Sales increased to 36.2 billion pesos, 4.6 billion pesos higher than in 2022, and equivalent to 14.4% growth. We recovered 3.5 percentage points in gross margin, which translated into increases of 31.1% and 25.7%, respectively, in EBIT and EBITDA.
Majority Net Income increased 70.0% to 1.3 billion pesos, due to strong operating performance and the Company’s stake in its partner MegaMex®.
We broke our consolidated free cash flow record with 3.2 billion pesos, which represents 8.8% of sales and 18.8% of average shareholders’ equity. This generation of funds allowed us to reduce our debt by 1.0 billion pesos, distribute 400 million pesos in ordinary dividends, and purchase 223 million pesos in shares.
Sales in the Preserves segment increased 13.7% to 28.8 billion pesos. The Company gained market share in the portfolio’s main categories.
In 2023, we were able to predict demand with 86.3% accuracy, which translated into a fill rate of 98%, a record service level in the segment.
Net sales increased 3.4% in dollars over 2022. Gross margin rose by 6.2 percentage points, while net income was 1.5 billion pesos, 73.1% higher than results in 2022, with a margin of 10.1%.
Net sales in the Impulse segment were 4.7 billion pesos, 19.4% higher than in the previous year. Store traffic is responding to commercial initiatives among the different brands, while the increase in frozen sales is due to a more profitable portfolio, a different mix of channels, and a firm operating discipline.
Export sales increased 13.5% in pesos, and 28.7% in dollars, because of new initiatives in price clubs, mainly in the United States.
We introduced Herdez® into Chile, Paraguay, Uruguay, and South Korea. On the other side of the Atlantic, we expanded our product portfolio in the United Kingdom where they can now enjoy meal kits with Mexican food, salsas, and seasonings. These new offerings are in addition to the distribution agreements in Spain, where Herdez® salsas and chiles can now be enjoyed.
McCormick®, synonymous with tradition, innovation, and unique flavors, has positioned itself among the ten most-consumed brands in Mexico, according to the eleventh edition of Brand Footprint, published by the global data firm Kantar (2023).
Del Fuerte®, the high-quality tomato puree brand created in 1933, celebrated its 90th anniversary, a milestone that shows Mexican households’ preference for this brand.
For the second consecutive year, Grupo Herdez® was recognized by MERCO (a leader in monitoring corporate reputation) as among the ten most environmentally responsible companies in Mexico, and it ranked sixth in the category of companies with the greatest ESG responsibility in the country.
In a world in which the effects of climate change are increasingly evident and impacting the availability of natural resources more heavily, working from a viewpoint of sustainability has indisputable value.
We contribute to protecting the planet with Del Fuerte® through the initiative Un Legado Más Fuerte (A Stronger Legacy). In Ejido Topia in Durango, we have contributed to the community— whose water basins supply a percentage of the fields where the tomatoes we use in our products are grown—in such a way that it meets extremely high environmental protection standards. Today it is one of the regions recognized internationally for issuing carbon credits in the stock market.
At the end of 2023, we met our annual goal of reducing water consumption, with an intensity of 2.15 m3/Tn produced, in line with the commitments under the sustainability-linked bond issued in 2022.
We also improved sustainable practices through strategic collaboration with providers and partners that encourage the production of sustainable agricultural raw materials, and the circularity of our packaging, through shared value programs that transcend and impact the habits of our consumers.
For the first time, every one of our fresh and non- perishable raw materials providers complied with the Best Agricultural Practices evaluation. This assessment is part of the Sustainable and Regenerative Agricultural Program, for which we have implemented quality requirements for export. Today, 15 years after its creation in 2008, this is one of our key lines for creating a responsible supply chain that guarantees fresh, quality food.
Just as we work hard to maintain soil balance and encourage conscientious consumption of water, we also earmark funds to fight hunger and increase food health.
Saber Nutrir®, the Company’s social responsibility program—focused since its start-up on fighting food insecurity— has shored up its activities and initiatives in recent years to address latent water scarcity in rural communities. This led to the installation of 13 cisterns to capture rainwater in the state of Yucatán, in the municipalities of Muna, Santa Elena, and Oxkutzcab, benefiting 110 families in four communities.
After the devastating Hurricane Otis, we joined forces with Fundación Herdez® and key industry players to support vulnerable families with the Unidos por Acapulco (Together for Acapulco) initiative. Together with other companies, we donated 35,000 care packages containing 20 kilos of food, hygiene and cleaning products, medications, and water, which benefited 104,000 people. This support was also manifested inward: all of our employees in Guerrero received care packages, medications, and cash from other members of the Company to rebuild their dwellings.
In line with the Sustainable Development Goals of Gender Equality and Decent Work and Economic Growth, we have created actions such as El Plato del Buen Vivir (The Good Living Plate), which gathers the tools of financial education, physical and mental health for our employees. We are raising awareness in matters of diversity and inclusion at all levels of the organization, and these initiatives position us at the forefront of the Bloomberg Gender Equality Index in Latin America.
Furthermore, 100% of our plants received a badge from the Safe and Healthy Working Environments program (ELSSA), awarded by the Mexican Social Security Institute. These are examples of a conscious effort to build work centers that prioritize the well- being of the people who give life to the Group.
We broke several records throughout 2023, due to the implementation of new technologies that increased our efficiency and productivity. We developed and supported innovative initiatives to meet the needs of our value chain, thus ensuring the continuation of the Company and helping preserve natural resources.
Looking out to this horizon, our capital investments during 2024 of 1.4 billion pesos will be earmarked for maintenance projects, increased capacity on our pasta and salsa lines for export, and migration of the ERP.
Our vision is to position Herdez® as a global representative of Mexican food by developing unique products for the market, such as ready- to-serve foods, avocado dips, tabletop salsas, and hot salsas, making our food a daily option. Through the development of commercial partnerships, we will further expand our brands, categories, and the areas where we are now present, including in the United States, Canada, Europe, and South America.
Héctor
Hernández-Pons
Torres
Chairman of the board
and
Chief Executive Officer
of Grupo Herdez®
Message from the CEO
