Sigma Alimentos, the Mexico-based food group, reported lower earnings in the first quarter of 2017 amid an increase in raw-material costs and the expense of new plants in Spain and the US.
The meat and dairy business, part of Mexican conglomerate Alfa, booked operating income of US$85m, down 28% on the first quarter of 2016 but a result Alfa said was “in line with guidance”.
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Alfa pointed to the impact of exchange rates on its raw material bill. The company said the prices of turkey thighs rose 26%, while milk was up 19%. The group also pointed to the effect of currency on Sigma’s results in Mexico when translated into US dollars. The Mexican market accounts for 41% of Sigma’s sales.
It also cited the start-up costs of a new facility in the Spanish city of Burgos and a new bacon plant in the US.
Sigma’s first-quarter revenues were US$1.35bn, level with those generated in the first three months of 2016. Excluding the impact of exchange rates, revenues rose 3%.
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