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Mixed Picture for Bachoco in Second Quarter

by 5m Editor
27 July 2010, at 10:15am

MEXICO - Industrias Bachoco has announced its 2010 second quarter results, which show strong growth in the pig sector while the poultry sector suffers from low prices.

Industrias Bachoco S.A.B. de C.V., Mexico's leading producer and processor of poultry products, has announced its unaudited results for the second quarter ended 30 June 2010.

The Company registered a 3.6 per cent increase in total sales when compared with the same quarter of 2009, and the chicken, eggs and swine volumes sold increased by 14.3 per cent, 0.5 per cent and 10.0 per cent, respectively.

Bachoco's EBITDA totaled 953.7 million pesos (MXP), with a margin of 15.4 per cent in 2Q10 versus an EBITDA margin of 17.0 per cent in 2Q09. Earning per share for the quarter were MXP1.03 (US$0.96 per ADS) versus MXP1.16 (US$1.08 per ADS) in 2Q09.

Cristobal Mondragon, Bachoco's CEO, commented: "The second quarter of the year is typically affected by seasonal effects, it used to be good for the Mexican poultry industry, and this year was no exception.

"We saw an adequate demand for our chicken products, our main product line, and by keeping a close control of expenses and productivity improvements it allowed us to achieve sound results during the quarter.

"In addition, we obtained good results in the swine, balance feed and other lines businesses, but weaker results in our egg business line.

"Since the second quarter of last year, we have had extraordinary strong prices and results, which affect comparisons; however, we reached a two-digit EBITDA and net margin for the second quarter.

"Following the business agreement made during the second half of last year, our Northeast operation is practically integrated and well coordinated with the rest of the company," concluded Mr Mondragon.

Net sales

Net sales for the second quarter amounted to MXP6,204.1 million, and were 3.6 per cent above the MXP5,991.1 million reported in the same 2009 quarter. This increase was mainly driven by higher chicken and swine sales, which were partially offset by a decrease in eggs and balance feed sales.

Operating results

Bachoco's second quarter gross margin, of 23.4 per cent was lower than 24.3 per cent reported in 2Q09. This result is directly attributed to lower sale prices of Bachoco's main line products.

The Company registered an operating profit of MXP783.1 million, which is lower than the operating profit of MXP858.6 million registered in the same 2009 quarter. The operating margin for the quarter was 12.6 per cent.

EBITDA amounted to MXP953.7 million, below the MXP1,019.3 million reported in the same 2009 quarter.

Net majority income (loss)

Net majority income for the second quarter amounted to MXP617.7 million, or MXP1.03 per share (US$0.96 per ADS), compared to a net majority income of MXP695.7 million, or MXP1.16 per share (US$1.08 per ADS) reported in the same 2009 period.

Results by business segment

Chicken
Sales of chicken products increased 8.5 per cent, when compared to 2Q09, producing as a result a 14.3 per cent increase in volume, which is mainly attributed to the business arrangement made during the second half of last year. This increase in volume was partially offset by the 5.1 per cent decline in chicken prices.

Table eggs
Sales of table eggs products decreased by 16.6 per cent during the second quarter, due to a 17.0 per cent decrease in eggs prices. However, lower prices were partially offset by a 0.5 per cent increase in the volume sold.

Balanced Feed
Sales of balanced feed decreased 11.0 per cent mainly due to the 1.9 per cent decrease in prices and 9.3% decrease in balance feed volume sold.

Swine
The swine business line was stable during the second quarter. Sales were strong and rose 33.8 per cent, as a result of a 21.6 per cent gain in swine prices and 10.0 per cent increase in volume sold.

Other lines
Sales of other lines decrease 20.6 per cent when compared with the same quarter of 2009, as sales of by-products declined.

First half 2010 - net sales

Net sales for the first half of 2010 amounted to MXP12,135.3 million, and were 2.3 per cent above the MXP11,857.9 million reported in 1H09. The increase was mainly driven by the 5.3 per cent increase in chicken sales, 24.4 per cent in swine sales, which were partially offset by the 8.3 per cent decrease in table eggs sales and 7.8 per cent decrease in balanced feed sales.