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Employee Benefits | 12 Months Ended
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Dec. 31, 2023
Employee Benefits [Abstract] |
Employee Benefits | Employee Benefits The Company has various labor liabilities for employee benefits in connection with pension, seniority and post-retirement medical benefits. Benefits vary depending upon the country where the individual employees are located. Presented below is a discussion of the Company’s labor liabilities in Mexico, which comprise the substantial majority of those recorded in the consolidated financial statements. 17.1 Assumptions The Company annually evaluates the reasonableness of the assumptions used in its labor liability for post-employment and other non-current employee benefits computations. Actuarial calculations for pension and retirement plans, seniority premiums and post-retirement medical benefits, as well as the associated cost for the period, were determined using the following long-term assumptions for Mexico:
Mexico |  | December 31, 2023 |  | December 31, 2022 |  | December 31, 2021 |
Financial: |  |  |  |  |  |  |
Discount rate used to calculate the defined benefit obligation |  | 10.20 | % | 9.90 | % | 8.00 | %
Salary increase |  | 4.75 | % | 4.75 | % | 4.50 | %
Future pension increases |  | 3.75 | % | 3.75 | % | 3.50 | %
Healthcare cost increase rate |  | 6.00 | % | 6.00 | % | 5.10 | %
Biometric: |  |  |  |  |  |  |
Mortality (1) |  | EMSSA 2009 |  | EMSSA 2009 |  | EMSSA 2009 |
Disability (2) |  | IMSS 97 |  | IMSS‑97 |  | IMSS 97 |
Normal retirement age |  | 60 years |  | 60 years |  | 60 years |
Employee turnover table (3) |  | BMAR 2007 |  | BMAR 2007 |  | BMAR 2007 |
Measurement date December: (1)EMSSA. Mexican Experience of social security. (2)IMSS. Mexican Experience of Instituto Mexicano del Seguro Social. (3)BMAR. Actuary experience. In Mexico, the methodology used to determine the discount rate was the Yield or Internal Rate of Return (“IRR”) which involves a yield curve. In this case, the expected rates for each period were taken from a yield curve of Mexican Federal Government Treasury Bonds (known as CETES in Mexico) because there is no deep market in high-quality corporate obligations in Mexican pesos. In Mexico upon retirement, the Company purchases an annuity for the employee, which will be paid according to the option chosen by the employee. Based on these assumptions, the amounts of benefits expected to be paid out in the following years are as follows:
|  | Pension and Retirement Plans |  | Seniority Premiums |  | Post-Retirement Medical Services |  | Total
2024 |  | Ps. | 701 |  | Ps. | 359 |  | Ps. | 18 |  | Ps. | 1,078
2025 |  |  | 400 |  |  | 262 |  |  | 19 |  |  | 681
2026 |  |  | 402 |  |  | 242 |  |  | 20 |  |  | 664
2027 |  |  | 544 |  |  | 234 |  |  | 22 |  |  | 800
2028 |  |  | 549 |  |  | 226 |  |  | 24 |  |  | 799
2029 to 2033 |  |  | 3,888 |  |  | 1,157 |  |  | 155 |  |  | 5,200
17.2 Balances of the liabilities for employee benefits
|  | December 31, 2023 |  | December 31, 2022
Pension and Retirement Plans: |  |  |  |  |  |
Defined benefit obligation |  | Ps. | 15,560 |  |  | Ps. | 15,113 |
Pension plan assets at fair value |  |  | (14,061) |  |  |  | (14,324) |
Effect due to asset ceiling |  |  | 3,098 |  |  |  | 3,851 |
Discontinued operations |  |  | (195) |  |  |  | — |
Net defined benefit liability |  | Ps. | 4,402 |  |  | Ps. | 4,640 |
Seniority Premiums: |  |  |  |  |  |
Defined benefit obligation |  | Ps. | 2,416 |  |  | Ps. | 2,068 |
Seniority premium plan assets at fair value |  |  | (123) |  |  |  | (128) |
Discontinued operations |  |  | (235) |  |  |  | — |
Net defined benefit liability |  | Ps. | 2,058 |  |  | Ps. | 1,940 |
Postretirement Medical Services: |  |  |  |  |  |
Defined benefit obligation |  | Ps. | 604 |  |  | Ps. | 556 |
Medical services plan assets at fair value |  |  | (95) |  |  |  | (88) |
Discontinued operations |  |  | (49) |  |  |  | — |
Net defined benefit liability |  | Ps. | 460 |  |  | Ps. | 468 |
Total Employee Benefits |  | Ps. | 6,920 |  |  | Ps. | 7,048 |
17.3 Plan assets Plan assets consist of fixed and variable return financial instruments recorded at fair value (Level 1), which are invested as follows:
|  | 2023 | 2022
Fixed return: |  |  |  |  |
Traded securities |  | 4 | % | 2 | %
Bank instruments |  | 16 | % | 13 | %
Federal government instruments of the respective countries |  | 47 | % | 52 | %
Variable return: |  |  |  |  |
Publicly traded shares |  | 33 | % | 33 | %
|  | 100 | % | 100 | %
In Mexico, the regulatory framework for pension plans is established in the Income Tax Law and its Regulations, the Federal Labor Law and the Mexican Social Security Institute Law. None of these laws establish minimum funding levels or a minimum required level of contributions. In Mexico, the Income Tax Law requires that, in the case of private plans, certain notifications must be submitted to the authorities and a certain level of instruments must be invested in Federal Government securities among others. The Company’s various pension plans have a technical committee that is responsible for verifying the correct operation of the plan with regard to the payment of benefits, actuarial valuations of the plan, and supervising the trustee. The committee is responsible for determining the investment portfolio and the types of instruments the fund will be invested in. The technical committee is also responsible for verifying the correct operation of the plans in all of the countries in which the Company has these benefits. The risks related to the Company’s employee benefit plans are primarily attributable to the plan assets. The Company’s plan assets are invested in a diversified portfolio, which considers the term of the plan to invest in assets whose expected return coincides with the estimated future payments. Since the Mexican Tax Law limits the plan’s asset investment to 10% for related parties, this risk is not considered to be significant for purposes of the Company’s Mexican subsidiaries. In Mexico, the Company’s policy is to invest at least 30% of the fund assets in Mexican Federal Government instruments. Guidelines for the target portfolio have been established for the remaining percentage and investment decisions are made to comply with these guidelines insofar as the market conditions and available funds allow. In Mexico, the amounts and types of securities in related parties included in the portfolio fund are as follows:
|  | December 31, 2023 |  | December 31, 2022
Debt: |  |  |  |  |  |
BBVA Bancomer, S.A de C.V. |  | Ps. | 46 |  |  | Ps. | 9 |
Grupo Industrial Bimbo, S.A.B. de C. V. |  |  | 18 |  |  |  | 5 |
Equity: |  |  |  |  |  |
Grupo Industrial Bimbo, S.A.B. de C. V. |  |  | 1 |  |  |  | — |
For the years ended December 31, 2023, 2022 and 2021, the Company did not make significant contributions to the plan assets and does not expect to make material contributions to the plan assets during the following fiscal year. There are no restrictions placed on the trustee’s ability to sell those securities. As of December 31, 2023 and 2022, the plan assets did not include securities of the Company in portfolio funds. 17.4 Amounts recognized in the consolidated income statements, the consolidated statements of comprehensive income and the consolidated statements of changes in equity
|  | Consolidated Income Statement |  | AOCI (1)
December 31, 2023 |  | Current Service Cost |  | Past Service Cost |  | Gain or Loss on Settlement or Curtailment |  | Net Interest on the Net Defined Benefit Liability |  | Remeasurements of the Net Defined Benefit Liability
Pension and retirement plans |  | Ps. | 489 |  |  | Ps. | 288 |  |  | Ps. | (243) |  |  | Ps. | 367 |  |  | Ps. | 1,311 |
Seniority premiums |  |  | 345 |  |  |  | 21 |  |  |  | (21) |  |  |  | 178 |  |  |  | 117 |
Postretirement medical services |  |  | 32 |  |  |  | 13 |  |  |  | (14) |  |  |  | 45 |  |  |  | (29) |
Total |  | Ps. | 866 |  |  | Ps. | 322 |  |  | Ps. | (278) |  |  | Ps. | 590 |  |  | Ps. | 1,399 |
December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pension and retirement plans |  | Ps. | 534 |  |  | Ps. | 189 |  |  | Ps. | (220) |  |  | Ps. | 313 |  |  | Ps. | 1,686 |
Seniority premiums |  |  | 328 |  |  |  | 21 |  |  |  | (27) |  |  |  | 150 |  |  |  | 38 |
Postretirement medical services |  |  | 32 |  |  |  | 26 |  |  |  | (29) |  |  |  | 45 |  |  |  | (35) |
Total |  | Ps. | 894 |  |  | Ps. | 236 |  |  | Ps. | (276) |  |  | Ps. | 508 |  |  | Ps. | 1,689 |
December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pension and retirement plans |  | Ps. | 390 |  |  | Ps. | 39 |  |  | Ps. | (55) |  |  | Ps. | 319 |  |  | Ps. | 1,757 |
Seniority premiums |  |  | 290 |  |  |  | 1 |  |  |  | (3) |  |  |  | 114 |  |  |  | 853 |
Postretirement medical services |  |  | 44 |  |  |  | 2 |  |  |  | (24) |  |  |  | 52 |  |  |  | 202 |
Total |  | Ps. | 724 |  |  | Ps. | 42 |  |  | Ps. | (82) |  |  | Ps. | 485 |  |  | Ps. | 2,812 |
(1)Amounts accumulated in other comprehensive income as of the end of the period. For the years ended December 31, 2023, 2022 and 2021, labor costs of Ps. 910, Ps. 854 and Ps. 684 have been included in the consolidated income statements in costs of goods sold, administrative expenses, and selling expenses. Net interest on the defined benefit liability has been included as part of interest expense (Note 19). Remeasurements of the net defined benefit liability recognized in accumulated other comprehensive income are as follows:
|  | December 31, 2023 |  | December 31, 2022 |  | December 31, 2021
Amount accumulated in other comprehensive income as of the beginning of the period, net of tax |  | Ps. | 1,661 |  |  | Ps. | 2,078 |  |  | Ps. | 2,099 |
Actuarial (gains) losses arising from exchange rates |  |  | (100) |  |  |  | (77) |  |  |  | 11 |
Remeasurements during the year, net of tax |  |  | 314 |  |  |  | 211 |  |  |  | 744 |
Actuarial (gains) and losses arising from changes in financial assumptions |  |  | 223 |  |  |  | (1,848) |  |  |  | (776) |
Actuarial (gains) and losses arising from changes in demographic assumptions |  |  | (4) |  |  |  | (71) |  |  |  | — |
Business Acquisitions |  |  | — |  |  |  | 336 |  |  |  | — |
Return on plan assets |  |  | (92) |  |  |  | 713 |  |  |  | — |
Changes in the effect of limiting a net defined benefit asset to the asset ceiling |  |  | (546) |  |  |  | 319 |  |  |  | — |
Effect of settlement |  |  | (533) |  |  |  | — |  |  |  | — |
Amount accumulated in other comprehensive income as of the end of the period, net of tax |  | Ps. | 923 |  |  | Ps. | 1,661 |  |  | Ps. | 2,078 |
Remeasurements of the net defined benefit liability include the following: •The return on plan assets, excluding amounts included in net interest expense. •Actuarial gains and losses arising from changes in demographic assumptions. •Actuarial gains and losses arising from changes in financial assumptions. 17.5 Changes in the balance of the defined benefit obligation for post-employment
|  | December 31, 2023 |  | December 31, 2022 |  | December 31, 2021
Pension and Retirement Plans: |  |  |  |  |  |  |  |  |
Initial balance |  | Ps. | 15,113 |  |  | Ps. | 8,015 |  |  | Ps. | 7,679 |
Current service cost |  |  | 489 |  |  |  | 534 |  |  |  | 390 |
Past service cost |  |  | 288 |  |  |  | 163 |  |  |  | 2,881 |
Interest expense |  |  | 820 |  |  |  | 687 |  |  |  | 527 |
Gain on settlement |  |  | (243) |  |  |  | (280) |  |  |  | (2,884) |
Remeasurements of the net defined benefit obligation |  |  | 531 |  |  |  | (2,073) |  |  |  | (42) |
Foreign exchange (gain) or loss |  |  | (48) |  |  |  | (79) |  |  |  | 28 |
Benefits paid |  |  | (1,504) |  |  |  | (1,146) |  |  |  | (564) |
Business Acquisitions |  |  | — |  |  |  | 9,189 |  |  |  | — |
Employees contributions |  |  | 119 |  |  |  | 103 |  |  |  | — |
Plan amendments |  |  | (4) |  |  |  | — |  |  |  | — |
Discontinued operations |  |  | (195) |  |  |  | — |  |  |  | — |
Ending balance |  | Ps. | 15,366 |  |  | Ps. | 15,113 |  |  | Ps. | 8,015 |
Seniority Premiums: |  |  |  |  |  |  |  |  |
Initial balance |  | Ps. | 2,068 |  |  | Ps. | 2,108 |  |  | Ps. | 1,763 |
Current service cost |  |  | 345 |  |  |  | 328 |  |  |  | 290 |
Past service cost |  |  | 21 |  |  |  | 7 |  |  |  | 836 |
Interest expense |  |  | 191 |  |  |  | 160 |  |  |  | 124 |
Gain on settlement |  |  | (21) |  |  |  | (13) |  |  |  | (839) |
Remeasurements of the net defined benefit obligation |  |  | 66 |  |  |  | (342) |  |  |  | 112 |
Benefits paid |  |  | (254) |  |  |  | (180) |  |  |  | (178) |
Discontinued operations |  |  | (235) |  |  |  | — |  |  |  | — |
Ending balance |  | Ps. | 2,181 |  |  | Ps. | 2,068 |  |  | Ps. | 2,108 |
Postretirement Medical Services: |  |  |  |  |  |  |  |  |
Initial balance |  | Ps. | 556 |  |  | Ps. | 647 |  |  | Ps. | 812 |
Current service cost |  |  | 32 |  |  |  | 32 |  |  |  | 44 |
Past service cost |  |  | 13 |  |  |  | 26 |  |  |  | 236 |
Interest expense |  |  | 54 |  |  |  | 52 |  |  |  | 57 |
Gain on settlement |  |  | (14) |  |  |  | (29) |  |  |  | (271) |
Remeasurements of the net defined benefit obligation |  |  | 5 |  |  |  | (136) |  |  |  | (191) |
Benefits paid |  |  | (43) |  |  |  | (36) |  |  |  | (40) |
Discontinued operations |  |  | (49) |  |  |  | — |  |  |  | — |
Ending balance |  | Ps. | 554 |  |  | Ps. | 556 |  |  | Ps. | 647 |
17.6 Changes in the balance of plan assets
|  | December 31, 2023 |  | December 31, 2022 |  | December 31, 2021
Total Plan Assets: |  |  |  |  |  |  |  |  |
Initial balance |  | Ps. | 14,540 |  | Ps. | 3,170 |  | Ps. | 3,001
Actual return on trust assets |  |  | 522 |  |  | (695) |  |  | 152
Foreign exchange loss |  |  | (150) |  |  | 60 |  |  | —
Life annuities |  |  | 6 |  |  | (3) |  |  | 17
Business Acquisitions |  |  | — |  |  | 12,417 |  |  | —
Benefits paid |  |  | (731) |  |  | (533) |  |  | —
Plan amendments |  |  | (126) |  |  | (101) |  |  | —
Employees´contributions |  |  | 102 |  |  | 103 |  |  | —
Employer´s contributions |  |  | 130 |  |  | 133 |  |  | —
Administration cost |  |  | (14) |  |  | (11) |  |  | —
Ending balance |  | Ps. | 14,279 |  | Ps. | 14,540 |  | Ps. | 3,170
As a result of the Company’s investments in life annuities plans, management does not expect it will need to make material contributions to plan assets to meet its future obligations. 17.7 Variation in assumptions The Company considers that the relevant actuarial assumptions that are subject to sensitivity and valued using the projected unit credit method, are the discount rate, the salary increase rate and healthcare cost increase rate. The reasons for choosing these assumptions are as follows: •Discount rate: The rate that determines the value of the obligations over time. •Salary increase rate: The rate that considers the salary increase which implies an increase in the benefit payable. •Healthcare cost increase rate: The rate that considers the trends of health care costs which implies an impact on the postretirement medical service obligations and the cost for the year. The following table presents the amount of defined benefit plan expense and OCI impact in absolute terms of a variation of 1% in the assumptions on the net defined benefit liability associated with the Company’s defined benefit plans. The sensitivity of this 1% on the significant actuarial assumptions is based on projected long-term discount rates for Mexico and a yield curve projection of long-term Mexican government bonds – CETES:
ctualiz |  |  |  |  |  |  |  |  |  |  |  |
+1%: |  | Consolidated Income Statement |  | OCI(1)
|  |  |  |  | (Gain) or |  | Effect of Net |  | Remeasurements
Discount rate used to calculate the defined benefit |  |  |  |  | Loss on |  | Interest on the Net |  | of the Net Defined
obligation and the net interest on the net defined |  | Current |  | Settlement or |  | Defined Benefit |  | Benefit Liability
benefit liability |  | Service Cost |  | Curtailment |  | Liability |  |
Pension and retirement plans |  | Ps. | 644 |  | Ps. | (199) |  |  | Ps. | 250 |  | Ps. | 1,289
Seniority premiums |  |  | 346 |  |  | (17) |  |  |  | 164 |  |  | 108
Postretirement medical services |  |  | 37 |  |  | (10) |  |  |  | 37 |  |  | (20)
Total |  | Ps. | 1,027 |  | Ps. | (226) |  |  | Ps. | 451 |  | Ps. | 1,377
Expected salary increase |  |  |  |  |  |  |  |  |  |  |  |
Pension and retirement plans |  | Ps. | 834 |  | Ps. | (227) |  |  | Ps. | 413 |  | Ps. | 1,358
Seniority premiums |  |  | 382 |  |  | (20) |  |  |  | 189 |  |  | 137
Total |  | Ps. | 1,216 |  | Ps. | (247) |  |  | Ps. | 602 |  | Ps. | 1,495
Assumed rate of increase in healthcare costs |  |  |  |  |  |  |  |  |  |  |  |
Postretirement medical services |  | Ps. | 52 |  | Ps. | (14) |  |  | Ps. | 52 |  | Ps. | (39)
-1%: |  |  |  |  |  |  |  |  |  |  | OCI(1)
|  |  |  |  | (Gain) or |  | Effect of Net |  | Remeasurements
Discount rate used to calculate the defined benefit |  |  |  |  | Loss on |  | Interest on the Net |  | of the Net Defined
obligation and the net interest on the net defined |  | Current |  | Settlement or |  | Defined Benefit |  | Benefit Liability
benefit liability |  | Service Cost |  | Curtailment |  | Liability |  |
Pension and retirement plans |  | Ps. | 830 |  |  | Ps. | (232) |  |  | Ps. | 468 |  |  | Ps. | 1,384 |
Seniority premiums |  |  | 387 |  |  |  | (19) |  |  |  | 194 |  |  |  | 128 |
Postretirement medical services |  |  | 52 |  |  |  | (14) |  |  |  | 52 |  |  |  | (39) |
Total |  | Ps. | 1,269 |  |  | Ps. | (265) |  |  | Ps. | 714 |  |  | Ps. | 1,473 |
Expected salary increase |  |  |  |  |  |  |  |  |  |  |  |
Pension and retirement plans |  | Ps. | 711 |  |  | Ps. | (199) |  |  | Ps. | 313 |  |  | Ps. | 1,327 |
Seniority premiums |  |  | 346 |  |  |  | (17) |  |  |  | 166 |  |  |  | 102 |
Total |  | Ps. | 1,057 |  |  | Ps. | (216) |  |  | Ps. | 479 |  |  | Ps. | 1,429 |
Assumed rate of increase in healthcare costs |  |  |  |  |  |  |  |  |  |  |  |
Postretirement medical services |  | Ps. | 36 |  |  | Ps. | (9) |  |  | Ps. | 37 |  |  | Ps. | (20) |
(1)Amounts accumulated in other comprehensive income as of the end of the period. 17.8 Employee benefits expense For the years ended December 31, 2023, 2022 and 2021, employee benefits expenses recognized in the consolidated income statements as cost of goods sold, administrative and selling expenses are as follows:
|  | 2023 |  | 2022 |  | 2021
Wages and salaries |  | Ps. | 97,751 |  |  | Ps. | 83,433 |  |  | Ps. | 70,238 |
Social security costs |  |  | 15,941 |  |  |  | 13,511 |  |  |  | 11,737 |
Employee profit sharing |  |  | 2,419 |  |  |  | 2,598 |  |  |  | 2,035 |
Post-employment benefits |  |  | 910 |  |  |  | 854 |  |  |  | 684 |
Share-based payments (Note 15) |  |  | 943 |  |  |  | 866 |  |  |  | 854 |
|  | Ps. | 117,964 |  | Ps. | 101,262 |  |  | Ps. | 85,548 |

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