Industrias Bachoco S.A.B. de C.V., Mexico's leading producer and processor of poultry and food products, has announced its unaudited results for the third quarter (3Q11) and nine month period ended September 30, 2011. All figures have been prepared in accordance with Mexico's Generally Accepted Accounting Principles (GAAP), and are presented in nominal Mexican pesos (MXP) per Mexican GAAP.

Compared to the same period last year, net sales in 3Q11 rose 3.5 per cent to MXP6,514.7 million. Chicken sales were 0.7 per cent higher, while table egg sales were up 8.8 per cent.

EBITDA margin was 0.5 per cent in 3Q11, compared to 15.4 per cent reported for 3Q10. Net majority loss per share in 3Q11 of MXP0.178 (US$0.154 per ADS), compared to net majority income per share of MXP1.058 (US$0.915 per ADS) in 3Q10.

Rodolfo Ramos, Bachoco's Chief Executive Officer,commented: "The third quarter's results were sharply affected by several external conditions that led the Company to post negative net income in the quarter, mainly; the continuous increase in the cost of grain, and oversupply conditions within the Mexican poultry industry, which led to a reduction in our chicken prices compared with the same quarter of 2010.

"On a positive note, total sales increased across the Company's main product lines, preserving positive EBITDA for the quarter, while adequate administration of our financial instruments softened the impact of the peso's depreciation when compared to the US dollar.

"Bachoco's aim is to maintain strict cost and expense controls, productivity improvements, while serving our markets and maintaining a healthy financial position," said Mr Ramos.

Quarterly results by business line

Chicken products sales in 3Q11 grew 0.7 per cent compared to 3Q10, which resulted from a 3.9 per cent increase in sales volume, partially offset by a 3.1 per cent decrease in chicken prices as industry supply for chicken products rose during the period.

Sales of table eggs increased 8.8 per cent during 3Q11 driven by a 16.3 per cent increase in prices, partially offset by a 6.4 per cent drop in sales volume.

The balanced feed business experienced strong improvement during 3Q11 with a 35.7 per cent increase in sales when compared to 3Q10, driven by a 19.9 per cent increase in balanced feed prices and 13.2 per cent greater sales volume.

As a result of a larger supply of swine in the Mexican market, the Company's sales decreased 8.3 per cent, resulted from a 5.9 per cent decrease in prices and 2.5 per cent decrease in sales volume.

Sales of other business lines increased 14.8 per cent when compared to 3Q10, as sales of beef products increase during the period.

Accumulated 2011 results

Net sales in the first nine months 2011 totalled MXP19,173.8 million, which represents a 4.0 per cent increase from the same period in the previous year. The increases in net sales were driven by an increase of 32.6 per cent in balanced feed sales, and 3.7 per cent in chicken sales. This result was offset by a 5.7 per cent decline in table egg sales, as well as 9.1 per cent decrease in other business sales.

Gross profit in the first nine months of 2011 totalled MXP2,285.9 million, 42.3 per cent below the MXP3,963.7 million reported in the same period 2010. Gross margin in the first nine months 2011 reached 11.9 per cent compared to 21.5 per cent in the same period 2010. This was attributed to a 16.7 per cent increase in total cost of sales.

The Company's operating profit in the first nine months 2011 totalled MXP185.1 million, less than MXP1,937.1 million in the same nine-month period 2010. The operating margin in the first nine months of 2011 was of 1.0 per cent, compared to 10.5 per cent in the same period 2010.

EBITDA in the first nine months of 2011 amounted to MXP718.6 million, 70.7 per cent below the MXP2,449.4 million reported in the same period 2010. EBITDA margin declined from 13.3 per cent to 3.7 per cent in 2011.