MEXICO: Poultry firm Bachoco swings to Q4 loss

By: just-food.com | 13 February 2009

The depreciation of the Mexican peso against the US dollar, as well as a weakened Mexican economy, has meant local poultry group Industrias Bachoco posted a loss for the last quarter of 2008.

Bachoco, Mexico's largest poultry processor, yesterday (12 February) booked a net loss of MXN873.5m (US$60.5m) for the three months to the end of December - against net income of MXN180.3m a year earlier.

Fourth-quarter net sales jumped 23.3% to MXN5.67bn thanks to higher sales of chicken, swine and table eggs but CEO Cristobal Mondragon said "several adverse conditions" had hit the company.

"During the quarter, the Company had to tackle several adverse conditions that again affected our results: inventory on hand at higher cost, currently being consumed, affected our cost of sales, and the Mexican economy slowed down following global trends, which led us to post negative results in terms of operating margin. In addition, the abrupt depreciation of the Mexican peso against the US dollar also affected our operating results, but mainly affected our net margins for the quarter," Mondragon explained.

The Bachoco boss, however, found some areas of encouragement. "We recorded the highest sales level for a quarter in the Company's history; particularly robust was the volume of chicken sold, our main product line, while reporting strong results in table eggs, our second main business line.

"In terms of EBITDA, we achieved positive results and by the end of the quarter we also registered positive operating levels that have spilled over to the beginning of 2009."

Bachoco's EBITDA amounted to MXN76.8m during the fourth quarter of 2008 - compared to MXN347.6m a year earlier.

For the year, while net sales rose 10.4% to MXN20.11bn, Bachoco recorded a net loss of MXN548.5m, against net income of MXN1.28bn for 2007.

Sectors: Emerging markets, Meat & poultry, Seafood