Growth in US business improves Gruma’s performance.
Mexico’s Monterey Gruma SAB de CV’s first-quarter market dynamics and fundamentals “unfolded better than expected,” especially in the company’s US businesses.
The company stated, “We saw strong demand for both of our core products, but the growth in the US business was driven by the success of our ‘Better for You’ product line and increased corn flour consumption in both the US and Mexico.” We are happy with our results, which included a 25% increase in consolidated revenue and a 28% increase in EBITDA due to the success of the US division. Our internal profitability metric, EBITDA per ton, increased by 22% in the past year. We are determined to safeguard profitability moving forward, but we are also wary of possible changes in consumer behavior, for which we are ready should they occur.
Gruma USA’s operating income increased by 14% to $124.5 million in the first quarter that concluded on March 31 from $83.3 million in the corresponding period the previous year. Sales volume climbed by 2%, but net sales increased by 22% to $887.2 million from $724.6 million.
Operating margin at Gruma USA climbed by 250 basis points to 14% in the first quarter from 11.5%, according to Gruma. In the meantime, cost of sales as a percentage of net sales increased to 59.1% from 60.1% in the first quarter, mostly due to higher labor and raw material expenses as well as higher volume, according to Gruma.
“There are currently no signs of a decline in trading for our product line in the US, and demand for it began the year at a great pace,” Gruma stated. “As part of our commitment to protect profitability, profitability has improved as assessed by EBITDA per ton. Our emphasis on quality and innovation has enabled us to sustain this successful performance.
Gruma said that its capital expenditures for the first quarter totaled $49 million. The company’s expenditures for the quarter were focused on expanding capacity at its tortilla plant in Australia, building a new tortilla plant in Indiana, upgrading equipment at its tortilla plant in Dallas, maintaining and upgrading general technology throughout the company, especially at GIMSA.
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Gruma SAB de CV’s majority net income for the first quarter of 2018 increased by 24% to $75.9 million from $61.2 million the previous year. Sales increased 25% to $1.59 billion from $1.26 billion, while EBITDA increased by 28% to $210.6 million.