Lower prices for chicken drag on Bachoco earnings
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CELAYA, Mexico – Lower chicken prices and a drop in chicken volume weighed on earnings for Industrias Bachoco S.A.B. de C.V., which reported a 43.7 percent decline in net profits for the third quarter ending Sept. 30.
The company reported net income of Ps. 353.5 million ($27.5 million), or Ps. 0.59 ($.046) per share for the quarter, compared with a net income of Ps. 627.5 million ($48.7 million), or Ps. 1.05 ($.082) per share reported in 3Q12. Net sales declined 4.7 percent to Ps. 9,437.0 million ($733 million) for the quarter compared to Ps. 9,901.0 million ($769.1 million) reported in the comparable year ago period.
The company attributed the sales decline to lower chicken prices in the Mexican market and a drop in chicken volume compared. The declines were partially offset by an increase in egg sales, while the rest of Bachoco’s business lines had mixed results.
Sales of Bachoco’s US operations represented 23 percent of total sales compared with 22 percent a year ago.
“This was a typical third quarter for the Company, in terms of seasonality, with chicken prices at their weakest,” said Rodolfo Ramos Arvizu, CEO of Bachoco. “Nevertheless, we continued to post positive results and margins in all of our main business lines, with chicken volumes fully recovering by the end of the third quarter as we had anticipated.
“As a result, we estimate that our chicken market share has been recovered, thanks to the confidence of our clients in our company and the excellent job of our sales force,” he added. “Additionally, we faced a tough basis of comparison due to strong results posted in the third quarter of 2012, which was atypically strong, in terms of seasonality for the poultry industry.
“Lastly, our CAPEX were entirely financed with internal resources and our balance sheet remains solid, with strong cash levels,” Arvizu concluded.