CELAYA, MEXICO & GUANAJUATO, MEXICO – Industrias Bachoco reported unaudited results for the third quarter and first nine months of fiscal 2021. Net sales for the third quarter ended Sept. 30, 2021, totaled 20,229,000,000 pesos; 1,936,600,000 pesos or 10.6% higher compared with the 18,292,400,000 pesos reported in same quarter a year ago. The company attributed the increase to better prices in all Bachoco’s business lines.

Sales generated by the company’s US operations represented 26% compared to 28.3% reported in the third quarter of 2020, the company said.

On a segment basis, Bachoco reported net sales of poultry at 177,557,000,000 pesos while other products totaled 2,463,300,00 pesos in net sales.

“This was a typical third quarter for the company, in terms of seasonality, with chicken prices at their weakest as compared to the first half of the year,” said Rodolfo Ramos Arvizu, chief executive officer of Bachoco. “In México, we observed lower demand which negatively affected our prices. Unlike the US, where main commodity prices remained strong for most of the quarter.”

Net financial income for the quarter was 459,600,000 pesos, compared to a net financial expense of 267,500,000 pesos reported in the same period of 2020. The company attributed that result to higher exchange rate gains.

Operating income totaled 738,400,000 pesos which was 746,400,000 million pesos lower than the operating income of 1,484,800,000 pesos reported in the third quarter of 2020. This represents an operating margin of 3.7% for quarter, versus an operating margin of 8.1% in the same period of 2020.

“The decrease in operating income is mainly attributed to higher cost of sales as a result of higher raw material costs both in US dollars and peso terms,” the company said.

Cost of sales during the third quarter was 17,619,000,000 pesos, which was 2,511,400,000 pesos or 16.6% higher than the 15,107,600,000 pesos reported in the year-ago quarter. Bachoco said the increase was mainly attributed to higher unit cost in the main business lines mainly as a result of higher raw material costs in peso terms.

Arvizu said that in terms of cost of sales, prices of corn and soybean meal remained high when compared to previous years, fully impacting the company’s cost in México and the United States.

“As a result, our cost of sales was 16.6% higher than reported in 3Q20,” he said.

“The behavior in pricing and the increase in cost led us to an EBITDA of $1,127.4 million and a margin of 5.6% for the 3Q21 compared to the $1,828.2 million and margin of 10.0% of the same period of 2020,” Arvizu said. “On the other hand, for the nine months of the year 2021, the EBITDA margin was 10.7%, higher when compared to 6.4% EBITDA margin of the same period of 2020.”

Expenses reported for the third quarter were 80.7 million pesos compared with 99.2 million pesos reported in the year-ago quarter. This item mainly includes the sale of unused assets as well as hens and other by-products. Bachoco said these sales are recorded as expenses when the sale price is below the book value of those assets.

“Despite the challenging conditions of this quarter, the company remained in a healthy financial condition as we reached a net cash level of 18,269.7 million (pesos), which will allow us to continue to support our growth plans,” Arvizu said.

During the nine months ended Sept. 30, 2021, net sales totaled 60,447,500,000 pesos; 9,984,900,000 pesos or 19.8% more than the 50,462,700,000 pesos reported in the same period of 2020, Bachoco said.

Sales at the company’s US operations represented 24.7% of total sales in the first nine months of 2021, compared with 29.6% reported in the year-ago period.

The cost of sales totaled 49,659,700,000 pesos; 6,420,300,000 pesos or 14.8% higher than the 43,239,400,000 pesos reported in the 9M20.

“As a result, we reached a gross profit of $10,787.9 million and a gross margin of 17.8% in 9M21, when compared to $7,223.3 million of gross profit and a gross margin of 14.3% reached in the same period of 2020,” according to Bachoco.

Operating income was 5,386,100,000 pesos, which represents an operating margin of 8.9%, an increase from an operating income of 2,171,500,000 pesos and an operating margin of 4.3% in 2021.

Net financial income in the first nine months of 2021 was $682,200,000 pesos lower when compared to the net financial income of 2,036,800,000 pesos last year, the company said.