Gruma USA Reports Strong Performance in Better-for-You Product Category

MONTERREY, MEXICO — Gruma USA has experienced notable growth in its operating income, driven primarily by strong performance in its better-for-you product segment during the fiscal year 2024. The company reported an operating income of $588.8 million, reflecting a 4.2% increase from the $565.2 million recorded in fiscal 2023.

Quarterly Performance Review

Despite the annual growth, Gruma USA’s operating income saw a decline of 11% in the fourth quarter, falling to $138.1 million from $156 million in the same period the previous year. This decrease highlights the challenges faced during the final quarter of the fiscal year.

Net Sales Analysis

Gruma USA’s net sales also experienced a slight downturn, decreasing by 1% to $3.61 billion compared to $3.65 billion in fiscal 2023. The trend continued into the fourth quarter, where net sales dropped 3%, from $890.4 million to $863.1 million year-over-year. This decline in sales reflects broader market conditions and shifts in consumer behavior.

Volume Trends in Key Channels

The company reported a 2% decrease in sales volume during the fourth quarter, totaling 388,000 tonnes. This decline was largely attributed to reduced demand in the foodservice sector. However, Gruma noted a positive trend within its corn flour business, where sales volumes increased by 2%. This growth suggests a steady recovery in the industrial sales segment while the retail channel continues to perform well, supporting overall positive results.

Margin Performance

Gruma’s operating margin declined by 150 basis points, settling at 16% during the fourth quarter. Despite this decline, the cost of sales as a percentage of net sales improved, falling by 4% to $493.8 million. This reduction in costs was primarily the result of operational efficiencies implemented across various aspects of the business.

Capital Investments and Future Expansion

During the fourth quarter, Gruma invested $69 million in capital expenditures, bringing the total for fiscal 2024 to $233 million. These expenditures were strategically allocated towards general upgrades and maintenance initiatives across the company. Significant investments were made at GIMSA, along with capacity expansions in Europe, the introduction of additional production lines in China, and enhancements in Guatemala. These investments are aimed at bolstering production capabilities and positioning the company for future growth.

Overall Financial Performance

In terms of overall financial health, Gruma SAB de CV reported a majority net income of $531.9 million for fiscal 2024, marking a substantial 24% increase from the previous year’s figure of $429.5 million. Despite a decrease in net sales, which fell by 1% to $6.49 billion from $6.58 billion, the company managed to enhance its profitability significantly.

Conclusion

Gruma USA’s ability to achieve an increase in operating income amidst a challenging market environment underscores the effectiveness of its strategic initiatives, particularly within its better-for-you product category. While the fourth quarter presented difficulties in terms of sales volume and operating margin, the company’s focus on operational efficiencies and capital investments positions it well for sustained growth in the coming years. As Gruma continues to adapt to changing market dynamics, its commitment to innovation and expansion will be critical in maintaining its competitive edge in the industry.