Gruma, the Mexican company that produces corn and masa, looks askance at inflation. The company, which for months has been facing the rise in raw materials after the start of the conflict in Russia and Ukraine, said in a conference with investors that in the second half of the year it will maintain its focus on containing the impact of high prices of corn.
Adolfo Fritz, the company’s director of investor relations, gave no clues about the company’s coverage and inventories, however, he assured that until now the company’s strategies have allowed it to cushion the impact. “Right now we have been able to manage the ongoing inflation … having a great year in terms of consumer demand that continues to be excellent,” he added.
But the company does not rule out future price increases. Gruma has said in the past that it will resort to this measure to deal with inflation. Between January 2021 and June 2022, the price of tortillas has shot up 26.45%, according to the Inegi Consumer Price Index.
The price varies by states. In Hermosillo, Sonora, for example, a kilo of tortilla cost 27 pesos on July 6, while on the same day in Tlaxcala it was possible to find 14 pesos, according to the National Market Information and Integration System (SNIIM).
The company is awaiting the evolution of the geopolitical conflict in Eastern Europe in order to resume grain exports from that region. Last February, Gruma stopped the operations of the plant that produces tortillas and wheat and corn flour that it has in Odessa, Ukraine, where about 500 employees work.
Since the outbreak of the conflict, the grain market has remained highly unstable. The last month and a half was particularly volatile. In the Chicago grain market, a global price reference, commodities jump more than 10 dollars between days, and then go down as easily as they rose.
This volatility has impacted the financial performance of companies. Gruma reported a 21% increase in cost of sales, to 872.1 million dollars, as a result of the inflationary impact on raw materials, an increase in labor costs, mainly in the United States, and a higher volume of sales. As a percentage of net sales, the cost of sales went from 64% to 65.2%, the company specified.
Gruma reported in the second quarter a drop in its net profit of 11% to 68.3 million dollars, compared to the same period of 2021, according to the data of its financial statement.
The company’s operating cash flow decreased 0.1% to 186.6 million dollars during the second quarter of the year, compared to 186.7 million dollars in the same period of the previous year.
The production company’s sales increased 19% to 1,337.4 million dollars, from 1,128 million dollars in the same period of 2021. Sales volume increased 2% to 1,078 thousand metric tons, driven by the division in the United States. This trend prompted the Mexican company to allocate 67 million dollars to expand its installed capacity in that market.
