Industrias Bachoco Announces its 2010 Third Quarter Results
CELAYA, Mexico, Oct. 21 /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 third quarter ended September 30th, 2010. All figures have been prepared in accordance with Mexican GAAP. Following Mexican Accounting Principles, all data is presented in nominal Mexican pesos.
Highlights:
- The Company registered a 12.2% increase in total sales when compared with the same 2009 quarter.
- Bachoco's EBITDA totaled Ps. 983.8 million, with a margin of 15.6% in 3Q10 vs an EBITDA margin of 3.6% in 3Q09.
- EPS for the quarter were up at Ps. 1.06 (US$ 1.01 per ADS) compared to a net loss per share of Ps. 0.09 (US$ 0.08 per ADS) in 3Q09.
CEO's Comments:
Cristobal Mondragon, Bachoco's CEO, stated, "The third quarter of the year was traditionally the weakest quarter for our Company, but this quarter it was quite different. We had a good balance between supply and demand in our chicken business line, which allowed us to capitalize our productivity and supply efforts and achieve stronger results during the third quarter.
"Swine and balanced feed business lines had a good performance, resulting in strong results for this business lines.
"Our egg business line, on the contrary, was affected by lower demand, impacting the volume and sales of these products.
"As a result, we reach a two digit EBITDA for the quarter; and were able to reverse the net loss reported in 3Q09, registering a significant net profit for the quarter.
"Finally, I want to stress that our financial position remains solid with cash and cash equivalents of Ps. 3,778.4 million," concluded Mr. Mondragon.
THIRD QUARTER 2010 RESULTS
Net sales |
3Q09 (%) |
3Q10 (%) |
|
Chicken |
79.2 |
83.1 |
|
Eggs |
9.7 |
7.6 |
|
Balanced feed |
6.5 |
5.4 |
|
Swine |
1.0 |
1.3 |
|
Other lines |
3.6 |
2.6 |
|
Total Sales |
100.0% |
100.0% |
|
Net Sales
Net sales for the quarter amounted to Ps. 6,297.3 million, 12.2% above the Ps. 5,613.6 million reported in the same 2009 quarter. This increase was mainly driven by higher chicken and swine sales, which were partially offset by a decrease in eggs, balanced feed and other business lines sales.
Operating Results
Bachoco's third quarter gross profit was Ps. 1,490.6 million, with a margin of 23.7%, higher than 12.0% margin reported in 3Q09. This result is directly attributed to higher sales in our chicken business as well as lower cost of sales in our main business lines.
The Company registered an operating profit of Ps. 812.1 million, which is also greater than the operating profit of Ps. 35.3 million registered in the same 2009 quarter. The operating margin for the quarter was 12.9%.
EBITDA amounted to Ps. 983.8 million, above the Ps. 207.5 million reported in the same 2009 quarter.
Net Majority Income
Net majority income for the third quarter amounted to PS. 635.1 million, or Ps. 1.06 per share (US$1.06 per ADS), compared to a net majority loss of Ps. 53.1 million, or Ps. 0.09 loss per share (US$0.08 loss per ADS) reported in the same 2009 period.
RESULTS BY BUSINESS SEGMENT
Chicken
Sales of chicken products increased 17.7%, when compared to 3Q09, as a result of a 3.0% increase in volume and a 14.2% increase in chicken prices. This strong increase in sales is attributed to a better balance between supply and demand in the Mexican industry as well as a stronger demand for our chicken products.
Table Eggs
Sales of table eggs products decreased by 11.7% during the third quarter, as egg prices decrease 10.3% and volume fell by another 1.6%. This is the result of a lower demand for egg products and the oversupply registered by the industry.
Balanced Feed
Sales of balanced feed decreased 6.5% following a 5.9% decrease in prices and a 0.6% decrease in balanced feed volume sold; nonetheless the Company managed to improve its gross margin from the same quarter of 2009.
Swine
The swine business line registered a solid third quarter. Sales were sound and rose 36.9%, as swine prices increased 26.8% and volume sold rose 7.9% increase in the period. Demand for live swine was stronger during this quarter.
Other Lines
Sales of other lines decreased 18.6% when compared with the same quarter of 2009, as sales of by-products declined.
FIRST NINE MONTHS OF 2010
Net Sales
Net sales for the first nine months of 2010 amounted to Ps. 18,432.6 million, up 5.5% from the Ps. 17,471.5 million reported in the same 2009 period. The increase was mainly driven by the 9.3% increase in chicken sales and, 28.6% in swine sales, both of which were partially offset by the 9.3% decrease in table eggs sales and 7.4% decrease in balanced feed sales.
Net sales |
Jan-Sep 2009(%) |
Jan-Sep 2010(%) |
|
Chicken |
78.6 |
81.5 |
|
Eggs |
10.0 |
8.6 |
|
Balanced feed |
6.4 |
5.6 |
|
Swine |
1.0 |
1.2 |
|
Other lines |
4.0 |
3.1 |
|
Total Sales |
100.0% |
100.0% |
|
Operating Results
Bachoco's gross margin for the first nine months of the year was up 21.5%, compared to the 18.5% registered in the same 2009 period, and was mainly attributed to stronger results in our chicken business line.
The Company's operating profit was Ps. 1,937.1 million, compared to an operating profit of Ps. 1,388.7 million reached in the same period of 2009.
EBITDA amounting Ps. 2,449.4 million was, 30.7% higher than the Ps. 1,874.3 million recorded in the first nine months of 2009. EBITDA margin for the first nine months of 2010 was 13.3%.
Taxes
Taxes for nine months period were Ps. 402.7 million.
Net Majority Income
Net majority income for first nine months of the year was Ps. 1,527.7 million, or Ps. 2.55 per share (US$2.42 per ADS), compared to net income of Ps. 916.5 million, or Ps. 1.53 per share (US$1.45 per ADS) reported in the same 2009 period.
Balance Sheet
Liquidity is solid with cash and cash equivalents amounting to Ps. 3,778.4 million as of September 30, 2010. The total debt outstanding as of September 30, 2010 was Ps. 763.6 million.
Capital Expenditures
CAPEX during the nine months of 2010 amounted to Ps. 233.6 million, and was entirely financed with internally generated resources.
Exhibits:
A.- Consolidated Balanced Sheets
B.- Consolidated Statement of Income
C.- Consolidated Statement Cash Flow
D.- Derivatives Position Report
A.- Consolidated Balance Sheets
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 September 30, |
As of September 30, |
||||||
ASSETS |
|||||||
Current assets |
|||||||
Cash and cash equivalents |
$ |
299 |
Ps |
3,778 |
Ps |
2,260 |
|
Total accounts receivable |
127 |
1,609 |
1,331 |
||||
Inventories |
347 |
4,388 |
4,413 |
||||
Other current assets |
- |
- |
- |
||||
Total current assets |
774 |
9,775 |
8,004 |
||||
Net property, plant and equipment |
844 |
10,661 |
10,949 |
||||
Other non current assets |
28 |
353 |
554 |
||||
TOTAL ASSETS |
$ |
1,646 |
Ps |
20,790 |
Ps |
19,507 |
|
LIABILITIES |
|||||||
Current liabilities |
|||||||
Notes payable to banks |
17 |
215 |
502 |
||||
Accounts payable |
99 |
1,245 |
1,255 |
||||
Other taxes payable and other accruals |
51 |
650 |
422 |
||||
Total current liabilities |
167 |
2,110 |
2,179 |
||||
Long-term debt |
43 |
549 |
547 |
||||
Labor obligations |
8 |
98 |
95 |
||||
Deferred income taxes and others |
168 |
2,117 |
1,932 |
||||
Total long-term liabilities |
219 |
2,764 |
2,574 |
||||
TOTAL LIABILITIES |
$ |
386 |
Ps |
4,874 |
Ps |
4,753 |
|
STOCKHOLDERS' EQUITY |
|||||||
Majority stockholder's equity: |
|||||||
Capital stock |
182 |
2,295 |
2,295 |
||||
Paid-in capital |
59 |
745 |
744 |
||||
Reserve for repurchase of shares |
13 |
159 |
159 |
||||
Retained earnings |
882 |
11,139 |
10,592 |
||||
Net majority income of the year |
121 |
1,528 |
917 |
||||
Deficit from restatement of stockholder's equity |
- |
- |
- |
||||
Derivate financial instruments |
- |
- |
- |
||||
Total majority stockholder's equity |
1,256 |
15,866 |
14,706 |
||||
Minority interest |
4 |
50 |
48 |
||||
TOTAL STOCKHOLDERS' EQUITY |
1,260 |
15,916 |
14,754 |
||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
1,646 |
Ps |
20,790 |
Ps |
19,507 |
|
(1) For reference, in millions of U.S. dollars using an exchange rate of $12.63 |
|||||||
Source: Mexico's National Bank, as of September 30, 2010. |
|||||||
(2) Millions of Mexican nominal pesos |
|||||||
B.- Consolidated Statement of Income
INDUSTRIAS BACHOCO, S.A.B. DE C.V. |
|||||||||||||
Consolidated Statements of Income |
|||||||||||||
-unaudited- |
|||||||||||||
THIRD QUARTER |
JANUARY - SEPTEMBER |
||||||||||||
U.S.D. |
Mexican Pesos |
U.S.D. |
Mexican Pesos |
||||||||||
2010(1) |
2010(2) |
2009(2) |
2010(1) |
2010(2) |
2009(2) |
||||||||
Net sales |
$ |
499 |
Ps |
6,297 |
Ps |
5,614 |
US |
1,459 |
Ps |
18,433 |
Ps |
17,472 |
|
Cost of sales |
381 |
4,807 |
4,938 |
1,146 |
14,469 |
14,238 |
|||||||
Gross profit (loss) |
118 |
1,491 |
676 |
314 |
3,964 |
3,233 |
|||||||
Selling, general and administrative expenses |
54 |
678 |
641 |
160 |
2,027 |
1,844 |
|||||||
Operating income (loss) |
64 |
812 |
35 |
153 |
1,937 |
1,389 |
|||||||
Other income (expense) net |
(4) |
(50) |
(70) |
(6) |
(80) |
(106) |
|||||||
Comprehensive financing (cost) income |
3 |
42 |
(28) |
6 |
75 |
(134) |
|||||||
Interest income |
4 |
50 |
33 |
10 |
123 |
107 |
|||||||
Interest expense and financing expenses |
(1) |
(18) |
(23) |
(5) |
(57) |
(67) |
|||||||
Foreign exchange gain (loss), net |
1 |
11 |
(18) |
1 |
15 |
(37) |
|||||||
Other financial income (expense) net |
(0) |
(0) |
(20) |
(0) |
(6) |
(137) |
|||||||
Income before income tax, asset tax |
64 |
805 |
(63) |
153 |
1,932 |
1,149 |
|||||||
Total income taxes |
13 |
169 |
(12) |
32 |
403 |
224 |
|||||||
Income tax, asset tax |
5 |
67 |
21 |
25 |
315 |
72 |
|||||||
Deferred income taxes |
8 |
102 |
(33) |
7 |
88 |
152 |
|||||||
Net income |
$ |
50 |
Ps |
635 |
Ps |
(51) |
121 |
1,529 |
925 |
||||
Minority net income |
0 |
0 |
2 |
0 |
1 |
9 |
|||||||
Majority net income |
50 |
635 |
(53) |
121 |
1,528 |
917 |
|||||||
weighted average shares outstanding (in thousands) |
600,000 |
600,000 |
599,954 |
600,000 |
600,000 |
599,930 |
|||||||
Net majority Income per share (in U.S.D per ADS) |
1.01 |
1.06 |
(0.09) |
2.42 |
2.55 |
1.53 |
|||||||
(1) For reference, in millions of U.S. dollars using an exchange rate of $12.63 |
|||||||||||||
Source: Mexico's National Bank, as of September 30, 2010. |
|||||||||||||
(2) Millions of Mexican nominal pesos |
|||||||||||||
C.- Consolidated Statement Cash Flow
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 September 30, |
As of September 30, |
|||||
NET MAJORITY INCOME BEFORE INCOME TAX |
$ |
153 |
Ps. |
1,932 |
Ps. |
1,149 |
|
ITEMS THAT DO NOT REQUIRE CASH: |
15 |
188 |
237 |
||||
Other Items |
15 |
188 |
237 |
||||
ITEMS RELATING TO INVESTING ACTIVITIES: |
39 |
494 |
455 |
||||
Depreciation and others |
41 |
512 |
486 |
||||
Income (loss) on sale of plant and equipment |
(1) |
(17) |
(22) |
||||
Other Items |
(0) |
(1) |
(9) |
||||
ITEMS RELATING TO FINANCING ACTIVITIES: |
14 |
180 |
151 |
||||
Interest income (expense) |
5 |
57 |
44 |
||||
Other Items |
10 |
123 |
107 |
||||
NET CASH GENERATED FROM NET INCOME BEFORE TAXES |
$ |
221 |
Ps. |
2,794 |
Ps. |
1,992 |
|
CASH GENERATED OR USED IN THE OPERATION |
(23) |
(284) |
(589) |
||||
Decrease (increase) in accounts receivable |
8 |
100 |
163 |
||||
Decrease (increase) in inventories |
10 |
125 |
705 |
||||
Increase (decrease) in accounts payable |
(38) |
(477) |
(727) |
||||
Income taxes paid |
(3) |
(33) |
(729) |
||||
NET CASH FLOW FROM FINANCING ACTIVITIES |
$ |
199 |
Ps. |
2,510 |
Ps. |
1,403 |
|
INVESTING ACTIVITIES |
|||||||
NET CASH FLOW FROM INVESTING ACTIVITIES |
(32) |
(407) |
(821) |
||||
Acquisition of property, plant and equipment |
(18) |
(234) |
(706) |
||||
Proceeds from sales of property plant and equipment |
(1) |
(13) |
(17) |
||||
Other Items |
(13) |
(161) |
(98) |
||||
CASH FLOW SURPLUS (REQUIREMENTS OF) TO BE USED IN |
|||||||
FINANCING ACTIVITIES |
$ |
166 |
Ps. |
2,103 |
Ps. |
581 |
|
FINANCING ACTIVITIES |
|||||||
Net cash provided by financing activities: |
(36) |
(450) |
180 |
||||
Proceeds from loans |
87 |
1,099 |
1,800 |
||||
Principal payments on loans |
(103) |
(1,299) |
(1,377) |
||||
Dividends paid |
(20) |
(250) |
(250) |
||||
Other items |
0 |
0 |
7 |
||||
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS |
101 |
1,276 |
288 |
||||
CASH AND INVESTMENTS AT THE BEGINNING OF YEAR |
198 |
2,503 |
1,972 |
||||
CASH AND INVESTMENTS AT END OF PERIOD |
$ |
299 |
Ps. |
3,778 |
Ps. |
2,260 |
|
(1) For reference, in millions of U.S. dollars using an exchange rate of $12.63 |
|||||||
Source: Mexico's National Bank, as of September 30, 2010. |
|||||||
(2) Millions of Mexican nominal pesos |
|||||||
D.- Derivatives Position Report
Industrias Bachoco, S.A.B. de C.V. |
|||||||||
Thousands of Mexican Pesos, as of September 30, 2010 |
Quarter: 3 |
||||||||
ANEXO 1 |
|||||||||
Type of Financial Instrument |
Objective of the Instrument |
Notional |
Value of the Related Commodity |
Reasonable Value |
Amounts Due by Year |
Guaranties Required |
|||
3Q-2010 |
2Q-2010 |
3Q-2010 |
2Q-2010 |
||||||
Forwards, knock out forwards, puts, collars and others under different amounts and conditions |
Hedge and negotiation |
$ 114,302 |
$ 12.63 |
$12.89 |
$ 4,491 |
$ 2,450 |
88.0% in 2010 and 12.0% in 2011 |
||
Futures for corn and Soybean meal |
Hedge |
$ 70,771 |
Corn for December 2010: $4.9575 USD/bushel. Soybean meal; $306.90 USD/ton for December 2010 . |
Corn for Sept 2010: $3.6275 USD/bushel. Soybean meal;$259.40 for December 2010 |
$ 14,296 |
$ 3,634 |
2010 |
The deals consider the possibility of margin calls but not another kind of guarantee |
|
Options for corn |
Hedge and negotiation |
-$ 386 |
-$ 386 |
||||||
None of the financial instruments exceed 5% of total assets as of September 30, 2010. |
|||||||||
A negative value means an unfavorable effect for the Company. |
|||||||||
The notional value represents the net position as of September 30, 2010 at the exchange rate of Ps.12.63 per USD. |
|||||||||
Industrias Bachoco, S.A.B. de C.V. |
|||||||||
Thousands of Mexican Pesos, as of September 30, 2010 |
Quarter: 3 |
||||||||
Table 2 |
|||||||||
Type of Financial Instrument |
Reasonable Value as of Sept 30, 2010 |
Value of the Related Commodity-reference value |
Effect on the Income Statement |
Effect on the Cash Flow *** |
|||||
-2.5% |
2.5% |
5.0% |
-2.5% |
2.5% |
5.0% |
||||
Forwards, knock out forwards, puts, collars and others under different amounts and conditions* |
$ 4,491 |
$12.31 |
$ 12.95 |
$ 13.26 |
Direct |
$ 1,633 |
$ 8,535 |
$ 1,770 |
|
-5% |
5% |
10% |
-5% |
5% |
10% |
||||
Futures for corn and, |
$ 4.7096 |
$ 5.2054 |
$ 5.4533 |
||||||
Soybean |
$ 14,296 |
$ 291.56 |
$ 322.25 |
$ 337.59 |
The effect will materialize as the inventory is consumed |
$ 10,042 |
$ 18,549 |
$ 22,802 |
|
Options for corn** |
-$ 386 |
-$ 1,075 |
$ 303 |
$ 991 |
|||||
A negative value means an unfavorable effect for the Company. |
|||||||||
** The reference value is the Futures of corn for December, $4.9575 USD for bushel and of soybean meal for December 2010, $306.9 USD/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. |
|||||||||
*** 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 |
|
In New York: |
|
Grayling |
|
Lucia Domville |
|
Ph. (646) 284 9416 |
|
SOURCE Industrias Bachoco, S.A.B. de C.V.
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