Gruma (GRUMA) Q3 2024 earnings summary

Executive summary

• Solid performance in Q3 2024 with growth in Better For You products and strong results in Europe, Asia/Oceania, and Central America, offset by lower U.S. food service volumes and distribution challenges.

• Consolidated EBITDA grew 3% year-over-year, with EBITDA per ton up 4%, despite a 1% volume decrease and 4% sales decline, mainly due to lower U.S. food service volumes and price adjustments in Mexico.

• Net sales for Q3 2024 were $1.6 billion, with non-Mexican operations contributing 74% of sales.

• The company maintains global leadership in corn flour and tortillas, driven by innovation and expansion in health-oriented and value-added segments.

• Leading subsidiaries include Gruma USA, GIMSA (Mexico), and Gruma Europe, each holding top market positions.

Financial highlights

• Q3 2024: Sales volume down 1% to 1,086 thousand metric tons; net sales down 4% to $1,623.4 million; EBITDA up 3% to $288.0 million; EBITDA margin expanded 130 bp to 17.7%.

• U.S. volumes contracted 2% and revenues declined 2%, but EBITDA grew 3% to $191.6 million.

• GIMSA (Mexico): Flat volume, net sales down 1%, EBITDA up 20% to $50.9 million, with margin expansion from cost efficiencies and insurance claim income.

• Europe: Flat volume, net sales up 5%, EBITDA up 45% to $17.1 million, driven by retail growth despite geopolitical pressures.

• Central America: Volume up 6%, net sales up 10%, EBITDA up 48% to $15.9 million, with a 16% EBITDA margin.

• Asia/Oceania: Flat volume, net sales up 5%, EBITDA up 24% to $9.6 million, with a 14.1% EBITDA margin.

Outlook and guidance

• Guidance for flat sales and volumes with a 120 basis point margin expansion is reiterated.

• Gradual recovery in U.S. food service channel expected by Q1 2025; logistics costs in Mexico seen as temporary, and U.S. freight costs tied to demand.

• Continued focus on innovation, Better For You expansion, and operational efficiency into 2025.

• Anticipate stronger performance in Asia/Oceania once China challenges are resolved and continued retail expansion in Europe.