Mexican bakery company Grupo Bimbo saw its sales climb more than 11% to US$ 7.39 billion in the first half of 2017, but reported a 6.4% fall in operating income and a 23.9% drop in net majority income.
The company's net sales in Mexico rose 11.7%, with higher volumes in "most categories and channels".
Bimbo closed two U.S. baking plants in the first quarter, and charges associated with the moves and other restructuring expenses weighed on profitability over the six-month period.
In North America, Grupo Bimbo's net sales were up 6.9%, boosted by exchange rates and by "growth" in its branded business. However, its non-branded and frozen businesses, as well as in the premium category, weighed on sales volumes, which saw a 1% decrease in sales when measured in dollars.
In Latin America, Grupo Bimbo's net sales climbed 9.1%, mainly reflecting favorable exchange rates. The net sales from the company's Europe, Asia and Africa unit jumped 79.5%, largely driven by the contribution from recent acquisitions like Donuts Iberia, Ready Roti in India and Groupe Adghal in Morocco.
Grupo Bimbo's operating income reached US$ 430.5 million in the first half of 2017, compared to US$ 445.7 a year earlier.
In addition to announcing financial results, Grupo Bimbo issued further background information on its recently announced agreement to acquire East Balt Bakeries from One Equity Partners.
East Balt’s annual sales of US$ 420 million have been growing at a 3.6% compound rate over the last five years while EBITDA of US$ 70 million has been growing at a 7% rate.
For Grupo Bimbo, the transaction will be accretive to margins, earnings per share and profitability, Bimbo said. East Balt will give Bimbo better access to global markets “where bread consumption through the Q.S.R. (quick service restaurant) channel is high,” the company said.
When the transaction is completed, Grupo Bimbo will be operating 196 baking plants in 32 countries together with 56,000 routes, 1,700 sales centers, 2.9 million points of sale and 136,000 associates.