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News and analysis on the global poultry
and animal feed industries.
on April 22, 2009

Bachoco announces positive first quarter

Mexico’s leading poultry company recorded its highest sales level for a single quarter.

Bachoco, Mexico's leading producer and processor of poultry products, announced its un-audited results corresponding to the first quarter ended March 31, 2009.

The company recorded its highest sales level for a quarter in its history, with total sales increasing 23.7% compared to the first quarter of 2008.

Bachoco’s sales rose across its main business lines: 28.2% in chicken, 11.0% in table eggs and 45.9% in pork, as supply conditions improved in the market.

Cristobal Mondragon, Bachoco’s CEO, stated, "During the quarter, the Mexican economy continued slowing down following the global trend, and we continued to experience a further depreciation of the Mexican peso against the US dollar.

"In our industry, however, there was a favorable balance between supply and demand that allowed us to transfer part of our past cost increases to our prices in our main product lines. This, combined with our internal efforts to serve our clients properly by optimizing the product mix (we made adjustments to our supply relative to the same quarter of 2008), and improved efficiency, allowed us to increase total sales to a new historical record and achieve positive results in terms of operating and net income.

"We expect to continue delivering positive results in the second quarter of the year," concluded Mondragon.

Sales of chicken products increased 28.2% as chicken prices rose 30.0%; however, this result was partially offset by a 1.3% decrease in volume from the previous year. During this quarter the company was able to transfer part of its cost increases to chicken prices. Bachoco is Mexico top chicken producer, processing close to 672 million birds a year.  This segment accounted for 79% of its net sales during the first quarter.

Sales of eggs increased by 11.0% during the first quarter as egg prices rose 17.3% from the previous year, but were partially offset by a 5.4% decrease in volume mainly driven by the adjustment in the production level of the company. Bachoco is Mexico’s second largest egg producer, with 9 million layers in production, and it concentrates particularly on brown eggs. The egg sector accounted for just over 10% of the company’s net sales for the quarter.

Sales of other lines increased 30.1% mainly due to higher by-product sales, such as poultry manure. These represented 4% of the quarterly sales.

As far as Bachoco’s outlook goes, they expect the peso-dollar exchange rate to remain volatile and think the worldwide decrease in the costs of raw material will benefit the company in 2009. Bachoco expects a good balance between supply and demand in the second quarter.

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