MEXICO CITY — Operating income of the North America business of Grupo Bimbo S.A.B. de C.V. increased 36% in the first quarter ended March 31 while sales also moved higher during the period.

Bimbo Bakeries USA operating income in the first quarter was 1,661 million pesos ($87.8 million), up from 1,223 million pesos in the first quarter last year. Net sales were 32,830 million pesos ($1,735 million), up 2.5% from 32,043 million pesos a year earlier.

“In North America, net sales rose 2.5% in peso terms, mainly due to the benefit of FX,” said Daniel Servitje, chairman and chief executive officer of Grupo Bimbo, during a May 2 conference call with analysts. “Our dollar sales are equal to last year. We implemented price increases and experienced growth in our strategic brands such as Artesano, Entenmann’s and Barcel snacks.

“We achieved sales and market share gains in the sweet baked goods category within the region, as well as in the bread category in Canada. However, these results continue to be pressured by the declining sales in the private label, breakfast and mainstream category.”

Bimbo said its 130-basis-points expansion in operating margin in North America was due to savings from the Voluntary Separation Program in the United States and an organizational restructuring initiative implemented in Canada. Gains partially were offset by higher restructuring expenses in the United States related to route restructuring initiatives and the January closing of the Bays English muffins baking plant in Detroit.

Providing additional color on the company’s U.S. operations, Fred Penny, president of Bimbo Bakeries USA, said, “We had some private label drag, which was a combination of trend and exiting some business. We exited in the fourth quarter a branded licensing agreement, which had some drag in the quarter. But then in our core categories, I would say, it’s really been mixed results.

“Our sweet baked goods business is exceptionally strong and continues to perform well. In mainstream bread, and in bread in general, I think we’re seeing, because we put a fair amount of pricing into the market in ’18, we are seeing some volume pressure from that pricing. That’s something we’re going to have to monitor closely and continue to work on refining our pricing strategies as needed. But quite frankly, given the inflation pressures we faced last year and we’re continuing to face this year, we’ve got to continue to push for price realization, while we balance that in terms of the impact it has on our volumes.”

Mr. Penny was asked by an analyst whether there is even any room, and whether supermarkets are pushing back in any of the categories in which Bimbo is a major player.

“I don’t want to speculate on other categories,” he said. “I mean, I think we’ve worked hard to improve price realization. In particular through revenue growth management, because we know we have to. As you know, it’s a price-sensitive category we’re in, especially when you talk about mainstream bread. The category has moved. The question is, is there more room without further volume drag, and I think that’s what we have to work through, and I guess stay tuned, we’ll see as we go through the year, whether we’ll able to generate additional price realization without negative volume impacts along the way.”

Net majority income of Grupo Bimbo was 1,318 million pesos ($69.7 million), up 1.5% from 1,298 million pesos in the same period last year. Sales were 69,573 million pesos ($3,677 million), up 3.6% from 67,149 million pesos.

The company’s operating income in Mexico increased 3.1%, and sales there were up 4.1%.

Bimbo said net sales in Mexico were driven by strong results in the bread, buns and cakes categories.

“Outperformance of Medias Noches buns and the Bimbo Cero Cero bread brand also contributed to growth,” the company said. “These results were partially offset by an intercompany commercial strategy implemented between subsidiaries of Mexico and the U.S.”