Breadmaker Bimbo hit by profit slump, cuts earnings outlook
MEXICO CITY: Mexican breadmaker Bimbo’s first quarter net profit fell by about 42% from a year earlier, the company says, citing foreign exchange effects stemming from a strong peso and weaker spending in its North American markets.

Earnings per share hit 0.54 peso, below the 0.73 peso expected from analysts polled by LSEG.

The company, which sells cakes, cookies and tortillas across some 35 countries, trimmed its outlook for adjusted core earnings growth this year to low-single digits from mid-single digits, chief finance officer Diego Gaxiola said on a conference call after the quarterly results were released.

Analysts had expected earnings before interest, taxes, depreciation and amortisation (ebitda) to grow by 6.7% this year, according to LSEG estimates.

Following the results, JPMorgan Chase & Co downgraded Bimbo’s stock to “underweight” from “neutral”, citing weaker-than-expected financials and limited visibility on profitability going forward.

“We believe there is high risk of guidance to be revised downwards,” the bank said in its research note.

Profits during the first three months of the year came in at 2.4 billion pesos, according to a company filing.

Revenues, meanwhile, shrank 6% to 93.2 billion pesos, missing the LSEG estimate of 95.95 billion pesos.

Net sales excluding foreign exchange impacts were essentially flat, the company added in a separate statement, with its operations in Europe, Asia and Africa showing the biggest sales growth when currency swings are excluded.

The narrower quarterly profit was caused in part by Bimbo’s North America margin, which contracted 160 basis points mainly due to the strong Mexican peso making products imported from Mexico more expensive, plus weaker sales volumes and inflation pressures.

Mexico’s peso currency appreciated more than 8% against the US dollar in the January to March period, versus a year earlier.

Bimbo’s adjusted ebitda fell by nearly 8% to 11.8 billion pesos.

Excluding the currency exchange effect, adjusted core earnings decreased 3.3% in the quarter, according to the statement.

Capital investments, meanwhile, are seen slightly down this year and in 2025, compared to a recent “peak” of around US$2bil spent last year, added executive chairman Daniel Servitje.

Servitje is the global breadmaker’s outgoing chief executive officer, and will be replaced by Rafael Pamias, the company announced last week. — Reuters
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Mexican breadmaker Bimbo’s first quarter net profit fell by about 42% from a year earlier, the company says, citing foreign exchange effects stemming from a strong peso and weaker spending in its North American markets.