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Industrias Bachoco Announces Third Quarter 2012 Results



           Industrias Bachoco Announces Third Quarter 2012 Results

PR Newswire

CELAYA, Mexico, Oct. 24, 2012

CELAYA, Mexico, Oct. 24, 2012 /PRNewswire/ -- Industrias Bachoco S.A.B. de
C.V., "Bachoco" or "the Company", announced today its unaudited results for
the third quarter 2012 ("3Q12") and first nine months ("9M12) ended September
30, 2012. All figures have been prepared in accordance with International
Financial Reporting Standard ("IFRS"), and are presented in nominal million
Mexican Pesos ("Ps.").

HIGHLIGHTS (3Q12 vs. 3Q11)

  o Net sales increased 52.0%.
  o EBITDA margin reached 9.6%.
  o Earnings per share totaled Ps. 1.05 (Ps. 12.55 per ADS), compared to a net
    loss per share of Ps. 0.18 (-Ps. 2.10 per ADS) in 3Q11.

CEO COMMENTS

"Bachoco's third quarter results were sound, due to an adequate balance
between supply and demand in the Company's main business lines, improvements
in production efficiencies as a result of investments in productivity
projects, as well as a reduction in operating expenses as a percentage of
sales, which allowed Bachoco to offset cost increases, which have been driven
by sustained raw materials price increases.

The Company was able to sell all of its chicken and egg production, and
recovered a portion of price lags within these business lines.

In addition, Bachoco's U.S. complex continued to operate with positive
results, with its integration into the Company in-line with Bachoco's overall
strategy.

Furthermore, the Company successfully issued its first local bond during the
third quarter, which will be mainly used to pre-pay some debt as well as to
diversify and make the Company's debt structure more efficient. It is worth
nothing that the Company's financial position remains strong, with negative
debt net."

BOND ISSUANCE

On August 29, 2012, the Company announced a public issuance of local bonds
("Certificados Bursatiles") totaling Ps. 1,500 million, for a tenor of 5
years, maturing in 2017. The bonds issued by Bachoco will have an interest
rate of 28-day TIIE + 0.60%.

EXECUTIVE SUMMARY

The following financial information is expressed in millions of nominal
Mexican Pesos, with comparative figures for the same periods in 2011.

      QUARTERLY                             ACCUMULATED
In
millions  3Q11         3Q12         Var.    2011          2012          Var.
of pesos
Net sales Ps.  6,514.7 Ps.  9,901.0 52.0%   Ps.  19,173.8 Ps.  28,642.7 49.4%
Net sales 6,514.7      7,758.4      19.1%   19,173.8      22,721.6      18.5%
Mexico
Net sales
in the    0.0          2,142.6      100.0%  0.0           5,921.1       100.0%
U.S.
Cost of   5,955.1      8,342.6      40.1%   16,882.1      24,222.7      43.5%
sales
Gross     559.6        1,558.4      178.5%  2,291.7       4,420.0       92.9%
profit
Total     708.0        839.9        18.6%   2,100.8       2,498.5       18.9%
expenses
EBITDA^1  28.7         955.0        3231.0% 724.4         2,651.7       266.1%
Net
majority  (105.6)      627.5        N/A     190.2         1,604.9       743.7%
income
(loss)

^1Operating income plus depreciation and amortization.

The Company's 3Q12 net sales totaled Ps. 9,901.0 million, 52.0% higher than
the Ps. 6,514.7 million reported in 3Q11. This resulted from strong increases
in sales across all business lines. In particular, chicken sales increased
year-over-year mainly as a result of the integration of Bachoco's U.S.
subsidiary "OK Foods", which was consolidated in November 2011.

The Company's production costs continued to be negatively impacted by
persistently high input costs, primarily grain and soybean meal.

Gross profit in 3Q12 was Ps. 1,558.4 million resulting in a gross margin of
15.7 % compared to a gross profit of Ps. 559.6 million with a margin of 8.6%
in 3Q11. Meanwhile, gross margin totaled 15.4% in 9M12, compared to 12.0% in
the same period 2011.

In 3Q12, total expenses represented 8.5% over total sales, compared to 10.9%
over total sales in 3Q11.  This was as a result of strict expense control
across all of Bachoco's operations.

EBITDA in 3Q12 reached Ps. 955.0 million, for a margin of 9.6%, compared to
EBITDA of Ps. 28.7 million, for a margin of 0.4% in 3Q11. EBITDA margin in
9M12 was 9.3%, compared to 3.8% reported in the same period 2011.

The comprehensive financial result was income of Ps. 19.9 million in 3Q12, and
Ps. 113.3 million in the first nine months 2012. This was mainly due to
interest earned on the Company's cash position.

                       QUARTERLY                  ACCUMULATED
In million of pesos    3Q11      3Q12      Var.   2011       2012       Var.
Financial income       Ps.  74.6 Ps.  19.9 -73.3% Ps.  137.8 Ps.  113.0 -18.0%
(expense) net
   Financial income    94.3      64.5      -31.6% 192.3      207.3      7.8%
   Financial expense   19.7      44.6      126.4% 54.5       94.3       73.0%

Total taxes in 3Q12 reached Ps. 172.4 million; resulting from Ps. 117.0
million in income taxes and Ps. 55.3 million in deferred income taxes.

Net majority income was Ps. 627.5 million in 3Q12 (Ps. 1.05 per share),
compared to a net majority loss of Ps. 105.6 (-Ps. 0.18 per share) reported in
3Q11. Meanwhile, net majority income in the first nine months 2012 was Ps.
1,604.9 million (Ps. 2.67 per share), compared to net majority income of Ps.
190.2 million (Ps. 0.32 per share) reported in the same period 2011.

BALANCE SHEET

Cash and equivalents as of September 30, 2012 totaled Ps. 4,526.0 million
compared to Ps. 3,036.4 million reported as of December 31, 2011. Total cash
increased during the quarter mainly due to the income from the bond
issuance as well as cash generated by the Company.

As of September 30, 2012, total debt was Ps. 2,717.4 million pesos, compared
to Ps. 1,837.4 million reported as of December 31, 2011. The Company's debt is
broken down as follows:

In millions of pesos As of Dec 31, 2011 As of Sep 30, 2012 Var.
Short term debt      Ps.       1,453.0  Ps.        1,141.7 -21.9%
Long term debt       384.4              1,575.7            309.9%
Total debt           1,837.4            2,717.4            47.9%
Net debt^2           -1,199.0           -1,808.6           50.8%

^2 Net debts equal to: total debt minus total cash and equivalents.

CAPITAL EXPENDITURES

Total CAPEX as of September 30, 2012 totaled Ps. 664.6 million, mainly
allocated towards productivity projects and maintenance.

STOCK INFORMATION

As of September 30, 2012
Total Shares                                        600,000,000
Total free float                                    17.25%
Total shares in treasury (as of September 30, 2012) 67,441
Total shares in treasury (as of October 24, 2012)   299,761
Market cap (millions)                               Ps.  15,546
                                                    BMV         NYSE
Ticker Symbol                                       Bachoco     IBA
Closing price as of September 30, 2012              Ps.  25.91  $24.06
Maximums closing price within the 52 weeks          Ps.  26.35  $ 24.06
Minimums closing price within the last 52 weeks     Ps.  20.30  $ 17.40
Pricing yield in 2012                                    16.2%  26.2%

ANALYST COVERAGE

INSTITUTION                      ANALYST              CONTACT INFO
GBM- Grupo Bursatil Mexicano,    Miguel Mayorga Tena  mmayorga@gbm.com.mx
Casa de Bolsa
BBVA Research – Food & Beverage  Fernando Olvera
Analyst                          Espinosa de los      fernando.olvera@bbva.com
                                 Monteros
Actinver, Casa de Bolsa          Eduardo Fonseca Fons efonseca@actinver.com.mx

COMPANY DESCRIPTION

Industrias Bachoco is the leader in the Mexican poultry industry, and one of
the largest poultry producers globally.

The Company was founded in 1952, and became a public Company in 1997, via a
public offering of shares on the Mexican and The New York Stock Exchange.
Bachoco is a vertically integrated Company headquartered in Celaya, Guanajuato
located in Central Mexico. Its main business lines are: chicken, eggs,
balanced feed, swine, and turkey and beef value-added products. Bachoco owns
and manages more than a thousand facilities, organized in nine productive
complexes and 64 distribution centers in Mexico, and a productive complex in
the United States. Currently the Company employs more than 25,000 people. In
2011, the Company reported net sales of Ps. 27.7 billion.

The Company is rated AA (MEX), representing high credit quality by Fitch
Mexico, S.A. de C.V., and HR AA+ which signals that the Company and the
offering both have high credit quality by HR Ratings de Mexico S.A. de C.V.

DISCLAIMER

The document contains certain information that could be considered forward
looking statements concerning anticipated future events and performance of the
Company. The statements reflect management's current beliefs based on
information currently available and are not guarantees of future performance
and are based on our estimates and assumptions that are subject to risks and
uncertainties, including those described in our Annual Information Form, which
could cause our actual results to differ materially from the forward-looking
statements contained in this document. Those risks and uncertainties include
risks associated with ownership in the poultry industry, competition for
investments within the poultry industry, shareholder liability, governmental
regulation, and environmental matters. As a result, there can be no assurance
that actual results will be consistent with these forward-looking statements.
Except as required by applicable law Industrias Bachoco, S.A.B. de C.V.
undertakes no obligation to publicly update or revise any forward-looking
statement.

APPENDICES TO FOLLOW

For reference, some figures have been translated in millions of U.S. dollars
("USD") using an exchange rate of $12.86, that correspond to the close of
September 30, 2012, according to Mexico's National Bank.

 1. Consolidated Statement of Financial Position
 2. Consolidated Statement of Income
 3. Consolidated Statement of Cash Flows
 4. Derivatives Position Report

1.      Consolidated Statement of Financial Position

-Unaudited-                                                     U.S. Dollar
                                   As of Dec 31, As of Sept 30, As of Sept 30,
In million of pesos                2011          2012           2012 ^(1)
ASSETS
Cash and cash equivalents          $ 3,036       $ 4,526        $ 352
Total accounts receivable          2,333         2,129          166
Inventories                        5,809         6,728          523
Other current assets               712           284            22
Total current assets               11,890        13,666         1,063
Net property, plant and equipment  11,755        11,557         899
Other non current assets           840           1,285          100
TOTAL ASSETS                       $ 24,484      $ 26,508       $ 2,061
LIABILITIES
Notes payable to banks             1,453.0       1,141.7        89
Accounts payable                   2,422         2,260          176
Other taxes payable and other      606           722            56
accruals
Total current liabilities          4,481         4,123          321
Long-term debt                     384.4         1,575.7        123
Other non current liabilities      58            62             5
Deferred income taxes              2,522         2,577          200
Total long-term liabilities        2,965         4,215          328
TOTAL LIABILITIES                  $ 7,446       $ 8,338        $ 648
STOCKHOLDERS' EQUITY
Capital stock                      1,393         1,393          108
Commission in shares issued        459           459            36
Repurchased shares                 93            102            8
Retained earnings                  13,975        15,279         1,188
Others accounts                    1,059         873            68
Total majority stockholder's       16,978        18,105         1,408
equity
Minority interest                  60            64             5
TOTAL STOCKHOLDERS' EQUITY         $ 17,038      $ 18,170       $ 1,413
TOTAL LIABILITIES AND              $ 24,484      $ 26,508       $ 2,061
STOCKHOLDERS' EQUITY

 

2.    Consolidated Statement of Income

-Unaudited-
                                         U.S.                           U.S.
                   Third Quarter         Dollar   Accumulated           Dollar
                                         ^(1)                           ^(1)
In million of
pesos as of        2011    2012  Var.    2012     2011   2012   Var.    2012
September 30:  
Net sales          $ 6,515 $     52.0%   $        $      $      49.4%   $    
                           9,901           770    19,174 28,643          2,227
Cost of sales      5,955   8,343 40.1%   649      16,882 24,223 43.5%   1,884
Gross profit       560     1,558 178.5%  121      2,292  4,420  92.9%   344
total expenses     708     840   18.6%   65       2,101  2,498  18.9%   194
Operating income   (148)   719   -584.2% 56       191    1,922  906.4%  149
EBITDA Result      29      955   3231.0% 74       724    2,652  266.1%  206
Other income       (64)    64    -199.4% 5        (92)   17     -118.9% 1
(expense) net
Comprehensive
financing (cost)   75      20    -73.3%  2        138    113    -18.0%
income
Minority net       0       (2)   -734.2% (0)      (1)    (4)    322.2%  (0)
income
Income before
income tax, asset  (138)   800   -681.6% 62       236    2,048  768.1%  150
tax
Total income taxes (32)    172   -634.0% 13       46     443    869.6%  9
Net majority       (105)   628   -696.2% 49       190    1,605  743.7%  142
income
Net income         (106)   628   -694.3% 49       190    1,605  743.7%  142
Net income per     (0.18)  1.05  -696.2% 0.08     0.32   2.67   0.0%    0.24
share (EPS)
weighted average   600     600   0.0%    600      600    600    0.0%    600
shares outstanding
Gross margin       8.6%    15.7%         15.7%    12.0%  15.4%          15.4%
Operating margin   -2.3%   7.3%          7.3%     1.0%   6.7%           6.7%
EBITDA margin      0.4%    9.6%          9.6%     3.8%   9.3%           9.3%
Net margin         -1.6%   6.3%          6.3%     1.0%   5.6%           5.6%

3. Consolidated Statement of Cash Flow

-Unaudited-
                                                                U.S. Dollar
                                  As of Sept 30, As of Sept 30, As of Sept 30,
In million of pesos               2011           2012           2012 ^(1)
NET MAJORITY INCOME BEFORE INCOME 236            2,048          159
TAX
ITEMS THAT DO NOT REQUIRE CASH:   -              -              -
ITEMS RELATING TO INVESTING       571            651            51
ACTIVITIES:
      Depreciation and others     533            730            57
      Income (loss) on sale of    37             63             5
plant and equipment
      Other Items                 -              (142)          (11)
ITEMS RELATING TO FINANCING       38             55             4
ACTIVITIES:
      Interest income (expense)   38             55             4
      Other Items                 -              -              -
NET CASH GENERATED FROM NET       845            2,754          214
INCOME BEFORE TAXES
CASH GENERATED OR USED IN THE     (845)          (1,454)        (113)
OPERATION:
   Decrease (increase) in         141            22             2
accounts receivable
   Decrease (increase) in         (974)          (1,234)        (96)
inventories
   Decrease (increase) in         4              (152)          (12)
accounts payable
   Decrease (increase) in other   (16)           (91)           (7)
liabilities
NET CASH FLOW FROM OPERATING      (1)            1,301          101
ACTIVITIES
INVESTING ACTIVITIES
NET CASH FLOW FROM INVESTING      (551)          (342)          (27)
ACTIVITIES
      Acquisition of property,    (548)          (665)          (52)
plant and equipment
      Proceeds from sales of      75             20             2
property plant and equipment
      Other Items                 (79)           304            24
CASH FLOW SURPLUS (REQUIREMENTS
OF) TO BE USED IN
FINANCING ACTIVITIES              (552)          959            75
Net cash provided by financing    (367)          531            41
activities:
   Proceeds from loans            895            2,354          183
   Principal payments on loans    (715)          (1,485)        (115)
   Dividends paid                 (300)          (300)          (23)
   Other items                    (247)          (39)           (3)
NET INCREASE (DECREASE) IN CASH   (911)          1,490          116
AND EQUIVALENTS
CASH AND INVESTMENTS AT THE       4,177          3,036          236
BEGINNING OF YEAR
CASH AND INVESTMENTS AT END OF    3,266          4,526          352
PERIOD

 

4.      Derivatives Position Report

Third Quarter 2012
Thousands of Mexican Pesos, as of September 30, 2012
 Type of                Notional Value of the Related Commodity    Reasonable Value Amounts Guaranties
 Financial  Objective                                                               Due     Required
 Instrument                      3Q-2012          2Q-2012          3Q-2012 2Q-2012  By Year
 Forwards
 and knock  Hedge and   $315,154 $12.86           $13.34           $       -$10,238 2012
 out        negotiation                                            2,458
 forwards.
                                 Month    Price   Month    Price
                                 Corn             Corn
                                 in USD per       in USD per
                                 bushel           bushel
                                 DEC-2012 $7.5625 JUL-2012 $6.7250
                                 MAR-2013 $7.5950 SEP-2012 $6.2850                          The deals
                                 MAY-2013 $7.5650 DEC-2012 $6.3475                          consider
 Futures                         JUL-2013 $7.4900 MAR-2013 $6.4375                          the
 for corn                        SEP-2013 $6.5900 MAY-2013 $6.4775                  2012    possibility
 and        Hedge       $111,824                  JUL-2013 $6.5175 $15,892 $ 23,548 and     of margin
 Soybean                         Soybean Meal     Soybean Meal                      2013    calls but
 meal                            In USD per ton   In USD per ton                            not another
                                 DEC-2012 $486.90 AUG-2012 $429.50                          kind of
                                 JAN-2013 $483.90 SEP-2012 $424.00                          guarantee
                                 MAR-2013 $468.40 OCT-2012 $416.30
                                 MAY-2013 $447.00 DEC-2012 $413.10
                                 JUL-2013 $435.40 JAN-2013 $408.10
                                                  MAR-2013 $387.70
                                                  MAY-2013 $373.90
                                                  JUL-2013 $371.80
 SWAP,                           TIIE to  4.8075%                  $       $        2012 y
 interest   Hedge       $330,939 28                                 490       -     2013
 rate                            days

 

Notes:

  o The total financial instruments do not exceed 5% of total assets as of
    September 30, 2012.
  o A negative value means an unfavorable effect for the Company.
  o The notional value represents the net position as of September 30, 2012 at
    the exchange rate of Ps.12.86 per USD.

 

 

Third Quarter 2012
Thousands of Mexican Pesos, as of September 30,             PROBABLE SCENARIO
2012
             Reasonable Value of the Related
Type of      Value      Commodity               Effect on
Financial    as of                              the Income  Effect on the Cash
Instrument   September  Reference Value         Statement   Flow^(3)
             30,
             2012       -2.5%   2.5%    5.0%                -2.5%   2.5%    5.0%
Forwards and $        
knock out               $12.54  $13.18  $13.50   Direct     -$5,421 $4,372  $3,918
forwards^(1) 2,458
                        -5%     5%      10%                 -5%     5%      10%
Futures of              $7.1844 $7.9406 $8.3188
corn: ^(2)   $                                   The effect                 $
Futures of                                      will        $12,205 $19,579 23,266
soybean      15,892     $462.56 $511.25 $535.59 materialize
meal: ^(2)                                      as the
Options for  $                                  inventory
corn and                                        is
soybean meal     -                              consumed 
^(2)
                        -2%     -1%     1%                  -2%     -1%     1%
SWAP         $                                              -$      -$      $
interest                2.8075% 3.8075% 5.8075%  Direct      3,173   1,341  2,321
rate^(4)      490

 

Third Quarter 2012
Thousands of Mexican Pesos, as of September 30, 2012                           PROBABLE
                                                                               SCENARIO
             Reasonable Value of the Related
             Value      Commodity                 Effect on
Type of      as of                                the       Effect on the Cash Flow(3)
Instrument   September  Reference Value           Income
             30,                                  Statement
             2012       -50%  -25%  25%    50%              -50%      -25%     25%     50%
Forwards and $                                                                         $
knock out               $6.43 $9.65 $16.08 $19.29  Direct   -$155,119 -$76,330 $19,079 38,369
forwards^(1)  2,458

 

Notes:

  o A negative value means an unfavorable effect for the Company.
  o Corn and soybean meal are presented in U.S. dollars per bushel in the case
    of corn and per short-tones in the case of soybean meal.
  o Even when table set above shows corn and soybean prices for contracts of
    December 2012, the effect on the Company's cash flow corresponds to the
    total positions effects.

^(1) The reference value is the exchange rate of Ps. $12.86 per USD, as of
September 30, 2012.

^(2) The reference value is the Futures of corn for December 2012, is $7.5625
USD/bushel and Soybean meal for December 2012, $486.90 USD/ton.

^(3) The Company has credit lines with the majority of its counterparts, so
that the effect in cash flow is lower than the amount shown.

^(4) The reference value is the 28 days TIIE rate of 4.8075%, as of September
30, 2012.

 

SOURCE Industrias Bachoco S.A.B. de C.V.

Contact: IR Contacts, Daniel Salazar, CFO, and Claudia Cabrera, IRO,
+011-52-461-618-3555, inversionistas@bachoco.net, both of Industrias Bachoco
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