Good afternoon, everyone, and welcome to Grupo Bimbo's fourth quarter and full year 2025 results conference call. If you need a copy of the press release issued earlier today, it is available on the company's website at grupobimbo.com. Before we begin, I would like to remind you that this call is being recorded and that the information discussed today may include forward-looking statements regarding the company's financial and operating performance. All projections are subject to risks and uncertainties, and actual results may differ materially. Please refer to the detailed note in the company's press release regarding forward-looking statements. I will now turn the call over to Mr. Alejandro Rodríguez, Chief Executive Officer of Grupo Bimbo. Please go ahead, sir.
Good afternoon, everyone, thank you for joining us today. Connected on the line today are CFO Diego Gaxiola, BBU President Greg Koehrsen, along with several members of our finance teams. I'm very excited and deeply honored by the opportunity and the trust placed to lead this extraordinary company as CEO. I would like to extend my sincere gratitude to Rafael Pamias for his leadership and dedication to Grupo Bimbo. Under his guidance, the company strengthened its strategic positioning and operational discipline, always driven by a long-term vision. My commitment is to build on this trajectory and continue positioning Grupo Bimbo as a beloved company in households around the world by driving growth through our powerful brands and expanding our global presence.
Together with the leadership team, we will maintain a constant focus on our associates, customers, and consumers, while preserving and strengthening our culture and philosophy of building a sustainable, highly productive, and deeply humane company. Before we move forward, I would like to recognize the recent retirement of Tony Gavin and Mark Bendix in the near future. Tony served as President of Bimbo Bakeries USA, completing an extraordinary 42-year career with the group, and Mark will be concluding more than 12 years in the company, serving most recently as Executive Vice President of Grupo Bimbo. We're deeply grateful for their leadership, commitment, and lasting contributions to Grupo Bimbo. As part of a planned leadership transition, Greg Koehrsen was appointed President of Bimbo Bakeries USA and joined our steering committee in January 2026. Greg brings more than a decade of leadership experience with Grupo Bimbo.
He has held several senior positions across the organization, most recently leading BBU's transformation journey. We're pleased to have Greg leading the continued evolution of BBU. He will join us on all future conference calls and will be available to address questions regarding the North America business. Turning into the year in 2025, we proudly celebrate our 80-year anniversary. Over these eight decades, we have grown from a small bakery in Mexico into the world's largest baking company and a relevant player in snacks with a global footprint and deeply humane culture that continues to define who we are. As part of this milestone, we inaugurated Mi BIMBO in Mexico City, an interactive museum that honors our journey and brings our story closer to the community. We warmly invite everyone to visit.
Celebrating our history also reinforces our commitment to innovation, long-term value creation, and to nourishing a better world over the next 80 years. In 2025, we advanced these commitments through discipline and execution and deliberate actions. Despite the complex global environment marked by microeconomic volatility, inflationary pressures, and shifting consumer behaviors, our performance demonstrated underlying strength and resilience of our business model. We delivered record financial results and market share gains across multiple categories, supported by continued investment in our brands, expanded distribution, and a robust innovation pipeline. We also achieved solid profitability gains, driven by disciplined operational performance across regions, further supported by productivity gains in North America, where we're capturing the early benefits of the transformation initiatives launched in 2024, with notable efficiencies across manufacturing, administrative, and logistics operations.
As a result, we achieved margin expansion for the full year, all while continuing to execute with discipline our long-term growth agenda, investing approximately $1.2 billion in CapEx and completing five strategic bolt-on acquisitions in attractive, high-growth markets, including Eastern Europe. These actions strengthen our global footprint, expanding our presence to 93 countries, enhance our capabilities, and improve our ability to serve evolving consumer needs. Building on this foundation, as consumption habits and occasions continue to diversify, innovation remains key to our strategy. Our innovation rate now exceeds 12%, reflecting our ability to translate consumer insights into differentiated offerings. By leveraging the strength of our trusted brands, together with the prior CapEx investments, operational excellence initiatives, and recent acquisitions, we have reinforced our competitive position to further strengthen our market leadership.
This integrated approach provides a strong platform for the long-term sustainable growth, supporting incremental volume gains, enhancing profitability, and creating enduring value across our markets. On our ESG journey, 2025 marked a milestone year in advancing our commitments. Aligned with our purpose of nourishing a better world through our Baked for You initiatives, 98% of our bread, buns, and breakfast portfolio deliver positive nutrition. We remain on track to eliminate all artificial colors by 2026, and continue to strengthen our core portfolio with around 48% of sales meeting or exceeding the 3.5 star benchmark under the Health Star Rating system, demonstrating optimal nutritional quality in every bite.
Our environmental agenda, through our Baked for Nature initiatives, have achieved 100% reuse of treated water versus our 2020 baseline, while exceeding our generative agriculture target with more than 500,000 hectares cultivated under these practices. We also reached 99% recyclable packaging. We continue to progress in renewable energy and fleet electrification, with more than 40,000 electric vehicles. Looking ahead, we remain fully focused on advancing our medium and long-term ESG ambitions. While challenges remain, celebrating Grupo Bimbo's 80 anniversary with record results and the ongoing commitment of our people, highlights the strength of our operational model and culture. With disciplined execution at the core of all our efforts, we're well-positioned to continue delivering consistent performance, driving profitable growth, enhancing returns, and creating sustainable value in 2026 and beyond. Now, taking a look at the regional results of the fourth quarter.
In Mexico, we delivered 4.8% sales growth, reaching an all-time high for a fourth quarter. This solid performance reflects our ability to grow despite a softer consumer environment, delivering positive results across all categories, with particularly strong performance in sweet baked goods, cakes and buns, and rolls. Results were also driven by favorable product mix and positive execution across all channels, with convenience standing out, positioning double-digit growth. This positive momentum accelerated towards the end of the quarter, including a record sales week in December, marking the strongest weekly performance in the region's history. This robust top-line growth, combined with the distribution efficiencies, productivity gains, and disciplined cost control, resulted in an Adjusted EBITDA margin expansion of 40 basis points to robust 22%, reflecting the strength and flexibility of our operational model.
Looking ahead, we remain encouraged by the resilience of our portfolio and the strength of our commercial execution. Through initiatives focused on prioritizing volume performance and delivering an attractive value proposition across both price and product mix, supported by innovation, we expect to maintain positive momentum. In North America, excluding FX, fourth quarter sales declined by 3%, reflecting a still sub-consumption environment. That said, our top-line trends continued to improve sequentially, supported by the actions taken throughout the year to strengthen revenue growth management, a more refined price pack architecture, and bring differentiated innovation to market, all to enhance our value proposition to consumers. We are particularly encouraged by recent innovation launches that address evolving consumer needs, including Sara Lee's half loaves, designed to serve smaller households and more accessible price points, and Thomas' High Protein Bagels, which resonate with health-conscious consumers.
Our actions in 2025 are reinforcing our confidence that we have and continue to improve a portfolio of attractive, consumer-centric products that positions us well to drive sustainable growth. Our efforts have resulted in market share performance improvements across all branded categories, with positive gains in buns and rolls, mainstream bread, and salty snacks. On profitability, thanks to the record productivity benefits captured throughout our transformation initiatives, we deliver a strong 330 basis points EBITDA margin expansion to 9.2%. This performance demonstrates how our team's discipline and focus are translating into structural improvements, strengthening efficiency and competitiveness across the operation. Looking ahead, while external headwinds remain, the improving momentum across key categories, coupled with the operational strength built throughout the transformation initiatives, position us well to continue progressing and to support a more balanced path toward growth and profitability over time.
Moving on to Latin America. Excluding FX effect, net sales grew 15.4% to a record four-quarter level, driven by positive momentum across every organization as a reflection of a strong focus on execution and effective price mix strategy. Sales results also benefited from the acquisition of Wickbold, completed in October 2025. Wickbold is a leading bakery player in Brazil that complements our brand portfolio and expands our presence in key categories, further strengthening our leadership position in the market. This acquisition offers meaningful synergy potential, including commercial opportunities and scale efficiencies that will enhance profitability over time. During the quarter, integration-related expenses led to a contraction of 420 basis points on the EBITDA margin. These investments are focused on capturing future synergies and strengthening the long-term value of the business.
While additional integration costs are expected in the coming quarters, they are strategic in nature and aimed at unlocking efficiencies and commercial opportunities. As integration advances, we expect margins to progressively improve. Excluding integration expenses, Adjusted EBITDA margin for Latin America contracted 180 basis points due to higher raw material costs in Brazil, attributable to the FX impact, as well as increased general expenses from strategic investments for future growth, mostly related to improvements in Chile's commercial operating model. Across the supply chain, including benefits from the transformation project in North America and past accretive acquisitions. In Europe, Asia, and Africa, excluding FX effect, sales increased 17.8%, reaching an all-time high.
This performance was primarily driven by the consistent strength of Bimbo QSR, Romania, U.K., and India, which posted double-digit growth rates, coupled with the contribution from the acquisition completing during the year, including Karamolegos in Romania and Don Don in the Balkans. The remarkable Adjusted EBITDA margin expansion of 420 basis points resulted from the solid sales performance, productivity initiatives, lower administrative and restructuring expenses related to last year's bakery closure in Spain, and the accreted contribution from the past acquisitions. This performance led to a record double-digit margin of 13.8%. With this, I would like now to turn over the call to Diego, who will walk you through our financials. Please, Diego, go ahead.
Thank you, Alejandro. Good afternoon, everyone. Thank you for joining us today. 2025 demonstrated the value of our diversification, discipline, execution, and long-term view. Despite a challenging operating environment, we not only met our guidance, achieving record levels of sales and Adjusted EBITDA, but exceeded our profitability outlook, driven by a better-than-expected fourth quarter performance. As a result, Adjusted EBITDA margin expanded by 30 basis points to 13.9%, the second highest annual margin in our history. Across our operations, performance was underpinned by notable strengths. Our EAA region substantially increased profitability, reaching a record double-digit margin. Significant contribution came from our operations in Mexico, posting sustained growth and an all-time high Adjusted EBITDA margin of 20.4%. These achievements helped offset the softer consumption environment in North America and short-term headwinds that we face in LATAM.
Furthermore, we continue to capture record productivity benefits from the transformation project in North America, driving a margin expansion of 60 basis points to 9% for the year, reinforcing our confidence in the path we have set. Alongside these efforts, enhanced revenue growth management capabilities, lower raw material costs, and disciplined strategic investments also helped us surpass our original profitability outlook, despite continued volatility in the global operating environment. From a capital allocation perspective, the $1.2 billion in CapEx that Alejandro mentioned for 2025 came below both prior year levels and our initial guidance of $1.3 billion-$1.4 billion. Although investments were lower than expected, our capital allocation priorities remained unchanged, centered on productivity, growth initiatives, and long-term value creation.
This same approach guided the acquisitions completed during the year, strengthening our platform in attractive markets and supporting long-term returns. We also distributed MXN 5.6 billion through dividends and share buybacks. Our total debt closed at MXN 154 billion. The increase compared to 2024 reflects the financing for CapEx and strategic investments, partially offset by the 11% appreciation of the Mexican peso. While we had originally anticipated a gradual deleveraging phase to start in 2026, our strong operating results, our focus on cash flow discipline, allow us to start the beginning of this deleverage process in 2025, with our net debt to Adjusted EBITDA ratio declining 0.2x as compared to 2024, closing at 2.7x .
Three weeks ago, we issued MXN 12 billion in Mexican bonds in two tranches, four and nine years. It was a success. It attracted a remarkable demand of MXN 19 billion, which underscores the confidence investors have in our strategy, financial profile, and long-term objectives. I would like to provide some visibility of what we are expecting for 2026. First, regarding top line, excluding the effect of the appreciation of the Mexican peso, we anticipate sales to increase in the low to mid-single-digit range, driven by growth across all regions in local currency, supported by continued investments behind our brands, value-accretive innovation for consumers, and a strong frontline execution. We also foresee a gradual improvement in the consumer environment, particularly in North America.
Incorporating our exchange rate assumption, where we are estimating an appreciation of the Mexican peso in 2026 as compared to 2025 of MXN 1.50. Given that approximately two-thirds of our sales are generated outside of Mexico, this appreciation represents an impact of more than 500 basis points on our expected top-line growth. As a result, we expect net sales in peso terms to be flattish. Regarding our Adjusted EBITDA margin, we expect a slight margin expansion, driven primarily by operational leverage and efficiencies across the supply chain, including benefits from the transformation project in North America and past accretive acquisitions. As for our raw material costs, we expect stability to a slight tailwind throughout the year, as some commodities have experienced decreases.
We expect CapEx investments to range between $1.2 billion-$1.4 billion, reflecting the carryover from 2025 as we close below the plan. This is just a timing effect as we continue to follow a focused and prudent investment approach centered on returns, efficiency, and strategic growth. As we look to 2026, we do so with confidence, supported by exceptional teams, a resilient business model, and a globally diversified platform that continues to deliver solid results. The progress achieved in 2025 has strengthened this foundation, positioning us to continue advancing on our long-term value creation path. Thank you all for your time. We can now proceed with the Q&A session, please go ahead.
Thank you. The floor is now open for questions. If you have a question, please press star one on your touchtone phone at this or any time. If at any point your question is answered, you may remove yourself from the queue by pressing star two. Questions will be taken in the order they are received. At this time, we will pause momentarily to assemble our roster. The first question will come from Ricardo Alves with Morgan Stanley. Please go ahead.
Good evening, Alejandro Rodríguez, Diego Gaxiola. Thanks for the opportunity, as always. Impressive performance in Mexico, particularly on the profitability. Congrats on that. Now, it beat at least our numbers, mainly on SG&A. We noticed in the release, and I quote, "Efficiencies in distribution, productivity across the value chain and lower admin expenses." Can you expand here? What's striking to us is that, you know, you'd find ways to cut costs in such a high-performing division already. I think it's worth exploring what were those low-hanging fruits, those initiatives that you still found, perhaps in Mexico, how sustainable that could be, and I think that that would help us model the division a little bit better.
Just more thoughts on the Mexico profitability. My second question is quicker, I think. I think that this one is probably to Diego on financial expenses. Financial expenses were higher than what we expected a bit. I think that in the release, you're making reference to energy hedges and higher leverage and rates. Just wanted to hear a little bit more details as it pertains to the magnitude of each effect. You know, it's not 100% clear to us what would be cash in nature. For instance, we did notice that there is an FX component, an FX loss component, but it's too small to explain.
If you could elaborate a little bit more on those other issues, Diego, that would be super helpful. And thanks again, everybody, for the call.
Thank you very much for your question. We drove EBITDA margin expansion through solid top-line growth, but as you asked, we also worked in three fronts. The first one was distribution efficiency. Despite that we seem to be mature, we have worked with our commercial execution and route to market model that expanded customer reach and improved selling efficiency. Like you said, it's a mature model, but we will continue to work on it. Productivity gains, we're working on food waste reduction, as we have had. We're just doubling down on it and improve finished goods control. Finally, a disciplined cost control, enabling savings across administrative and operation expenses. For instance, we're using AI in administrative tasks to look further for optimization. Hey, hi, Ricardo, and thank you for joining the call.
Let me explain you a little bit more details on the financing cost for the full year, if I got your question correctly, right? Not just for the quarter.
Thanks, Diego. The question was a little bit more on the quarter, but.
Okay.
That's totally fine also. Thank you.
No, perfect. I can jump to the quarter. No, no problem, no issue. Basically, yes, we, as you mentioned, we have an important increase of a little more than 20% for the fourth quarter, which is mainly driven by the impact of energy cost hedges, which I will probably get into a little bit more details to provide the right visibility and understanding of this movement. We also have higher interest expenses from an increased debt position, and finally, and less material, a higher foreign exchange loss. Now, what happened also, it's a comparable basis.
What we have, related to the VPPA, you know, a virtual purchasing power agreement, which, as you know, it's a financial contract with a renewable energy developer, that allows to support the renewable energy generation without physically receiving the power, has some fluctuations on the P&L, depending on the price as compared to what we have in the agreement. What happened last year is that we had a movement on the cost of energy, where the fixed price was lower than the projected energy prices, which made us to recognize a benefit in the income statement. Of course, conversely, if the fixed price is higher than the projected prices, then we will have an impact in our results. Mainly, this quarter wasn't a big movement.
What happened is that in the comparable quarter, 2024, we did have a positive impact. That is basically the VPPA. The other, as I mentioned, I think it's very clear, we have a higher leverage in absolute terms, although we were able to deleverage the company before our expectation. Remember that we had, for the full year, a guidance of a slight improvement to a flat leverage ratio. Seeing today the leverage of the company at 2.7x as compared to 2.9x , it's a very good news. We were able to anticipate the deleverage. As I mentioned, by being very careful on the CapEx, we ended below the expectation, but also a better operating performance, as you noted, basically across all different segments. Thank you, Ricardo, for the questions.
Thank you, gentlemen. Super helpful.
The next question will come from Benjamin Theurer with Barclays. Please go ahead.
Hey, this is Ree filling in for Ben. Thanks for taking the question. Sort of two here. Firstly, as there's been more discussion around GLP-1 adoption and potential implications for food consumption, have you seen any measurable impacts over 2025 in volume or mix, particularly in North America and more developed markets, such as Europe? How do you materially view this as a factor today versus something that's still more of a longer-term consideration? Secondly, EAA saw a meaningful step-up in profitability this quarter. Can you break down the key drivers of the margin expansion and discuss how much of this is seen as sustainable versus one-off? Sort of how should we think about the margin progression in EAA over the next few quarters? Thanks.
Thank you, Ben. Good evening. I will take the first one. The impact from Ozempic GLP-1. We have a greater understanding of the phenomenon now and its consequences, and we have detected some changes in consumer behavior among users. We're actively working on enhancing our portfolio, and let me share with you four initiatives. One example, we're making products with a higher fiber and protein content. We believe this trend is here to stay, and we will continue to ride on it as protein bagels or within the Thomas' brands. We're also, around the world, developing products in our big breakfast category. Expect to see more innovations like these ones. The second one is we're also offering smaller portions in snacks with a minimal nutrition density.
By bringing smaller portions, we accompany these kind of, adopting consumers. The third one is we have been developing sugar-free recipes and increased innovation in premium products. These premium products that will overall maximize the experience of this seeking a reward, but at the same time, with a lower, or non-sugar content. Finally, we will continue to transition into simpler and more natural recipes. By this, we will provide options for these emerging consumers. As I said, more grains, higher fiber, more protein-based solutions, and continue to innovate in that space.
Now for the question regarding the improvement in the margin. 2025 was a record year for EAA.
It's a reflection of an exceptional performance driven by both, one, solid organic growth, but also the contribution from accretive acquisitions, particularly the last one that we did in the Balkans, that, as we mentioned, when we concluded, this acquisition, it is accretive in all points of view to the profitability of the company. We feel confident that this margin is not only sustainable, but that we can continue to improve it in the future. Specifically, EAA has been a region that has outperformed. In 2025, we achieved a 12% 5-year compounded annual growth rate in sales and reached the record annual margin of 10.8%, with a more than a 300 basis expansion for the year.
We're very happy with the performance and but also we're very confident for a positive future for this region. Thank you, Ben, for the questions.
Thank you very much. Pass on.
The next question will come from Alvaro Garcia with BTG. Please go ahead.
Hey, good evening, gentlemen. Alejandro Diego, Greg, hope you're well. My question's on North America. You mentioned you foresee a gradual improvement in the consumer environment there. You also made some comments on sort of where the transformation project is in the context of your margin guidance. Yeah, any color on sort of the factors driving that potential gradual improvement and any commentary on margins, specifically for North America in 2026, would be very helpful. Thank you.
Thanks for the question. I'll talk a few points on trends, and then you also asked about our transformational efforts. As it relates to trends, you saw in our prepared comments, and it's pretty clear in syndicated data, that the total category continues to be somewhat pressured. We are seeing sequential improvement in the category quarter over quarter in 2025, and beyond that, we've seen improvement quarter over quarter in our share performance over that period of time. We're particularly excited about our performance in mainstream bread, in buns and rolls, and in salty snacks, where we've seen positive share gains in the fourth quarter, and those have candidly continued on even at the beginning of this year.
The thing I would leave you with is that the consumer continues to be bifurcated across the market. Value, mainstream, and premium, and our response is to make sure that we are innovating into those spaces appropriately to move where our consumers are going for each of the cohorts. That's how I might think about the trends. In terms of our transformation journey, I would say we've made significant progress in 2025. As you could imagine, we looked at every area of our business from a cost perspective: manufacturing, logistics, procurement, and our G&A spend. I just wanna thank the team for the progress that they've made together over the course of time. I would expect us to continue to be very inspecting all areas of our cost base. We will continue to do that.
The other area that I think is important is that our price and promotion. We looked at our price and promotion very carefully over the last couple of quarters. We're gonna continue to look at our pricing and promotion activities very carefully to make sure that we're doing so in a way that is beneficial to our customers. We will continue to have rational and disciplined pricing and promotion activities as we go forward as well. I think that's important to understand as we think about our transformation journey.
Thank you, Alvaro.
Thank you very much.
The next question will come from Antonio Fernandez with Actinver. Please go ahead.
Hi. Hello, good afternoon. Just a quick one regarding Latin America, what are your expectations there, especially in Brazil? I mean, you have now this new acquisition, it's also an interesting year because of elections. The overall outlook in the region and more specifically in Brazil. Thanks.
Antonio, we weren't able to hear the last part of your question, so do you mind repeating, please?
Sure. My question is regarding your outlook in Latin America and more specifically in Brazil, given the recent acquisition, an interesting year there in Brazil because of elections as well. Overall outlook in the region. Thanks.
Yes. Well, we feel confident for the region also, that we will start to see positive trends as we believe the fundamentals for sustained growth are in place. Now, I want to be very specific that in the fourth quarter and in the coming quarters, we will still have some extraordinary expenses for the integration of the Wickbold acquisition. Of course, you know, it was a project that took a lot of time to be approved, and it's a project that has the potential to create synergies. We need to invest a lot, and many of these investments are gonna be reflected through the P&L. That can put some pressure in the short term.
Again, now with a more long-term view, I think that the region will start to go back to previous margins. Now with the acquisition, and once we end the integration, we feel confident we're gonna be able to surpass even the level of margins that we had in the past. Thank you, Antonio, for the question.
Thanks.
The next question will come from Froylan Mendez with JP Morgan. Please go ahead.
Hello, gentlemen. Can you hear me well?
We can.
Can you hear me well, sorry?
Yes, yes, we can hear you.
Perfect. Excellent. Thank you. Regarding the evolution of the project in the U.S., how far are we from stabilized margins? How far can they go? Could you share a little bit more color on the outlook on a per region basis, both top line and margins, if possible? Thank you.
Yeah, thanks for the question. I would say in terms of where we are in the transformation journey, we've made significant progress, as you can see in the results in 2025. To reiterate, we will continue to look at every area of the business. We expect that, you know, the gains that we made in this past year, we feel good about how they will carry on into the future. You know, short of giving specific guidance, I would say that we will continue to look at every area of the business as we have done and will continue to do.
Regarding the guidance or the outlook for the different regions, we do not provide that specific guidance. What I can tell you, without being specific, is that, of course, we feel confident that it's gonna be a positive year in local currencies. Organically, we're gonna be able to see some growth. Also, as I mentioned, for Grupo Bimbo, we expect a slight margin increase, which is, of course, the consequence of improvements in the different regions.
Well, maybe if I can then add a little bit on the U.S. In the U.S., where do you base your, let's say, view that there should be an improvement? Is this more on your side, regaining share, or is it more of a consumer recovery that you're seeing or expecting? Thank you.
Yeah, maybe a couple of things. I, again, I think we see moderate improvement in the category, but it's a category that continues to be pressured. There are certainly pockets of growth, and for us, it's really about making sure that we are, being disciplined about innovating in the right spaces for our consumers. I would say, too, as we continue to be, rational and disciplined as it relates to pricing and promotion, I, I do think that that will, continue to be positive, for the entire category in 2026.
Appreciate it. Thank you.
Thank you, Froylan, for the question.
The next question will come from Matteo Besada with TRG. Please go ahead.
Hi, Diego and team. Congrats on the results, and thank you for the space for questions. I don't know if you already touched on this, so sorry if you did, but I wanted to know if you could provide a little bit more color on what drove the margin improvements in Peru. See if there were any unusual tailwinds or if it's fair to expect this type of structurally higher margin from now on, like, consistently on the double digits. Thank you again.
We had a strong operating performance in many markets. You know, the LATAM region is a composition of several countries. Peru, Ecuador, Chile, there are many markets that had a very good performance. Again, that we still believe that we can continue to have an improvement in the margins. Of course, we do not disclose not only the guidance, but the specific margins by country. For the quarter, the region had, what we mentioned, the impact, particularly from the operations of Brazil, because of two things. One, the pressure that we had from the cost of sales due to the hedges that we had for the FX, and also the one-time expenses related to the integration of Wickbold as part of the Bimbo Brazil business.
sorry, guys, I don't know if I said, LATAM. I wanted to hear about Europe margins.
Europe. Okay, sorry. I thought you were asking about Peru, I probably made them there. It wasn't very clear. For Europe, I think that this was also previously asked. In Europe, we had a record year. We had an organic growth, also the positive contribution of the acquisitions that we did, enter into four new markets through the acquisition of Don Don in the Balkans. This has helped also the margins of the region, it was a very accretive acquisition. We believe that this margin is not only sustainable, we have room to see a continuous improvement.
Great. Thank you very much.
Thank you, Matteo.
The next question will come from Renata Cabral with Citigroup. Please go ahead.
Hi, everyone. Thanks so much for this space for questions. I have two, actually, are follow-ups. One is related to the transformational project in the US. I wonder if you could share some color of the advancement in terms of operation that you achieved so far. For 2026, what would be the top priority within the projects? For instance, the distribution of the South or the sweet snacks, you see more opportunity in one or in the other or both. If all the logistics capabilities are already in place, if not, where do you see some opportunities to tackle in 2026, would be really helpful. Another one, it's a follow-up in margins in the U.S., because we are seeing some transformation in the markets that the company operates.
From one side, we have the increase in the portfolio of the private label. In the other hand, we have this new transformational project. Both interacting will end up in maybe in three to five years in a different margin for the company. Not asking for guidance here, but more direction in terms of what you think the margin from U.S. will go towards the next couple of years. Thank you.
Thank you for the question. I'll start and then I'll turn it over to Diego for the second part of the question. As it relates to the transformation journey, I would think about 2026 as sort of deepening our efforts on almost every area that we've already talked about. Logistics, manufacturing, our pricing and promotion disciplines, all of those we're gonna continue to work along. If there's one thing I would maybe add to the discussion, and Alejandro already mentioned this in his prepared comments, is using AI as an enabler across all of those different areas. Demand forecasting, network optimization, et cetera, those are areas that we believe that AI can be utilized within our organization in order to make it even better in the future.
That might be one area of color that would be added to the conversation. For the rest of it, I'll turn it to Diego.
Thank you, Greg. Well, let me give you a little bit of color. I'm gonna go back a few years. We used to operate in North America, and this, of course, is past history, in the low double digits. 2022 was 11%, then in 2023, we had a 50 basis point contraction. Then, as everybody knows, we had a very complicated second half in 2024, and we ended the year in 8.4%, 8.5%. Now, what we're seeing in 2025, I think it's outstanding. More considering that we still haven't seen a recovery in the consumption environment, as we already talked about. Unfortunately, we're still seeing a decline on volumes.
Even though we're facing that complicated consumer environment in the U.S., we were able to deliver, I would say, an impressive and above our expectation margin expansion, not only in the fourth quarter, but for the full second year. I perfectly remember when we provided the guidance last year, that we were very specific that still for the first half of 2025, we were expecting a margin contraction, and that exactly happened. What we feel very happy about is to see how sequentially, the margin contraction in North America started in the first quarter with 130 basis points, then negative 70 basis points. We were able to achieve 90 basis point expansion and, of course, this quarter, 330 basis points. We were able to end the year with a positive margin expansion in North America, 60 basis points.
Consider that first, volumes were not necessarily on an optimistic environment, and second, that we have a lot of one-time expenses in the year, a lot of expenses that have to do with the transformation that we have talked a lot about and that Greg explained, and that is putting some pressure to the results. Are we gonna continue to have expenses? Definitely, because we haven't ended this transformation. Is this gonna create some pressure? Yes, not necessarily more than the one that we already have in 2025. That on the side of the expenses. What is, let's say, encouraging, is to think that we will start to see and capitalize on these past investments.
I think that more than a specific comment on the guidance for 2026 or 2027, I will definitely say that we're on the right path to go back not only to the margins that we had in the past, but even to end having a company with a higher profitability than the one that we had some years ago. Thank you, Renata, for the questions.
Thank you so much for comprehensive answer, and congrats on the results.
Thank you, Renata.
The next question will come from Felipe U cros with Scotiabank. Please go ahead.
Good evening, Alejandro, Diego, and team. Thanks for the space. I think you just took one from me, on where long-term margins could go in the U.S. and whether you would get back to old levels. I had a second one, which had to do with the market share gains. You discussed this quite a bit in your remarks and also in the release. I know there's been a little bit of innovation, but I imagine those categories are still small. Wondering what you think was the main driver in getting those shares back up? Any color you can give us on those would be great. Thank you.
Yeah, thanks for the question. I'm assuming that the market share gains that you're talking about were... I'll at least speak to North America, and if there's a question beyond that, I'll let Alejandro Rodríguez take it. You know, as it relates to North America, I would say a couple of things. First, the innovation is has been successful. Alejandro Rodríguez talked about both of the ones that I'd like to highlight. Small loaves, which really go to shrinking overall households in terms of number of people. Then our protein efforts, Thomas' Bagels being one example of that, where we are reaching to not only new consumer cohorts, but also existing consumer cohorts that are changing their purchasing behaviors and their consumption behaviors.
You can expect us to continue to innovate along those lines, because those have both been successful, and we expect to do more innovation like that in the future. I would also add that part of our transformation efforts has been around sales execution, and with that's around all of our DSD disciplines. And we've seen improvement in our DSD disciplines, thanks to the fine efforts of our frontline associates that are in the field every single day. And that goes to our ordering patterns, it goes to executing at a high level on our innovation when we do launch it, and then also executing at a high level our promotional activities when we partner with customers in order to do something exciting within the consumption environment.
I would say execution has been part of our improvement as it relates to our share gains. Innovation and execution would be where I would underline.
Great. The question was mostly for the U.S., so that covers it. Thanks a lot.
Great. Thank you.
Gracias, Felipe.
The next question is a follow-up from Ricardo Alves with Morgan Stanley. Please go ahead.
Thanks for the follow-up. It's on snacks. We noticed two divergent sales trends more recently. In sweet snacks, Entenmann's seems to be losing a little bit of share on the margins. I just wonder if there's any update on the competitive environment in the U.S. around Entenmann's and, you know, your main competitors. Any pricing or discount that we should be aware or, I don't know, maybe, packaging or channel issues? On the flip side, as I said, divergent trends, salty snacks, super strong. I wonder, what's up with Takis? What is the latest double-digit growth in the fourth quarter?
Just wanted to see, you know, the industry is still kind of flattish, so anything that you could do, if you could zoom a little bit further into those two subcategories, that would be helpful to understand what's going on. Thank you very much again for the follow-up.
Great, thanks for the question. Appreciate it. I'll answer the question as it relates to sweet snacking, and then I'll turn it over to Alejandro, who can probably talk more broadly about salty snacking. As it relates to sweet snacking, I would say it always has been and continues to be a very competitive environment. It is a subcategory that has been under probably a little bit more consumer pressure than most subcategories, so there's certainly that component of it. I would say, as it relates to the competitive environment, we're continuing to take a hard look at the Entenmann's business specifically and our sweet baked goods portfolio in general.
We believe that there are, you know, innovation that we can bring to those brands and to the category that we think will be helpful to the consumer who is still very interested in those offerings. There's some work to do, I would say, on sweet baked goods, but we're actively working on that as we, as we go forward.
Thank you, Ricardo. As you know, I used to be the leading person of the salty snacks globally. I think our success in the U.S. in this fourth quarter has been the result of what Greg was talking. It's all about execution. It's focusing in what we know what to do, and we're just doing it better. Our product is awaited, it's awaited everywhere, and we're just being able to drive through more product, and the response of consumers has been very good, as you have seen. Thank you, Ricardo, for the questions.
Super helpful again. Thank you. Good night.
The next question is from Fernando Olivieri with Bank of America. Please go ahead.
Hi, good afternoon, and thanks for taking my question. My line disconnected, sorry if they already asked this. Diego, just wondering, based on the net debt to EBITDA ratio of 2.7, no, that you reached at the end of 2025, does this changes in any way, how are you thinking about dividends and buybacks for this year?
Hi, Fernando. No, it doesn't change it. I think that what we have in front of us from a few quarters ago, when we had the increase on the leverage of the company, because, as you know, with intensive years of CapEx, a very intensive CapEx program, plus many bolt-on acquisitions, we set ourselves the target to start to have a deleveraging in the company and go back to the levels that we can feel more comfortable, and that we have more financial flexibility for the company, and of course, then start to capture other future growth opportunities. It is a very good news, but this is not gonna change what we're looking for. We still are above the target zone where we want to be.
We will continue to invest in organic growth, as we have been doing in the past years. As I said, we have an incremental CapEx expectation, but this is mainly, a timely issue of some CapEx that we did not execute, in 2025, that is gonna happen this year. The combination of this is looking as if we were to increase the CapEx program, is more of a delay. I think we're pretty much in track with the strategy that we set for the company. No, definitely we're not gonna change today, the allocation of resources, either for dividends or share buybacks.
Okay.
Thank you.
Great. Thank you, Diego.
Thank you, Fernando.
The next question is a follow-up from Alvaro Garcia of BTG. Please go ahead.
Hey, thanks very much for the follow-up. It's for Alejandro in Mexico. Like we haven't spoken about Mexico. You know, if you look at wheat prices, particularly in MXN peso terms into the back half of 2026, you know, it looks quite nice. I guess I wanna tie that question to sort of how you're thinking about pricing this year. Obviously, consumer is a bit softer, your category is very defensive, but it seems like it would be a good year to sort of lean into volume growth. Any comments with regards to sort of how you're thinking about top line in Mexico in 2026? Maybe some comments on the World Cup as well would be helpful. That'd be greatly appreciated. Thank you.
Thank you, Alvaro. In regards of the World Cup, we're gonna try to capture as much of occasions, not only Mexico, but around the world. It's during the summer. That's where our buns and bread and salty sell the best, we'll try to capture as many occasions as we can. In terms of pricing, I think we're gonna be in line with inflation. I think we're gonna focus on volume growth in some regions, in terms of really executing around the basics of our business. It's gonna be, like Greg said, in the U.S., it's gonna be execution in how we order, how we move, how we deliver, and how we execute product.
Great.
Thanks, Alvaro.
Look forward to enjoy your product during the World Cup.
Appreciate it. Thank you.
This concludes our question and answer session. I would like to turn the conference back over to Mr. Alejandro Rodriguez for any closing remarks.
Thank you all for your time today. Please do not hesitate to contact our investor relations team, and with any further comments or questions you may have, and thank you very much for the insightful questions. Have a great night.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.