MEXICO CITY — Responding to soft demand in the US market, Grupo Bimbo SAB de CV has launched a line of bread varieties targeting consumers seeking value, said Rafael Pamias, chief executive officer.

In an April 29 conference call with investment analysts after the release of first quarter results, Pamias described steps Bimbo is taking to shore up its US business. Weakness in the United States contributed to a decision by Bimbo to lower its guidance for the full year.

Operating income of the North America business of Grupo Bimbo was 802 million pesos ($41 million) in the first quarter of 2025, down 42% from 1.39 billion pesos in the same quarter last year. Excluding the effects of foreign currency, profits were down 52%.

The sector’s operating margins in the first quarter were 1.7%, half of first quarter 2024 margins of 3.4%, and tighter than the profitability in any of Bimbo’s other geographic regions, including Mexico, at 13.9%; Europe Asia and Africa, at 1.9%; and Latin America at 2.9%.

Net sales in North America during the quarter were 46.85 billion pesos ($2.4 billion), up 14% from a year earlier though down 4.9%, excluding the effects of foreign exchange. Bimbo attributed to the adjusted sales decline to “the continued soft consumer environment across the industry in the US and the past strategic exits of some non-branded businesses.”

“The company maintained its market share in sweet baked goods and snacks in the US and performed well in Canada, with share gains in bread, sweet baked goods and snacks,” Bimbo said.

During the call, Pamias cited an “industry-wide soft consumption environment in the US where consumers continue to seek pricing and value.”

“We have recently launched a price/value portfolio in the bread category to proactively address the slowdown in consumption trends through targeted and decisive strategies while continuing to drive growth in artisanal breads,” he said. “At the same time, (we are) maintaining our market share across sweet baked goods, buns and rolls, and snacks, reflecting the resilience and competitiveness of our portfolio.  Additionally, we are actively broadening our distribution footprint to meet consumers where they shop, leveraging channel-specific price pack architectures to deliver compelling value across the board.”

Even after productivity gains and lower commodity costs, EBITDA margins in North America narrowed by 130 basis points from last year, to 7.4%.

“This was primarily due to the soft top-line performance and the continued strategic investments in the transformation project aimed at optimizing our go-to-market capabilities in the long term and increasing saturation with improved execution to enable growth as we serve more effectively our customers and consumers,” Pamias said. “Moving forward, we will remain focused on proactively seeking opportunities to improve productivity, expand distribution, and grow market share by connecting with consumers at every shopping opportunity.”

Mark Bendix, executive vice president, North America, said bread is not the only baked foods category experiencing difficulties in the United States.

“All the categories remain challenged in the US,” he said during the call. “What we’re seeing is a bifurcation where economically stressed consumers are moving down to private label for other value offerings, while more affluent customers, consumers are moving to more premium products.

“That challenge, as the largest player in the mainstream, we have an oversized exposure to the middle, which is where the bulk of the category declines are occurring right now. So, our business momentum does not have sufficient size to offset those losses. But what we’re focused on is expanding our value segment offerings. We’ve just introduced in April, Sara Lee half loaves. We’ve also introduced Bimbo bread as a value component in this category as well, and it is doing exceptionally well.”

To take advantage of growth on the premium side of the business, Bendix said Bimbo is expanding the distribution of Rustik and has introduced a protein-focused products as well as artisanal Hawaiian offerings.

“So, we’re trying to play in the high and low,” Bendix said, adding that Bimbo also is “doing selective promotions.”

“Things are a lot different now in terms of promotional response from consumers in the US after the after the pandemic,” he said.

Bimbo lowered its sales guidance for the year to high single-digit growth from its initial forecast of low double-digit growth. It now expects slight EBITDA margin contraction, versus its initial forecast of slight expansion.

While capital spending in the first quarter of 2025 was 20% lower than a year earlier, Diego Gaxiola, chief financial officer, said Bimbo is holding its capital expenditure guidance at $1.4 billion to $1.5 billion, at least for now. The range is below $1.6 billion in 2024.

“We are still not adjusting the forecast,” he said. “You remember, we said around $1.4 billion to $1.5 billion. Today, I would probably feel more in the low end of the range. We’re still analyzing several projects. So that’s why we still wanted to adjust the guidance.  But I wouldn’t be surprised if in the next quarter, we moved the number is slightly below the initial guide.”

Tariffs are cause for concern at Grupo Bimbo, Gaxiola said, but the direct impact on the company is “not material.”

“The majority of the products that we export to the US from Mexico do not have an impact for the current tariff as they are within the framework of the USMCA (US-Mexico-Canada Trade Agreement),” he said. “The small adjustments to the guidance from the expectation… in the US, it's more based on what we are seeing to date. I think that we all know how overall tariffs might have an impact on inflation, and as a consequence of higher inflation, then (on) consumption, disposable income for consumers, and if there can be a change on consumer habits and behaviors.”

Bimbo net majority income in January-March was 1.77 billion pesos ($90 million), down 27% from the first quarter last year, down 25% excluding the effects of foreign exchange. The company’s net profit margin was 1.7%, down 90 basis points from 2.6% last year. Sales were 103.73 billion pesos ($5.3 billion), up 11% from the year before, though down 0.3% excluding foreign exchange effects. Adjusted EBITDA was 12.82 billion pesos ($650 million), up 8% and unchanged, excluding foreign exchange.

Subsequent to the end of the quarter, Grupo Bimbo acquired Karamolegos Bakery, a bread baker based near Bucharest in Romania.