July 28, 2006

Mexico's Bachoco poultry company reports improved Q2 results

Industrias Bachoco, Mexico's leading producer and processor of poultry products, has reported improved profits for its second quarter ended Jun 30, 2006, the third consecutive quarter it has reported improved results.

The company had a gross margin of 21.4 percent for the quarter, and operating margin of 8.3 percent. The EBITDA margin reached 11.7 percent; volume of balanced feed sold increased 30 percent, on-year.

Sales reached MXN 3,636.1 million (US$333 million) for the quarter

Despite a slight oversupply situation in the second quarter of 2006 which increased the cost of raw materials, the company were able to achieve improved results, Cristobal Mondragon, chief executive officer of Bachoco, said.

However, Bachoco's gross margin was narrower than the same quarter last year, largely due to a decrease in the price of chicken and swine.

Sales of chicken decreased 11.8 percent during the quarter as a result of a 9.9 percent decrease in prices and a decrease in volume compared to the same quarter last year.

The latter was the result of a cut in production days as the "Holy Week" occurred during this quarter compared to first quarter last year.

Moreover, the total yield was reduced as the company moved towards value-added products.