You are currently viewing Grupo Bimbo hints at more price hikes as runaway inflation expected to hammer bottom line

Mexico’s annual inflation reached a 21-year high in March, with consumer pricing rising by 7.45% from a year earlier, above the estimate of 7.38%. The country’s central bank, Banxico, said inflation would peak in the first quarter, then slow to 5.5% by the year’s end. However, this is still way above its target of 3%.

Rising inflation has become a political headache for President Andres Manuel Lopez Obrador, who said earlier this week the government is working on a plan to control the price rises on food.

Bimbo said it has had preliminary talks with the government about bread prices, but CEO Daniel Servitje confirmed on a conference call with analysts that it is considering more price increases to offset spiking costs.

Record levels of Q1 sales

Despite the mounting challenges, Grupo Bimbo posted a 17.8% increase in sales to 93.32 billion pesos ($4.5bn).

In Mexico, sales improved by 19.5%, attributable to volume growth, favourable product mix, and price increases, while in Latin America as a whole, net sales (excluding the FX effect) increased 25.1%.

North America saw net sales growing 18.8% in dollar terms. EAA reported a 21.1% increase, in part driven by the contribution from the acquisition of Modern Foods and Kitty Bread in India.

“We had a very strong start in the year, [reaching] record level of sales for our first quarter and gaining market share in several categories,”​ said Servitje.

He noted Bimbo’s salty snacks, buns and rolls, snack cakes, pastries and confectionery categories outperformed, along with its QSR business and performance in Mexico and Latin America.