GRUPO HERDEZ
SECOND QUARTER 2021
EARNINGS RELEASE
CONSOLIDATED HIGHLIGHTS FOR THE QUARTER
- Net sales decreased 1.2% to $6.0 billion, while on a comparable basis they grew 1.4%.
- EBIT before other income decreased 7.0% due to lower gross margin.
- Consolidated net income was $391 million.
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Mexico City, Mexico, July 22, 2021 - Grupo Herdez, S.A.B. DE C.V. ("Grupo Herdez" or the "Company") (MSE: HERDEZ) today announced results for the second quarter 2021, ended June 30, 2021.
"Despite a difficult comparative, a weaker dollar and changes in our product portfolio, our second quarter results were satisfactory. We cannot speak of a return to normalcy, but rather of a path to adaptation to the new environment," said Héctor Hernández-Pons Torres, Chairman and Chief Executive Officer of Grupo Herdez.
The information contained in this document is prepared in accordance with International Financial Reporting Standards ("IFRS") and is expressed in Mexican pesos unless stated otherwise.
Grupo Herdez consolidates 100 percent of its Frozen division, Barilla Mexico, Herdez Del Fuerte - Mexico, and McCormick de Mexico in its financial statements. The proportional stake of Herdez Del Fuerte in MegaMex is registered in Equity Investments in Associated Companies.
NET SALES
Net sales in the second quarter were $6.0 billion, 1.2% below 2020, while year to date they were $11.9 billion, practically in line with the previous year. The performance of consolidated net sales was affected by the decline experienced in the Preserves segment as it faced a difficult comparison with 2020 due to the beginning of the pandemic. On a comparable basis-excluding fresh tuna, Nair tuna, Ocean Spray and General Mills-consolidated net sales would have grown 1.4% in the quarter and 4.5% year to date.
Net sales in the Preserves segment in the quarter were $4.7 billion, a 2.2% decrease compared to the same quarter of 2020. On a cumulative basis, sales were in line with the prior year, reaching $9.5 billion. The best-performing categories in the quarter were mayonnaise, vegetables and ketchup. On a comparable basis, consolidated net sales grew 2.8% in the quarter and 6.6% year to date.
On the other hand, net sales of the Frozen segment increased 36.2% year-over-year to $931 million in the quarter, which represented 94.7% of sales recorded in the second quarter of 2019. On a cumulative basis, sales posted 10.0% growth to $1.5 billion, which translates to 90.7% of cumulative 2019 net sales. The results reflect the reopening of the stores, mainly benefited by the recovery of traffic. Helados Nestlé sales continued to perform favorably in the convenience, self-service and price club channels, while the recovery of the traditional channel is still lagging.
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Exports net sales for the quarter were $405 million, while year to date they were $861 million. This represents a decrease of 34.7% and 13.7%, respectively, affected by a combination of: i) a higher basis of comparison derived from elevated sales volume of mayonnaise and homemade sauces, and ii) the appreciation of the peso against the dollar.
NET SALES | 2Q21 | 2Q20 | % change | 6M21 | 6M20 | % change |
Consolidated | 6,020 | 6,091 | (1.2) | 11,869 | 11,844 | 0.2 |
Preserves | 4,684 | 4,789 | (2.2) | 9,463 | 9,442 | 0.2 |
Frozen | 931 | 684 | 36.2 | 1,544 | 1,404 | 10.0 |
Exports | 405 | 619 | (34.7) | 861 | 998 | (13.7) |
Figures in millions of MXN |
NET SALES PERFORMANCE | ||||
6,091 | 5,817 | 6,375 | 5,849 | 6,020 |
2Q20 | 3Q20 | 4Q20 | 1Q21 | 2Q21 |
GROSS PROFIT
Consolidated gross margin for the quarter was 37.3%, down 0.3 percentage points from a year ago. In the Preserves segment, gross margin for the quarter decreased 1.1 percentage points, mainly due to higher input costs. In Frozen, the margin remained practically in line with the same quarter of last year due to the incorporation of Häagen-Dazs, part of the General Mills portfolio, while in Exports it decreased 9.4 percentage points due to lower sales.
On a cumulative basis, the consolidated margin decreased 0.3 percentage points to 37.4%. In Preserves, it expanded 0.4 percentage points due to the price increases realized in the last twelve months. In the
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Frozen segment, the margin decreased 3.2 percentage points due to higher participation of the modern channel in the sales mix, while the gross margin of Exports fell 8.4 percentage points to 14.4% due to the appreciation of the peso against the US dollar.
GROSS PROFIT | 2Q21 | 2Q20 | % change | 6M21 | 6M20 | % change |
Consolidated | 2,243 | 2,288 | (1.9) | 4,439 | 4,462 | (0.5) |
Preserves | 1,674 | 1,763 | (5.0) | 3,462 | 3,415 | 1.4 |
Frozen | 506 | 371 | 36.5 | 853 | 821 | 3.9 |
Exports | 62 | 154 | (59.4) | 124 | 227 | (45.3) |
Figures in millions of MXN | ||||||
GROSS MARGIN | 2Q21 | 2Q20 | pp chg | 6M21 | 6M20 | pp chg |
Consolidated | 37.3 | 37.6 | (0.3) | 37.4 | 37.7 | (0.3) |
Preserves | 35.7 | 36.8 | (1.1) | 36.6 | 36.2 | 0.4 |
Frozen | 54.4 | 54.3 | 0.1 | 55.2 | 58.4 | (3.2) |
Exports | 15.4 | 24.8 | (9.4) | 14.4 | 22.8 | (8.4) |
Figures in percentages |
GROSS PROFIT PERFORMANCE
2,288 | 2,180 | 2,346 | 2,195 | 2,243 |
37.6 | 37.5 | 36.8 | 37.5 | 37.3 |
2Q20 | 3Q20 | 4Q20 | 1Q21 | 2Q21 |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (SG&A)
For the quarter, consolidated SG&A represented 27.1% of net sales, virtually in line with the previous year. In the case of Preserves, SG&A as a percentage of net sales increased 0.9 percentage points due to higher expenses related to the refurbishment of the Mexico distribution center. In Frozen, SG&A represented 63.3% of net sales, 23.0 percentage points lower than last year due to the absorption of expenses derived from the recovery of the business.
For the full year, consolidated SG&A expenses were 26.9% of net sales, 0.4 percentage points higher than
the previous year. This increase was due to higher freight and warehousing expenses in the Preserves 4 segment.
EARNINGS BEFORE INTEREST AND TAXES BEFORE OTHER INCOME
EBIT before other income for the quarter was $610 million, 7.0% lower than in the second quarter of 2020, due to lower income in the Preserves segment, which was partially offset by the recovery in the Frozen segment.
Year to date, consolidated operating income before other income was $1.2 billion, 5.6% lower than in the previous year, mainly affected by the Exports segment.
OTHER INCOME
Other net expenses of $70 million were recorded in the quarter, explained by costs related to sanitary measures implemented in the last twelve months, which compare unfavorably with income of $185 million derived from the divestment of the tuna business in the first half of 2020.
EARNINGS BEFORE INTEREST AND TAXES (EBIT)
EBIT for the quarter was $540 million with a margin of 9.0%, which is 16.5% lower than that recorded in the previous year, with a margin contraction of 1.6 percentage points. This was the result of the decline in the
Preserves gross margin. Year-to-date, operating income fell 21.3% to $1.2 billion, with a margin of 10.0%. Excluding the income related to the sale of the tuna assets recorded in 2020, consolidated EBIT would have decreased 11.4%.
EBIT | 2Q21 | 2Q20 | % change | 6M21 | 6M20 | % change | |
Consolidated | 540 | 647 | (16.5) | 1,185 | 1,506 | (21.3) | |
Preserves | 625 | 776 | (19.4) | 1,435 | 1,645 | (12.8) | |
Frozen | (119) | (238) | NA | (313) | (294) | NA | |
Exports | 34 | 108 | (68.8) | 64 | 155 | (58.6) | |
Figures in millions of MXN | |||||||
EBIT MARGIN (%) | 2Q21 | 2Q20 | pp chg | 6M21 | 6M20 | pp chg | |
Consolidated | 9.0 | 10.6 | (1.6) | 10.0 | 12.7 | (2.7) | |
Preserves | 13.4 | 16.2 | (2.8) | 15.2 | 17.4 | (2.2) | |
Frozen | (12.8) | (34.7) | (21.9) | (20.3) | (20.9) | (0.6) | |
Exports | 8.3 | 17.4 | (9.1) | 7.4 | 15.5 | (8.1) | |
Figures in percentages |
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EBIT PERFORMANCE
1,100 | ||||||
647 | 649 | 17.3 | 646 | |||
540 | ||||||
10.6 | 11.2 | 11.0 | 9.0 | |||
2Q20 | 3Q20 | 4Q20 | 1Q21 | 2Q21 | ||
COMPREHENSIVE FINANCING RESULT
In the second quarter, the comprehensive financing cost was $164 million, 5.4% lower than in the same period of 2020. This is explained by a decrease in the cost of financing derived from the issuance of Local Bonds in 2020. Year to date, the integral cost of financing was $317 million, 37.8% higher than the previous year due to a $102 million exchange gain recorded in the first quarter of 2020.
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Grupo Herdez SAB de CV published this content on 22 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 July 2021 22:47:04 UTC.