MONTERREY, MEXICO — Sales volumes in the United States remained strong at Gruma USA as demand for the company’s “better-for-you” product remained strong and corn flour operations reached record levels in sales in the first quarter of fiscal 2022.
Operating income at Gruma USA in the first quarter ended March 31 totaled $83.3 million, down 4% from $86.5 million in the same period a year ago. Net sales increased 17% to $724.6 million from $618.9 million, while sales volume rose 5%.
“From a divisional performance basis in the US division, both tortillas and corn flour had a solid first quarter of the year,” Adolfo Fritz, investor relations officer at Gruma, said during an April 21 conference call with analysts. “Retail tortilla kept its strong momentum, growing by 1.2% on the back of healthy demand from ‘better-for-you’ tortillas, specifically the gluten-free, Carb Balance product lines. Meanwhile, foodservice has not only recovered to pre-pandemic levels since the fourth quarter of 2021; it has experienced strong demand, evidenced by volume growth of 8% compared to last year.
“In all, volume in our tortilla operation in the US grew by 2% in the quarter. And our corn flour operations (had) a volume growth of 9%, with results close to historical record levels in the US had it not been for 2020, where the effects of the pandemic supports strong volume sales. We experienced strong demand from institutional clients in addition to healthy volume growth from our retail clients as home cooking since the pandemic has started to overtake dining at restaurants, and even more so with inflation levels during the start of 2022. These healthy volumes, coupled with the price increases implemented last year, boosted sales by 17%, setting a firm precedent for future performance.”
Mr. Fritz added that Gruma’s brand recognition in the United States is “substantial,” putting the company in a much better position to support price increases than its competitors.
“I think we feel very comfortable in that regard,” he said. “And our competition is in the same boat dealing with their own issues according to their own cost structure.”
Gruma said operating margin at Gruma USA fell 250 basis points during the first quarter to 11.5% from 14%. Meanwhile, cost of sales as a percentage of net sales improved to 60.1% from 56.5% in the first quarter, resulting mostly from meaningful growth in costs relative to the first quarter of fiscal 2021, Gruma said.
Gruma said it incurred $63 million in capital expenditures during the first quarter. During the quarter, the company allocated expenditures to construction and capacity expansion of a new tortilla plant in Indiana; land purchase for wastewater treatment at a corn milling plant in Madera, Calif.; transportation equipment at its tortilla plants in Mexico; upgrades at its tortilla plant in Omaha, Neb.; capacity expansion at its tortilla plant in Australia; and maintenance and general technology upgrades across the company, particularly at GIMSA.
Overall, majority net income at Gruma SAB de CV in the first quarter was $61.2 million, down 5% from $64.3 million a year ago. EBITDA was 164.9 million, down 2% from 168.9 million, while sales rose 17% to $1.26 billion from $1.08 billion.