INDUSTRIAS BACHOCO, S.A.B. DE C.V. 
By CELAYA, Mexico, July 28, 2011 /PRNewswire/ -- Industrias Bachoco S.A.B. de C.V. ("Bachoco" or "the Company") (NYSE: IBA; BMV: Bachoco), Mexico's leading producer and processor of poultry and food products, announced today its unaudited results for the second quarter ("2Q11") and first half periods ("1H11") ended June 30, 2011. All figures have been prepared in accordance with Mexico's Generally Accepted Accounting Principles ("GAAP"), and are presented in nominal Mexican pesos per Mexican GAAP.
Highlights (2Q11 vs. 2Q10):
-- Net sales for 2Q11 rose 6.7% to Ps. 6,616.8 million
-- Chicken sales rose 6.9% in 2Q11
-- Table egg sales declined 4.9% in 2Q11
-- EBITDA margin was 4.9% for 2Q11, compared to 15.4% reported for 2Q10
-- Earnings per share in 2Q11 reached Ps. 0.23 (USD$ 0.24 per ADS),
compared to Ps. 1.03 (USD$1.06 per ADS) in 2Q10
Comments from the Chief Executive Officer:
Rodolfo Ramos, Bachoco's CEO, stated: "Our second quarter results were characterized by the challenge facing the poultry industry worldwide, higher grain costs. Given this is the largest component of the Company's cost of sales, margins and profitability were affected despite efficiency improvements and hedging strategies.
"Even with the increase in our cost of sales, the operating results for our business during the second quarter were positive. We capitalized on the higher demand for chicken and balanced feed products in the Mexican market, thereby achieving greater sales volume and revenues from these business lines.
"The Company's egg business continued to be affected by a large oversupply in the Mexican market; therefore egg sales volume and prices declined in the second quarter.
"Bachoco is focused on factors that will enable the Company to maximize its results. Through strict cost and expense controls, productivity improvements and enhanced sales efforts, the Company continues to work towards maintaining a healthy financial position while remaining the leader in the Mexican poultry industry. Furthermore, we believe that our hedging policy has helped us mitigate the effects of grain price increases and we expect to continue with the same strategy for the rest of the year. "
SECOND QUARTER 2011 RESULTS
Net Sales
Net sales for 2Q11 reached Ps. 6,616.8 million, an increase of 6.7% when compared to Ps. 6,204.1 million reported in 2Q10. This was driven by the strong performance in the chicken and balanced feed businesses, partially offset by declines in sales of egg, swine and other business lines.
Operating Results
Gross profit totaled Ps. 865.1 million for 2Q11, 40.4% below the Ps. 1,453.2 million reported for 2Q10. Gross margin was 13.1% in 2Q11 compared to 23.4% in 2Q10, due to a 21.1% increase in cost of sales.
The Company's operating profit for 2Q11 totaled Ps. 149.5 million, which represented a sharp decrease from the Ps. 783.1 million reported for 2Q10. The operating margin for 2Q11 was 2.3%, compared to 12.6% in 2Q10, due to the aforementioned factors.
EBITDA reached Ps. 326.6 million for a margin of 4.9%, which reflects a decrease from the Ps. 953.7 million and 15.4% EBITDA margin reported in 2Q10.
Net Income
Net income for 2Q11 was Ps. 138.4 million, or Ps. 0.23 per share (US$0.24 per ADS), compared to Ps. 618.0 million, or Ps. 1.03 per share (US$1.06 per ADS) reported in 2Q10.
QUARTERLY RESULTS BY BUSINESS LINE
The following chart illustrates Bachoco's sales by business line as a percentage of Total Net Sales:
SALES BREAKDOWN BY PRODUCT LINE
Business Line 2011
-------------
CHICKEN 82%
EGGS 7%
BALANCED FEED 7%
SWINE 1%
OTHER LINES 3%
TOTAL COMPANY 100%
------------- ---
Chicken
Chicken products sales for 2Q11 increased 6.9% compared to 2Q10 which resulted from a 6.5% increase in sales volume and 0.4% higher prices as demand for chicken products remained strong during the period.
Eggs
Sales of table eggs declined 4.9% during 2Q11 driven by a 3.1% drop in sales volume and 1.8% lower prices. This weaker performance reflects the oversupply that continues to affect the Mexican egg market.
Balanced Feed
The balanced feed business experienced strong growth during 2Q11 with a 32.3% increase in sales when compared to 2Q10, driven by a 13.0% increase in balanced feed prices and 17.0% greater sales volume.
Swine
Swine sales volume increased 2.8%, however, given the increasing supply present in the Mexican market, the price of swine dropped 6.8% which led to a decrease of 4.2% in swine sales when compared to 2Q10.
Other Business Lines
Sales of other business lines declined 12.9% when compared to 2Q10. By-product sales continued to decline during the period.
FIRST HALF 2011 RESULTS
Net Sales
Net sales for 1H11 totaled Ps. 12,659.1 million; representing 4.3% increase over 1H10. The growth in sales was driven by increases of 31.1% in balanced feed sales, 5.3% in chicken sales, and 0.9% in swine sales volume. This was slightly offset by a 12.0% decline in table egg sales, as well as an 18.6% decrease in other business sales.
Operating Results
Gross profit totaled Ps. 1,728.3 million, 30.1% below Ps. 2,473.1 million reported for 1H10. Gross margin reached 13.7% in 1H11 compared to 20.4% in 1H10. This result was attributed to a 13.1% increase in total cost of sales.
The Company's operating profit for 1H11 totaled Ps. 335.5 million, less than Ps. 1,125.0 million in 1H10. The operating margin for the first half of 2011 was 2.7%, compared to 9.3% in 1H10.
EBITDA for 1H11 amounted to Ps. 689.1 million, 53.0% below Ps. 1,465.7 million reported for 1H10. EBITDA margin declined from 12.1% to 5.4% 1H11.
Comprehensive Financial Result
During the first half of 2011, financial income of Ps. 63.2 million was reported, 48.4% higher than Ps. 32.6 million in 1H10. The result is mainly attributed to greater interest income.
Taxes
Total taxes for 1H11 reached Ps. 77.2 million.
Net Income
Net income for the 1H11 totaled PS. 293.7 million, or Ps. 0.49 per share (US$0.50 per ADS), compared to a net income of Ps. 894.0.million, or Ps. 1.49 per share (US$1.53 per ADS) reported in 1H10.
Balance Sheet
Total cash and cash equivalents amounted to Ps. 4,337.2 million as of June 30, 2011, compared to Ps. 3,590.6 million at June 30, 2010. The total debt outstanding in 2011 was Ps. 735.4 million compared to Ps. 790.3 million as of June 30, 2010.
Capital Expenditures
CAPEX for 1H11 amounted to Ps. 285.8 million, and was financed entirely by internal resources.
Recent Events
Bachoco Declared Cash Dividend - On April 28, 2011, Industrias Bachoco, S.A.B. de C.V. announced that during the Company's Annual Shareholder Meeting, The Board of Directors approved a cash dividend payment for 2011 for the amount of Ps. 0.50 per share outstanding and Ps. 6.00 per ADS (equal to 12 Shares).
FINANCIAL TABLES FOLLOW
Industrias Bachoco, S.A.B. de C.V.
Condensed Consolidated Balance Sheets
-Unaudited-
U.S.D. Mexican Pesos
-------------
2011(1) 2011(2) 2010(2)
As of June 30, As of June 30,
-------------- --------------
ASSETS
Cash and cash equivalents $370 Ps 4,337 Ps 3,591
Total accounts receivable 130 1,524 1,578
Inventories 388 4,545 4,012
Other current assets - - -
Total current assets 889 10,406 9,181
Net property, plant and
equipment 902 10,557 10,789
Other non current assets 34 395 418
TOTAL ASSETS $1,824 Ps 21,358 Ps 20,388
------ ------ ------
LIABILITIES
Notes payable to banks 26 307 465
Accounts payable 143 1,676 1,457
Other taxes payable and
other accruals 39 458 734
Total current liabilities 208 2,441 2,656
Long-term debt 37 429 325
Labor obligations 11 127 106
Deferred income taxes and
others 171 1,999 2,017
Total long-term
liabilities 218 2,555 2,449
TOTAL LIABILITIES $427 Ps 4,995 Ps 5,106
--- ----- -----
STOCKHOLDERS' EQUITY
Capital stock 196 2,295 2,295
Paid-in capital 64 745 745
Reserve for repurchase of
shares 13 155 159
Retained earnings 1,095 12,822 11,139
Net majority income of
the year 25 292 893
Deficit from restatement
of stockholder's equity - - -
Derivate financial
instruments - - -
Total majority
stockholder's equity 1,393 16,309 15,231
Minority interest 5 53 52
TOTAL STOCKHOLDERS'
EQUITY 1,397 16,363 15,282
----- ------ ------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,824 Ps 21,358 Ps 20,388
--------------------- ------ --- ------ --- ------
(1) For reference, in millions of U.S. dollars using an exchange rate
of $11.71
Source: Mexico's National Bank, as of June 30, 2011.
(2) Millions of Mexican nominal pesos
INDUSTRIAS BACHOCO, S.A.B. DE C.V.
Consolidated Statements of Income
-Unaudited-
SECOND QUARTER
--------------
U.S.D. Mexican Pesos
-------------
2011(1) 2011(2) 2010(2)
------ ------ ------
Net sales $565 Ps 6,617 Ps 6,204
Cost of sales 491 5,752 4,751
Gross profit (loss) 74 865 1,453
Selling, general and administrative
expenses 61 716 670
Operating income (loss) 13 150 783
Other income (expense) net 0 1 (30)
Comprehensive financing (cost) income 3 34 35
Interest income 5 55 39
Interest expense and financing
expenses (2) (18) (19)
Foreign exchange gain (loss), net (0) (3) (0)
Other financial income (expense) net - - 16
Income before income tax, asset tax 16 185 789
Total income taxes 4 46 171
Income tax, asset tax 1 14 202
Deferred income taxes 3 32 (32)
Net income $12 Ps 139 Ps 618
Minority net income 0 0 0
Majority net income 12 138 618
weighted average shares outstanding
(in thousands) 600 600 600
Net majority Income per share (in
U.S.D per ADS) 0.24 0.23 1.03
--------------------------------- ---- ---- ----
FIRST HALF
----------
U.S.D. Mexican Pesos
-------------
2011(1) 2011(2) 2010(2)
------ ------ ------
Net sales US 1,081 Ps 12,659 Ps 12,135
Cost of sales 933 10,931 9,662
Gross profit (loss) 148 1,728 2,473
Selling, general and administrative
expenses 119 1,393 1,348
Operating income (loss) 29 336 1,125
Other income (expense) net (2) (28) (30)
Comprehensive financing (cost) income 5 63 33
Interest income 9 107 73
Interest expense and financing
expenses (2) (25) (39)
Foreign exchange gain (loss), net (1) (6) 4
Other financial income (expense) net (1) (13) (6)
Income before income tax, asset tax 32 371 1,127
Total income taxes 7 77 233
Income tax, asset tax 10 120 248
Deferred income taxes (4) (43) (15)
Net income 25 294 894
Minority net income 0 1 1
Majority net income 25 292 893
weighted average shares outstanding
(in thousands) 600 600 600
Net majority Income per share (in
U.S.D per ADS) 0.50 0.49 1.49
--------------------------------- ---- ---- ----
(1) For reference, in millions of U.S. dollars using an exchange rate
of $11.71
Source: Mexico's National Bank, as of June 30, 2011.
(2) Millions of Mexican nominal pesos
Industrias Bachoco, S.A.B. de C.V.
Consolidated Statement of Cash Flows
-Unaudited- Mexican Pesos
-------------
U.S.D. 2011(2) 2010(2)
As of June As of June
2011(1) 30, 30,
------ ----------- -----------
NET MAJORITY INCOME
BEFORE INCOME TAX $32 Ps. 371 Ps. 1,127
ITEMS THAT DO NOT
REQUIRE CASH: (20) (232) (61)
ITEMS RELATING TO
INVESTING ACTIVITIES: 32 378 330
Depreciation and
others 30 354 341
Income (loss) on sale
of plant and
equipment 2 25 (9)
Other Items (0) (1) (1)
ITEMS RELATING TO
FINANCING ACTIVITIES: 11 132 112
Interest income
(expense) 2 25 39
Other Items 9 107 73
NET CASH GENERATED
FROM NET INCOME
BEFORE TAXES $55 Ps. 648 Ps. 1,508
CASH GENERATED OR USED
IN THE OPERATION: 2 28 384
Decrease (increase) in
accounts receivable 7 85 77
Decrease (increase) in
inventories (1) (11) 501
Decrease (increase) in
accounts payable 4 43 (264)
Decrease (increase) in
other liabilities (8) (89) 71
NET CASH FLOW FROM
OPERATING ACTIVITIES $58 Ps. 676 Ps. 1,892
INVESTING ACTIVITIES
NET CASH FLOW FROM
INVESTING ACTIVITIES (26) (306) (382)
Acquisition of
property, plant and
equipment (24) (286) (203)
Proceeds from sales of
property plant and
equipment (5) (62) (7)
Other Items 4 42 (171)
CASH FLOW SURPLUS
(REQUIREMENTS OF) TO
BE USED IN FINANCING
ACTIVITIES $32 Ps. 370 Ps. 1,510
FINANCING ACTIVITIES
Net cash provided by
financing activities: (18) (210) (422)
Proceeds from loans 13 154 770
Principal payments on
loans (6) (65) (944)
Dividends paid (13) (150) (125)
Other items (13) (148) (124)
NET INCREASE
(DECREASE) IN CASH
AND EQUIVALENTS 14 160 1,088
CASH AND INVESTMENTS
AT THE BEGINNING OF
YEAR 357 4,177 2,503
CASH AND INVESTMENTS
AT END OF PERIOD $370 Ps. 4,337 Ps. 3,591
(1) For reference, in millions of U.S. dollars using an exchange rate
of $11.71
Source: Mexico's National Bank, as of June 30, 2011.
(2) Millions of Mexican nominal pesos
Derivatives Position Report
Industrias Bachoco, S.A.B. de C.V.
Thousands of Mexican Pesos, as of June 30, 2011
Quarter: 2
Table 1
Objective
Type of Financial of the
Instrument Instrument Notional
Put spread, knock
out forwards and Hedge and
puts negotiation $217,644
Futures for corn
and soybean meal Hedge $-
Options for corn Hedge and
and soybean meal negotiation $12,143
Value of the Related Commodity
2Q-2011 1Q-2011
$11.71 $11.89
Corn: $6.9325 USD/
bushel for May
2011 and $7.0100
USD/bushel for
July 2011 .
Corn: $6.29 USD/ Soybean meal:
bushel for Jul $370.70 USD/ton
2011. Soybean for May 2011 and
meal: $334.50 USD/ $375.10 USD/ton
ton for Aug 2011. for July 2011.
---------------- -------------------
Soybean meal:
$334.50 USD/ton
for Aug 2011.
----------------
Amounts
Reasonable Due by Guaranties
Value Year Required
2Q-2011 1Q-2011
89% 2011
and 11%
-$ 988 $5,830 2012
The deals
consider the
possibility
of margin
calls but
not another
kind of
$- $3,319 2011 guarantee
-$ 853 $141 2011
-None of the financial instruments exceed 5% of total assets as of
June 30, 2011.
-A negative value means an unfavorable effect for the Company.
-The notional value represents the net position as of June 3o, 2011
at the exchange rate of Ps. 11.71 per USD.
Industrias Bachoco, S.A.B. de C.V.
Thousands of Mexican Pesos, as of June 30, 2011
Quarter: 2
Table 2
Reasonable Value
Type of Financial as
Instrument of June 30, 2011
---------- ----------------
Put spread, knock out
forwards and puts* -$ 988
Futures for corn and, $-
soybean**
Options for soybean
meal -$ 853
Value of the Related Commodity-reference
value
----------------------------------------
-2.5% 2.5% 5.0%
---- --- ---
$11.42 $12.00 $12.30
-5% 5% 10%
$5.9755 $6.6045 $6.9190
$316.39 $353.25 $367.37
$316.39 $353.25 $367.37
Effect on the Income Effect on the Cash Flow ***
---------------------------
Statement -2.5% 2.5% 5.0%
--------- ---- --- ---
Direct -$ 9,678 $9,851 $18,448
-5% 5% 10%
--- --- ---
The effect will
materialize as the
inventory is
consumed $- $- $-
-$ 1,547 -$ 226 $304
A negative value means an unfavorable effect for the Company.
* The reference value is the exchange rate of Ps. 11.71 per USD as
of June 30, 2011
** The reference value is the Futures of corn for Jul 2011, $6.29
USD/bushel and soybean meal for Aug 2011, $334.50 USD/ton.
Note: even when table set above shows corn and soybean prices for
contracts of July and August 2011, the effect on the cash flow
corresponds to the total positions effects.
*** The Company has credit lines with the majority of its
counterparts, so that the effect in cash flow is lower than the
amount shown.
Company Description:
Industrias Bachoco is the leader of the Mexican poultry industry and an important player in Mexico's food industry. Its main product lines are chicken, table eggs, balanced feed and swine. Founded in 1952, Bachoco is headquartered in Celaya, in the state of Guanajuato in central Mexico with operations that span the country including 60 distribution centers, and a growing export business. Bachoco trades on both the Mexican and New York Stock Exchanges under the ticker IBA and BACHOCOB.MX For the year ended December 31, 2010, the Company reported Net Sales of over US$ 2 billion.
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, whether as a result of new information, future events or otherwise.
SOURCE Industrias Bachoco, S.A.B. de C.V.
