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Mexico's Bachoco, positive Q1 results

Industrias Bachoco S.A.B. de C.V., one of Mexico's leading producers and processors of poultry products, announces good results for the first quarter ended 31 March 2009.

Bachoco's quarterly sales are up 23.7% on the same quarter of 2008. The growth was achieved across all main business lines: 28.2% in chicken, 11.0% in table eggs and 45.9% in swine, as supply conditions improved in the market.

Operating profit increased 102.5% during the quarter, while EBITDA was 66.3% higher at 654.3 mln pesos (MXP) in Q1 2009 from MXP 393.3 mln in Q1 2008.

CEO Cristobal Mondragon: "During the quarter, the Mexican economy continued slowing down following the global trend, and we continued to experience a further depreciation of the Mexican peso against the US dollar," he said.

"In our industry, however, there was a favourable balance between supply and demand that allowed us to transfer part of our past cost increases to our prices in our main product lines. This, combined with our internal efforts to serve our clients properly by optimising the product mix (we made adjustments to our supply relative to the same quarter of 2008), and improved efficiency, allowed us to increase total sales to a new historical record and achieve positive results in terms of operating and net income," he added.

"We expect to continue delivering positive results in the second quarter of the year," concluded Mondragon.

Results by business segment

Chicken

Results for the chicken business line were strong during the first quarter. Sales of chicken products increased 28.2% as chicken prices rose 30%; however, this result was partially offset by a 1.3% decrease in volume from the previous year. During this quarter the Company was able to transfer part of its cost increases to chicken prices.

Table Eggs

Sales of eggs increased by 11.0% during the first quarter as egg prices rose 17.3% from the previous year, but were partially offset by a 5.4% decrease in volume mainly driven by the adjustment in the production level of the company.

Balanced Feed

The balanced feed business line remained affected by higher costs in the inventories of raw materials. Sales of balanced feed decreased by 8.0%, while balanced feed prices increased by 19.6%, but were offset by a strong decrease in volume sold of 23.1%, as demand in the sector declined.

Swine

Demand and supply were stable during this quarter. Swine sales significantly increased by 45.9% from Q1 2008, and were driven by a 50.3% increase in swine prices, partially offset by a 2.9% decrease in volume.

Other lines

Sales of other lines increased 30.1% mainly due to higher by-product sales, such as poultry manure.

Natalie Berkhout

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