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 (4Q10) and 2010 full year ended 31 December 2010. All figures have been prepared in accordance with Mexican GAAP. Following Mexican Accounting Principles, all data is presented in nominal Mexican pesos.

Among the highlights are total sales for the fourth quarter up 9.9 per cent and 6.6 per cent for year. Chicken volume sold rose 7.2 per cent during 2010 compared with the previous year.

EBITDA margin was 12.9 per cent for year 2010, compared to an EBITDA margin of 8.9 per cent reached in the previous year Earnings per share in 2010 reached 3.34 pesos (MXP; US$3.24 per ADS), compared to MXP1.35 (US$1.30 per ADS) in 2009. Net income per share in the fourth quarter of 2010 of MXP0.80 (US$0.77 per ADS) compared to MXP0.18 loss per share (US$ 0.18 loss per ADS) in the same quarter of 2009.

Rodolfo Ramos, Bachoco's CEO, stated: "The fourth quarter is typically a good quarter for the Company, and this year was not the exception; we recorded solid results. Our chicken business line performance was strong during the quarter; we observed a good demand and prices were sound.

"Our egg business line continued to be affected by the oversupply conditions; nevertheless, prices and volume showed some recovery when compared with previous quarters.

"The rest of our business lines, swine, turkey, balance feed and others, continued to be profitable for the Company and in line with our strategies.

"Our financial position is healthy, with a strong cash position and a low indebtedness level.

"With this fourth quarter results, we recorded a successful year for the company in 2010. We achieved our goals and set a solid basis to face a 2011 challenging; we trust our team, which along the continuous improvement of our processes and an adequate administration of our raw materials inventories, will lead us to achieve new goals."

Fourth quarter 2010 results

Net sales
Net sales during the fourth quarter amounted to MXP6,374.6 million, 9.9 per cent above the MXP5,800.3 million reported in the same 2009 quarter. The good market conditions seen in the previous quarter continued, and as a result, the increase in sales 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 4Q10 gross profit was MXP1,287.7 million, with a margin of 20.2 per cent, which compares favourably with the MXP707.7 million profit and 12.2 per cent margin reported in 4Q09. This result is directly attributed to higher sales in the chicken and swine business.
The Company registered an operating profit of MXP584.5 million, which is also greater than the operating profit of MXP38.0 million registered in the same 2009 quarter. The operating margin for the quarter was 9.2 per cent compared to an operating margin of 0.7 per cent in 4Q09.
EBITDA amounted to MXP758.2 million (11.9 per cent margin), above the MXP205.2 million (3.5 per cent margin) reported in the same 2009 period.

Net majority income
Net majority income for the 4Q10 amounted to MXP477.1 million, or MXP0.80 per share (US$0.77 per ADS), compared to a net majority loss of MXP109.5 million, or MXP0.18 loss per share (US$0.18 loss per ADS) reported in the same 2009 period.

Quarterly results by business segment

Chicken
Sales of chicken products increased 14.9 per cent, when compared to 4Q09, as a result of a 17.8 per cent increase in chicken prices, which were partially offset by a decrease of 2.5 per cent in volume sold. The good balance between supply and demand in the 3Q10 extended to the last quarter of 2010.

Table eggs
Sales of table eggs products decreased by 15.2 per cent during the 4Q10, as egg prices decreased 10.6 per cent and volume fell by 5.1 per cent. These figures are a result of lower demand for eggs as well as the oversupply registered in the industry during most part of the year.

Balanced feed
Sales of balanced feed showed a slight improvement from previous quarters, sales declined 0.9 per cent as a result of a 2.6 per cent decrease in balanced feed prices, which were partially offset by an increase of 1.7 per cent in volume sold. This business line has been affected by the volatility of raw material prices.

Swine
The swine business line recorded again a strong quarter. Sales were sound and rose 21.8 per cent, as swine prices increased 20.7 per cent and volume sold rose 0.9 per cent increase in the period.

Other lines
Sales of other lines decreased 3.8 per cent when compared with the same quarter of 2009, as sales of by-products declined.

Year 2010 results

Net sales
Net sales for the year amounted to MXP24,807.2 million, up 6.6 per cent from the MXP23,271.8 million reported in the previous year. The increase was mainly driven by the 10.7 per cent increase in chicken sales and 26.8 per cent in swine sales, both of which were partially offset by the 10.8 per cent decrease in table eggs sales and 5.8 per cent decrease in balanced feed sales.