Bachoco reports a 1% increase in sales in 2019

Industrias Bachoco, the leading poultry company in Mexico and one of the largest poultry companies in the world, has announced its unaudited results for both the fourth quarter of 2019 and the entire year.

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(Benjamin Ruiz)
(Benjamin Ruiz)

Industrias Bachoco, the leading poultry company in Mexico and one of the largest poultry companies in the world, has announced its unaudited results for both the fourth quarter of 2019 and the entire year.

As reported, net sales decreased 1.8% in the fourth quarter of 2019, but for the full year, they grew 1%, when compared to the same periods of 2018.

On the other hand, EBITDA was of MXN517.5 million (US$27.8 million), with a margin of 3.8% in the last quarter of 2019, less than that of the same fourth quarter of 2018. The 2019 EBITDA was of MXN5.2 billion (US$0.28), with a margin of 8.5%, greater than 2018.

Since 1997, Bachoco has been listed on the Mexican Stock Exchange and the New York Exchange. It should be noted that it has these scores: “AAA (MEX),” which is the maximum assigned by Fitch Mexico, as well as “HR AAA” of the highest credit quality granted by HR Ratings Mexico. This time, earnings per share were of MXN0.26 pesos in the last quarter and MXN5.26 in 2019.

The slowdown in the Mexican economy came swiftly, particularly in the fourth quarter of 2019. Rodolfo Ramos, CEO of Bachoco, said that, despite this situation at the end of 2019, “we managed to end the year with positive results in terms of profitability, compared to 2018”.

“In Mexico, during the quarter, we observed certain conditions of oversupply in our poultry sector, which, combined with lower demand, pushed down prices and volume, particularly in our traditional markets,” he said, which coincides with the situation notified by several poultry farmers in the country.

As for the United States operation, "At the end of the quarter, we began to observe a recovery in prices, mainly of the leg quarters," said Ramos. However, "a lower volume sold and the appreciation of the Mexican peso compared to the U.S. dollar had a negative impact on our sales," in that country.

According to the data reported, Bachoco's business is still concentrated in Mexico, with 72.5% of sales, while in the United States it is 27.5%.

In terms of volume, "feed exceeded our expectations, achieving a double-digit growth in this segment, both for the quarter and for 2019 against the same periods of 2018". However, poultry accounted for 90.3% of the 2019 sales.

On the other hand, Ramos said that good feed conversion rates and the appreciation of the peso against the U.S. dollar helped offset corn prices, which did have a negative impact when comparing quarter to quarter, in terms of costs. They also decreased approximately 5% in operating expenses quarter-over-quarter, thanks to the effort and improvement projects to keep them under control.

In addition, Ramos said that the company maintains “a solid financial structure”, with a net cash of MXN14.25 billion and CAPEX of MXN2,02 billion at the end of the quarter, which allows Bachoco to continue with the growth plans.

Fully integrated, Bachoco’s corporate headquarters are located in central Mexico, in Celaya, Guanajuato. Its main business lines are: chicken, eggs, feed, pork, and turkey and beef value-added products. Subject to confirming its production data soon, according to the Industria Avícola database, in 2018 Bachoco produced in Mexico 622 million chickens, and had 12.2 million layers in production.

The company has more than a thousand facilities, organized in nine production complexes and 64 distribution centers in Mexico and a production complex in the United States.

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