Input costs hinder Bachoco earnings

by Meat&Poultry Staff
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CELAYA, Mexico – Industrias Bachoco S.A.B. de C.V. attributed negative profit for its fourth quarter (ended Dec. 31, 2011) and weak full-year results to the decreasing value of the Mexican peso and increasing prices worldwide for feed and other production costs.

Bachoco reported a net loss of 58 million pesos (US$4.566 million) or 0.10 pesos (US$.0008) per share , compared to majority net income of 477 million pesos (US$37.557 million) or 0.80 pesos (US$.06) last year.

Net sales for the quarter were 8,564 million pesos (US$674.298 million) compared to 6,375 million pesos (US$501.944 million) in 2010.

During the year the company acquired O.K. Foods, based in Fort Smith, Ark., for US$93.4 million.

"During the fourth quarter we observed a strong demand for chicken meat, particularly towards the end of the quarter,” said Rodolfo Ramos, CEO. “We had increases in sales across all our business lines; as a result we reached record sales figures. Total sales rose 34.4 percent during the fourth quarter and 11.8 percent in 2011 over the previous year.”

Production costs did not reflect full transfer increases to customers, because of: a strong supply of chicken coupled with weak demand for chicken during most of the year, the company stated, in addition to a 13 percent depreciation of the peso during the year, “resulting in a 2.9 per cent negative operating margin for the quarter and 0.2 per cent negative operating margin for year 2011,” said Ramos. “Nonetheless, we were able to reach a positive EBITDA result for the quarter and for the year, as well as posting a net profit in year 2011.”

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