Grupo Bimbo to restructure US baking business amid Q4 earnings plummet

USA – Mexican multinational food company, Grupo Bimbo SAB de CV has announced a restructuring of its North American businesses as it gears up for further improvements in revenues and EBITDA.

Briefs about the restructuring were shared by Diego Gaxiola, group chief financial officer on Feb. 19 in a call with investment analysts in connection with the release of Bimbo’s financial results for the fourth quarter of 2023.

“We will begin to implement a transformational program designed to improve our North American business and ultimately reach our full potential,” Gaxiola said.

According to him, these investments will better align and focus resources to drive growth and protect profitability while continuing to create long-term value for shareholders, as has been the case with past restructuring initiatives.

During the call, the company also issued initial guidance for 2024, projecting a generally positive but uneven year ahead.

According to its financial report, the Mexican breadmaking giant has reported a staggering 89.2% decrease in its Q4 net profit for 2023.

However, the company expects to see “tailwinds” from easing commodity prices, coupled with productivity benefits from past restructuring and capital investments in 2024.

Both sales and adjusted EBITDA are forecast to increase in the low-to-mid-single digit range in 2024. Those metrics reached unprecedented levels in value terms last year, growing 0.3% to 399.9bn pesos (US$23.4bn) and 2.8% to 54.9bn pesos (US$3.2bn) respectively, helped by six acquisitions.

“While we continue to see the benefit of lower commodities, this year will be marked by a transitional phase as we navigate through a diverse consumer environment, witnessing a blend of cautiousness in certain markets and resilience in some others,” chairman and CEO Daniel Servitje told analysts.

Servitje said Bimbo’s restructuring efforts are “aligned with our proactive approach to identifying opportunities that resonate with our philosophy and strategy to be a sustainable, highly productive, and deeply humane company.”

Asked by an analyst for more details about the program, Servitje said Bimbo was constantly evaluating and instituting “best-in-world practices.”

For the new year, Servitje was generally upbeat about Bimbo’s prospects but offered words of caution as well.

“Looking into 2024, while we continue to see the benefit of lower commodities, this year will be marked by a transitional phase as we navigate through a diverse consumer environment, witnessing a blend of cautiousness in certain markets and resilience in some others,” he said.

 “Emphasizing the significance and importance of diversification, he identified the US restructuring as a “key focus” in the new year.

Taking a step back, Servitje said the past four years, since before the start of the pandemic, have been a period of “outstanding effort and resilience.” Over this period, he noted the company has grown 37% in peso terms, has grown even more in dollar terms, and has widened EBITDA margins by 2.2 percentage points.

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