Bachoco net income drops in first quarter
Company affected by oversupply conditions in Mexico, volatile peso
Bachoco, Mexico's largest poultry company, saw its net income drop in the first quarter of fiscal year 2016, seeing a decline to MXN596.9 million (US$34.68 million) for the quarter, compared to the MXN1.266 billion (US$73.53 million) reported during the same quarter of fiscal year 2015.
The decline in net income comes in spite of a 3.8 percent increase in net sales for the company with operations in both Mexico and the United States.
"Conditions prevailing in the poultry industry in the second half of 2015 continued throughout most part of the first quarter of 2016. We observed over-supply conditions in Mexico, which put pressure on prices. In the U.S. market, we also continued to observe lower prices, mainly in leg quarters and breast, as compared with the equivalent quarter of 2015,” Rodolfo Ramos Arvizu, CEO of Bachoco, stated in a press release.
Arvizu added that volatility in the Mexican peso affected its cost of sales in Mexico, which resulted in lower operating margins.
Net sales in Mexico increased by 2 percent, while in the United States, net sales were up by 9.3 percent. O.K. Foods is Bachoco’s U.S. subsidiary.
Arvizu stated that the company plans continued focus on continual improvements and efficiencies within its operations, and it will closely monitor external economic factors that it cannot control.