Lala, owner of the Force, prioritizes improving margins in Brazil

Mexican Lala, which controls the Force food, put between its priorities improving margins in brazilian operation that are well below those recorded in Mexico. In a teleconference with analysts to comment the results of Lala in the first quarter of this year, dairy company executives stated that the goal is to increase the margin in Brazil at 200 basis points over the next three years. In the first quarter, without considering the effects of the acquisition of Force last August, Lala posted a earnings before interest, taxes, depreciation and amortization (Ebitda) of $ $95.9 million during the period, almost 13% over the first quarter of 2017. Considering the purchase, Ebitda was $ $108.5 million, up 28% over the $ $84.9 million a year before. The values were converted from Mexican pesos for dollars, whereas the average exchange rate in the two quarters. Without Force, the margin stood at 11.8% — up from 11.7% recorded in the first quarter of 2017, but taking into account the acquisition of brazilian company, the margin dropped to 11.1% in the first three months of this year. The pullback is due to tighter margins of business in Brazil, which are half the registered in Mexico, according to Lala. In the period, sales of the Force totaled 3.064 billion Mexican pesos, and Ebitda stood at 236 million pesos, representing a 7.7% margin. Scot Rank, CEO of Lala, said the increase in margins will come from the mix of products, the growth of sales of higher value-added items, such as cheese and yogurt. In addition, the company is also implementing the brazilian operation your know-how to reduce costs and improve operational efficiency in supply chain and productivity. Another priority of the company is deleveraging. The goal is that the Ebitda ratio and net debt is less than 2.5 times at the end of the year. At the end of the first quarter, was at 2.7 times, depending mainly of the purchase of the Force. A year earlier, the ratio was 0.3 time. In the Conference call, the CFO of Lala, Alberto Arellano García, emphasized that all debt is made for the purchase of the Force was refinanced. Were 9 banks today are 5. In addition, Lala was able to reduce the cost of the spread in Brazil of CDI plus 2.4% per year in December 2017, to CDI 0.7% more in March this year. Arellano García also reported that the company's Capex this year should add 3 billion Mexican pesos, down from $3.8 billion pesos of R 2017. For Brazil, not been provided "important investments," he said. "We have sufficient capacity to meet the growth in coming quarters with what we have" in Brazil, he added.