Bachoco’s profitability will be pressured by price increases in raw materials: Bx+

The increase in the prices of raw materials, such as corn, and higher energy costs, will have put pressure on the profitability of Bachoco during the first quarter of this year, estimated Marisol Huerta, an analyst at Financial Group Go for More (Bx+).

Through a preliminary report on the financial results that the poultry sector company will publish on April 29, the specialist projected a 33.2% contraction in the station’s operating flow (EBITDA) during the first three months of 2022 compared to same period of 2021.

Likewise, it estimated that Bachoco’s net profit will amount to 1,665 million pesos, which will mean a decrease of 20.7% against the 2,100 million pesos reported in the first quarter of 2021.

“At the operating level, we expect a contraction in margins due to higher raw material prices (corn and soybean paste), as well as higher energy, overtime and freight expenses,” the report reads.

However, its quarterly sales would have grown 21.5%, to 23,522 million pesos between January and March of this 2022, compared to the same period last year.

Bachoco is one of the companies that has started the process to delist its shares from the Mexican Stock Exchange (BMV) and the New York Stock Exchange (NYSE), after 25 years of becoming a public company.

Therefore, the company is expected to provide more details of the voluntary takeover bid, for up to all of the shares representing the capital stock, which is about to be launched, said Marisol Huerta.

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