Bachoco recently reported an 8.5 percent decline in net income for the second quarter of fiscal year 2018, but a 7.3 percent increase in net sales.

The quarter ended on June 30.

In a press release, Bachoco, a Mexico-based poultry company that also has operations in the United States, stated that it achieved a net income of MXN1.58 billion (US$80 million), down from the MXN1.72 billion (US$90 million) from the same quarter of the 2017 fiscal year.

However, its net sales of MXN16.2 billion (US$870 million) was a 7.3 percent increase from the MXN15.1 billion (US$810 million) in net sales from the second quarter of the 2017 fiscal year.

Rodolfo Ramos Arvizu, Bachoco CEO, called the second quarter “challenging in both our Mexico and U.S. operations.”

“In Mexico, cost of raw materials increased, in part due to a weaker Mexican peso, offsetting the increases in prices leading to pressure in margins. In the U.S., we observed atypical lower prices in the white mat market which combined with higher cost of raw materials, resulted in a difficult comparison versus 2Q17,” he stated.

“Overall, the good balance between supply and demand allowed us to observe a net increase in price of our main products and to increase total sales by 7.3 percent in the quarter and 9.4 percent in the semester, compared to the same periods of 2017.”

Net sales breakdown by geography

Bachoco’s net sales in Mexico for the quarter were MXN11.6 billion (US$620 million), a year-over-year increase of 1.5 percent. In the United States, however, the net sales for the quarter were MXN 4.66 billion (US$250 million), a year-over-year increase of 24.9 percent.

O.K. Foods is Bachoco’s U.S. subsidiary.

Looking forward to the third quarter

Ramos, in the press release, stated that as the company enters the third quarter, it is observing prices in Mexico trending down, which is unusual for a third quarter. However, Ramos said, raw material costs are declining and the exchange rate on the Mexican peso versus the U.S. dollar has strengthened.

“At the same time, we keep working to capture efficiencies across our processes in order to be the best option for our customers,” he said.