Grupo Bimbo cuts 2023 sales and profit forecast due to a stronger Mexican peso.


Mexican bakery manufacturer Grupo Bimbo has lowered its sales and profit outlook for 2023 due to the impact of the Mexican peso's appreciation, which also affected its second-quarter performance.

Bimbo's Chief Financial Officer, Diego Gaxiola, announced during a conference call with analysts that the company has lowered its annual sales forecast to a low-to-mid single-digit increase, compared to the previously forecasted mid-to-high single-digit growth.

Gaxiola stated, "Compared to our initial sales forecast, the impact of exchange rates exceeded 6 percentage points."

So far this year, the Mexican peso has appreciated 13% against the dollar.

The forecast for the annual growth in earnings before interest, taxes, depreciation, and amortization (EBITDA) has also been revised down to a mid-to-high single-digit increase from the previously forecasted high single-digit growth.

Also on Tuesday, the company, which sells small bread rolls, cakes, cookies, bagels, and tortillas in 34 countries, reported that due to price increases, its second-quarter revenue grew by 4% to 100.37 billion pesos ($5.86 billion), but this growth was offset by the peso's appreciation.

The company's sales in the United States and Canada, which account for about half of its total revenue, fell nearly 2% in peso terms but grew nearly 12% in dollar terms.

However, in Mexico, sales volumes across various product categories increased after price hikes.

Bimbo noted that the appreciation of the peso also contributed to a nearly 30% decrease in quarterly net profit to 4.3 billion pesos.

Although the significant drop in profit was partly due to the non-cash pension plan launched by Bimbo in the same period last year, even excluding the $90 million pension impact, strong local currency coupled with higher interest rates led to a doubling of financing costs.

Second-quarter adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) grew by 7.8%, reaching 14 billion pesos.

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Currency Appreciation

Currency appreciation, also known as currency revaluation, refers to the situation where a country's currency increases in exchange rate or value relative to other countries' currencies.

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