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Grupo LALA posts solid Q4 results with plans to invest in US and Central America for 2017

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Mary Ellen Shoup

By Mary Ellen Shoup+

Last updated on 22-Feb-2017 at 10:52 GMT2017-02-22T10:52:20Z

Grupo LALA reported solid gains in Q4 of 2016 despite headwinds, its CEO said.
Grupo LALA reported solid gains in Q4 of 2016 despite headwinds, its CEO said.

Mexico-based Grupo LALA registered a 14.6% sales increase for the fourth quarter of 2016 posting $720m (14.5bn pesos), up from $620m (12.5bn pesos) for the same period last year. 

Net income also grew 19.8% to $61.7m (1.2bn pesos) in the fourth quarter.

“In the fourth quarter, the company’s profitability in Mexico, showed improvement versus the third quarter in spite of inflation of input costs,” Grupo LALA CEO, Scot Rank, said.

Period of recovery after US investment

Rank expects the company to bounce back from the sales momentum lost from its US acquisition of Laguna Dairy Company , a manufacturer of value-added dairy products, for $246m.

The move was part of the Grupo LALA’s aim to enter the high-growth value-added dairy market and extend its brand awareness into the US.

“At a consolidated level, results from recently acquired businesses outside of Mexico diluted overall performance. We expect a recovery in these businesses during 2017, and will invest 3.6bn pesos in productivity and innovation to accelerate growth across the business this year and beyond,” Rank said.

In 2016, the company made capital investments amounting to $144.8m (2.9bn pesos), of which the majority went towards increasing production capacity and updating manufacturing facilities.

"By 2017, we will first protect our core business in Mexico, which means investing in brands as well as infrastructure and accelerating our productivity," Rank said during a Q4 earnings call.

However, Rank said that continued investment and expansion into the US and Central America is a major focus for the company.

Growth by product segment

When broken down by segment, “other dairy products,” which includes yogurt, cream cheese, and desserts, experienced the most year-over-year with a 25.7% sales. The company credits the sales increase to the rising popularity of value-added dairy products.

Milk also registered strong gains rising from $410m (8.2bn pesos) in the Q4 of 2015 to nearly $450m (9bn pesos) in the fourth quarter of 2016, a 9.4% increase.

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