Bimbo’s sweet baked goods, buns & rolls, bread, English muffins and snacks categories posted a 23.5% sales increase in the US. This was partially offset by weak volumes across the QSR and foodservice businesses, including schools (which remain temporarily closed) and lower traffic in channels such as convenience due to coronavirus.
“We’ve outperformed in Sweet Goods in terms of growth and relative to the category and gaining market share … and it really cuts across all our brands, including snacks,” Alfred Penny, president of Bimbo Bakeries USA, told analysts on the earnings call, particularly calling out the Entenmann’s, Marinela and Sara Lee brands.
“To some degree, it’s driven by some strong product innovation and expansion of some new products but I think in large part, it’s the strength of the brands and the portfolios with really solid execution by our front line. And hopefully, we’ll see that continue.”
Nonetheless, in Mexico, the Salty Snacks & Confectionery categories as well as the convenience, vending, wholesale and food service channels remained under pressure due to COVID, reflected in the overall 0.8% sales increase for the region.
Impulse buys versus pantry items
Bimbo chairman & CEO Daniel Servitje said the categories most affected were those linked to impulse buying that were more on-the-go eating versus pantry items.
“The most negative effect that we are facing in Mexico is in the top line with some particular channels completely shut down and others that have been negatively affected because of the pandemic,” added Group CFO Diego Gaxiola.
He conceded the future remains unpredictable, but noted the company is confident it has survived the worst.
“Like most CPG food companies, we’re trying to figure out what the future could look like even before we get post COVID, whatever normal might be and we’re monitoring various forecasts, and we’ll see where that nets out. I wouldn’t want to give any predictions, [but] we’re confident in the fact that we've over the last, call it, six months.
“Now we've gained a large number of new consumers and new households into our brands. We're investing incremental marketing support behind that to try to retain as many of those new consumers as possible as we get into the post-COVID or a more normal situation.”
The financials
For the three months ended 30 September 2020, Grupo Bimbo posted record net sales of MXN85.8 billion pesos ($4.09bn), a 14.6% increase, primarily due to the outstanding volume growth in North America (23.5% net sales increase).
This was followed by the EAA with +20.7% net sales increase, mainly driven by healthy results across the UK’s QSR business, which offset the weak performance in Iberia thanks to the crisis. Net sales in Lantin America rose by 10.1% and Mexico posted +0.8%.
To boost its home front business, Bimbo increased its ownership in the JV Blue Label Mexico, which provides a wide range of services to small merchandisers in Mexico, such as electronic airtime deals, payments with credit, debit and food vouchers and cash-back transactions.
Gross profit was MXN46,1bn ($2.2bn), a 16.9% increase, with operating income at MXN7,9bn ($379m). Adjusted EBITDA also reached record levels for a period with a 17.9% growth and a 40 basis point margin expansion.
The company’s total debt decreased by MXN6.5bn ($310m) compared to the last quarter, mainly because of the strong cash flow generation.
Free cash flow before dividends and share buybacks totalled nearly MXN13bn ($620m), from which Bimbo returned MXN5.7bn ($358m) to shareholders. It also cancelled more than 169 million shares (nearly 4% of its total shares) held in treasury.
Optimistic future with 6m slices of bread donated to foodbanks
Gaxiola said Bimbo expects to close the year between mid-to-high 30s, with “an expectation of a low double-digit growth rate for our sales, mid to high teens for our adjusted EBITDA and a better effective tax rate from the previous estimate.
“We are optimistic about the future as our results continue to be strong. Our teams are doing an extraordinary job, and our global diversification continues to pay off.”
Earlier this month, Grupo Bimbo virtually hosted the 2020 Global Energy Race, and due to an overwhelming participation, will donate more than six million slices of bread to foodbanks in host cities.
Grupo Bimbo produces over 13,000 products, sold in more than 2.8 million points of sales in 33 countries around the globe. Its main product lines include sliced bread, buns & rolls, pastries, cakes, cookies, English muffins, bagels, tortillas & flatbread, salty snacks and confectionery products, among others.
Its shares trade on the Mexican Stock Exchange (BMV) under the ticker symbol BIMBO, and in the over-the-counter market in the US with a Level 1 ADR, under the ticker symbol BMBOY.