For the first time in 2012, operations in the United States comprised more than half of Grupo Bimbo’s consolidated sales, underscoring the rapid growth of Bimbo Bakeries USA (BBU), as the business is known, driven by a number of high-profile acquisitions in recent years, including the landmark purchase of Sara Lee’s North American Fresh Bakery business in late 2011.
The country continued to recover from the economic recession but the overall consumption environment remained weak with consumers seeking value. Nonetheless, BBU volumes showed sequential improvement over the course of 2012, with sales momentum increasing at year-end. The sweet baked goods and breakfast categories outperformed in the year, as did sales of our Marinela and Bimbo branded products.
The key focus in 2012 was the integration of the Sara Lee operation, with significant advances in systems and IT, national and local customer alignment, national brand rollouts, and reconfiguring and optimizing the manufacturing footprint. We closed four plants, began construction of two new state-of-the-art facilities in Texas and Pennsylvania, and invested in distribution as part of our growth strategy. Integration synergies, efficiency measures and waste reduction initiatives across the entire “silo to store” value chain, resulted in a more efficient use of assets and yielded almost US$120 million benefits during the year. We also concluded the key divestitures required by the US Department of Justice.
Net sales in the year totaled Ps. 79 billion, a 46.7% rise over the previous year. Gross margin expanded with a moderate improvement, with lower average input costs and waste reduction initiatives offsetting the slow volume recovery. The decline in operating income and 4.3 percentage point contraction in the margin, to 1.4%, reflect the higher cost structure of the Sara Lee operation, integration related expenses and a non-cash charge generated by the withdrawal from two Multiemployer Pension Plans (MEPPs).
|Financial Regional Highlights|
1 Consolidated results exclude inter-company transactions.
* Figures expressed in millions of nominal pesos.