May 4, 2011

Bachoco ends with a tough quarter

Industrias Bachoco has declared its first quarter results for 2011, which consists of a rise of about 2% in total sales for the quarter in contrast to the same period last year.

Industrias Bachoco S.A.B. de C.V., Mexico's leading producer and processor of poultry products, has announced its unaudited results for the first quarter of 2011, ended on 31 March 2011. All figures have been prepared in accordance with Mexican GAAP. Following Mexican Accounting Principles, all data is presented in nominal Mexican pesos (MXP).

Among the highlights are that total sales for the first quarter of 2011 rose 1.9% from the previous year. Chicken sales rose 3.6% during 2011 compared with the same 2010's quarter.

EBITDA margin was 6% for the quarter, compared to 8.6% for the same quarter of 2010. Earnings per share in the quarter totalled MXN0.26 per ADS (US$0.02), compared to MXN0.46 per ADS (US$0.04) in the same period of 2010.
 

Rodolfo Ramos, Bachoco's CEO, stated, "The first quarter of 2011 was difficult for our company. Our main challenge was to mitigate the negative impact caused by high prices of corn and soymeal during this period, resulting in higher cost of sales.

"Our chicken business line was affected by a slightly lower demand mainly due to seasonal factors; despite this circumstance, we recorded increases in sales, when compared to the previous quarter.

"The margins for our eggs business line were affected due to a negative streak of oversupply, impacting volume, sales and prices for these products.

"Our balanced feed products, on the other hand, benefited from stable market conditions; we were able to achieve double-digit increases in both sales and volume sold. The swine business line was also very stable and was supported by a good balance between demand and supply.

"As a result of our successful hedging strategies, strong control of operating expenses, and the optimisation of our products mix, we were able to soften the impact of having adverse conditions during this first quarter and keep achieving positive results.

"On a final note, the company's market maker began its operations in January of this year, and as a result we have seen an increase in the liquidity of our shares trading in the Mexican Exchange. We are confident that this contract will contribute to a better performance of our shares in addition to the company's strategy to reach its goals for 2011," said Ramos.
 

Sales of chicken products for the first quarter 2011 increased 3.6%, compared to the same 2010 quarter. The balance between supply and demand was stable, with a slight slowdown trend by the middle of the quarter.

Sales of table eggs products decreased by 18.2% during this period of 2011, as egg prices decreased 9.9% and volume fell by 9.2%. These figures are a reflection of a large oversupply period observed within the industry.

This business line was stable during the first quarter. Sales rose 6.4%, as swine prices increased 4.6% and volume sold rose 1.7% in the period.

Sales of other lines recorded a decrease, 24.4% lower when compared with the same quarter of 2010, as sales of by-products declined.