Mexico-based Industrias Bachoco, the parent company of OK Foods in Fort Smith, reported annual revenue growth of 5.2% for the year ending Dec. 3. The integrated poultry company is the largest in Mexico. While sales were higher overall, profits were down.
The company reported fourth-quarter sales growth of 2.6%, citing tighter operations margins in the quarter than for the year on the whole.
“We finished this quarter a very challenging second semester of 2018 in the two countries [Mexico and US] in which we participate,” said Rodolfo Ramos, general director of Bachoco. “Although with a tendency to improve, a large part of the prevailing conditions in the third quarter continued into the fourth quarter of 2018.”
He said the balance of supply and demand improved in Mexico, as did seasonal demand which allowed for price increases as the fourth quarter played out. He said margins were negatively impacted by exchange rates during the fourth quarter which was partially offset from the benefits of lower raw material costs.
With regard to the United States, “We continued to observe conditions of meat oversupply, which put pressure on chicken prices. However, this negative impact was partially offset by the integration of our Albertville operation which, as a net meat buyer, captured benefits from the price decrease,” Ramos said.
The company’s U.S. sales declined 4.8% in the fourth quarter. Meanwhile, sales in Mexico rose 5.9% from the year-ago period.
The company reported gross earnings of approximately $47.95 million in the fourth quarter, slightly lower than the year-ago period. Earnings per share based in U.S. currency were 7 cents per share for the quarter. For all of 2018, the company reported earnings per share of 30-cents (US). Overall net income, earnings were down compared to prior-year periods.
The company said it had net cash of $700 million (US) at the end of the fiscal year.
“We continue to focus on capturing efficiencies through all our processes and being close to our customers, which we believe is the key to continue growing,” Ramos noted.