MEXICO CITY, MEXICO — Gruma SAB de CV has reclassified its Venezuelan business and will report on the nationalized assets as “discontinued operations,” effective Jan. 22, 2013.
The reporting change was announced as part of the company’s first-quarter financial results.
The move relates to actions by the Venezuelan government dating back to 2009-10, when Venezuela’s government under President Hugo Chavez expropriated the property and assets of Molinos Nacionales CA, or Monaca, from Gruma. Gruma Venezuela and a second subsidiary called Demaseca, was the second largest corn and wheat miller in Venezuela, operating 13 mills. At the time of the expropriation, Gruma Venezuela accounted for just under 10% of all Gruma SAB sales.
Gruma said the expropriation decree and a related administrative resolution published in January 2013 in the Official Gazette of Venezuela prompted the reclassification. Based on the International Financial Reporting Standards, Gruma no longer will reconsolidate the financial information of Monaca and Demaseca.
On Gruma’s balance sheet, the deconsolidation was the largest influence in a number of significant changes, including a 10% reduction in total assets from the fourth quarter of 2012, to 44.368 billion pesos ($3.647 billion). With the change, the balance sheet shows the Venezuelan assets and liabilities as a net asset under the line “assets held for sale.” Liabilities were lowered by 11% to 31.281 billion pesos ($2.571 billion) and shareholder equity fell 9%, to 13.086 billion pesos ($1.076 billion).
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