CashNews.co
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Export Segment Sales Growth: 24.1% increase in dollar sales.
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Lost Sales Due to Weather: Estimated MXN40 million.
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Impulse Segment Retail Growth: Close to 7% growth.
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Gross Margin: 40.5%.
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Free Cash Flow: MXN603 million in the quarter.
Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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The export segment showed strong performance with a 24.1% increase in dollar sales, driven by mayonnaise and new product introductions in the US market.
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The company achieved a healthy gross margin of 40.5%, supported by a favorable sales mix and operational efficiency.
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Retail business within the impulse segment demonstrated resilience, growing close to 7% despite weather-related disruptions.
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Grupo Herdez SAB de CV (GUZOF) maintained a strong free cash flow of MXN603 million, allowing continued investment in growth and sustainability projects.
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The company is actively investing in capacity expansion, equipment modernization, and new store openings to support future growth.
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Severe weather events, including hurricanes and flooding, significantly impacted the impulse segment, resulting in approximately MXN40 million in lost sales.
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Megamex faced challenges due to soaring avocado prices, increased competition, and a shift in consumer preferences, leading to lower income from unconsolidated affiliates.
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The company’s EBIT was pressured by weather-related disruptions and increased commercial investments.
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Grupo Herdez SAB de CV (GUZOF) is experiencing capacity constraints in the mayonnaise category, which could limit growth potential.
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The business environment in Mexico is becoming more expensive and complex, with potential impacts from proposed labor reforms and inflationary pressures.
Q: Can you provide insights on the current consumption environment in Mexico and whether the slowdown is temporary or structural? Additionally, what are your expectations for export growth in the coming years? A: We observed a deceleration in the first quarter, but the gap has recently closed. We anticipate consumption in our sector to be between flattish and low single-digit growth in volume. The current administration’s strategies should continue to support disposable income, translating into more consumption. Regarding exports, particularly in the mayonnaise category, we are experiencing capacity constraints, which we plan to address to meet U.S. demand. We expect to continue growing in the single-digit range in terms of volume, and we are investing in salsa production to drive exports further in the next 12 months. – Gerardo Miguel, Chief Financial and Information Officer