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INDUS BCHOR SAB CV : Industrias Bachoco Announces Second Quarter 2008 Results

07/24/2008 | 05:00pm US/Eastern

CELAYA, Mexico, July 24 /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, today announced its unaudited results for the second quarter ended June 30, 2008. All figures have been prepared in accordance with Mexican GAAP. In line with the Mexican Accounting Principles, 2008 data is presented in nominal pesos while that of 2007 is presented in constant pesos as of December 31, 2007.

Highlights:

-- The Company recorded sales of Ps. 4,987.5 million during the second quarter of 2008, 3.0% above the Ps. 4,842.1 million reached during the same period last year.

-- Bachoco sales increased in most of its business lines: chicken, eggs, swine and other.

-- The company reached positive operating results during the quarter, with an operating margin of 6.2% and EBIDTA margin of 9.2%.

-- EPS were Ps. 0.32 (US$ 0.38 per ADS) versus Ps. 0.80 (US$ 0.93 per ADS) reached in 2Q07.

CEO's Comments:

Cristobal Mondragon, Bachoco's CEO, stated, "Second quarter results continued largely affected by the global trend of higher raw materials prices, which continued to affect the cost of grain and soybean meal. The cost of these ingredients rose even higher during this quarter and reached record levels. These increases coupled with a sluggish economic condition in our markets that did not allow us to fully transfer cost increases into chicken prices, and continued to affect the Company's results.

"Despite said adverse difficulties, we were able to deliver positive results given our focus to reinforce productivity, and optimize our product mix, while keeping the best level of service for our customers.

"Our commitment will continue to satisfy our customers' needs by providing high quality products, delivering satisfactory results to our shareholders and continuing to implement our growth plans," concluded Mr. Mondragon.

Releases during the quarter:

-- On April 16 the Company announced a partial fire at the secondary process of its plant located in Monterrey in northern Mexico.

-- On May 29 the Company announced the construction of new farms to be built in the south of Mexico.

To see the complete version of these releases, please visit our web page. http://www.bachoco.com.mx

SECOND QUARTER 2008 RESULTS

Net Sales

Net sales for the quarter reached Ps. 4,987.5 million, 3.0% above the Ps. 4,842.1 million reported in 2Q07. This increase was mainly driven by the 1.3% increase in chicken sales, 15.9% in table eggs sales and 61.4% in swine sales, which was partially offset by 7.2% decrease in balanced feed sales.


       Net Sales          2Q08 (%)  2Q07 (%)
       CHICKEN             77.8      79.1
       EGGS                9.4       8.3
       BALANCED FEED       7.4       8.2
       SWINE               1.1       0.7
       OTHER LINES         4.3       3.7
       TOTAL COMPANY       100.0     100.0

Operating Results

Bachoco's second quarter gross margin was 17.9%, lower than 23.1% reached in 2Q07. The decrease is mainly attributed to the constant increases in raw materials cost. The Company's operating profit was Ps. 311.6 million lower than Ps. 559.6 million reached in 2Q07. EBITDA for the quarter was Ps. 460.3 million, with a margin of 9.2%, lower than Ps. 698.5 million reached in the same period of 2007.

Taxes

Taxes recognized by the Company during the second quarter were Ps. 54.2 million.

Net Income

Net income for second quarter 2008 was Ps. 194.4 million, or Ps. 0.32 per share (US$0.38 per ADS), compared to net income of Ps. 479.2 million, or Ps. 0.80 per share (US$0.93 per ADS) reported in the same 2007 period.

RESULTS BY BUSINESS SEGMENT

Chicken

Chicken sales rose 1.3% during 2Q08 as a result of 1.4% increase in price while volume sold remained at the same level of 2Q07. At the beginning of the quarter, chicken prices remained at a good level, but the situation changed towards the end of the quarter, as chicken prices dropped lower than expected.

Table Eggs

During this quarter, sales of table eggs were stronger, increasing by 15.9% from the same quarter last year, as a result of 23.8% increase in egg prices, due partially to a better balance in the market supply, as well as a better product mix of the company's products, with both issues contributing to partially offsetting a 6.4% decrease in volume.

Balanced Feed

Sales of Balanced Feed declined 7.2% when compared with 2Q07, despite a 16.9% price increase. Volume of balance feed sold dropped 20.7%, as a result of the large period of higher costs in our main raw material.

Swine

Sales of swine increased 61.4.0% from the previous year; the strong increase stems from a 23.8% volume gain and a 30.4% increase in swine prices, as the Mexican market's swine oversupply softened.

Other Lines

Sales of other lines rose 21.1% during 2Q08, mainly as a result of increases in sales of turkey and other lines.


                              FIRST HALF OF 2008

    Net Sales
    Net sales for the first half of 2008 amounted to Ps. 9,730.8 million, 9.2%
above Ps. 8,913.0 million reported in 1H07. The increase was mainly driven by
the 8.1% increase in chicken sales, 20.8% in table eggs sales and 35.2% in
swine sales, which was partially offset by 0.6% decrease in sales of balanced
feed.


    Net Sales             1H 2008(%)     1H 2007(%)
    CHICKEN                77.0           77.8
    EGGS                   10.3            9.4
    BALANCED FEED           7.6            8.3
    SWINE                   1.0            0.8
    OTHER LINES             4.1            3.8
    TOTAL COMPANY         100.0          100.0

Operating Results

Bachoco's gross margin for the first half was 17.7%, lower than 21.0% in 1H07. The decrease is directly attributed to the standing increases in raw materials costs. The Company's operating profit was Ps. 556.0 million, lower than Ps. 786.8 million reached in 1H07. EBITDA was Ps. 853.7 million; lower than Ps. 1,066.4 million in the same period of 2007. EBITDA margin was 8.8%.

Taxes

Taxes recognized by the Company during the first half of the year were Ps. 117.3 million.

Net Income

Net income for first half of the year was Ps. 425.2 million, or Ps. 0.71 per share (US$0.83 per ADS), compared to net income of Ps. 728.0 million, or Ps. 1.21 per share (US$1.41 per ADS) reported in the same 2007 period.

Balance Sheet

The Company's financial structure remained healthy. Liquidity is solid with cash and cash equivalents of Ps. 2,878.8 million as of June 30, 2008. Total debt outstanding was Ps. 72.7 million as of June 30, 2008. CAPEX during the first half of 2008 amounted to Ps. 685.7 million.

Adoption of New Accounting Standards

As of January 1, 2008, the Company has adopted the changes to "Inflationary Effects" in accordance with the Mexican Accounting Principles. Due to the relatively low inflation that the country has consistently achieved during the past several years, a new accounting principle went into effect on January 1, 2008, which eliminates the recognition of inflationary effects in its financial information. Consequently, financial information corresponding to the year 2007 is expressed in millions of Mexican pesos with purchasing power as of December 31, 2007, while the financial information for the year 2008 is stated in current or nominal Mexican pesos.

Company Description

Industrias Bachoco S.A.B. de C.V. (also referred in this report as Bachoco) was founded in 1952. The Company is the largest poultry company in Mexico, with over 700 production and distribution facilities currently organized in nine complexes throughout the country. Bachoco's main business lines are chicken, eggs and balanced feed, and the Company also is present in other business like swine, beef, margarine and turkey. The Company's headquarters are in Celaya, Guanajuato.

Industrias Bachoco made an initial public stock offering in September 1997. Its securities are listed and traded on the BMV (Bachoco) and on the NYSE (IBA).

For more information, please visit Bachoco's website at http://www.bachoco.com.mx or contact our IR department.

This press release contains certain forward-looking statements that are subject to a number of uncertainties, assumptions and risk factors that may influence its accuracy. Actual results may differ. Factors that could cause these projections to differ, include, but are not limited to: supply and demand, industry competition, environmental risks, economic and financial market conditions in Mexico and operating cost estimates. For more information regarding Bachoco and its outlook, please contact the Company's Investor Relations Department.

    IR Contacts:

    Daniel Salazar. CFO
    Caludia Cabrera. IRO
    Ph. 011 52 (461) 618 35 55
    inversionistas@bachoco.net

    In New York:

    Lucia Domville
    Grayling Global
    Ph. (646) 284 9416
    ldomville@hfgcg.com

    Headquarters:

    Industrias Bachoco, S.A.B. de C.V.
    Av. Tecnologico 401, Celaya, Gto.
    Mexico. 38010
    http://www.bachoco.com.mx



                      INDUSTRIAS BACHOCO, S.A.B. DE C.V.
                      Consolidated Statements of Income

                                                    SECOND QUARTER
                                                 U.S.D.       Mexican Pesos
                                                 2008(1)   2008(2)    2007(3)

    Net Sales                                     $484   Ps 4,987   Ps 4,842
    Cost of Sales                                  397      4,093      3,721
    Gross Profit (loss)                             87        895      1,121
    Selling, general and administrative
     expenses                                       57        583        561
    Operating Income (loss)                         30        312        560
    Comprehensive financing (cost) income           (5)       (47)        38
        Interest income                              3         31         69
        Interest expense and financing cost          5         49         20
        Foreign exchange gain (loss), net           (3)       (30)       (11)
    Other income (expense) net                      (1)       (14)        12
    Income before income tax, asset tax             24        250        610
    Total income taxes                               5         54        131
        Income tax, asset tax                        2         24         23
        Deferred income taxes                        3         30        108
    Net Income                                      19        196        479
    Minority net income                              0          2          0
    Mayority net income                             19        194        479
    Weighted average shares outstanding
     (in thousands)                            600,000    600,000    600,000
    Net majority Income per share
     (in U.S.D. per ADR)                          0.38       0.32       0.80

    (1) Million of U.S. dollar (Peso at the rate of Ps. 10.3035)
    (2) Million of constant pesos as of June 30, 2008
    (3) Million of constant pesos as of December 31, 2007


                      INDUSTRIAS BACHOCO, S.A.B. DE C.V.
                      Consolidated Statements of Income

                                                       FIRST HALF
                                                 U.S.D.       Mexican Pesos
                                                 2008(1)   2008(2)    2007(3)

    Net Sales                                     $944   Ps 9,731   Ps 8,913
    Cost of Sales                                  777      8,011      7,041
    Gross Profit (loss)                            167      1,720      1,872
    Selling, general and administrative
     expenses                                      113      1,164      1,086
    Operating Income (loss)                         54        556        787
    Comprehensive financing (cost) income           (2)       (17)        99
        Interest income                              9         98        154
        Interest expense and financing cost          7         70         37
        Foreign exchange gain (loss), net           (4)       (45)       (18)
    Other income (expense) net                       1          6         54
    Income before income tax, asset tax             53        545        939
    Total income taxes                              11        117        209
        Income tax, asset tax                       12        127         72
        Deferred income taxes                       (1)        (9)       138
    Net Income                                      42        428        730
    Minority net income                              0          2          2
    Majority net income                             41        425        728
    Weighted average shares outstanding
     (in thousands)                            600,000    600,000    600,000
    Net mayority Income per share
     (in U.S.D. per ADR)                          0.83       0.71       1.21

         (1) Million of U.S. dollar (Peso at the rate of Ps. 10.3035)
         (2) Million of constant pesos as of June 30, 2008
         (3) Million of constant pesos as of December 31, 2007


                      Industrias Bachoco, S.A.B. de C.V.
                    Condensed Consolidated Balance Sheets

                                             U.S.D.         Mexican Pesos
                                           2008(1)      2008(2)      2007(3)
    ASSETS
    Current assets
    Cash and cash equivalents                $279     Ps 2,879     Ps 3,480
    Total accounts receivable                 124        1,283          946
    Inventories                               434        4,473        3,838
    Other current assets                       -            -
    Total current assets                      838        8,634        8,264
    Net property, plant and equipment       1,032       10,637        9,829
    Other non current assets                   36          374          378
    TOTAL ASSETS                           $1,907    Ps 19,645    Ps 18,470

    LIABILITIES
    Current liabilities
    Notes payable to banks                      6           67           61
    Accounts payable                          131        1,348          848
    Other taxes payable and other accruals     59          611          573
    Total current liabilities                 197        2,025        1,482
    Long-term debt                              7           73           62
    Labor obligations                           5           56           44
    Deferred income taxes and others          188        1,937        2,338
    Total long-term liabilities               201        2,066        2,445
    TOTAL LIABILITIES                        $397     Ps 4,091     Ps 3,926

    STOCKHOLDERS' EQUITY
    Majority stockholder's equity:
    Capital stock                             223        2,295        2,295
    Paid-in capital                            64          660          660
    Reserve for repurchase of shares           24          244          244
    Retained earnings                       1,471       15,156       14,250
    Net majority income of the year            41          425          728
    Deficit from restatement of
     stockholder's equity                    (363)      (3,738)      (3,664)
    Derivate financial instruments             46          469          (15)
    Total majority stockholder's equity     1,505       15,510       14,498
    Minority interest                           4           44           46
    TOTAL STOCKHOLDERS' EQUITY              1,510       15,554       14,544
    TOTAL LIABILITIES AND
     STOCKHOLDERS' EQUITY                  $1,907    Ps 19,645    Ps 18,470

    (1) Million of U.S. dollar (Peso at the rate of Ps. 10.3035)
    (2) Million of constant pesos as of June 30, 2008
    (3) Million of constant pesos as of December 31, 2007


                      Industrias Bachoco, S.A.B. de C.V.
      Condensed Consolidated Statements of Changes in Financial Position

                                            U.S.D.         Mexican Pesos
                                            2008(1)     2008(2)     2007(3)

    Operating Activities:
      Net Income                               $42     Ps. 428     Ps. 730
    Adjustments to Reconcile Net
     Income to Resources Provided
     by Operating Activities:
    Depreciation and Others                     29         295         278
    Changes in Operating Assets and
     Liabilities                                35         357        (900)
    Deferred Income Taxes                      (42)       (438)        156
    Resources Provided by
    Operating Activities                       $62     Ps. 643     Ps. 264

    Financing Activities:
      Increase of Capital Stock                  0           0          (0)
      Proceeds from Long-term Debt               -           -          32
      Proceeds from Short-term Debt             12         123          51
      Repayment of Long-term Debt
       and Notes Payable                         9          94          (5)
      Decrease in Long-term Debt
       in Constant Pesos                       (18)       (187)         (0)
      Cash Dividends Paid                      (11)       (118)       (122)
    Resources Provided by (Used in)
     Financing Activities                      $(9)    Ps. (88)   Ps.  (44)

    Investing Activities:
      Acquisition of Property,
      Plant and Equipment                      (67)       (686)       (287)
      Minority Interest                         (0)         (3)          1
      Others                                    (3)        (27)        (38)
    Resources Used in Investing
    Activities                                $(69)   Ps. (715)  Ps.  (324)

    Net (Decrease) Increase in Cash
     and Cash Equivalents                     $(16)   Ps. (161)  Ps.  (104)

    Cash and Cash Equivalents at
     Beginning of Period                       295       3,040       3,584

    Cash and Cash Equivalents at
     End of Period                            $279   Ps. 2,879   Ps. 3,480

           (1) Million of U.S. dollar (Peso at the rate of Ps. 10.3035)
           (2) Million of constant pesos as of June 30, 2008
           (3) Million of constant pesos as of December 31, 2007

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

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