Gruma: returns to profit in Q1/2010

Monterrey / MX. (dj) Mexican corn flour and tortilla maker Gruma S.A.B. de C.V. said that it swung to a first-quarter profit from a year-ago loss as the company´s financing costs fell sharply but sales were down 13 percent from a year earlier. Gruma reported a net income of 260,7 million MXN in Q1/2010. Other highlights:

• Majority net income increased considerably to 261 million MXN versus a majority net loss of 491 million MXN in Q1/2009.
• Sales volume remained flat as volumes in Gruma Corporation and Gimsa were stable and higher sales volume in Molinera de Mexico was offset by lower volumes in Gruma Venezuela and Gruma Centroamerica.
• Net sales decreased 13 percent as a result of lower net sales in Gruma Corporation due to price reductions, the appreciation of the Peso against the US-Dollar, and the devaluation of the Bolivar.
• Ebitda decreased 30 percent and Ebitda margin declined to 8,8 percent from 11,0 percent. The Peso appreciation and lower margins, mainly in Gruma Venezuela, Gruma Corporation, and Gimsa, drove the consolidated decrease in Ebitda.
• Debt decreased 35 million USD or two percent as of March 2010 versus December 2009 in connection with payments made with cash generation. In Peso terms debt decreased eight percent due to the reduction in debt in US-Dollar terms and the appreciation of the Peso against the US-Dollar.

Consolidated Results of operations (Q1/2010 versus Q1/2009)

Sales volume remained at 1’097 thousand metric tons. Volumes in Gruma Corporation and Gimsa were stable and higher sales volume in Molinera de Mexico was offset by lower volumes in Gruma Venezuela and Gruma Centroamerica.

Net sales decreased 13 percent to 11’258 million MXN in connection with lower net sales in Gruma Corporation due to price reductions, the appreciation of the Peso against the US-Dollar, and the devaluation of the Bolivar. Sales from non-Mexican operations constituted 66 percent of consolidated net sales during the quarter.

Cost of sales as a percentage of net sales increased to 66,7 percent from 65,7 percent, driven mainly by Gimsa and Gruma Venezuela. In absolute terms, cost of sales fell to 7’508 million MXN as higher cost of sales in Gimsa was offset by reductions in Gruma Venezuela and Gruma Corporation due to the Bolivar devaluation and the appreciation of the Peso, respectively.

Selling, general, and administrative expenses (SG+A) as a percentage of net sales increased to 27,7 percent from 26,4 percent, driven mainly by Gruma Corporation. In absolute terms, SG+A declined eight percent to 3’118 million MXN due primarily to Gruma Venezuela in connection with the Bolivar devaluation.

Operating income decreased 38 percent, to 632 million MXN, and operating margin declined to 5,6 percent from 7,9 percent; both results were driven by Gruma Venezuela, Gruma Corporation and Gimsa.

Other expense, net, was 40 million MXN, 23 million MXN lower than in the same period of 2009.

Comprehensive financing cost, net, was 161 million MXN versus 1’104 million MXN in Q1/2009. The variation resulted mainly from the losses on currency derivative instruments in Q1/2009. Also, the appreciation of the Peso generated a positive effect during the quarter.

Gruma´s share of net income in unconsolidated associated companies (primarily Banorte) totalled 127 million MXN, ten percent lower than in Q1/2009.

Taxes amounted to 216 million MXN, 128 million MXN lower than in Q1/2009, in connection with lower pre-tax income in foreign subsidiaries.

Gruma´s total net income was 342 million MXN versus a net loss of 345 million MXN in Q1/2009; the difference came mainly from the losses on currency derivative instruments in Q1/2009 and a positive effect of the Peso appreciation during Q1/2010.

Gruma´s majority net income was 261 million MXN, compared with a majority net loss of 491 million MXN in the same period of 2009.

Info: More details see the company`s statement (PDF)