A lower demand for its poultry products and a higher cost of sales played a significant factor in a dismal third quarter for Bachoco’s 2018 fiscal year.
The Mexico-based company reported a net loss of MXN187.5 million (US$9.63 million) , compared to a net income of MXN997.9 million (US51.3 million) during the third quarter of the 2017 fiscal year.
“We faced a more than expected, challenging third quarter in our Mexico and U.S. operations,” said Rodolfo Ramos Arvizu, chief executive officer of Bachoco. “In Mexico, as it is typical for a 3rd quarter, we observed a lower demand, and our prices were affected negatively, even more than we expected and on the other hand, we also saw higher cost of sales. The combination of those two conditions caused an important adjustment in our margins.”
In the U.S, Bachoco observed oversupply conditions for all main animal proteins which continued pushing poultry prices to low levels, Ramos explained, which impacted margins also in Bachoco’s U.S. operation, O.K. Foods.
Net sales
Bachoco’s net sales for the third quarter dropped 0.7 percent to MXN14.1 billion (US$724 million). Broken down by geography, its net sales in Mexico were MXN9.9 billion (US$510 million), a 0.5 percent drop, while in the U.S., net sales were down 1.1 percent to MXN4.25 billion (US$218.3 million).
Financial improvement anticipated
Ramos said that despite the challenging conditions of the third quarter, Bachoco’s financial structure continues to be strong, as the company ended the quarter with a net cash position of MXN12.4 billion (US$637 million).
“We are confident that our financial discipline, our focus on capturing efficiencies and being close to our customers, will allow us to improve our results as soon as industry conditions recover and we will be able to take advantage of the opportunities that may arise in the future,” he said.
