Mexican breadmaker Bimbo doubles Q2 net profit, raises outlook

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MEXICO CITY (Reuters) – Mexican breadmaker Grupo Bimbo on Thursday reported its second-quarter net profit doubled and the company raised its sales and operating earnings outlook, citing strong demand from regions including the United States and Europe.

Net profit rose to 6.1 billion pesos ($305 million), the company said in a filing to Mexico’s main stock exchange. Revenue totaled 96.4 billion pesos, an 18% rise from the year-ago period. Bimbo attributed the growth to a “favorable price mix and strong volume performance across all regions.”

Analysts at Mexican brokerage Monex said the results showed “an attractive advance” in gains, and said “recent adjustments” in raw material prices could mean the breadmaker sees more favorable returns in the second half of the year.

“Our attention will be on consumer purchasing power… and on changes in purchasing habits,” the analysts wrote.

Bimbo now forecasts “high single-digit growth” for its yearly earnings before interest, tax, depreciation and amortization (EBITDA), Chief Financial Officer Diego Gaxiola said in a call with analysts, up from a previous range of mid-to-high single digits.

EBITDA for the quarter jumped 12.5% to 13 billion pesos.

Bimbo also upped its top-line guidance for the year from “low double-digit growth” to “low-to-mid teens,” Gaxiola added.

The executive said in the report that demand grew despite inflationary pressures and increased raw material prices.

The firm said in May it was backing an initiative by the Mexican government to tame prices amid rising inflation and decided to freeze its white bread prices for six months.

Grupo Bimbo announced in April it will sell its confectionery business, Ricolino, for around $1.3 billion to Mondelez International Inc (NASDAQ:MDLZ).

The firm continues to expect to receive the regulatory permission to sell the business in the fourth quarter, though it is still unsure how much it will have to shell out in taxes, executives said in the analysts call.

($1 = 20.1353 pesos at end-June)