MEXICO CITY – Grupo Bimbo SAB de CV’s North American business continues to gain momentum showing the benefits of the company’s productivity initiatives and value amid soft sales volumes, said Alejandro Rodriguez, executive director.
Operating income of Bimbo’s business in North America was 2,493 million pesos ($134 million), an increase of 9% from 2,279 million pesos in the same period of the previous year (up 18%, excluding foreign exchange). Sales during the quarter were 44.2 billion pesos ($2.4 billion), down 7% from 47.470 million pesos (up 1.2%, excluding foreign exchange).
Sales profit (excluding foreign exchange) is the third division in a row.
“Our sales trajectory is clearly improving, supported by stronger revenue growth management and better market execution,” Rodriguez said in an Oct. 22 earnings call with investment analysts. “We also see progress where it is most important. We gained share in four out of six categories and our margins improved for another quarter. Our productivity agenda continues to be delivered in the value chain. We reduce waste, improve recipes and packaging, operate plants more efficiently and optimize the footprint of manufacturing and routes, strengthen, source and simplify the organization, not an important improvement.
“We are building a more competitive, efficient and agile North American business. We are encouraged by progress, but we are not declaring victory. The transformation will not be complete until North America returns to profitable volume growth. That remains our goal.”
The operating margin of the North American business increased to 5.6% in the third quarter, from 4.8% a year earlier and 3.6% in the third quarter of 2024.
In an inflationary environment, a holistic approach to cost management is necessary to maintain the company’s margin advantage, said Greg Koehrsen, president and CEO of Bimbo Bakeries USA.
“It’s really about looking at our footprint, the way the product flows from the bakery through the sales center to the store,” Koehrsen said during the call. “We are looking at all our transportation lines from the perspective of bakery operations. It is literally bakery by bakery looking at all the opportunities that we have to be more efficient in the production of the products that we produce.
“From a procurement perspective, you can imagine that we’ve reviewed all of our purchasing categories and worked with our vendor partners to ensure that we’re not only getting the highest quality product, but of course at the right cost.”
Sales discipline, delivering the right product in the right amount to each customer, represents another step necessary for margin protection, Koehrsen said.
“And finally, part of our transformation has been refreshing our leadership team in Dallas,” he said. “This is a step we took at the beginning of the year. We have, as a leadership team, come together to work more collaboratively and cross-functionally than ever before.”
Calling the baked goods category “resistant,” Koehrsen said, bifurcation continues to characterize today’s consumer environment. Low- and middle-income consumers remain “value-conscious,” he said. Bimbo is making inroads with these and premium consumers, he added.
“Our portfolio bifurcates into mainstream and premium value, and we ensure that we have the right products at the right price points for everyone,” he said. “While the total environment may be mixed, we also believe that we can activate various consumer segments not only for the balance of this year but will be next year.
In response to a question about where consumer trends will move in the coming years, Koehrsen said it is difficult to “predict how sustainable” changes in consumer behavior will prove. Still, it is clear that a significant change in behavior has occurred.
“Some of the things consumers are asking for is value,” he said. “They asked for quality. They asked for renovation and innovation of the portfolio. So we got it.
The key is to have the right options for “all cohorts of consumers in the market, whether it’s value-based or more mainstream and more premium,” Koehrsen said.
Eliminate ingredients such as food coloring Red No. 3, is another sign that Bimbo meets the needs of consumers, he said.
“We continue to develop our portfolio in our key brands, continue to change recipes that need to keep moving forward with where the consumer is,” Koehrsen said. “We feel very excited about this move, even though consumers are changing and their expectations have evolved over the past few years. We also believe that we are well positioned to stay in front of these consumers and where they are going.”
Net majority income for Grupo Bimbo in the third quarter was 4,109 million pesos ($221 million), up 22% from 3,364 million a year earlier (up 24% excluding foreign exchange). Net sales were 106.1 billion pesos ($5.7 billion), up 1.3% (3.6%)
With strong quarterly results, Grupo Bimbo raised its guidance for the full year.
Diego Gaxiola, chief financial officer, warned analysts that at the beginning of the year, only a slight expansion in the EBITDA margin had been anticipated. With results consistently exceeding expectations, the company has consistently raised its guidance.
The guidance increase announced with third quarter results is the company’s third so far this year. The company now expects its EBITDA margin for 2026 to improve by 85 to 120 basis points from 2025, up from 70 basis points at the latest low.
The company expects top-line growth in the mid-single digits for the year.
“Looking to 2027, we see some encouraging drivers in our portfolio,” Gaxiola said. “We expect continued benefits from the transformation initiatives implemented in North America, profitable growth in Mexico, improved performance in Latin America and continued momentum in EAA. At the same time, the investments we have made in capacity, distribution automation and digital capabilities over the past few years enable us to support future growth while increasing productivity.
Full-year guidance for 2027 will be released with fourth-quarter results, Gaxiola said.