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Bachoco Announces Positive Results for 2nd Quarter

24 July 2013

MEXICO - Industrias Bachoco announced its unaudited results for the second quarter and first half periods ended 30 June 2013.

All figures have been prepared in accordance with International Financial Reporting Standard, and are presented in nominal million Mexican Pesos.

Rodolfo Ramos Arvizu, Chief Executive Officer of Bachoco, stated: "Seasonally, the second quarter is usually the strongest quarter of the year, and it seems this quarter will follow that trend.

"After a complicated start to the year, the company was able to surpass various difficulties and achieve positive results. All this was due to a strict control of expenses and productivity improvements, resulting from a close surveillance of procedures and constant implementation of processes and technologies that make us more productive day to day.

"The company's chicken sales volume decreased this quarter, as a consequence of the outbreak of avian flu that affected our breeding farms in the state of Guanajuato; at this time, this problem is under control but not totally eradicated, and our production is in the process of recovering normalized levels.

"On the other hand, the supply of our main products was stable in the markets we operate and prices were at solid levels, both conditions that are common during the second quarter in the poultry industry.

Lastly, the company maintains a solid Balance Sheet, and we recently announced a strategic acquisition of assets and inventory of a breeder operation in the US, which was financed with internal resources," said Mr Arvizu.

Net Sales

The company's second quarter net sales totaled Ps. 10,546.6 million, 12.1 per cent higher than the Ps. 9,404.0 million reported in the same period last year. This resulted from increases in sales across Bachoco's main business lines, mainly due to seasonality, as the second quarter tends to be the strongest quarter of the year, together with a stable supply and good price levels.

Second quarter sales of the company's US operations accounted for 19.3 per cent of total sales.

Total sales in the first half of this year increased 9.6 per cent when compared with the same period of 2012 on the back of a strong second quarter performance.

Gross Profit

Cost of sales totaled Ps. 8,040.0 million, 1.1 per cent lower than Ps. 8,127.3 million reported in the same period of 2012. The decrease in cost of sales was mainly due to the decline in chicken volume, as a result of inventory loss caused by the influenza outbreak.

At the same time, the company recognized a one-time additional charge of Ps. 87.8 million in the production cost, resulting from the loss of inventories described above.

As a result, Bachoco's gross profit in the second quarter totaled Ps. 2,506.6 million, resulting in a gross margin of 23.8 per cent, compared to a gross profit of Ps. 1,276.8 million, and a gross margin of 13.6 per cent reached in the same period last year.

Meanwhile, gross margin was 19.4 per cent in the first half of this year, compared to 15.3 per cent in the same period of 2012.

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