Grupo Bimbo is poised for a “transitional phase” in 2024 as the bakery business gears up for further improvements in revenues and EBITDA.

The Mexico-headquartered company expects to see “tailwinds” from easing commodity prices, Grupo Bimbo’s management team said as they presented last year’s results yesterday (19 February).

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 ($23.4bn) and 2.8% to 54.9bn pesos, 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.

“Emphasising the significance and importance of diversification, our company is strategically positioned to navigate this environment.

“Throughout the year, our commitment to growth and improving our profitability will manifest through continuous investments in capex projects, fostering both expansion and productivity initiatives.”

Elsewhere in the 2023 results, gross profit rose just 0.1% to 205.5bn pesos and operating income dropped 34% to 35.5bn. Grupo Bimbo’s net majority income slid 67% to 15.5bn pesos.

However, operating income and net income were hit by an adjustment in 2022 for pensions, so-called multi-employer pension plans (MEPPs).

Net income was also impacted by the disposal in 2022 of the Ricolino confectionery business to Mondelez International. Without the pension and MEPPs effect, net income was down “less than” 1%, CFO Diego Gaxiola said.

Gaxiola explained how the new year will evolve: “We will see some tailwinds this year coming from commodity prices, coupled with productivity benefits from past restructuring and capital investments.”

He added that the first half will be comparatively “more complicated” due to the all-time high sales in the year-earlier period. The EBITDA margin is likely to contract in the opening six months of the year before a recovery in the back end, along with “higher top-line growth”.

"Restructuring" plans

After announcing in January the planned closure of a bread and buns manufacturing plant in Albuquerque, New Mexico, Servitje suggested there could be more in 2024 as part of “optimising” operations in the US.

“A key focus will be on restructuring investments in countries such as the US, in line with our proactive approach to identifying opportunities that resonate with our philosophy and strategy to be a sustainable, highly productive” company, he said in his prepared remarks.

Pressed during the Q&A session, Servitje added: “We are always actively evaluating and terminating the best-in-world practices and we have a footprint in the US that is a lot of local bakeries and a lot of acquisitions. So we'll continue to look at specific opportunities that we have to optimise our footprint.

“I won't go into anything specific but know that we're making investments in our business and our decisions to better serve our retailers and to continue to deliver high quality and order fill for our consumers and customers.”

CFO Gaxiola said M&A may continue to play a part in Grupo Bimbo’s expansion after completing single deals in Romania and Canada last year, along with two in the US and one each in Spain and Switzerland.

“We continue to proactively look for these opportunities to complement our global profile,” he said.

Like Servitje, the CFO also briefly discussed plans for North America.

“We continuously and proactively look for opportunities to improve our value chain and enable sustained profitable growth. This year, we will begin to implement a transformational programme designed to improve our North American business and ultimately reach our full potential.

“We strongly believe these investments will better align and focus resources to drive growth and protect profitability, while continuing to create long-term value for our shareholders.”