Mexican conglomerate Alfa has posted a jump in quarterly food sales – but they were not enough to stem a fall in annual profits from the division.
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The company, which has interests in auto parts, petrochemicals, telecommunications and food, said sales from its Sigma food division rose 15% during the last three months of 2007.
Sigma saw domestic sales rise 11% to MXN5.3bn (US$489m) during the fourth quarter thanks to higher demand for its processed meats and cheese.
Internationally, Sigma’s sales leapt 47% to MXN951m, thanks to growth in the US, Central America and the Caribbean.
However, fourth-quarter operating income tumbled 27% to MXN488m due to, among other factors, rising dairy and meat costs.
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By GlobalDataThe Sigma division weighed in with an 11% rise in sales to MXN23.1bn throughout the whole of 2007 but Alfa admitted that rising costs had weighed on its food business over the full year. Sigma’s operating income fell 9% to just under MXN2bn.
“The company’s profitability has been under pressure over the past few quarters due to the combination of higher costs for raw materials, such as meat and milk, which all companies in the industry have been suffering from in the past year, plus expenses related to the launching of new products into the market,” Alfa said.
On a group-wide basis, Alfa’s full-year revenue jumped 34% to MXN106.8bn. Rising costs meant profits grew slower; operating income was up 5.5% to MXN6.5bn.
