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Bachoco Reports Record Chicken Sales

by 5m Editor
5 February 2010, at 10:52a.m.

MEXICO - Industrias Bachoco has announced its fourth quarter and 2009 full year results. Chicken sales volume reached a record, while sales for the egg and pig sectors were strong.

Industrias Bachoco S.A.B. de C.V., Mexico's leading producer and processor of poultry products, has announced its unaudited results for the fourth quarter (4Q09) and full year ended 31 December 2009. All figures have been prepared in accordance with Mexican GAAP. In line with the Mexican Accounting Principles, data is presented in nominal Mexican pesos (MXP).

Total sales for the fourth quarter rose 2.2 per cent and 15.7 per cent during 2009, and the Company continued to record historic chicken volume sales.

EBITDA margin was 3.5 per cent for 4Q09 and 8.9 per cent in 2009, up from 4.2 per cent in 2008. Earnings per ADS in 2009 reached US$1.23 compared to a net loss of $0.84 USD in 2008. Loss per ADS in 4Q09 at $0.17 was better than the loss recorded in the same year-ago period. In the fourth quarter, the Company recorded a one-time charge related to deferred taxes following the changes in the Mexican income tax rate.

CEO's comments

Cristobal Mondragon, Bachoco's CEO, stated: "During the fourth quarter, we observed lower raw materials prices, which coupled with our efficiency strategy, allowed us to improve the cost of sales.

"The chicken industry was also stable during the quarter; there was a good level in the supply and demand balance, especially around the holiday season. However, prices remained under pressure, and were mainly attributed to a weaker purchasing power of the Mexican population as the economy slowed down. We expect prices to improve as the Mexican economy shows signs of recovery.

"Our egg business line was strong during the year given that eggs are the lowest-cost animal protein in Mexico. Also, our balanced feed business line results improved during the year, even when the sales volume continued to be affected.

"At the year end, the balance was positive, reaching significant improvements from last year: we recorded the highest chicken volume sales, and positive operating and net margins, while we increased our chicken market share as a result of our latest business acquisition. Our leadership in Mexico remains solid as well as our financial position."

Net sales

Net sales for the fourth quarter amounted to MXP5,800.3 million, 2.2 per cent above the MXP5,674.3 million reported in 4Q08. This increase was mainly driven by a 1.6 per cent increase in chicken sales, a 6.3 per cent increase in table eggs sales, and a 2.8 per cent increase in swine sales; which were partially offset by a 2.3 per cent decrease in balanced feed sales.

Operating results

Bachoco's fourth quarter gross margin was 12.2 per cent, above the 9.8 per cent registered in the same 2008 quarter. The increase in the gross margin is attributed to the 5.5 per cent increase in sales volume, which was partially offset by a 3.2 per cent decrease in the sale prices.

The company had an operating profit of MXP38.0 million, compared to an operating loss of MXP79.1 million in the same 2008 quarter. The operating margin for 4Q09 was 0.7 per cent.

EBITDA amounted to MXP205.3 million, compared with MXP76.8 million reported in the same 2008 quarter.

Results by Business Segment

Chicken
Sales of chicken products increased 1.6 per cent, while chicken prices decreased 6.2 per cent during the quarter and chicken volume grew 8.4 per cent. Even when the sales and sales volume increased during the quarter, chicken prices remained affected, and declined significantly from 4Q08, mainly due to the weaker purchasing power of Mexican consumers.

Table eggs
Demand for table egg products remained strong during the fourth quarter. Sales of table eggs increased by 6.3 per cent during the quarter as egg volume rose 6.4 per cent from the previous year; this result was partially offset by a slight decrease in egg prices of 0.1 per cent.

Balanced feed
Sales of balanced feed decreased by 2.3 per cent, mainly due to a 0.3 per cent increase in prices and 2.0 per cent decrease in balanced feed volume. This business line remained affected by higher costs and decreased demand.

Swine
The swine business line was stable during the 4Q09. Sales rose 2.8 per cent during the fourth quarter, as a result of a 2.4 per cent gain in swine prices and a 0.4 per cent increase in swine volumes when compared to the same 2008 quarter.

Other lines Sales of other lines increased 9.5 per cent when compared with 4Q08. The main products sold were turkey and by-products.

Net sales

Net sales for the year 2009 amounted to MXP23,271.8 million, 15.7 per cent above the MXP20,109.6 million reported in 2008. The increase was mainly driven by the 17.8 per cent increase in chicken sales, 11.8 per cent in table eggs sales and 11.7 per cent in swine sales; which were partially offset by a slight decrease in balanced feed sales of 0.4 per cent.

Operating results

The Company's gross margin for 2009 was 16.9 per cent, higher than the 13.1 per cent recorded in 2008, and was attributed to higher sales in most of our business lines, mainly in chicken and table eggs products. The Company's operating profit, of MXP1,426.7 million, compares favourably to an operating profit of MXP233.2 million recorded in 2008. EBITDA, of MXP2,079.5 million, was well above the MXP837.8 million recorded in 2008. EBITDA margin for year 2009 was 8.9 per cent.

Further Reading

- You can view the full report by clicking here.