Gruma (GRUMA) Q2 2024 earnings summary

Executive summary

• Consolidated EBITDA grew 17% and EBITDA per ton rose 19% year-over-year, reflecting resilience and adaptability across markets.

• Strong demand in Europe, Asia, and Oceania, with resilient performance in Central America and steady growth in value-added products in the US despite private label competition.

• U.S. volume growth was restrained by food service channel changes, but retail channel expanded by 2% year-over-year.

• The company is the world's largest corn flour and tortilla producer, with a global presence and leading brands in multiple regions.

• Consistent growth in net sales and profitability is driven by innovation and expansion in health-oriented and value-added product segments.

Financial highlights

• Net sales were flat at $1.66 billion in 2Q24, with 72% from non-Mexican operations.

• EBITDA margin guidance upgraded to 120 basis points growth for the year, up from 70 basis points.

• Operating income increased 23% to $226.9 million; operating margin expanded 260 bps to 13.7%.

• Majority net income increased 42% to $136.9 million; EPS up 44% to $0.38.

• Cost of sales decreased 5% to $1.0 billion, improving to 61.9% of net sales from 65.0%.

Outlook and guidance

• Expectation of gradual recovery in European corn milling volumes as logistics normalize.

• Continued margin improvement is expected, driven by a shift to higher-margin SKUs, healthier alternatives, and operational efficiencies.

• No price adjustments anticipated in Mexico as long as traditional pricing methods remain stable.

• Profitability guidance for EBITDA margin increased by 50 basis points to 120 basis points for 2024.

• GIMSA anticipates stable results due to the defensive nature of its products and ongoing transition to nixtamalized corn flour.