Release Date: April 24, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Consolidated net sales grew by 9.3%, reaching 9.7 billion pesos, driven by substantial increases in sales volumes across key categories.
- The company achieved a consolidated gross margin improvement to 40.7%, an increase of 1.3 percentage points.
- Grupo Herdez SAB de CV (GUZOF, Financial) reported a 17% increase in EBITDA, reaching 1.5 billion pesos, which drove the operating margin to 15%.
- The successful launch of new products and strategic partnerships, such as the McCormick Diablo Rocos sponsorship and Alice in Wonderland tea licensing agreement, boosted volume, revenue, and brand visibility.
- The company announced a spinoff of Grupo Nutrisa, which is expected to generate significant value by allowing both entities to focus on their specific sectors.
Negative Points
- The impulse segment experienced a contraction in EBITDA, resulting in an operating loss of 105 million pesos due to higher cocoa prices and an unfavorable sales mix.
- Free cash flow was impacted by higher than expected sales volume, leading to a significant increase in accounts receivable.
- The company faces challenges with high avocado prices, which could impact future profitability.
- The spinoff of Grupo Nutrisa may lead to liquidity concerns for the newly independent company.
- There is an ongoing investigation by the Mexican tax authority regarding VAT at Nutrisa, which could pose a potential liability.
Q & A Highlights
Q: What is the main rationale behind the spinoff of Grupo Nutrisa? Is it more of an operational decision or a financial one to unlock value?
A: The rationale is both operational and financial. The focus is on operational control, while the value will be determined by external forces. (Respondent: Unidentified_2)
Q: How did Grupo Herdez manage to achieve positive volume growth in the preserves segment when most food and beverage companies reported negative volumes?
A: Several factors contributed, including seasonality effects, a strong finish to the quarter, and the regularization of mayo availability after egg shortages in the previous quarter. (Respondent: Unidentified_2)
Q: Can you provide more details on the impressive results from MegaMex, particularly regarding Don Miguel and Wholly Guacamole?
A: The results are due to management changes, focus on new products like chunky salsa, and increased distribution, especially on the East Coast. A new CEO has also brought different dynamics to the business. (Respondent: Unidentified_2)
Q: Will any debt or cash be transferred to Nutrisa as part of the spinoff transaction?
A: No, the transaction is debt-free, and there will be no transfer of cash or debt to Nutrisa. (Respondent: Unidentified_2)
Q: Regarding the potential liability from the Mexican tax authority investigation on VAT at Nutrisa, will this remain with Nutrisa post-spinoff?
A: Yes, the potential liability is confirmed to be under Nutrisa, and all related information is publicly available. (Respondent: Unidentified_2)
Q: What is the expected timing for the Nutrisa spinoff dividend to take place?
A: The plan is to complete the spinoff this year, pending regulatory approval. (Respondent: Unidentified_2)
Q: What is the optimal capital structure for Grupo Herdez post-Nutrisa spinoff, particularly regarding leverage?
A: Currently, Grupo Herdez is under-levered, and the capital structure is flexible enough to pursue new business opportunities. (Respondent: Unidentified_2)
Q: How did channel performance impact the results, particularly in the preserves segment?
A: Wholesalers outperformed retail and modern trade channels this quarter, which contributed to the strong performance in the preserves segment. (Respondent: Unidentified_2)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
