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Daily Newsletter

01 November 2023

Daily Newsletter

Grupo Bimbo confirms Mile Hi Bakery acquisition

The world’s largest bakery group disclosed the deal while publishing its third-quarter results.

Dean Best October 31 2023

Grupo Bimbo has snapped up smaller US peer Mile Hi Bakery.

The bakery giant disclosed the move for the Colorado business alongside its third-quarter results.

Financial terms were not released.

In a brief statement, Bimbo described Mile Hi Bakery as a supplier of “buns and English muffins for the QSR channel”.

According to Mile Hi Bakery’s website, the company’s plant can bake “5,000 dozen buns” and “1,500 dozen muffins” an hour.

Mile Hi Bakery was set up in 1985 to produce buns for McDonald’s in the Rocky Mountain region. Among the clients listed on the company’s website are McDonald’s, Wendy’s, Chick-Fil-A and Bimbo Bakeries USA, Bimbo’s local subsidiary.

In July, when Bimbo announced its second-quarter results, CFO Diego Gaxiola said the company had “a very robust pipeline of potential targets”.

The Mexican group’s third-quarter results statement also included news the company has bought the majority of its QSR operations in Switzerland and now owns 60% of the business. The other shareholders in the entity were not disclosed.

In the third quarter of the year, Bimbo’s group net sales fell 3.5% to 99.18bn Mexican pesos ($5.51bn). Excluding the impact of exchange rates, net sales were up 8.2%.

Bimbo said sales reached a “record” in the third quarter when exchange rates were discounted from the numbers. It pointed to “a favourable price/mix across regions”.

Stripping foreign exchange from the results, net sales were up in all regions, including in North America, the company’s largest. In the 12 months to the end of September, the North America division – which does not include Bimbo’s domestic market of Mexico – accounted for just over 49% of net sales.

Third-quarter operating income fell 11.4% to 9.75bn Mexican pesos, or by 4.6% excluding foreign exchange.

Net majority income was down 31% at 4.18bn Mexican pesos and by 27.5% when currency fluctuations were stripped from the numbers.

Bimbo said both results included the impact of the group lapping a pension benefit recorded in 2022.

Excluding the pension factor from the figures, net majority income fell 10.7%.

Adjusted EBITDA dipped 0.2% to 14.47bn Mexican pesos. Without taking into account exchange rates, adjusted EBITDA increased 9.5%.

The dairy and soy food sector will see rising demand for lactose-/gluten-free products

GlobalData estimates that the global dairy & soy food sector will grow at a CAGR of 17% during 2022–27. The healthy eating trend has encouraged consumers to seek alternatives to traditional dairy products. Plant-based dairy alternatives are often perceived as healthier due to their lower saturated fat content. Moreover, increasing awareness about food allergies and intolerances, coupled with consumers’ interest in alternative diets, will drive manufacturers to launch lactose- and gluten-free products.