The sale of milk, the category that generates 55% of the company’s income, was slightly contracted by a decrease in the consumption of milk formula, partially offset by the sale of ultra-pasteurized milk.
There was also a decrease in sales in the dairy products category, reflecting the termination of the maquiladora contract in Brazil.
EBITDA -or operating flow- reported in the third quarter of 2021, reached 1,957 million pesos, with a margin of 9.6%. This represented an annual reduction of 4% with a margin contraction of 27 basis points.
Sales by region
Sales for the third quarter of 2021 in Mexico increased 3.9% year-over-year, to 16,386 million pesos, with solid performance in the yogurt, cream and milk categories, coupled with tactical price increases.
The company’s operation in Brazil reported net sales of 2,486 million pesos in the third quarter of 2021; an annual contraction of 18.0% in local currency and a decrease of 23.5% in Mexican pesos. The company explained that this decrease is mainly due to the previously announced termination of the maquiladora contract and the effect of the price increases implemented to mitigate the impact of inflation on the main inputs.
In Central America, Grupo Lala reported a decrease in sales of 1.2% in dollars and 10.6% in Mexican pesos, to reach 749 million pesos in the third quarter of 2021. This, derived from the closure of operations in the Costa Rican market carried out in December 2020. Sales in Nicaragua and Guatemala increased 15.7% year-on-year in dollars, thanks to a “strong performance” in the milk and ice cream categories.
The operation in the US market reported 762 million pesos in net sales for the third quarter of 2021; a contraction of 3.5% in constant currency and a decrease of 12.6% in Mexican pesos. Sales were mainly affected by lower volume in the categories of shaken yogurt and ultra-pasteurized milk.
Investments, debt and cash
As of September 30, 2021, the Mexican company invested 1,417 million pesos in capacity expansion and maintenance. Grupo Lala detailed in its report that 937 million pesos were for property, plant and equipment and another 480 million pesos in leasing of vehicles, machinery and equipment.
Lala ended the quarter with a total debt of 28,148 million pesos, made up of 2,576 million in short-term debt and another 25,572 million in long-term debt. As of September 30, 2021, the company registered a net debt of 23,387 million pesos, representing 2.9x over EBITDA.
The company closed the period with a cash position of 4,762 million pesos, an increase of 7.5% year-on-year.
“We have made the decisions and implemented the necessary adjustments to maintain our margins and market share … We expect a gradual improvement in the coming periods,” said Celis.