Servitje said, despite challenging comparisons driven by the pandemic-induced buying that occurred in March last year, the company saw volume soar across multiple categories, specifically buns and rolls, pastries, snack cakes, confectionery, bagels and snacks, along with its Mexican and QSR businesses.
“We have sequentially recorded record sales and profits, and our free cash flow has been consistently growing,” Servitje told analysts and media in an earnings call.
“Our strong results are a reflection of our team’s dedication, global diversification, strong consumer demand, investments in our brand and pricing strategies.”
For Q3, Bimbo posted an increase of 11.9% of 4,031 million pesos ($197.6m) versus the previous year.
Gross profit between July and September was 46,719 million pesos ($2,2bn), up 1.2% from the same period of 2020, while operating profits grew by 4.9% to 8,350 million pesos ($409.27m).
Revenue pumped in 88,182 million pesos ($4,3bn), an increase of 2.9% compared to the same period in 2020.
Regional breakdown
Servitje said the company is facing a significantly higher inflationary environment – specifically, increases in commodity, freight and labour costs, as well as shortages across the supply chain in the US, UK and Canada.
However, compared to pre-pandemic levels, run rates were “very strong” with sales growing at 17.8%, adjusted EBITDA at 26.2% and net majority income more than doubling.
Its North American business had “a great quarter” with net sales grew 5.5% in dollar terms.
“The strength driven by consumer demand and investments we have made and continue to make in our brands. The private label run rate has remained soft, while food service is beginning to rebound as schools and restaurants manage reopen.”
Sales in Mexico improved by 16.4%, attributable to volume growth, favourable product mix and price increase.
“Almost every category and channel grew more strongly in cookies, pastries, buns, salty snacks, and confectionery as well as the traditional and modern channel and the recovery of the convenience in brand new channels.”
In Latin America, net sales increased 70%, driven by strong volumes and price/mix across all three organisations.
Moving to EAA, sales increased nearly 16%, thanks to double-digit growth across almost every country where Bimbo operates but particularly, Iberia, the UK and the QSR business, coupled with the acquisitions of Medina del Campo in Spain and Modern Foods in India.
“We also continue to see a recovery of our QSR business throughout all the region.”
Broad strides
During the quarter, the Mexico City-headquartered company completed the acquisition of Popcornopolis, one of the fastest growing popcorn brands in the US that produces “premium ready-to-eat popcorn made with natural and best-in-class ingredients. This acquisition marks our entrance to the crafted popcorn category in the US, which is an excellent platform for innovation,” said Servitje.
It also completed the acquisition of Aryzta’s Brazilian operation (a major player in the country’s QSR bakery market, specialising in hamburger buns and breadsticks and nuggets, with a growing business in the sweet and bakery market) and acquired Kitty Bread, the number two bread manufacturer in Northern India.
This pushed the company’s net debt to 90,888 million pesos ($4,4bn), up from the 85,229 million pesos ($4,1bn) at the end of 2020.
CFO Diego Gaxiola said the company had renewed its sustainability-linked committed revolving credit facility for $1.75bn.
“I am proud that this successful transaction perfectly aligns with our philosophy of building a sustainable, highly productive and deeply humane company.
“With this sustainability-linked loan, we continue to strengthen our financial profiles and given that sustainability is part of our DNA, and it is growing relevance in our world and business, we have renewed and linked it to our sustainability goals,” said Gaxiola.
5.8m slices of bread and renewed targets
Servitje reiterated the company’s commitment to achieve “zero net carbon emissions by 2050”, having joined the United Nations-led Race To Zero, the largest ever alliance to mobilise actors outside of national governments to join the Climate Ambition Alliance.
The company has also surged ahead with its commitment to swap over to 100% renewable electricity in all its operations by 2025.
“During the quarter, France, Italy, Russia and their 13 operations have started working with renewable electricity. We will soon share with you our renewed sustainability strategy with more ambitious targets. So, stay tuned,” said Servitje.
He added Bimbo will be donating more than 5.8 million slices of bread to food banks around the world, thanks to the 29,940,000 runners who entered the Bimbo-organised 2021 Virtual Global Energy Race.
2022 outlook
Gaxiola reaffirmed the company’s guidance for 2021 and provided some visibility on what it was expecting for 2022.
“In terms of net sales, we expect to see a growth of mid-single-digit. Taking into account that we will have a tough comparison, given the remarkable results of 2021 and despite the high inflationary environment, we are still expecting adjusted EBITDA to increase from mid to high single-digit, which will translate, of course, into a potential margin expansion,” he said.
