Industrias Bachoco Announces its 2010 First Quarter Results
CELAYA, Mexico, April 26 /PRNewswire-FirstCall/ -- Industrias Bachoco S.A.B. de C.V. ("Bachoco" or "the Company") (NYSE: IBA; BMV: Bachoco), Mexico's leading producer and processor of poultry products, announced today its unaudited results for the first quarter ended March 31, 2010. All figures have been prepared in accordance with Mexican GAAP. In line with the Mexican Accounting Principles, data is presented in nominal Mexican pesos.
Highlights:
-- Total sales increased 1.1% from 2009's first quarter
-- The Company recorded historic chicken volume sold, increasing 16.6% over 1Q09. Volume sold also increased for table eggs and swine
-- EBITDA margin of 8.6% in 1Q10 was lower than the 11.2% in 2009's first quarter
-- Earnings per share for the quarter reached Ps.$ 0.458, compared to PS$ 0.457 in 1Q09
CEO's Comments:
Cristobal Mondragon, Bachoco's CEO, stated, "While the economic conditions prevailing in Mexico continued to slowly improve, we observed a good demand for our products, impacting our first quarter results and showing an improvement from the previous year in terms of sales and volume sold.
"In particular, the chicken industry was stable with good demand, lower prices and costs than in the previous quarter. The cost was lower mainly due to the strength of the Mexican peso and stable cost for our main imports.
"As a result of the business agreement reached last July, production efficiency and some organic growth registered in the states of Chiapas and Yucatan, the Company recorded an important increase in volume of chicken sold during this quarter.
"Our egg business, swine and balanced feed showed important improvements as seen in the results for the quarter.
"Our results were strong and sound, while our financial position remained solid even after the investments made during the past quarters," concluded Mr. Mondragon.
Releases made during the quarter:
On April 7, 2010, the Company reported to the market that its table eggs facilities located in Mexicali, Baja California, which represent about 9% of its total table eggs production, were affected by the earthquake registered on April 4, 2010.
FIRST QUARTER 2010 RESULTS
Net sales 1Q10 (%) 1Q09 (%)
Chicken 79.8% 79.0%
Eggs 10.1% 10.2%
Balanced feed 5.5% 5.8%
Swine 1.2% 1.0%
Other lines 3.4% 4.0%
Total Sales 100.00% 100.00%
Net Sales
Net sales for the first quarter amounted to Ps. 5,931.2 million, and were 1.1% above the Ps. 5,866.8 million reported in the same 2009 quarter. This increase was mainly driven by higher chicken, eggs and swine sales.
Operating Results
Bachoco's first quarter gross margin was 17.2%, lower than 18.8% reported in 1Q09. This result is directly attributed to a decrease in the sale prices of Bachoco's main line products.
The Company registered an operating profit of Ps. 342.0 million, which is lower than the operating profit of Ps. 494.8 million registered in the same 2009 quarter. The operating margin for the first quarter of 2010 was 5.8%.
EBITDA amounted to Ps. 511.9 million, below the Ps. 654.3 million reported in the same 2009 quarter.
Taxes
Total taxes for the first quarter were Ps. 62.5 million.
Comprehensive Financial Income (Cost)
The Company's comprehensive financial cost was Ps. 2.9 million during the quarter, which was substantially below the comprehensive financial cost of Ps. 119.8 million reported in the same year-ago quarter.
Net Majority Income (loss)
Net majority income for the first quarter amounted to PS. 274.9 million, or Ps. 0.46 per share (US$0.44 per ADS), compared to a net majority income of Ps. 273.9 million, or Ps. 0.46 per share (US$0.44 per ADS) reported in the same 2009 period.
Balance Sheet
The financial position of the Company remained solid with cash and cash equivalents amounting to Ps. 2,851.9 million as of March 31, 2010. The total debt outstanding for the same period was of Ps. 863.4 million.
Capital Expenditures
CAPEX during the first quarter of 2010 amounted to Ps.60.8 million.
RESULTS BY BUSINESS SEGMENT
Chicken
Sales of chicken products increased 2.1%, when compared to 1Q09, as a result of the 16.6% increase in volume, which is mainly attributed to productivity achievements, organic growth and the integration of the new business agreements. This increase in volume was partially offset by the 12.4% decline in chicken prices.
Table Eggs
Sales of table eggs products increased 0.2% during the first quarter, mainly stemming from a 2.4% increase in the volume sold. This growth was partially offset by the 2.0% decrease in table eggs prices. This business line remained solid with a good level between demand and supply.
Balanced Feed
Sales of balanced feed decreased 3.8%, mainly due to the 0.8% decrease in prices and 3.1% decrease in balance feed volume.
Swine
The swine business line was stable during the first quarter. Sales were strong and rose 15.8%, as a result of a 20.1% gain in volume sold; which was partially offset by a 3.6% decrease in swine prices when compared to the same 2009 quarter.
Other Lines
Sales of other lines decreased 13.6% when compared with 1Q09, as sales of turkey and by-products declined.
Exhibits:
A.- Consolidated Balanced Sheets
B.- Consolidated Statement of Income
C.- Consolidated Statement Cash Flow
D.- Derivatives Position Report
Company Description
Industrias Bachoco S.A.B. de C.V. is the largest poultry company in Mexico, with over 800 production and distribution facilities currently organized in nine complexes throughout the country. Bachoco's main business lines are: chicken, eggs, and balanced feed, among others. The Company is also present in other businesses like swine, beef, margarine and turkey in Mexico. The Company's headquarters are located in Celaya, Guanajuato, Mexico.
For more information, please visit Bachoco's website at http://www.bachoco.com.mx or contact our IR department.
Exhibit A: Consolidated Balance Sheets
INDUSTRIAS BACHOCO, S.A.B. DE C.V.
Consolidated Statements of Income
-unaudited-
FIRST QUARTER
U.S.D. Mexican Pesos
2010(1) 2010(2) 2009(2)
Net sales $480 Ps 5,931 Ps 5,867
Cost of sales 397 4,911 4,765
Gross profit (loss) 83 1,020 1,102
Selling, general and
administrative expenses 55 678 607
Operating income (loss) 28 342 495
Other income (expense) net (0) (1) (32)
Comprehensive financing (cost)
income (0) (3) (120)
Interest income 3 34 512
Interest expense and
financing expenses (2) (19) (637)
Foreign exchange gain
(loss), net 0 4 5
Other financial income
(expense) net (2) (22) -
Income before income tax,
asset tax 27 338 343
Total income taxes 5 62 67
Income tax, asset tax 4 46 24
Deferred income taxes 1 17 43
Net income $22 Ps 276 Ps 276
Minority net income 0 1 2
Majority net income 22 275 274
weighted average shares
outstanding (in thousands) 600,000 600,000 600,000
Net majority Income per share
(in U.S.D. per ADS) 0.44 0.46 0.46
(1) For reference, in millions of U.S. dollars using an exchange rate of
$12.357
Source: Mexico's National Bank, as of March 31, 2010.
(2) Millions of Mexican nominal pesos
Exhibit B: Consolidated Statement of Income
Industrias Bachoco, S.A.B. de C.V.
Condensed Consolidated Balance Sheets
U.S.D. Mexican Pesos
2010(1) 2010(2) 2009(2)
As of March As of March
31, 31,
ASSETS
Current assets
Cash and cash equivalents $231 Ps 2,852 Ps 2,449
Total accounts receivable 121 1,495 1,332
Inventories 346 4,278 3,862
Other current assets - - -
Total current assets 698 8,625 7,643
Net property, plant and
equipment 875 10,812 10,684
Other non current assets 34 417 516
TOTAL ASSETS $1,607 Ps 19,853 Ps 18,842
LIABILITIES
Current liabilities
Notes payable to banks 49 611 235
Accounts payable 117 1,441 1,099
Other taxes payable and
other accruals 36 446 381
Total current liabilities 202 2,498 1,714
Long-term debt 20 253 382
Labor obligations 8 100 86
Deferred income taxes and
others 169 2,088 2,317
Total long-term liabilities 198 2,441 2,785
TOTAL LIABILITIES $400 Ps 4,938 Ps 4,499
STOCKHOLDERS' EQUITY
Majority stockholder's
equity:
Capital stock 186 2,295 2,295
Paid-in capital 60 745 744
Reserve for repurchase of
shares 13 159 158
Retained earnings 922 11,389 10,829
Net majority income of the
year 22 275 274
Deficit from restatement of
stockholder's equity - - -
Derivate financial
instruments - - -
Total majority stockholder's
equity 1,203 14,863 14,299
Minority interest 4 51 45
TOTAL STOCKHOLDERS' EQUITY 1,207 14,914 14,344
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,607 Ps 19,853 Ps 18,842
(1) For reference, in millions of U.S. dollars using an exchange rate of
$12.357
Source: Mexico's National Bank, as of March 31, 2010.
(2) Millions of Mexican nominal pesos
Exhibit C: Consolidated Statement of Cash Flows
Industrias Bachoco, S.A.B. de C.V.
Consolidated Statement of Cash Flows
Mexican Pesos
U.S.D. 2010(2) 2009(2)
2010(1) As of March 31, As of March 31,
NET MAJORITY INCOME BEFORE
INCOME TAX $27 Ps. 338 Ps. 343
ITEMS THAT DO NOT REQUIRE
CASH: (3) (33) (70)
Other Items (3) (33) (70)
ITEMS RELATING TO INVESTING
ACTIVITIES: 13 162 148
Depreciation and others 14 170 160
Income (loss) on sale
of plant and equipment (1) (7) (10)
Other Items (0) (1) (2)
ITEMS RELATING TO FINANCING
ACTIVITIES: 4 53 76
Interest income
(expense) 2 19 25
Other Items 3 34 51
NET CASH GENERATED FROM NET
INCOME BEFORE TAXES $42 Ps. 521 Ps. 496
CASH GENERATED OR USED IN THE
OPERATION 6 77 164
Decrease (increase) in
accounts receivable 5 68 183
Decrease (increase) in
inventories 19 235 1,256
Increase (decrease) in
accounts payable (23) (280) (883)
Income taxes paid 4 54 (391)
NET CASH FLOW FROM FINANCING
ACTIVITIES $48 Ps. 598 Ps. 661
INVESTING ACTIVITIES
NET CASH FLOW FROM INVESTING
ACTIVITIES (11) (142) (176)
Acquisition of
property, plant and
equipment (5) (61) (140)
Proceeds from sales of
property plant and
equipment (0) (4) (4)
Other Items (6) (78) (31)
CASH FLOW SURPLUS
(REQUIREMENTS OF) TO BE USED
IN FINANCING ACTIVITIES $37 Ps. 456 Ps. 485
FINANCING ACTIVITIES
Net cash provided by
financing activities: (8) (99) (8)
Proceeds from loans 18 226 15
Principal payments on
loans (26) (326) (24)
Dividends paid - - -
Other items 0 1 1
NET INCREASE (DECREASE) IN
CASH AND EQUIVALENTS 28 349 476
CASH AND INVESTMENTS AT THE
BEGINNING OF YEAR 203 2,503 1,972
CASH AND INVESTMENTS AT END
OF PERIOD $231 Ps. 2,852 Ps. 2,449
(1) For reference, in millions of U.S. dollars using an exchange rate of
$12.357
Source: Mexico's National Bank, as of March 31, 2010.
(2) Millions of Mexican nominal pesos
Exhibit D: Derivatives Position Report
Industrias Bachoco, S.A.B. de C.V.
Thousands of Mexican Pesos, as of March 31, 2010
Table 1
Type of Financial Objective of the
Instrument Instrument Notional
Forwards, knock out
forwards, puts,
collares and others Hedge and
under different negotiation $468,454
amounts and
conditions
Futures for corn and
Soybean meal Hedge $48,158
Hedge and
Options for corn negotiation $-
Type of Financial Value of the Related Commodity
Instrument 1Q-2010 4Q-2009
Forwards, knock out
forwards, puts,
collares and others
under different $12.36 $13.08
amounts and
conditions
Corn for May 2010:
Futures for corn and $ 3.45 USD/bushel. Corn of March 2010:
Soybean meal Soybean meal; $265.8 $4.145 USD/bushel
and $248.6 USD/ton
for May and December
2010 respectively
Options for corn - Corn of March 2010:
- $4.145 USD/bushel
Type of Financial Instrument Reasonable Value
1Q-2010 4Q-2009
Forwards, knock out
forwards, puts,
collares and others
under different
amounts and conditions -$24,664 $2,004
Futures for corn and
Soybean meal -$2,068 -$1,404
Options for corn $- $1,651
Type of Financial
Instrument Amounts Due by Year Guaranties Required
Forwards, knock out
forwards, puts, 99.6% in 2010 and
collares and others 0.4% in 2011
under different
amounts and The deals consider
conditions the possibility of
margin calls but
not another kind
of guarantee
Futures for corn and
Soybean meal 2010
Options for corn
None of the financial instruments exceed 5% of total assets as of March
31, 2010.
A negative value means an unfavorable effect for the Company.
The notional value represents the net position as of March 31, 2010 at the
exchange rate of Ps.12.357 per USD.
Industrias Bachoco, S.A.B. de C.V.
Thousands of Mexican Pesos, as of March 31, 2010
Table 2
Reasonable
Value as of
March 31,
Type of Financial Instrument 2010
Forwards, knock out forwards,
puts, collares and others under
different amounts and
conditions* -$24,664
Futures for corn and Soybean meal** -$2,068
Options for corn** $-
Type of Financial Instrument Value of the Related Commodity -
reference value
-2.5% 2.5% 5.0%
Forwards, knock out forwards,
puts, collares and others under
different amounts and
conditions* $12.05 $12.67 $12.97
-5% 5% 10%
Futures for corn and Soybean $3.2775 $3.6225 $3.7950
meal** $252.51 $279.09 $292.38
Options for corn** - - -
Type of Financial Instrument Effect on the Income Statement
Forwards, knock out forwards,
puts, collares and others under Direct
different amounts and
conditions*
Futures for corn and Soybean
meal** The effect will
materialize as the
inventory is
Options for corn** consumed
Type of Financial Instrument Effect on the Cash Flow ***
-2.5% 2.5% 5.0%
Forwards, knock out forwards,
puts, collares and others under
different amounts and
conditions* -$40,933 -$12,952 $1,382
-5% 5% 10%
Futures for corn and Soybean
meal** -$4,372 $237 $2,541
Options for corn** $- $- $-
A negative value means an unfavorable effect for the Company.
* The reference value for the peso/USD as of March 31, 2010 is $12.357
** The reference value is the Futures of corn for May 2010, $3.45 USD per
bushel and of soybean meal for may 2010, $265.8 USD per ton
*** The company has credit lines with the majority of its counterparts, so
that the effect in cash flow is lower than the amount shown
IR Contacts:
Daniel Salazar, CFO
Claudia Cabrera, IRO
Ph. +52 (461) 618 3555
[email protected]
In New York
Grayling
Lucia Domville
Ph. (646) 284 9416
[email protected]
SOURCE Industrias Bachoco S.A.B. de C.V.
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