Industrias Bachoco profits down 93 percent in 2011

Industrias Bachoco made 127.8 million pesos (US$10.06 million) in net profit in 2011, down 93.6 percent from 2010's 2.005 billion pesos (US$157.85 million), according to the company's latest financial report. Industrias Bachoco experienced large increases in production costs, driven by global increases in prices of corn, soybean meal and other components of production, according to the company. This, combined with challenging economic conditions and high depreciation of the Mexican peso at the end of 2011, led the company to post negative profit for the fourth quarter (-57.9 million pesos [US$4.56 million]) and weak results for 2011. "We were not able to fully transfer increases in our poultry production costs to our customers, mainly due to a strong supply of chicken coupled with weak demand for chicken during most of the year, and a 13 percent depreciation of the peso in 2011, resulting in a 2.9 percent negative operating margin for the quarter and 0.2 percent negative operating margin for 2011," said Rodolfo Ramos, CEO of Industrias Bachoco. "Nonetheless, we were able to reach a positive EBITDA (earnings before interest, taxes, depreciation and amortization) result for the quarter and for the year, as well as posting a net profit in year 2011. We ended the year with a positive outlook for the company, with positive results in both our Mexican and U.S. operations registered in December."