2021 was yet another ‘exceptional year for Grupo Bimbo’

By Gill Hyslop contact

- Last updated on GMT

Pic: Grupo Bimbo
Pic: Grupo Bimbo

Related tags: Grupo bimbo, Earnings Call, Bimbo bakeries usa, Aryzta, Cerealto Siro Foods, Emmy's Organics, acquisition, HFSS

Mexican bakery giant Grupo Bimbo posted a 66.9% increase in fourth quarter net profit, along with a 74.7% bump up for FY 2021 to reach 15.9 billion pesos ($78m).

Net sales for the October-December period jumped 14.9% to 97,445 million pesos ($4.8m), while the full year results showed a 5.4% increase to reach a record level of 348,887 million pesos ($17.23m).

According to Bimbo’s approachable, action-oriented and market-driven leader Daniel Servitje, these exceptional results were attributable to the “hard work of our teams, the strong execution of our plans and strategies, our ample diversification and the strength of our brands”,​ while “transforming the business in a complex operating environment”.

Price increases for 2022

The revenue climb was driven by a mix of favourable prices for the company’s 100+ brand, however, on a call with analysts, chief financial officer Diego Gaxiola said Bimbo is planning to increase prices this year to catch up with inflation, labour shortages and supply chain constraints.

Operating income in the fourth quarter rose 17.4% to 9,998 million pesos and the margin expanded 30 basis points – FY202: +34.3% to 34,126 million pesos; 210 basis points – mainly due to productivity savings from past restructuring strategies and cost-cutting projects, partially offset by the abovementioned higher cost of sales.

Adjusted EBITDA reached a record level for both the quarter (+5.8% to 13,516 million pesos) and full year (+8.8% to 49,178 million pesos), attributable to the strong sales and operating performance across the company.

Regional breakdown

Despite difficult comparisons as the company lapped COVID-driven performance in 2020, sales in North America increased 12.4%, thanks to strong market share performance, successful implementation of the pricing strategy and excellent in-store execution.

Mainstream, premium, buns and rolls, sweet baked goods and snacks categories outperformed, as did the modern channel.

Sales in Mexico showed solid growth at 21.5%. Every channel posted double-digit growth, as did the snacks, confectionery, snack cakes, cookies, sweet baked goods, sliced bread and buns categories.

The EAA also showed growth at 17.7% – propelled by acquisitions in Iberia and India – while Latin America posted the strongest growth at 24.6%, benefited by the inorganic contribution from the acquisition of Aryzta do Brazil.

Return on Equity (ROE) reached its highest level for over 10 years, at 15.2%.

“2021 results were outstanding, especially when we consider the difficult comparison from the 2020 remarkable results we are cycling, the FX conversion impact, overall inflation and the complicated operating environment in several countries,”​ said Gaxiola.

“We surpassed our Sales and our Effective Tax Rate guidance, achieved our Adjusted EBITDA guidance and remain confident that 2022 will be a strong year, as we strengthen our investments to be more efficient and to enhance our global presence.”

Acquisitions and achievements

Bimbo successfully completed six strategic acquisitions during the year: two in the US (Popcornopolis and Emmy’s Organics),​ two in India (Modern Foods and Kitty Breads),​ one in Spain (a production plant in Medina del Campo, acquired from Cerealto Siro Foods)​ and one in Brazil (Aryzta’s Brazilian bakery operations).

For the eighth consecutive year, Grupo Bimbo occupied the first position in Merco’s 2021 ranking as the Most Responsible Company in ESG in Mexico. It also obtained first position in each of the Environmental, Social and Governance categories.

The company maintained its sustainability journey. Said Servitje, "Nearly, 100% of our bread tortillas and buns comply with international standards of saturated and trans fat, sodium and added sugar to offer products with an improved nutritional quality. We also signed the commitment to net zero carbon emissions by 2050, achieved 85% renewable electricity across all our global operations and reduced by 1.2 million kilogrammes the plastic in our packages among several other accomplishments."

Gaxiola added the company will increase its spend from the previously estimated $900m to $1.5bn in 2022 on growth projects, including new products.

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