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THIS REPORT

The objective of this annual report is to share with our stakeholders the fulfillment of our corporate purpose through the achievements and progress we made, which were guided by our Business and Sustainability Strategy.
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ANNUAL REPORT 2022
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OUR FINANCIAL RESULTS

Financial results

Record levels in Net Sales and Profits

“2022 was a remarkable year with historic financial performance. We reached $19.8 billion dollars in Net Sales and $2.7 billion dollars in EBITDA, posting 10% and 12% 10- year CAGR, respectively. We saw market share gains in most categories, made record CAPEX investments, fine-tuned our strategic focus on grain-based foods, successfully turned around Argentina and Brazil, and we launched our sustainability strategy.”

Daniel Servitje,
Chairman and CEO

Financial Performance

NET SALES

2022 Net Sales reached a record level at Ps. 398,706 million, an increase of 17.7%, mainly attributable to strong price/mix and volume across every region, which was partially offset by FX rate effect. Excluding this effect, Net Sales increased 20.6%

¹The North American region includes the results of operations in the United States and Canada.

North America¹

Net Sales in North America in US dollars terms grew 18.4%, mainly reflecting the successful implementation of the pricing strategy across categories and channels. Net Sales also benefited from an extra week of sales compared to prior year. Snacks, Premium and Mainstream bread, and Sweet Baked Goods categories outperformed, with continued solid market share performance in multiple categories.

grew

18.4%

Net Sales in North America in US dollars terms

Mexico²

Net Sales increased 19.5%, attributable to favorable price/product mix performance and price increases. Every channel posted double-digit growth, most notably the convenience, retail, and traditional channels, as did the snacks, sweet baked goods, snack cakes, cookies, and bread categories.

²Inter-company transactions have been removed from Mexico.

increased

19.5%

Net Sales in Mexico

Latin America³

Net Sales increased 23.5% in peso terms. Excluding the FX rate effect, Net Sales increased by 36.4%, mainly due to favorable price/mix and strong volume performance. Almost every country posted double-digit growth in local currency, highlighting Brazil, Colombia, Argentina and Chile. To a lesser extent, sales growth was also benefited by the inorganic contribution from the acquisition of Aryzta do Brasil.

³The Latin America region includes the results of operations in Central and South America.

increased

23.5%

Net Sales in Latin America in peso terms

EAA⁴

Net Sales increased 9.8% in peso terms. Excluding the FX rate effect, Net Sales increased 21.3%. Primarily reflecting pricing actions and volume growth across most countries in the region, as well as the incremental sales from the acquisition of St. Pierre. This was partially offset by a continued challenging Covid environment in China.

⁴The EAA region includes the results of operations in Europe, Asia and Africa.

increased

9.8%

Net Sales in EAA in peso terms

GROSS PROFIT

Gross Profit increased 13.4%, while the margin contracted 200 basis points to 51.5%, mainly due to higher raw material costs.

OPERATING INCOME

For the full year, Operating Income grew 64.8% and the margin expanded 390 basis points, mainly due a non-cash benefit of US $934 million from the adjustment to the MEPPs liability, the above-mentioned strong sales performance and productivity savings across every region despite the inflationary environment. This was partially offset by the above mentioned effects.

ADJUSTED EBITDA

Adjusted EBITDA reached a record level at Ps. 53,455 million an increase of 12.8%, while the margin contracted 60 basis points, primarily attributable to the above mentioned higher cost of sales, partially offset by the strong sales performance globally.

North America

The 120 basis point margin con- traction in North America was mainly due to a higher inflationary environment, including commodities and labor costs. This was partially offset by pricing, favorable product mix and productivity benefits from past restructuring investments.

Mexico

In Mexico, the margin contracted 110 basis points, mainly attributable to higher raw material costs. This was partially offset by strong sales performance, the favorable product and category mix, and distribution and administrative expenses efficiencies.

Latin America

The margin expanded 270 basis points, primarily due to strong sales performance across all organizations, an improved product mix, productivity gains through- out the supply chain, and strong results in Brazil and Argentina.

EAA

EAA posted a 90 basis point margin contraction, mainly due to higher raw material costs, FX headwinds and negative product mix effect in Iberia, as well as weak results in China.

COMPREHENSIVE FINANCING COST

Comprehensive Financing Cost totaled Ps. 2,916 million, a 33.4% increase when compared to the fourth quarter of 2021, attributable to higher exchange loss and interest expenses.

NET MAJORITY INCOME

Net Majority Income rose 194.7% and the margin expanded 710 basis points, due to the strong sales and operating performance, the divestiture of Ricolino, the positive effect of MEPPs, and a lower effective tax rate which stood at 31.3%. Excluding these effects, Net Majority Income increased 21.4% and the margin expanded 20 basis points

FINANCIAL STRUCTURE

Total Debt on December 31, 2022, was Ps. 84 billion, compared to Ps. 93 billion on December 31, 2021. The decrease was primarily due to the prepayment of debt using the proceeds from Ricolino and the FX rate effect.

Average debt maturity was 14.1 years with an average cost of 6.0%. Long-term Debt comprised 92% of the total; 45% of the debt was denominated in US dollars, 41% in Mexican pesos, 8% in Eu- ros and 6% in Canadian dollars.

The Net Debt to Adjusted EBIT- DA ratio, which does not consider the effect of IFRS16, was 1.5 times, compared to 2.0 times on December 31, 2021.

Currency Mix

Amortization Profile

*Note: Does not include US $56 mm of long-term debt at subsidiary level. Includes 30-year issuance by BBU

“I’m very proud of the impressive hard work of our teams to navigate under difficult conditions, with a successful implementation of pricing actions, an excellent execution at the point of sale and delivering better-than-expected results. After a year of outstanding results, we start 2023 well-positioned to reach our plan, with continued investments in key strategic opportunities for sustainable growth.”

Diego Gaxiola,
CFO

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