) and Sara Lee (2011) in the US, we have invested over these years in strongly transforming our manufacturing footprint,” he said. “In fact, we have integrated 74 bakeries, opened 5 new bakeries and closed 29 in the last 15 years, while increasing our revenues and outperforming market growth. We will keep looking for opportunities to optimize the efficiency of our supply chain. Currently, we have identified great opportunities to invest in transforming our distribution network by installing next-generation distribution centers to structurally cut ongoing operating costs and at the same time, increase our penetration in channels where we see the opportunity to do so with a right product portfolio.”

Regarding Bimbo’s product line, Servitje said the company keeps a “consumer-centric mindset” to optimize its portfolio and to “capture the consumer needs and micro occasions through purposeful innovation and price pack architecture.”

Bimbo is committed to long-term growth, and efficiency and waste elimination will be keys to improving profitability and allowing the company to “reinvest in our brands, people and technology transformation,” Servitje said

Responding to a question about how Bimbo has been performing versus private label, Mark J. Bendix, executive vice president, said a large portion of the volume softness was “some strategic exits of some private label business that we felt had no longer utility for our business.”

“If you look at overall edibles and consumption across all the CPGs in North America, the one area that’s growing is the private label category,” he said. “And consumers are becoming more value conscious as the SNAP benefits are now retired. So we’ve seen that. We see our portfolio as resilient. And sequentially, as we look out for the rest of the year, we see that mitigating in our branded business beginning to grow again moderately as we exit ‘24.”

Later in the call, Bendix said Bimbo is not exiting private label but instead is making sure its private label and branded business “coexist in a profitable way.” While private label demand is quite strong at present, Bendix said brands will prevail longer term because of “superior facets and superior delivery of quality” and expressed optimism the company will experience “modest growth” in the second half of 2024.

Servitje said the analyst call would be his last after participating in 100 such calls during his tenure at Bimbo. He has been CEO since 1997. At the same time, he pledged to remain highly active in the business.

“On top of being the chairman of the board, I will continue to be highly involved in all aspects of the strategy and execution of the company,” he said. “I will focus on our growth strategy, competitiveness and long-term view while promoting the culture and focusing on talent development of generations to come. We will continue to double down on quality, innovation and R&D.”

He described Pamias, his successor, as “an excellent operator and strategist with a global vision.” Pamias will be the first CEO of Bimbo who is not a member of the Servitje family, which owns about two thirds of Grupo Bimbo.

“I thank, Rafa, for having accepted this great challenge,” Servitje said. “And I am sure that he will do a magnificent job in this responsibility, and he has all my support and guidance to accompany him on this new, exciting path.”

First quarter net majority income of Grupo Bimbo was 2.37 billion pesos ($140 million), down 42% from 4.07 billion a year earlier. Net sales were 93.22 billion ($5.49 billion), down 6% from 99.2 billion. Excluding the effects of foreign exchange, net sales were down 0.3%.