Grupo Bimbo SAB (BIMBOA) said quarterly profit fell for a fourth consecutive quarter as the world’s largest bread maker absorbed higher wheat costs and expenses integrating Sara Lee’s North American bakery business.
Net income plunged 82 percent to 369.5 billion pesos ($28.4 million) from 2.05 billion pesos a year earlier, the Mexico City-based company said today after the close of trading. Quarterly revenue climbed 35 percent to 43.4 billion pesos.
Bimbo is on pace to post its fourth annual profit decline this year as the company integrates Sara Lee, which it acquired for $675 million a year ago. The breadmaker is facing higher wheat expenses after the worst U.S. drought in 56 years prompted futures to surge by almost 50 percent in a five-week span in July.
Increased cost of sales in the quarter “reflected the higher expense structure of the Sara Lee operations in the United States,” the company said in its quarterly statement.
Bimbo’s annual profit is expected to fall 8.3 percent to 4.89 billion pesos this year, from 5.33 billion pesos, according to the median estimate of six analysts’ estimates compiled by Bloomberg. For 2013, analysts expect profit to rise to 7.17 billion pesos, the data shows.
In the third quarter, Bimbo total debt was 2.8 times earnings before interest, depreciation and amortization, from 3.1 times last year, the company said today. Bimbo’s goal is to lower debt to two times Ebitda, according to company presentations.
Bimbo’s debt fell 11 percent to 41.8 billion pesos.
Bakery sales from Mexico rose 8 percent to 17.8 billion pesos, while U.S. bread sales increased 65 percent to 19.9 billion pesos during the period. South and Central America sales were 5.5 billion pesos, up 20 percent from a year earlier.
Larger wheat crops for 2013 and savings after completing the integration of new businesses should help Bimbo earnings improve next year, said Miguel Mayorga, an analyst at GBM Grupo Bursatil Mexicano in Mexico City.
“The long-term uncertainty about wheat prices is almost gone,” he said in a telephone interview before the report was released.
Quarterly financing costs increased to 607 million pesos from 156 million pesos the prior year, Bimbo said.
Shares rose 1 percent to 32.58 pesos on the Mexican Stock Exchange today. They have gained 14 percent this year.
Wheat futures for December delivery dropped 1.3 percent, to settle at $8.7275 a bushel at close on the Chicago Board of Trade.
Bimbo makes Entenmann’s cakes, Thomas English Muffins, Pan Bimbo and Mrs. Baird’s breads.