Despite lower profits and sales, Gruma USA indicators are excellent.
MONTERREY, MEXICO — The second-quarter results of Gruma USA, a division of Gruma SAB de CV, based in Monterrey, showed a “rebalancing” of the company’s product portfolio, reflecting the gradual recovery of the world economy as companies resume their pre-pandemic levels.
“The tortilla industry, which is primarily concentrated in the United States and Europe, is showing a return shift towards the foodservice channel as it has been recovering. This is similar to the global vaccination effort’s progress, which has led to food and leisure establishments reopening to the public,” Chief Financial Officer Raul Cavazos Morales stated in a July 22 conference call with analysts. Given our solid customer base, the retail channel is demonstrating impressive growth in Europe and tenacity in the US constructing during the previous few years.
That being said, compared to the outstanding performance of previous year, it has somewhat slowed down in this area. Furthermore, it still much exceeds our previous measurements. As per the IRI consumer panel, Gruma has been recognised as one of the leading brands in the US that has greatly impacted the market in 2020 and managed to hold onto over 50% of the gains in 2021.
“We are thrilled to hear this news and are sure that our loyal customer base will enable us to expand our (franchises) and the tortilla’s nationwide reach while boosting profitability. As with the US tortilla industry’s output fluctuations, it was difficult to duplicate the high level of activity in the corn operation last year due to the increased demand at the pandemic’s beginning. In all places where maize flour operations are conducted worldwide, this effect has been identical.
Gruma USA’s operating income decreased by 8% to 1.70 billion pesos ($84.72 million) during the second quarter that concluded on June 30 from 1.85 billion pesos during the same time the previous year.
Gruma USA’s second-quarter sales volume was steady, but net sales dropped 1% to 12.45 billion pesos ($620.44 million) from 12.53 billion pesos.
Operating margin at Gruma USA decreased by 100 basis points to 13.7% from 14.7% in the second quarter, according to Gruma. In the meantime, the shift in the sale mix and various factors helped the cost of sales as a percentage of net sales grow to 57.3% from 55.9% in the second quarter labour expense, according to Gruma.
Given the market dynamics we have observed in relation to our tortilla operations, we remain optimistic about our success in the region going forward, Mr. Cavazos Morales stated. “We’ve been able to hold onto most of the clientele we brought on in 2020. Furthermore, we continue to innovate and develop goods that adapt to changing customer lifestyles. One such product line is our better-for-you line, which is expanding rapidly across the United States as more people become aware of the advantages and adaptability of tortillas.
Gruma said that its capital expenditures for the second quarter totaled $63 million. The company spent the quarter building new tortilla facilities in Indiana and Spain and increasing their capacity there; wastewater treatment systems at corn flour plants located in Edinburg, Texas, and Evansville, Indiana; as well as basic technology improvements and upkeep for the entire organisation.
According to Mr. Cavazos Morales, Gruma plans to open for business in August at its plant in Omaha, Nebraska. Since 2015, the factory has been closed.
“By producing in the Midwest rather than importing from, say, Dallas or California, we will be able to increase our production capacity and save some money on distribution,” he stated. “And we want to be close enough to Omaha, Nebraska so that we can supply the product from there.”
Gruma SAB de CV’s total majority net income for the second quarter was 1.53 billion pesos, a 13% decrease from 1.75 billion pesos in the same period last year. Profit and Loss revenue decreased by 8% to 3.72 billion pesos from 4.02 billion pesos, and sales decreased by 7% to 22.45 billion pesos from 24.15 billion pesos.