The year 2020 will be remembered as a tragic year for humanity, but also as a year where the rules of work for human beings and companies were redefined. Many businesses perished, while others flourished, capitalizing on opportunities through adaptability, quickness and, above all, determination to evolve. For Grupo Herdez, 2020 was a year of solidarity, results, learning, and being grateful.
At the start of the pandemic, we planned for two main objectives:
At Grupo Herdez, we feel proud to have fully met our goals.
In 2020, we set another sales record by selling over $24 billion.
Sales of the Preserves segment grew 10.6% to reach $19.4 billion. We increased the market share in spices, ice cream, mayonnaise, jams, mole, tomato purée, and tea.
Sales of the Frozen segment fell by 19.2% to $2.6 billion, as a result of the impact of the mobility restrictions in the country, which affected traffic in ice cream shops, cafeterias, and stores in the traditional channel.
Export sales reached $2.0 billion, a 23% increase with respect to the previous year.
Gross margins of Preserves and Exports increased 0.4 and 7.9 percentage points, respectively, while gross margin for Frozen fell by 8.2 percentage points as a result of lower sales due to the contingency and to the unfavorable sales mix at Helados Nestlé.
Consolidated SG&A remained at 25.5% as a share of net sales, practically in line with the previous year. The aforementioned, as a result of expenses discipline implemented throughout the Company.
EBIT before other income reached $2.8 billion, in line with the previous year, while the margin fell by 0.9 percentage points to 11.8%. In the Preserves segment, EBIT before other income was $3.3 billion, a 24% increase, while the Export segment went from $110 to $301 million.
Additionally, we obtained extraordinary income for $408 million, mainly from the divestment of the tuna business, and income derived from the liquidation of a Hispanic company investment fund in the United States.
Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA) -including extraordinary income-, reached $4.2 billion, thanks to a 28.7% and 111.9% growth in Preserves and Exports, respectively. In Frozen, EBITDA was negative for $205 million.
Equity Investment in Associated Companies was $757 million, 2.4% less than in 2019 due to a reduction in sales to restaurants in MegaMex, as well as to the strengthening of the Dollar.
Additionally, consolidated net income of the Group totaled $2.4 billion, 6.5% more than in 2019, while the majority net income was $828 million, 18.4% less than in 2019, affected by the Frozen segment.
Free cash flow -without considering the divestment of the tuna business- was $1.3 billion, equivalent to 5.5% and 7.5% of net sales and shareholders’ equity, respectively.
We invested $680 million in fixed assets, mainly in mole packaging equipment and expansions in tomato and vegetable collection capacity.
In 2020, we acquired 31.6 million of our own shares for $1.1 billion pesos, or 8.1% of the outstanding shares as of December 31, 2019. This amount, jointly with the payment of ordinary dividends represented a return to shareholders of 9.3% on the average market capitalization of the company.
In the Persons pillar, the two most important initiatives of the year were related to SDG 5, Gender Equality. On one hand, at the end of the year, we started the first Diagnostic of Diversity and Inclusion within the Group, the results of which will help us focus our efforts to contribute to a more equitable Mexico, aligning with the United Nations sustainable development goals. On the other, we launched “Semillero Nutrisa”, an initiative that promotes the development of small and medium-sized companies led by women. This project will strengthen our product portfolio with innovative local proposals. In its first edition, Semillero gave 12 scholarships in a training program to strengthen its business model and develop them as potential suppliers of the Group.
In the Community pillar, the majority of our efforts were focused on fighting the effects of the pandemic on the most vulnerable sectors.
First, jointly with Sanfer and La Costeña, we prepared more than 35 thousand baskets with food, health, cleaning, and medication products that benefited more than 175 thousand Mexicans in a vulnerable situation.
Likewise, in alliance with suppliers of the restaurant sector, Directores de Cadenas Restauranteras (DICARES), Asociación Mexicana de Restaurantes (AMR), Comida para Ayudar, and Vatel Club, we collected more than 60 tons of food to benefit 24 thousand collaborators of restaurants from the country’s capital.
And lastly, in the #somosfamiliagrupoherdez effort, those of us who collaborate in the Group have made donations to fellow employees that have suffered the loss of any family member due to COVID-19. In this initiative, the company matches the donation.
Lastly, in the Planet pillar:
Additionally, through our brands, we continue to reinforce our commitment to the environment.
Through our Por Un Mundo Más Vivo program, in spite of the social distancing measures, we were able to clean two Mexican beaches before the suspension of activities, equivalent to 30 kilometers of coast, adding up to a total of 437 km of benefitted beaches. Since the start of this initiative in 2018, we have collected more than 3,000 kilos of trash and 80 tons of gulfweed (sargazo) with the tireless assistance of 2,690 volunteers.
Under the #siguedandolata initiative, we installed 52 can collection machines in 14 States and 12 supermarket chains, collecting a total of 5.3 tons of tin, exceeding our goal by 7%. With this, we were able to install 8 wind turbine generator systems for communities in the southern part of the country, benefitting 68 people.
We participated in the first virtual reforestation through “Sembremos una nueva normalidad”. The goal consisted of reforesting 3.6 acres in six days at Barranca de Tarango, one of the main forest areas of Mexico City.
Through the Herdez and Aires de Campo brands, we contributed more than 200 trees, which are able to absorb 29 tons of carbon dioxide per year.
The program considered the creation of temporary jobs as a strategy aimed at addressing the loss of jobs due to the contingency, and for young people in a social reinsertion process.
Throughout the course of the century that we have been present in the homes of Mexican families, we have always faced factors that lead us to adapt. This is one of such moments. At Grupo Herdez, we live the future with optimism, adapting to the circumstances, and seeking to be more efficient. It is an honor to lead an extraordinary team of persons who, jointly with processes and technology, allow us to continue to have the preference of our consumers and clients.
We are grateful for the commitment and dedication of those that form part of the commercial, planning and supply, systems and digital transformation, environmental care, health and safety teams, people at the plants who, with their enthusiasm and commitment, were able to get the products of the Group to Mexican families. We give our most recognition to all of them.
And, especially, I want to thank all of the families of those of us who work at the corporate offices of the Group for making our work from home easier.
With all confidence… Mexico will move forward.
Sincerely,
