Grupo Nutresa grows 8.9% in third quarter

By Asia Sherman

- Last updated on GMT

© Getty Images / marchmeena29
© Getty Images / marchmeena29

Related tags: Colombia, financial report

Colombia’s Grupo Nutresa posted an 8.9% increase in third-quarter consolidated sales, totaling COP 7.2 trillion (US$ 2.2 billion) with a profit margin of 13.8%.

Founded in 1920, the Colombian food-processing conglomerate operates 45 production facilities and distribution networks throughout the Americas. Its eight business units include cold cuts, biscuits, chocolates, Tresmontes Lucchetti, coffee, retail food, ice cream and pasta.

“All the businesses had positive behaviors, both in value and in volume,” ​said Carlos Ignacio Gallego Palacio, Chief Executive Officer of Grupo Nutresa. “I would highlight that this growth is mainly due to higher volumes which increased by 8.9% during the period.”

Sales in Colombia reflected a sustained positive trend, reaching COP 4.5 trillion (US$ 1.4 billion), a 6.4% year-on-year increase resulting from an increase in volumes and prices of 5.8% and 0.5%, respectively. International sales grew by 13.5% year-on-year, totaling COP 2.7 trillion (US$ 839 million), or 37.8% of total sales.

The 13.8% profit (EBITDA) margin translated to COP 992 billion (US$ 308 million), an 18% year-on-year increase, noting that results are now based on the new accounting standard for leases in the financial statements (IFRS16).

Innovation of both consumer products and experiences continue to be an important driver of growth and differentiation, says the company, with Innovation-driven sales representing 21.9% of total sales. 

Inorganic growth news

During the third quarter, Nutresa acquired Cameron’s Coffee, a Minnesota (U.S.)-based company specialized in the production and distribution of premium roasted and ground coffee. Cameron’s Coffee, with an enterprise value of US$ 113 million, posted US$ 72 million in sales for the 12-month period ending in July 2019 and is expected to expand Nutresa’s distribution network in the US.

Gallego explained the strategic reasoning behind the acquisition: “First of all, it is to strengthen the platform that we already have in the US by adding a regional coffee brand with a national potential.”  ​He also said Cameron’s Coffee “highly-trained management team”, ​which comes on board with the acquisition, has the capability to develop synergies and networks to help “other products go to market in the States, not only coffee but in other categories as well.”

On October 25, the Superintendency of Industry and Commerce approved a transaction for Nutresa to acquire 51% of Atlantic Food Service, an importer and distributor of over 400 products in Colombia’s six main cities. According to Gallego, this will make it possible to consolidate the over-the-counter market, complement Nutresa’s one-stop-shop strategy and diversify channels.

First on the Dow Jones Global Sustainability Index

Grupo Nutresa also highlighted that it was named the most sustainable food company by the Dow Jones Sustainability World Index of 2019 in recognition of its corporate practices in tax strategy, health and nutrition, materiality, human capital development, corporate citizenship and philanthropy, operational eco-efficiency, packaging, water-related risks and environmental reporting.

“Achieving the first position after nine consecutive years ranking in this index, is evidence of Grupo Nutresa’s deep commitment, strong leadership, and consistent hard work in striving for superior competitiveness while adopting the best-in-class ESG practices,”​ the company said in a statement.