Industrias Bachoco S.A.B. de C.V., Mexico's leading producer and processor of poultry products, has announced its unaudited results for the third quarter (3Q10) ended 30 September 2010.

Among the highlights are that the Company registered a 12.2 per cent increase in total sales when compared with the same 2009 quarter. EBITDA totalled 983.8 million pesos (MXP), with a margin of 15.6 per cent in 3Q10 versus an EBITDA margin of 3.6 per cent in 3Q09.

EPS for the quarter were up at MXP1.06 (US$1.01 per ADS) compared to a net loss per share of MXP0.09 ($0.08 per ADS) in 3Q09.

Cristobal Mondragon, Bachoco's CEO, commented: "The third quarter of the year was traditionally the weakest quarter for our Company, but this quarter it was quite different. We had a good balance between supply and demand in our chicken business line, which allowed us to capitalise our productivity and supply efforts and achieve stronger results during the third quarter.

"Swine and balanced feed business lines had a good performance, resulting in strong results for this business lines.

"Our egg business line, on the contrary, was affected by lower demand, impacting the volume and sales of these products.

"As a result, we reach a two-digit EBITDA for the quarter; and were able to reverse the net loss reported in 3Q09, registering a significant net profit for the quarter.

"Finally, I want to stress that our financial position remains solid with cash and cash equivalents of MXP3,778.4 million," concluded Mr Mondragon.

Third-quarter 2010 results

Net sales
Net sales for the quarter amounted to MXP6,297.3 million, 12.2 per cent above the MXP5,613.6 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, balanced feed and other business lines sales.

Operating results
Bachoco's third quarter gross profit was MXP1,490.6 million, with a margin of 23.7 per cent, higher than 12.0 per cent margin reported in 3Q09. This result is directly attributed to higher sales in our chicken business as well as lower cost of sales in our main business lines.
The Company registered an operating profit of MXP812.1 million, which is also greater than the operating profit of MXP35.3 million registered in the same 2009 quarter. The operating margin for the quarter was 12.9 per cent.
EBITDA amounted to MXP983.8 million, above the MXP207.5 million reported in the same 2009 quarter.

Net majority income
Net majority income for the third quarter amounted to MXP635.1 million, or MXP1.06 per share ($1.06 per ADS), compared to a net majority loss of MXP53.1 million, or MXP0.09 loss per share ($0.08 loss per ADS) reported in the same 2009 period.

Results by business segment
Sales of chicken products increased 17.7 per cent, when compared to 3Q09, as a result of a 3.0 per cent increase in volume and a 14.2 per cent increase in chicken prices. This strong increase in sales is attributed to a better balance between supply and demand in the Mexican industry as well as a stronger demand for our chicken products.
Sales of table eggs products decreased by 11.7 per cent during the third quarter, as egg prices decrease 10.3 per cent and volume fell by another 1.6 per cent. This is the result of a lower demand for egg products and the oversupply registered by the industry.
Sales of compund feed decreased 6.5 per cent following a 5.9 per cent decrease in prices and a 0.6 per cent decrease in balanced feed volume sold; nonetheless the Company managed to improve its gross margin from the same quarter of 2009.
The swine business line registered a solid third quarter. Sales were sound and rose 36.9 per cent, as swine prices increased 26.8 per cent and volume sold rose 7.9 per cent increase in the period. Demand for live swine was stronger during this quarter.
Sales of other lines decreased 18.6 per cent when compared with the same quarter of 2009, as sales of by-products declined.

Firsh nine months of 2010

Net sales
Net sales for the first nine months of 2010 amounted to MXP18,432.6 million, up 5.5 per cent from the MXP17,471.5 million reported in the same 2009 period. The increase was mainly driven by the 9.3 per cent increase in chicken sales and, 28.6 per cent in swine sales, both of which were partially offset by the 9.3 per cent decrease in table eggs sales and 7.4 per cent decrease in balanced feed sales.

Operating results
Bachoco's gross margin for the first nine months of the year was up 21.5 per cent, compared to the 18.5 per cent registered in the same 2009 period, and was mainly attributed to stronger results in our chicken business line.
The Company's operating profit was MXP1,937.1 million, compared to an operating profit of MXP1,388.7 million reached in the same period of 2009.
EBITDA amounting MXP2,449.4 million was, 30.7 per cent higher than the MXP1,874.3 million recorded in the first nine months of 2009.
EBITDA margin for the first nine months of 2010 was 13.3 per cent.
Taxes for nine months period were MXP402.7 million.

Net majority income
Net majority income for first nine months of the year was MXP1,527.7 million, or MXP2.55 per share ($2.42 per ADS), compared to net income of MXP916.5 million, or MXP1.53 per share ($1.45 per ADS) reported in the same 2009 period.

Balance sheet
Liquidity is solid with cash and cash equivalents amounting to MXP3,778.4 million as of 30 September 2010. The total debt outstanding as of 30 September 2010 was MXP763.6 million.

Capital expenditure
CAPEX during the nine months of 2010 amounted to MXP233.6 million, and was entirely financed with internally generated resources.

Further Reading

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