MEXICO CITY — Reflecting major non-cash charges taken during the period, the U.S. baking business of Grupo Bimbo S.A.B. de C.V. sustained a loss of 422 million pesos ($33 million) in the third quarter ended Sept. 30, a sharp reversal from a profit of 985 million pesos in the third quarter of fiscal 2011. Net sales for the division were 19,913 million pesos ($1,548 million), up 65% from 12,045 million a year earlier.
The largest driver of the operating loss was a one-time charge of 1,037 million pesos ($80 million) associated with the withdrawal from two multiemployer pension plans (m.e.p.p.s). The company currently participates in 34 m.e.p.p.s covering about 15,100 employees.
“To safeguard pensions already earned by its employees and to substantially mitigate risks to the company’s future pension liabilities, B.B.U. recently took a proactive stance to address funding concerns for two of the m.e.p.p.s in which it participates, The New England Teamsters Pension Fund and the Bakers Local 433 Fund,” the company said.
Despite the charge, Bimbo said the withdrawal from the two plans “enhances the company’s long-term financial health and generates a positive financial effect with a present value of 876 million pesos before tax.”
Of the sales increase of 65%, Bimbo attributed 58.8 points to the inclusion of the North American fresh baking operations of Sara Lee Corp., acquired late in 2011, and a more favorable dollar-peso exchange rate.
“Consumption remained soft, leading to weak volume recovery and lower average prices; nonetheless, the sweet baked goods and breakfast categories generated growth in the period,” the company said.
Profit for the U.S. division, Bimbo Bakeries USA, before other income and expenses was 1,076 million pesos ($84 million) in the third quarter ended Sept. 30, up 10% from 975 million pesos in the same quarter last year. Profit margins contracted to 5.4% from 8.1% in the third quarter of fiscal 2011.
Bimbo attributed the 2.7 percentage point contraction in profit margins to the dilution of profitability resulting from the Sara Lee acquisition, an impact Bimbo said had been anticipated, and because of “ongoing investments in modernizing the production platform.”
The investments bore benefits for gross profits at B.B.U., Bimbo said.
“Lower input costs and certain efficiencies including waste reduction initiatives undertaken since the start of the year offset lower average prices and the slow volume recovery,” Bimbo said.
In the nine months ended Sept. 30, B.B.U. operating income was 614 million pesos ($46 million), down 78% from 2,818 million pesos last year. Sales were 58,480 million pesos ($4,547 million), up 69%.
Net majority income of Grupo Bimbo in the third quarter was 369 million pesos ($29 million), down 62% from 2,051 million in the third quarter last year. Net sales were 43,448 million pesos ($3,379 million), up 35% from 32,263 million in the third quarter last year.
Year-to-date consolidated income was 5,145 million pesos ($400 million), down 30% from 7,311 million pesos.
Sales were 127,864 million pesos in the first nine months of fiscal 2012 ($9,942 million), up 39% from 91,927 million a year earlier.