Industrias Bachoco earnings advance in 2Q

by Meat&Poultry Staff
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CELAYA, Mexico – A boost in sales throughout all business lines lifted second-quarter earnings results for Industrias Bachoco.

The company reported a net majority income of 316.8 million pesos ($23.6 million) in the second quarter, 0.53 pesos per share ($.039), compared to a net majority income of 140.0 million pesos ($10.4 million), or 0.23 pesos per share ($.017) in 2011. EBITDA for the quarter was 663.0 million pesos ($49.38 million) with a margin of 7.0 percent, compared to 328.5 million pesos ($24.43 million) with a margin of 5.0 percent in the same year-ago period.

Net sales for the second quarter jumped 42.1 percent to 9,404 million pesos ($700.3 million), compared to 6,616.8 million pesos ($492.8 million) for the comparable year-ago period. The company reported increased sales across business lines.

"For the second quarter, Bachoco's poultry and balanced feed business lines demonstrated a proper balance between supply and demand, said Rodolfo Ramos Arvizu, chief executive officer. “On the contrary, the egg business line experienced oversupply conditions and high production costs which narrowed margins in this business line when compared to the same period in 2011. Bachoco incorporated into the category of "other business lines" sales of live swine which were also affected by oversupply conditions in the second quarter of 2012.

"We can conclude that Bachoco obtained favorable operating results year over year (2Q12 vs. 2Q11), however, when compared to 1Q12, results were lower," he said.

"Our second quarter results were largely attributed to a reduction in operating expenses as a percentage of net sales as well as operating efficiencies in all of the Company's business processes," Arvizu said. "Our performance was affected by volatility stemming from increases in the price of soybean meal, one of Bachoco's key production cost components, as well as by the volatility of the Mexican peso versus the US dollar.

"The company's financial position remains solid and in line with the strategic plan laid out for 2012."
Chicken sales advanced 48.3 percent compared 2011 driven by the integration of OK Foods in November 2011, according to the company.

Table egg sales increased 12.7 percent on a 10.6 percent increase in prices and a 1.9 percent rise in volume sold.

The company's balanced feed business line climbed 5.1 percent on a 14.5 percent price increase, which was partially offset by an 8.2 percent decline in sales volume due to increased supply and higher commodity prices.

Bachoco's other business lines, which includes hogs, turkey and beef value-added products, as well as by-products, grew 37.7 percent. The company attributed the increase to growth in value-added beef products after the integration of a newly acquired plant Monterrey, Mexico during the second half of 2011. Higher by-product sales also contributed to the increase, the company said.

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