Bachoco Announces First Quarter 2013 Results
CELAYA, Mexico, April 25, 2013 /PRNewswire/ -- Industrias Bachoco S.A.B. de C.V., "Bachoco" or "the Company", (NYSE: IBA; BMV: Bachoco) announced today its unaudited results for the first quarter period ("1Q13") ended March 31, 2013. All figures have been prepared in accordance with International Financial Reporting Standard ("IFRS"), and are presented in nominal million Mexican Pesos ("Pesos" or "Ps.").
HIGHLIGHTS 1Q13
- Net sales increased 7.0%
- EBITDA margin was 9.5%
- Earnings per basic and diluted share totaled Ps. 1.06, or Ps. 12.76 per ADR.
CEO COMMENTS
Mr. Rodolfo Ramos Arvizu, Chief Executive Officer of Bachoco, stated, "In the first quarter of 2013, prices of our main raw materials stabilized with a downward trend; also, we observed a good balance between supply and demand across our main business lines.
Based on those facts, Bachoco reported satisfactory results, with total sales up 7.0%, with operating and EBITDA margins of 7.6% and 9.5% respectively, as a result of our productivity and commercial efforts. In particular, we registered important improvements in operating expenses, which came in at 8.0% over net sales, among the lowest percentages in the Company's history.
On the other hand, we faced sanitary challenges, as some of our farms were affected by an outbreak of influenza H7N3, which only affects birds; we immediately reinforced our bio-security programs, and executed several measures to mitigate negative effects in this regard and to assure our standard quality service to our customers. As of today, the outbreak of influenza is under control but not yet eradicated.
Due the influenza outbreak, in the first quarter we recognized a one-time charge in our production cost of Ps. 220.8 million, mainly attributed to the loss of inventory.
Finally, I would like to reiterate the strong financial position that the Company maintains, with negative net debt of Ps. 3,630.3 million at the end of the first quarter."
EXECUTIVE SUMMARY
The following financial information is expressed in millions of nominal Pesos, except in amounts per Share or per ADR, with comparative figures for the same period in 2012.
| SUMMARY |
|||||
| As of March 31, |
|||||
| In millions of pesos |
1Q12 |
1Q13 |
Var. |
||
| Net sales |
Ps. |
9,337.6 |
Ps. |
9,988.8 |
7.0 % |
| Net sales Mexico |
7,469.0 |
7,719.8 |
3.4 % |
||
| Net sales in the U.S. |
1,868.6 |
2,669.0 |
21.4% |
||
| Cost of sales |
Ps. |
7,750.7 |
Ps. |
8,509.8 |
9.8 % |
| Gross profit |
1,586.9 |
1,479.1 |
(6.8)% |
||
| Selling, general and administrative expenses |
801.3 |
795.0 |
(0.8)% |
||
| Other income |
6.1 |
77.1 |
(1,363.3)% |
||
| Operating Income |
779.6 |
761.1 |
(2.4)% |
||
| Net profit |
662.3 |
637.7 |
(3.7)% |
||
| Weighted average Shares outstanding (thousands) |
598,345 |
599,972 |
|||
NET SALES
Net sales in 1Q13 totaled Ps. 9,988.8 million, 7.0% higher than the Ps. 9,337.6 million in net sales reported in 1Q12. The increase was mainly due to 21.4% increase in sales of our U.S. operations, which represent 22.7% of the Company's total sales.
GROSS PROFIT
Cost of sales in 1Q13 totaled Ps. 8,509.8 million, 9.8% higher than Ps. 7,750.7 million in cost of sales reported in 1Q12. Even when prices of our main raw materials stabilized with a downward trend, they were slightly higher than in the first quarter of 2012.
The Company recognized a one-time charge of Ps. 220.8 million in the production cost resulting from the loss of inventories due to the outbreak of influenza in some Company's farms in the state of Guanajuato.
As a result, gross profit in 1Q13 was Ps. 1,479.1 million, resulting in a gross margin of 14.8%, compared to a gross profit of Ps. 1,586.9 million, with a gross margin of 17.0% in 1Q12.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
The Company continued implementing expense cuts and practiced strict controls over all operating expenses. As a result, in 1Q13, operating expenses represented 8.0% of net sales, which is among the lowest percentages recorded in the Company's history, compared to 8.6% in 1Q12.
OTHER INCOME NET
Beginning this quarter, and following NIIF provisions, we include other income and other expenses as part of our operating income within this MD&A.
Other income (expense) includes the selling of unused assets as well as the selling of hens and other by-products. We record such sales as expenses when the sale price is lower than the book value of those assets.
In 1Q13, we recorded other income of Ps. 77.1 million, compared with Ps. 6.1 million of other income reported in 1Q12; this is mainly attributed to sale of some assets.
OPERATING INCOME
Operating income in 1Q13, totaled Ps. 761.1 million with a 7.6% of operating margin, compared with Ps. 779.6 million and 8.3% of margin reported in 1Q12; the decrease is mainly due to Ps. 220.8 million of one-time charges as a consequence of the outbreak described previously in this report.
NET FINANCE INCOME
The Company reported net finance income of Ps. 19.3 million, 73.0% lower than Ps. 71.3 million reported in 1Q12. The reduction is mainly due to interest paid in connection with the local Bond issuance, partially offset by interest earned on the Company's cash position.
TAXES
Industrias Bachoco and all of its subsidiaries file separate income tax returns; as of March 31, 2013 total taxes were Ps. 140.1 million.
NET INCOME
Net income was Ps. 635.1 million in 1Q13, or Ps. 1.06 per share or Ps. 12.76 per ADR, compared with a net income of Ps. 659.6 million, or Ps. 1.10 pesos per share or Ps. 13.23 pesos per ADR reported in 1Q12.
EBITDA
EBITDA in 1Q13 reached Ps. 944.3 million, representing a margin of 9.5%, compared to EBITDA of Ps. 986.3 million in 1Q12 and 10.6% of EBITDA margin.
The following chart shows reconciliation of EBITDA and adjusted EBITDA margin to consolidated net income.
| EBITDA |
|||
| First Quarter |
|||
| As of March 31, |
|||
| In million of pesos as of March 31: |
2012 |
2013 |
|
| Net income |
662.3 |
637.7 |
|
| Income tax expense (benefit) |
185.9 |
140.1 |
|
| Share of results in associates |
2.7 |
2.6 |
|
| Comprehensive financial (income) expense, net |
(71.3) |
(19.3) |
|
| Depreciation and amortization |
206.8 |
183.1 |
|
| EBITDA RESULT |
986.3 |
944.3 |
|
| EBITDA margin |
10.6% |
9.5% |
|
| Other expense (income) net |
6.1 |
(77.1) |
|
| Adjusted EBITDA result |
992.4 |
867.2 |
|
| Adjusted EBITDA Margin |
10.6% |
8.7% |
|
| Net revenues |
9,337.6 |
9,988.8 |
|
BALANCE SHEET DATA
Cash and equivalents as of March 31, 2013, totaled Ps. 6,057.6 million compared to Ps. 5,138.1 million reported as of December 31, 2012, and Ps. 4,205.7 million as of March 31,2012.
As of March 31, 2013, total debt was Ps. 2,427.3 million compared to Ps. 2,741.2 million reported as of December 31, 2012 and Ps. 1,774.4 million in March 31, 2012.
Net debt was negative Ps. 3,630.3 million as of March 31, 2013, compared with a negative net debt of Ps. 2,396.9 million as of December 31,2012, and Ps. 2,431.3 million as of March, 2012.
CAPITAL EXPENDITURES
Total CAPEX as of March 31, 2013 was Ps. 111.2 million, mainly allocated toward productivity projects and maintenance.
ANALYST COVERAGE
| INSTITUTION |
ANALYST |
CONTACT INFO |
| GBM |
Miguel Mayorga |
|
| BBVA Bancomer |
Fernando Olvera |
|
| Actinver |
Eduardo Fonseca Fons |
STOCK INFORMATION
| As of March 31, 2013 |
||
| Total Shares |
600,000,000 |
|
| Total free float |
17.25% |
|
| Total shares in treasury |
0 |
|
| Market cap (millions) |
Ps. 19,752 |
|
| BMV |
NYSE |
|
| Ticker Symbol |
Bachoco |
IBA |
| Closing price |
Ps. 32.92 |
US$ 32.12 |
| Maximums closing price in 1Q13 |
34.27 |
33.89 |
| Minimums closing price in 1Q13 |
28.80 |
27.02 |
| Pricing yield in 2013 |
9.3% |
15.0% |
APPENDICES
For reference, some figures have been translated into millions of U.S. dollars ("USD") using an exchange rate of Ps. 12.33 per US$1, which corresponds to the rate at the close of March 31, 2013, 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
| FIRST QUARTER |
||||
| -Unaudited- |
||||
| As of December 31, |
As of March 31, 2013 |
|||
| In million of pesos |
2012 |
Ps. |
U.S. Dollar (1) |
|
| TOTAL ASSETS |
28,090.1 |
27,937.0 |
2,265.8 |
|
| Total current assets |
15,032.1 |
14,591.2 |
1,183.4 |
|
| Cash and cash equivalents |
5,138.1 |
6,057.6 |
491.3 |
|
| Total accounts receivable |
2,385.3 |
2,370.3 |
192.2 |
|
| Inventories |
7,202.4 |
5,773.2 |
468.2 |
|
| Other current assets |
306.3 |
390.1 |
31.6 |
|
| Net property, plant and equipment |
11,949.5 |
11,809.2 |
957.8 |
|
| Other Assets |
1,108.4 |
1,536.6 |
124.6 |
|
| TOTAL LIABILITIES |
9,001.4 |
8,289.1 |
672.3 |
|
| Total current liabilities |
4,820.9 |
4,274.0 |
346.6 |
|
| Notes payable to banks |
1,206.1 |
899.8 |
73.0 |
|
| Accounts payable |
2,925.9 |
2,419.5 |
196.2 |
|
| Other taxes payable and other accruals |
688.9 |
954.6 |
77.4 |
|
| Total long-term liabilities |
4,180.4 |
4,015.1 |
325.6 |
|
| Long-term debt |
1,535.1 |
1,527.5 |
123.9 |
|
| Other non current liabilities |
100.1 |
99.9 |
8.1 |
|
| Deferred income taxes |
2,545.3 |
2,387.7 |
193.6 |
|
| TOTAL STOCKHOLDERS' EQUITY |
19,088.7 |
19,647.9 |
1,590.3 |
|
| Capital stock |
1,174.4 |
1,174.4 |
95.3 |
|
| Commission in shares issued |
399.6 |
399.6 |
32.4 |
|
| Repurchased shares |
99.5 |
99.6 |
8.1 |
|
| Retained earnings |
16,405.2 |
17,042.9 |
1,382.2 |
|
| Others accounts |
973.3 |
891.9 |
72.3 |
|
| Non controlling interest |
36.7 |
39.3 |
3.2 |
|
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
28,090.1 |
27,937.0 |
2,265.8 |
|
2. Consolidated Statement of Income
| FIRST QUARTER RESULTS |
||||||
| -Unaudited- |
As of March 31, |
|||||
| U.S. Dollar (1) |
Var. |
|||||
| In millions of pesos |
2012 |
2013 |
2013 |
2013 vs 2012 |
||
| Net revenues |
9,337.6 |
9,988.8 |
810.1 |
7.0% |
||
| Cost of sales |
7,750.7 |
8,509.8 |
690.2 |
9.8% |
||
| Gross profit |
1,586.9 |
1,479.0 |
120.0 |
-6.8% |
||
| Selling, general and administrative expenses |
801.3 |
795.0 |
64.5 |
-0.8% |
||
| Other income (expenses), net |
-6.1 |
77.1 |
6.3 |
-1363.3% |
||
| Operating income |
779.6 |
761.1 |
61.7 |
-2.4% |
||
| Net finance income |
71.3 |
19.3 |
1.6 |
-73.0% |
||
| Income tax |
185.9 |
140.1 |
11.4 |
-24.6% |
||
| Net profit |
662.3 |
637.7 |
51.7 |
-3.7% |
||
| Controlling interest |
2.7 |
2.6 |
0.2 |
-1.9% |
||
| Non-controlling interest |
659.6 |
635.1 |
51.5 |
-3.7% |
||
| Basic and diluted earnings per share(1) |
1.10 |
1.06 |
0.09 |
-3.6% |
||
| Basic and diluted earnings per ADR(2) |
13.23 |
12.76 |
1.03 |
-3.6% |
||
| Weighted average Shares outstanding (thousands) |
598,345 |
599,972 |
599,972 |
0.3% |
||
| EBITDA Result |
986.3 |
944.3 |
76.6 |
-4.3% |
||
| EBITDA margin |
10.6% |
9.5% |
9.5% |
|||
| Gross margin |
17.0% |
14.8% |
14.8% |
|||
| Operating margin |
8.3% |
7.6% |
7.6% |
|||
3. Consolidated Statement of Cash Flows
| -Unaudited- |
||||
| As of March 31, |
||||
| U.S. Dollar(1) |
||||
| In million of pesos |
2012 |
2013 |
2013 |
|
| NET MAJORITY INCOME BEFORE INCOME TAX |
848.2 |
777.9 |
63.1 |
|
| ITEMS THAT DO NOT REQUIRE CASH: |
- |
- |
- |
|
| ITEMS RELATING TO INVESTING ACTIVITIES: |
230.1 |
226.6 |
18.4 |
|
| Depreciation and others |
250.1 |
183.1 |
14.9 |
|
| Income (loss) on sale of plant and equipment |
27.1 |
105.9 |
8.6 |
|
| Other Items |
(47.1) |
(62.3) |
(5.1) |
|
| ITEMS RELATING TO FINANCING ACTIVITIES: |
16.7 |
31.6 |
2.6 |
|
| Interest income (expense) |
16.7 |
31.6 |
2.6 |
|
| Other Items |
- |
- |
- |
|
| NET CASH GENERATED FROM NET INCOME BEFORE TAXES |
1,095.0 |
1,036.1 |
84.0 |
|
| CASH GENERATED OR USED IN THE OPERATION: |
1,235.3 |
850.3 |
69.0 |
|
| Decrease (increase) in accounts receivable |
214.0 |
37.0 |
3.0 |
|
| Decrease (increase) in inventories |
1,473.0 |
1,347.9 |
109.3 |
|
| Decrease (increase) in accounts payable |
(554.6) |
(506.3) |
(41.1) |
|
| Decrease (increase) in other liabilities |
102.9 |
(28.2) |
(2.3) |
|
| NET CASH FLOW FROM OPERATING ACTIVITIES |
2,330.3 |
1,886.4 |
153.0 |
|
| INVESTING ACTIVITIES |
- |
|||
| NET CASH FLOW FROM INVESTING ACTIVITIES |
221.0 |
(598.4) |
(48.5) |
|
| Acquisition of property, plant and equipment |
(170.7) |
(111.2) |
(9.0) |
|
| Proceeds from sales of property plant and equipment |
6.5 |
30.6 |
2.5 |
|
| Other Items |
385.2 |
(517.8) |
(42.0) |
|
| CASH FLOW SURPLUS (REQUIREMENTS OF) TO BE USED IN |
- |
|||
| FINANCING ACTIVITIES |
2,551.4 |
1,288.0 |
104.5 |
|
| Net cash provided by financing activities: |
(1,382.1) |
(368.5) |
(29.9) |
|
| Proceeds from loans |
273.5 |
200.0 |
16.2 |
|
| Principal payments on loans |
(347.4) |
(513.9) |
(41.7) |
|
| Dividends paid |
(16.7) |
(31.6) |
(2.6) |
|
| Other items |
(1,291.5) |
(23.0) |
(1.9) |
|
| NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS |
1,169.3 |
919.5 |
74.6 |
|
| CASH AND INVESTMENTS AT THE BEGINNING OF YEAR |
3,036.4 |
5,138.1 |
416.7 |
|
| CASH AND INVESTMENTS AT END OF PERIOD |
4,205.7 |
6,057.6 |
491.3 |
|
4. Derivatives Financial Position
| Industrias Bachoco, S.A.B. de C.V. |
|||||||||||
| First Quarter 2013 |
|||||||||||
| Thousands of Mexican Pesos, as of March 31, 2013 |
|||||||||||
| Type of Financial Instrument |
Objective |
Reasonable Value |
Amounts Due By Year |
||||||||
| Notional |
Value of the Related Commodity |
Guaranties Required |
|||||||||
| 1Q-2013 |
4Q-2012 |
1Q-2013 |
4Q-2012 |
||||||||
| Knock out forwards. |
Hedge and negotiation |
$ 61,650 |
$12.33 |
$0.00 |
-$ 987 |
$ - |
2013 |
The deals consider the possibility of margin calls but not another kind of guarantee |
|||
| Futures for corn and Soybean meal. |
Hedge |
$ 112,003 |
Month |
Price |
Month |
Price |
$ 26,069 |
$ 273 |
2013 |
||
| Corn |
Corn |
||||||||||
| in USD per bushel |
in USD per bushel |
||||||||||
| MAY-2013 |
$6.9525 |
MAR-2013 |
$6.9825 |
||||||||
| JUL-2013 |
$6.7600 |
MAY-2013 |
$7.0030 |
||||||||
| SEP-2013 |
$5.6300 |
JUL-2013 |
$6.9725 |
||||||||
| SEP-2013 |
$6.2125 |
||||||||||
| Soybean Meal |
Soybean Meal |
||||||||||
| In USD per ton |
In USD per ton |
||||||||||
| MAY-2013 |
$404.60 |
MAR-2013 |
$419.40 |
||||||||
| JUL-2013 |
$400.50 |
MAY-2013 |
$411.80 |
||||||||
| JUL-2013 |
$407.30 |
||||||||||
| Options for corn and Soybean meal |
Hedge and negotiation |
-$ 830 |
Month |
Price |
Month |
Price |
-$ 830 |
-$ 1,648 |
2013 |
||
| Corn |
Corn |
||||||||||
| in USD per bushel |
in USD per bushel |
||||||||||
| MAR-2013 |
$6.9825 |
||||||||||
| MAY-2013 |
$6.9525 |
MAY-2013 |
$7.0030 |
||||||||
| JUL-2013 |
$6.9725 |
||||||||||
| SEP-2013 |
$6.2125 |
||||||||||
| Soybean Meal |
Soybean Meal |
||||||||||
| In USD per ton |
In USD per ton |
||||||||||
| MAR-2013 |
$419.40 |
||||||||||
| MAY-2013 |
$404.60 |
MAY-2013 |
$411.80 |
||||||||
| JUL-2013 |
$418.30 |
JUL-2013 |
$407.30 |
||||||||
| SWAP, interest rate. |
Hedge |
$ 140,846 |
TIIE to 28 days |
4.3512% |
TIIE to 28 days |
4.8475% |
-$ 25 |
$ 490 |
2013 |
||
| $ 300,000 |
-$ 1,276 |
$ 490 |
2014 |
||||||||
| Notes: |
|||||||||||
| -The total financial instruments not exceed 5% of total assets as of March 31, 2013. |
|||||||||||
| -A negative value means an unfavorable effect for the Company. |
|||||||||||
| -The notional value represents the net position as of March 31, 2013 at the exchange rate of Ps.12.33 per USD. |
|||||||||||
| Industrias Bachoco, S.A.B. de C.V. |
|||||||||
| First Quarter 2013 |
|||||||||
| Thousands of Mexican Pesos, as of March 31, 2013 |
PROBABLE SCENARIO |
||||||||
| Type of Financial Instrument |
Reasonable Value |
Value of the Related Commodity |
Effect on the Income Statement |
||||||
| As of March 31, 2013 |
Reference Value |
Effect on the Cash Flow(3) |
|||||||
| -2.5% |
2.5% |
5.0% |
-2.5% |
2.5% |
5.0% |
||||
| Knock out forwards. |
-$ 987 |
$ 12.02 |
$ 12.64 |
$ 12.95 |
Direct |
-$ 2,529 |
$ 554 |
$ - |
|
| -5% |
5% |
10% |
-5% |
5% |
10% |
||||
| Futures of corn: (2) |
$ 26,069 |
$ 6.605 |
$ 7.300 |
$ 7.648 |
The effect will materialize as the inventory is consumed |
$ 18,843 |
$ 33,294 |
$ 40,520 |
|
| Futures of soybean meal: (2) |
$ 384.37 |
$ 424.83 |
$ 445.06 |
||||||
| Options for corn and soybean meal (2) |
-$ 830 |
-$ 1,053 |
-$ 606 |
-$ 383 |
|||||
| -2% |
-1% |
1% |
-2% |
-1% |
1% |
||||
| SWAP interest rate(4) |
-$ 1,301 |
2.3512% |
3.3512% |
5.3512% |
Direct |
-$ 13,234 |
-$ 7,268 |
$ 4,665 |
|
| Notes: |
|||||||||
| -A negative value means an unfavorable effect for the Company. |
|||||||||
| -Corn and soybean meal are presented in US dollars per bushel in the case of corn and per short-tones in the case of soybean meal |
|||||||||
| -Even when table set above shows corn and soybean prices for contracts of March 2013, the effect on the cash |
|||||||||
| flow corresponds to the total positions effects. |
|||||||||
| (1)The reference value is the exchange rate of Ps. $12.33 per USD as of March 31, 2013 |
|||||||||
| (2)The reference value is the Futures of corn for March 2013, $6.9525 USD/bushel and Soybean meal for March 2013, $404.6 USD/ton. |
|||||||||
| (3)The Company has credit lines with the majority of its counterparts, so that the effect in cash flow is lower than the amount shown. |
|||||||||
| (4)The reference value is the 28 days TIIE rate of 4.3512%, as of March 31, 2013 |
|||||||||
| First Quarter 2013 |
|||||||||||
| Thousands of Mexican Pesos, as of March 31, 2013 |
PROBABLE SCENARIO -STRESS- |
||||||||||
| Reasonable Value |
Value of the Related Commodity |
Effect on the Income Statement |
Effect on the Cash Flow(1) |
||||||||
| Type of Instrument |
As of March 31, 2013 |
Reference Value |
|||||||||
| -50% |
-25% |
25% |
50% |
-50% |
-25% |
25% |
50% |
||||
| Knock Out Forwards |
-$ 987 |
$6.17 |
$ 9.25 |
$ 15.41 |
$ 18.50 |
Direct |
-$ 31,813 |
-$ 16,400 |
$ - |
$ - |
|
| (1)The reference value is the exchange rate of Ps. $12.33 per USD as of March 31, 2013 |
|||||||||||
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 production complexes and 64 distribution centers in Mexico, and a production complex in the United States. Currently the Company employs more than 25,000 people. In 2012, the Company reported net sales of Ps. 39.3 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.
SOURCE Industrias Bachoco S.A.B. de C.V.
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