First quarter sales, income down for OK Foods parent company

Sales of poultry in the first quarter of 2019 for Industrias Bachoco – the parent company of Fort Smith-based OK Foods – declined 6.7% compared with the same quarter in 2018. Total U.S. sales for the company were down 4.7%.

The company, based in Celaya, Mexico, announced its first quarter results Monday (April 29). Total poultry and other sales for the company in the quarter reached $745 million ($14.323 million pesos), down from $795 million ($15.303 million pesos) in the same quarter of 2018. (U.S. dollar value based on April 29 currency exchange rate.)

Product sales in Mexico were 71.9% of total sales during the quarter, down from 72.47% in the 2018 quarter. Poultry sales were 90% of all sales in the quarter, unchanged compared with the same quarter in 2018.

First quarter net income was $15.73 million ($302.5 million pesos), well below the $65.56 million ($1.269 billion pesos) in the same quarter of 2018.

“In Mexico, the conditions prevailing in last two quarters of 2018, continued into the first quarter of this year. In general, we saw sluggish demand conditions that kept prices down for most of the quarter. Furthermore, strong results in 1Q18 made it a very challenging to compare with,” Bachoco CEO Rodolfo Ramos Arvizu noted in the earnings report. “In the US market, we observed also relatively low prices for most of 1Q19, with an improvement towards the end of the quarter.”

While sales and net income fell, sales volume was up in the quarter, a reflection of the price issue noted by Arvizu. Total sales volume in the quarter was 553,175 tons, up 1.2% compared with the same quarter in 2018. Poultry sales volume was 425,745 tons, up 0.8%. Higher expenses and lower costs for products pushed the operating income margin to 2.3% in the quarter, well below the 11.9% in the same quarter of 2018.

OK Foods, once one of the largest private employers in Arkansas, was acquired in a $93.4 million deal by Bachoco in October 2011. Bachoco was founded in 1952, is a vertically integrated company and its primary products are chicken, eggs, balanced feed, swine, and turkey and beef value-added products. The company manages more than 1,000 facilities, with nine production complexes and 64 distribution centers in Mexico, and a production complex in the United States. The company employs more than 27,000 people.