MEXICO CITY — The opportunities open to Grupo Bimbo SAB de CV for global expansion in grain-based foods have not nearly been exhausted, Daniel Servitje, chairman and chief executive officer, said in an April 27 earnings call.

Mr. Servitje made the observation in response to a question from an investment analyst about the lack of large acquisitions by Bimbo in recent years. The analyst asked whether Bimbo was now either focused on smaller acquisitions or was reaching “the point where it’s about to maybe return some of that cash to shareholders.”

“We still see a lot of opportunities in the grain-based foods business in which we are,” Mr. Servitje said. “So definitely, our business is not local. It’s not only Mexico or US. It’s global. And the way we are organized, we see that we still have a lot of opportunities for organic and also from non-organic growth. And that’s why we are continually looking at opportunities on both ends. But having said that, we will remain also reasonable in terms of what can we digest.”

Diego Gaxiola, chief financial officer, said that while Bimbo would continue seeking acquisition opportunities and remained committed to investing in capital expenditures to maintain and enhance productivity, Bimbo also has returned dollars to shareholders. He noted that the company on April 26 declared a dividend that represented a 20% increase in the payout rate and also issued an extraordinary dividend in connection with its sale of Ricolino to Mondelez International, Inc. in April 2022.

The Bimbo executives were upbeat about the company’s first-quarter financial results. While earnings were down in the quarter ended March 31, the company’s leaders saw considerable cause to be encouraged. Total Grupo Bimbo sales in the quarter jumped 9.9% and fell just shy of 100 billion pesos, reaching 99.6 billion.

“We kicked off the year with a very strong first quarter,” Mr. Servitje said. “We continue to see the benefit from the pricing strategy implemented during 2022, which enabled us to surpass our expectations and last year’s results. Our sales reached historic levels for the first quarter. Our EBITDA margin closed at 12.9%.”

Operating income of the North America business of Grupo Bimbo SAB de CV was 2.77 billion pesos ($154 million), down 30% from 3.96 billion pesos in the first quarter of 2022. Operating margin was 5.9%, down 280 basis points from 8.7% in the first quarter of 2022. Sales were 47.2 billion pesos ($2.6 billion), up 4.3% from 45.3 billion pesos in the first quarter the year before.

Bimbo said higher costs of sales and an inflationary environment put pressure on margins. Operating income also was boosted a year earlier by a $73 million non-cash benefit connected with multi-employer pension plans.

Bimbo said the company benefited from strong sales performance and lower distribution and administrative expenses.

Net sales in North America were up 15% in US dollars, mostly reflecting higher prices.

“The premium bread and snacks categories outperformed,” Bimbo said. “This was partially offset by a difficult comparison from the Omicron surge effect during the first quarter of 2022.”

Adjusted EBITDA in North America was 4.87 billion pesos ($270 million), up 4.8% from 4.65 billion a year earlier. BBU’s adjusted EBITDA margin was 10.3%, unchanged from the year before. The adjusted EBITDA figure, which excludes the effect of MEPPs, rose mostly because of sales gains and productivity savings “across the value chain,” Bimbo said.

“North America margin remained flat mainly due to the strong sales performance and a favorable price and product mix effect, which was offset by a higher inflationary environment, including commodities and labor costs,” Bimbo said.

Of the North American business, Mr. Servitje said, “North America delivered strong top-line performance, growing 15% in dollar terms, mainly due to the carryover pricing effect since we experienced a volume pressure as we cycled last year’s Omicron surge. Despite the challenging inflationary environment and a difficult comparison base, we were able to maintain our adjusted EBITDA margin at 10.3%.”

Mr. Servitje cited an “ongoing difficult labor environment” among challenges the company was facing. While Bimbo did not share figures on volume during the quarter, Mr. Servitje implied they were under pressure.

“We are still expecting a solid 2023, more specifically in the back half of the year,” he said. “We hope we’ll start to see volumes improving as we cycle the price increases as well as realized productivity benefits throughout our business.”

Addressing a question about a steep drop in commodity prices relative to a year ago, Mark Bendix, president of Grupo Bimbo, reminded the analyst that Bimbo employs forward hedging, complicating the year-to-year comparison.

“But our business has really remained resilient,” Mr. Bendix said. “Obviously, you’ve seen we’ve delivered another strong quarter, but we still have to be vigilant about mitigating inflation. So that includes looking at strong execution, cost savings initiatives and initiatives to have productivity improvement in everything we do. And then tying in with your extended question, this is, well, experiencing elasticity that’s well below historical levels.”

Mr. Bendix said Bimbo expects lower commodity costs in the second half of 2023 but added that pressure on the company’s sales has not been evident.

“We did see some trade down to private label that has flattened out,” Mr. Bendix said. “But I would tell you that we’re seeing consumers still under pressure because of inflation. But we’re also still seeing really nice growth in our premium products and snacks. So, we need to be vigilant and continue to look and see, but it hasn’t been the migration that you necessarily would have expected to private label, and we’ve all been a little bit surprised by that.”