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Bachoco Announces Increased Net Sales

27 July 2012

MEXICO - Mexican meat and feed company, Industrias Bachoco S.A.B. de C.V. saw net sales increaseby 42.1 per cent in the second quarter of 2012.

EBITDA margin reached 7.0 per cent and earnings per share totalled Ps. 0.53 (Ps. 6.36 pesos per ADS), compared to Ps. 0.23 (Ps. 2.80 pesos per ADS) in the second quarter of 2011.

Bachoco's CEO said: "For the second quarter, Bachoco's poultry and balanced feed business lines demonstrated a proper balance between supply and demand. On the contrary, the egg business line experienced oversupply conditions and high production costs which narrowed margins in this business line when compared to the same period in 2011. Bachoco incorporated into the category of "other business lines" sales of live swine which were also affected by oversupply conditions in the second quarter of 2012.

"Generally speaking, we can conclude that Bachoco obtained favorable operating results year over year, however, when compared to the first quarter of 2012, results were lower.

"Our second quarter results were largely attributed to a reduction in operating expenses as a percentage of net sales as well as operating efficiencies in all of the Company's business processes. Our performance was affected by volatility stemming from increases in the price of soybean meal, one of Bachoco's key production cost components, as well as by the volatility of the Mexican peso versus the US dollar.

"The Company's financial position remains solid and in line with the strategic plan laid out for 2012."

The Company's second quarter net sales reached Ps. 9,404.0 million, 42.1 per cent higher than the Ps. 6,616.8 million reported in the second quarter of 2011. This resulted from increased sales throughout all business lines:

  • In particular, an increase in chicken sales of 48.3 per cent in 2012 compared to 2011, due to the integration of the subsidiary "OK Foods" (production facility in the US), which was consolidated into Bachoco in November of 2011.


  • Table egg sales were up 12.7 per cent in the second quarter of 2012 compared to teh same period in 2011, as a result of a 10.6 per cent increase in prices (prices were down 13.0 per cent when compared to the first quarter of 2012) and a 1.9 per cent rise in volume sold.


  • Bachoco's balanced feed business line rose 5.1 per cent, as a result of a 14.5 per cent price increase, partially offset by an 8.2 per cent decline in sales volume as a result of more supply and higher commodity prices.


  • The line item "other business lines", which includes swine, turkey and beef value-added products, as well as by-products, grew 37.7 per cent. This increase was mainly due to the growth in value-added beef products, resulting from the integration of the newly acquired plant located in Monterrey during the second half of 2011, as well as higher by-product sales.

Production costs per unit increased around 18 per cent during the second quarter of 2012 compared to 2011, as a result of higher input costs, primarily in corn, soybean meal, as well as the volatility of the exchange rate in the Mexican peso.

Gross profit for 2Q12 was Ps. 1,276.8 million resulting in a gross margin of 13.6 per cent, compared to a gross profit of Ps. 867.0 million with a margin of 13.1 per cent registered in 2Q11. Meanwhile, the gross margin was 15.3 per cent in the first half of 2012, compared to 13.7 per cent in the first half of 2011.

EBITDA for the second quarter of 2012 reached Ps. 663.0 million with a margin of 7.0 per cent, compared to an EBITDA of Ps. 328.5 million with a margin of 5.0 per cent reported in 2011.

EBITDA margin for the first half of 2012 was 9.1 per cent, compared to 5.5 per cent reported in the first half od 2011.

The comprehensive financial result was and income of Ps. 21.8 million in the second quarter of 2012, and Ps. 93.1 million in the first half of 2012. This was mainly due to interest earned on the Company's cash.

Total taxes for the second quarter of 2012 reached Ps. 85.2 million.

Net majority income was Ps. 316.8 million in the second quarter of 2012 (Ps. 0.53 pesos per share), compared to a net majority income of Ps. 140.0 (Ps. 0.23 pesos per share) reported in 2011.

Meanwhile net majority income for the first half of 2012 was Ps. 977.4 million (Ps. 1.63 pesos per share), compared to a net majority income of Ps. 295.5 million (Ps. 0.49 pesos per share) reported in the same period of 2011.

TheMeatSite News Desk



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