Corporate Profiles - 2020 - 64

COMPANY OVERVIEW

Grupo Bimbo SAB de CV
Making incremental moves even as pandemic bolsters retail sales
or Grupo Bimbo SAB de CV, the past year
has been marked by numerous, wide-ranging incremental steps to build its business
for the long term while the company's (and the
entire economy's) near-term fortunes have been
swept up by the effects of the coronavirus (COVID-19) pandemic.
Steps taken by the company over the past year,
even in the midst of the pandemic, suggest the
company has an eye firmly fixed on its long-term
objectives.
For the company's North American business,
which does not include its foodservice operations, the pandemic has brought about at least
a short-term reversal of the steady sales losses
experienced by the company in recent years. In
the 52 weeks ended Feb. 23, fresh bread sales of
Grupo Bimbo in the United States totaled $2.4
billion (retail), according to data from Information
Resources, Inc., down 3.6% from a year earlier.
Unit sales fell even more sharply. At 820 million
units, volume was down 4.8%.
By the end of the second quarter of the year,
the picture had changed completely. In the three
months ended June 30, the company's sales were
49.41 billion pesos ($2.3 billion), up 36% from
36.24 billion pesos in the second quarter of
2019. Adjusted for foreign exchange swings, sales

rose 12%, and Bimbo described volume growth
during the quarter as "outstanding." Operating
income in the period totaled 4.07 billion pesos
($187 million), up 219% from 1.28 billion pesos
in the second quarter of 2019.
"The bread, buns and rolls; breakfast; sweet
baked goods; and snacks categories posted market share gains, while the retail and the e-commerce channels outperformed," Bimbo said.
Tracing what has transpired since the start of
March, Fred Penny, president of Bimbo Bakeries
USA, in a July 27 earnings call said the first few
weeks of the pandemic were characterized by
"panic buying." Since then, sales have remained
consistently strong.
The earnings call was Mr. Penny's first since the
pandemic outbreak in March (he did not participate in an April earnings call).
"Volume growth was extraordinary across the
retail channel, which includes grocery, mass merchandisers and club," commented Daniel Servitje,

chairman and president of Grupo Bimbo, during
the call. "We experienced market share gains
across the bread, buns and as well as breakfast,
sweet baked goods and snacks categories. And
the e-commerce channel more than doubled.
This strong performance was partially offset by
weak volumes across the QSR (quick-service restaurants), foodservice and convenience channel
due to the pandemic. Adjusted EBITDA margin
reached a record level at 12.9%, reflecting the
strong sales growth, lower commodity prices and
productivity benefits from past investments, which
were partially offset by onetime expenses related
to the coronavirus."
Mr. Penny said sales of branded products have
been strong for Bimbo and its competitors in recent months. Private label sales have been growing far more modestly, if at all, he added. He said
these trends apply across the various product categories in which Bimbo participates.
How Bimbo has responded to the demand
surge has varied by product category, Mr. Penny
said. The company initially reduced the number of
stock-keeping units "to varying degrees," based
on the category and whether the company had
adequate or not enough production capacity.
"Frankly, there were a number of categories where we just simply had to scale back on

Chairman and president -
Daniel Servitje

Grupo Bimbo share price

Grupo Bimbo net sales

Grupo Bimbo net income

in Mexican pesos

4,630

5,808

6,319

2017

2018

2019

64 \ October 2020

in millions of Mexican pesos

44
40
36

268,485

289,320

291,926

2017

2018

2019

32
28

Oct.
2019

Dec.

Milling & Baking News * Food Business News * Baking & Snack * Meat+Poultry * Pet Food Processing

Feb.
2020

Apr.

June

Aug.

Corporate Profiles

Corporate Profiles - 2020

Table of Contents for the Digital Edition of Corporate Profiles - 2020