Gruma B de C : Quarterly financial report

Quarterly Financial Information

1 of 87

[105000] Management commentary

Management commentary [text block]

FOURTH QUARTER 2021 RESULTS

Thanks to GRUMA´s strong brand positioning, we have been able to increase prices in this inflationary environment, across all our divisions during the fourth quarter, which served to enhance GRUMA´s strong operational performance during the year. Combining healthy demand, with price increases and a permanent cost management policy, we delivered sales growth of 17% relative to 4Q20, which was already a record setting quarter for us. If we compare our performance to pre-pandemic levels in 2019, net sales have grown by 32%, and EBITDA has grown by 29%.

This performance gives us confidence for another solid year as we head into 2022, having prepared thoroughly to maximize the opportunities we see in our operation.

HIGHLIGHTS

Disclosure of nature of business [text block]

2 of 87

GRUMA, S.A.B. de C.V., is one of the world's leading tortilla and corn flour producers. With leading brands in most of its markets, GRUMA has operations in the United States, Mexico, Central America, Europe, Asia and Oceania.

Disclosure of management's objectives and its strategies for meeting those

objectives [text block]

Our strategy is to focus on our core business-corn flour and tortilla-as well as to expand our product portfolio towards the flatbreads category in general. We will continue taking advantage of the increasing popularity of Mexican food and, more importantly, tortillas, in the U.S., European, Asian and Oceanian markets. We will also continue taking advantage of the adoption of tortillas by the consumers of several regions of the world for the preparation of different recipes other than Mexican food. Our strategy includes the following key elements:

Expand in the Tortilla Market in the United States: We believe that the size and growth of the tortilla market in this country still offer us significant opportunities for expansion, mainly in the retail channel, looking to continuously innovate our products with emphasis on healthy alternatives based on the preferences of our customers.

Enter and Expand in the Tortilla, Flatbread Markets and Flavored Corn Chips in Europe, Asia and Oceania: We believe that markets in other continents such as Europe, Asia and Oceania offer us significant opportunities. We believe our current operations will enable us to better serve our customers in those regions, with fresher products and respond more quickly to their needs.

Gradually Enter the Flat Bread and Flavored Corn Chips Markets in the United States and Mexico.

Maintain MISSION® and GUERRERO® Tortilla Brands as the First and Second National Brands in the United States and Position our Mission Brand in Other Regions of the World: We intend to achieve this by increasing our efforts at building brand name recognition, and by expanding and having presence in more supermarket chains.

Encourage Transition from the Traditional Cooked-Corn Method to the Corn Flour Method as Well as New Uses for Corn Flour: GRUMA introduced the corn flour method for the production of tortilla and other corn-based products to the market. We believe that there is still much growth potential and that the transition from the Traditional Method to the corn flour method of making tortillas and other corn-based products, is the primary opportunity for increased corn flour sales, particularly in Mexico. We continue working in expanding the use of corn flour in the manufacture of different types of products.

Invest in our Core Business and Focus on Optimizing Operational Matters: We intend to focus our capital expenditure program on our core business to enable us to meet future demand, consolidate our leading position in the industry and continue generating returns to the shareholders above our cost of capital.

3 of 87

Disclosure of entity's most significant resources, risks and relationships [text block]

Our financial condition and results of operations may be influenced by some of the following factors:

• level of demand for tortillas and corn flour;
• increase or decrease in the Hispanic population in the United States;
• increases in Mexican food consumption by the non-Hispanic population in the United States; and use of tortillas in non-Mexican cuisine in the United States, Europe, Asia and Oceania;
• costs and availability of corn and wheat flour;
• costs of energy and other related products;
• acquisitions, plant expansions and divestitures;
• effects of government initiatives and policies;
• effects from variations of interest rates and exchange rates;
• volatility in corn and wheat prices and energetics costs;
• competition from tortilla manufacturers, especially in the United States;
• competition in the corn flour business; and
• general economic conditions in the countries where we operate and worldwide.

Disclosure of results of operations and prospects [text block]

FOURTH QUARTER 2021 RESULTS

Thanks to GRUMA´s strong brand positioning, we have been able to increase prices in this inflationary environment, across all our divisions during the fourth quarter, which served to enhance GRUMA´s strong operational performance during the year. Combining healthy demand, with price increases and a permanent cost management policy, we delivered sales growth of 17% relative to 4Q20, which was already a record setting quarter for us. If we compare our performance to pre-pandemic levels in 2019, net sales have grown by 32%, and EBITDA has grown by 29%.

This performance gives us confidence for another solid year as we head into 2022, having prepared thoroughly to maximize the opportunities we see in our operation.

4 of 87

HIGHLIGHTS

CONSOLIDATED RESULTS OF OPERATIONS 4Q21 versus 4Q20

Sales volume remained flat at 1,081 thousand metric tons compared to 4Q20.

Net sales increased 17% to Ps.25,718 million due to (1) the benefit of the implementation of price increases during 3Q21 and 4Q21; (2) higher sales volume in the U.S., European, Asian and Oceanian divisions; and (3) by the weakening of the Mexican Peso ("MXN" or "peso") versus the U.S. dollar ("USD" or "dollar") on figures for foreign operations when measured in peso terms. Sales from non-Mexican operations represented 74% of consolidated figures.

Cost of sales ("COGS") increased 19% to Ps.16,533 million due to higher overall inflation on raw materials in all divisions, as well as higher labor costs mainly in the U.S. As a percentage of net sales, it increased to 64.3% from 63.4% mainly due to the cost dynamics mentioned above.

Selling, general and administrative expenses ("SG&A") increased 18% to Ps.5,988 million due to higher distribution costs impacting the U.S. and European divisions. As a percentage of net sales, SG&A increased 20 basis points to 23.3%.

Other expense, net, was Ps.74 million compared to Ps.336 million last year. The Ps.262 million change resulted mostly from an extraordinary expense in 4Q20 related to impairments on long lived assets.

Operating income grew by 19% to Ps.3,124 million. Operating margin increased 10 basis points to 12.1% from 12.0%. Please keep in mind that there was an extraordinary expense in 4Q20 in the "Other expense, net" line mentioned above. Excluding its effect from our financials, operating income would have increased by

5 of 87