CELAYA, Mexico – Higher raw material costs weighed on second-quarter results for poultry processor Industrias Bachoco.

For the second quarter ended June 30, 2018, the company reported net income of 1,576.9 million pesos, or basic and diluted income of 2.62 pesos per share, compared with a net income of 1,722.8 million pesos, representing 2.87 pesos of net income per share in the second quarter of 2017.

The company attributed the decrease in profit to lower operating results. Net margin for the quarter was 9.7 percent compared to 11.4 percent reported in the year-ago quarter.

Net sales advanced 7.3 percent to 16,213.6 million pesos compared with 15,116.3 million pesos reported in the second quarter of 2017. Net sales improved on better prices in poultry and balanced feed.

“This second quarter was challenging in both our Mexico and US operations,” said Rodolfo Ramos Arvizu, CEO of Bachoco. “In Mexico, cost of raw materials increased, in part due to a weaker Mexican peso, offsetting the increases in prices leading to pressure in margins.

“In the US we observed atypical lower prices in the white meat market which combined with higher cost of raw materials, resulted in a difficult comparison vs. 2Q17.”

Net sales in the company’s Mexico business climbed 1.5 percent to 11,553.9 million pesos in the second quarter, while its US business reported net sales of 4,659.7 million pesos, an increase of nearly 25 percent, for the period.

Operating income for the second quarter totaled 1,656.4 million pesos, which was 673.6 million pesos lower than 2,330.0 million pesos reported in the year-ago period. Operating margin was 10.2 percent for the quarter which was lower when compared to the same period of 2017.