Industrias Bachoco, S.A.B. de C.V. : Industrias Bachoco Announces Third Quarter 2011 Results
10/27/2011| 05:05pm US/Eastern
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CELAYA, Mexico, Oct. 27, 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 third quarter ("3Q11") and nine month period ended September 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 (3Q11 vs. 3Q10):
-- Net sales in 3Q11 rose 3.5% to Ps. 6,514.7 million
-- Chicken sales rose 0.7% in 3Q11
-- Table egg sales increased 8.8% in 3Q11
-- EBITDA margin was 0.5% in 3Q11, compared to 15.4% reported for 3Q10
-- Net majority loss per share in 3Q11 of Ps. 0.178 (USD$ 0.154 per ADS),
compared to net majority income per share of Ps. 1.058 (USD$0.915 per
ADS) in 3Q10
Comments from the Chief Executive Officer:
Mr. Rodolfo Ramos, Bachoco's Chief Executive Officer, stated: "The third quarter's results were sharply affected by several external conditions that lead the Company to post negative net income in the quarter, mainly; the continuous increase in the cost of grain, and oversupply conditions within the Mexican poultry industry, which led to a reduction in our chicken prices while compared with the same quarter of 2010."
"On a positive note, total sales increased across the Company's main product lines, preserving positive EBITDA for the quarter, while adequate administration of our financial instruments softened the impact of the peso's depreciation when compares to the U.S. dollar.
Bachoco's aim is to maintain strict cost and expense controls, productivity improvements, while serving our markets and maintaining a healthy financial position".
THIRD QUARTER 2011 RESULTS
Net Sales
Net sales in 3Q11 reached Ps. 6,514.7 million, an increase of 3.5% when compared to Ps. 6,297.3 million reported in 3Q10. This was result of a strong performance in the balanced feed businesses, eggs and other business lines, as well as a slight increase in chicken products sales, partially offset by a decline in swine sales.
Operating Results
Gross profit totaled Ps. 557.6 million in 3Q11, 62.6% below the Ps. 1,490.6 million reported in 3Q10. Gross margin was 8.6% in 3Q11 compared to 23.7% in 3Q10, due mainly to a 23.9% increase in cost of sales.
The Company's operating loss in 3Q11 totaled Ps. 150.4 million, which represented a decline from operating profit of Ps. 812.1 million reported in 3Q10.
EBITDA reached Ps. 29.5 million for a margin of 0.5%, a decrease from the Ps. 971.6 million and 15.4% reported in 3Q10.
Taxes
Bachoco reported positive total taxes for the third quarter 2011 of Ps.32.7 million, as a result of positive income tax of Ps. 56.3 million, compensated by a charge in deferred income tax of Ps. 23.6 million.
Net income (loss)
Bachoco recorded a net majority loss of Ps. 106.9 million, or Ps. 0.178 per share (US$0.154 per ADS) in 3Q11, compared to a net majority income of Ps. 635.1 million, or Ps. 1.058 per share (US$0.915 per ADS) reported in 3Q10.
QUARTERLY RESULTS BY BUSINESS LINE
Chicken
Chicken products sales in 3Q11 grew 0.7% compared to 3Q10, which resulted from a 3.9% increase in sales volume, partially offset by a 3.1% decrease in chicken prices as industry supply for chicken products rose during the period.
Eggs
Sales of table eggs increased 8.8% during 3Q11 driven by a 16.3% increase in prices, partially offset by a 6.4% drop in sales volume.
Balanced Feed
The balanced feed business experienced strong improvement during 3Q11 with a 35.7% increase in sales when compared to 3Q10, driven by a 19.9% increase in balanced feed prices and 13.2% greater sales volume.
Swine
As a result of a larger supply of swine in the Mexican market, our sales decreased 8.3%, resulted from a 5.9% decrease in prices and 2.5% decrease in sales volume.
Other Business Lines
Sales of other business lines increased 14.8% when compared to 3Q10, as sales of beef products increase during the period.
ACCUMULATED 2011 RESULTS
(January-September 2011 Vs. January-September 2010)
Net Sales
Net sales in the first nine months 2011 totaled Ps. 19,173.8 million; representing a 4.0% increase from the same period in the previous year. The increases in net sales were driven by an increase of 32.6% in balanced feed sales, and 3.7% in chicken sales. This result was offset by a 5.7% decline in table egg sales, as well as 9.1% decrease in other business sales.
Operating Results
Gross profit in the first nine months of 2011 totaled Ps. 2,285.9 million, 42.3% below the Ps. 3,963.7 million reported in the same period 2010. Gross margin in the first nine months 2011 reached 11.9% compared to 21.5% in the same period 2010. This was attributed to a 16.7% increase in total cost of sales.
The Company's operating profit in the first nine months 2011 totaled the Ps. 185.1 million, less than Ps. 1,937.1 million in the same nine month period 2010. The operating margin in the first nine months of 2011 was of 1.0%, compared to 10.5% in the same period 2010.
EBITDA in the first nine months of 2011 amounted to Ps. 718.6 million, 70.7% below the Ps. 2,449.4 million reported in the same period 2010. EBITDA margin declined from 13.3% to 3.7% in 2011.
Comprehensive Financial Result
During the first nine months in 2011, the comprehensive financial result was an income of Ps. 137.8 million, 84.0% higher than the Ps. 74.9 million reported in the same period 2010. The result was mainly attributed to greater interest income.
Taxes
Total taxes as of September 30, 2011 were Ps. 44.6 million.
Net Income
Net majority income for the first nine months of 2011 totaled PS. 185.6 million, or Ps. 0.309 per share (US$0.267 per ADS), compared to a net majority income of Ps. 1,527.7 million, or Ps. 2.55 per share (US$2.200 per ADS) reported in the same period 2010.
Balance Sheet
Total cash and cash equivalents amounted to Ps. 3,276.8 million as of September 30, 2011, compared to Ps. 3,778.4 million at the same period of 2010. The total debt outstanding in 2011 was Ps. 827.0 million compared to Ps. 763.6 million as of September 30, 2010.
Capital Expenditures
CAPEX for 2011 amounted to Ps. 461.5 million, and was financed entirely by internal resources.
Recent Events
August 23, 2011 "Industrias Bachoco Acquires Further Processed Meats Facility in Northern Mexico". The Company announced that it reached an agreement with Grupo OSIG to acquire the assets of Trosi de Carnes, S.A. de C.V. This facility is located in Monterrey, Nuevo Leon in Northern Mexico.
Company Description:
Industrias Bachoco is the leader of the Mexican poultry industry and an important player in Mexico's food industry. Its main product lines are chicken, table eggs, balanced feed and swine. Founded in 1952, Bachoco is headquartered in Celaya, in the state of Guanajuato in central Mexico with operations that span the country including 60 distribution centers, and a growing export business. Bachoco trades on both the Mexican and New York Stock Exchanges under the ticker IBA and BACHOCOB.MX. For the year ended December 31, 2010, the Company reported Net Sales of over US$ 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.
FINANCIAL TABLES FOLLOW
Industrias Bachoco, S.A.B. de C.V.
Condensed Consolidated Balance Sheets
-Unaudited-
U.S.D. Mexican Pesos
------
as of
Sep
30, 2011(2) 2010(2)
As of Sep As of Sep
30, 30,
---------- ----------
ASSETS
Cash and cash equivalents $236 Ps 3,277 Ps 3,778
Total accounts receivable 109 1,510 1,609
Inventories 390 5,413 4,388
Other current assets - - -
Total current assets 735 10,200 9,775
Net property, plant and
equipment 761 10,570 10,661
Other non current assets 27 381 353
TOTAL ASSETS $1,523 Ps 21,151 Ps 20,790
--- ---
LIABILITIES
Notes payable to banks 29 396 215
Accounts payable 118 1,637 1,245
Other taxes payable and
other accruals 17 243 650
Total current liabilities 164 2,277 2,110
Long-term debt 31 431 549
Labor obligations 10 137 98
Deferred income taxes and
others 148 2,054 2,117
Total long-term liabilities 189 2,621 2,764
TOTAL LIABILITIES $353 Ps 4,897 Ps 4,874
--- ---
STOCKHOLDERS' EQUITY
Capital stock 165 2,295 2,295
Paid-in capital 54 745 745
Reserve for repurchase of
shares 11 154 159
Retained earnings 924 12,822 11,139
Net majority income of the
year 13 186 1,528
Deficit from restatement of
stockholder's equity - - -
Derivate financial
instruments - - -
Total majority stockholder's
equity 1,167 16,202 15,866
Minority interest 4 52 50
TOTAL STOCKHOLDERS' EQUITY 1,171 16,254 15,916
----- ------ ------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,523 Ps 21,151 Ps 20,790
--------------------- ------ --- ------ --- ------
(1) For reference, in millions of U.S. dollars using
an exchange rate of $13.8835
Source: Mexico's National Bank, as of September 30,
2011.
(2) Millions of Mexican nominal pesos
INDUSTRIAS
BACHOCO, S.A.B.
DE C.V.
Consolidated Statements of Income
-Unaudited-
THIRD QUARTER AS OF SEPTEMBER,
------------- ----------------
U.S.D. Mexican Pesos U.S.D. Mexican Pesos
------ ------
2011(1) 2011(2) 2010(2) 2011(1) 2011(2) 2010(2)
------ ------ ------ ------ ------ ------
Net sales $469 Ps 6,515 Ps 6,297 US 1,381 Ps 19,174 Ps 18,433
Cost of sales 429 5,957 4,807 1,216 16,888 14,469
Gross profit
(loss) 40 558 1,491 165 2,286 3,964
Selling, general
and
administrative
expenses 51 708 678 151 2,101 2,027
Operating income
(loss) (11) (150) 812 13 185 1,937
Other income
(expense) net (5) (64) (50) (7) (92) (80)
Comprehensive
financing
(cost) income 5 75 42 10 138 75
Interest income 4 49 50 11 156 123
Interest expense
and financing
expenses (1) (13) (18) (3) (38) (57)
Foreign exchange
gain (loss),
net 3 48 11 3 42 15
Other financial
income
(expense) net (1) (10) (0) (2) (23) (6)
Income before
income tax,
asset tax (10) (140) 805 17 231 1,932
Total income
taxes (2) (33) 169 3 45 403
Income tax,
asset tax (4) (56) 67 5 64 315
Deferred income
taxes 2 24 102 (1) (19) 88
Net income $(8) Ps (107) Ps 635 13 187 1,529
Minority net
income (0) (0) (0) 0 1 1
Majority net
income (8) (107) 635 13 186 1,528
------------ --- ---- --- --- --- -----
weighted average
shares
outstanding 600 600 600 600 600 600
Net majority
Income per
share (0.154) (0.178) 1.058 0.267 0.309 2.546
------------ ------ ------ ----- ----- ----- -----
(1) For reference, in millions of U.S.
dollars using an exchange rate of
$13.8835
Source: Mexico's National Bank, as of
September 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 Sep As of Sep
2011(1) 30, 30,
------ ---------- ----------
NET MAJORITY INCOME
BEFORE INCOME TAX $17 Ps. 231 Ps. 1,932
ITEMS THAT DO NOT REQUIRE
CASH: (20) (275) (188)
ITEMS RELATING TO
INVESTING ACTIVITIES: 40 550 494
Depreciation and others 38 533 512
Income (loss) on sale of
plant and equipment 1 18 (17)
Other Items (0) (1) (1)
ITEMS RELATING TO
FINANCING ACTIVITIES: 14 194 180
Interest income (expense) 3 38 57
Other Items 11 156 123
NET CASH GENERATED
FROM NET INCOME
BEFORE TAXES $50 Ps. 701 Ps. 2,417
CASH GENERATED OR USED IN
THE OPERATION: (69) (964) (284)
Decrease (increase) in
accounts receivable 10 138 100
Decrease (increase) in
inventories (63) (879) 125
Decrease (increase) in
accounts payable 0 4 (477)
Decrease (increase) in
other liabilities (16) (227) (33)
NET CASH FLOW FROM
OPERATING ACTIVITIES $(19) Ps. (263) Ps. 2,133
INVESTING ACTIVITIES
NET CASH FLOW FROM
INVESTING ACTIVITIES (37) (518) (407)
Acquisition of property,
plant and equipment (33) (462) (234)
Proceeds from sales of
property plant and
equipment (5) (73) (13)
Other Items 1 17 (161)
CASH FLOW SURPLUS
(REQUIREMENTS OF) TO BE
USED IN
FINANCING ACTIVITIES $(56) Ps. (781) Ps. 1,726
FINANCING ACTIVITIES
Net cash provided by
financing activities: (9) (120) (450)
Proceeds from loans 64 895 1,099
Principal payments on
loans (52) (715) (1,299)
Dividends paid (22) (300) (250)
Other items (0) (0) 0
NET INCREASE (DECREASE)
IN CASH AND EQUIVALENTS (65) (900) 1,276
CASH AND INVESTMENTS AT
THE BEGINNING OF YEAR 301 4,177 2,503
CASH AND INVESTMENTS
AT END OF PERIOD $236 Ps. 3,277 Ps. 3,778
(1) For reference, in millions of U.S. dollars using
an exchange rate of $13.8835
Source: Mexico's National Bank, as of September 30,
2011.
(2) Millions of Mexican nominal pesos
Derivatives Position Report
-Unaudited-
Industrias Bachoco, S.A.B. de C.V.
Thousands of Mexican Pesos, as of September 30, 2011
Quarter: 3
Table 1
Type of Objective of Amounts
Financial the Due by Guaranties
Instrument Instrument Notional Value of the Related Commodity Reasonable Value Year Required
---------- ------------ -------- ------------------------------ ---------------- ------- ----------
3Q-2011 2Q-2011 3Q-2011 2Q-2011
------- ------- ------- -------
Forwards,
calls,
knock
out The deals
calls, consider the
knock 97.0% in possibility
out 2011 of margin
forwards and calls but not
and Hedge and 3.0% in another kind
puts negotiation -$ 96,319 $13.88 $11.71 -$ 3,420 -$ 988 2012 of guarantee
---------- ------------ -------------- ------ ------ ---------- ------------- --------- -------------
Futures
for Corn: $5.9250 USD/
corn bushel for December Corn: $6.29 USD/bushel for
and 2011. Soybean meal: July 2011 . Soybean meal:
soybean $308.6 USD/ton for $334.50 USD/ton for August
meal Hedge $12,815 December 2011 2011 -$ 3,357 $- 2011
------- ----- ------- ------------------- --------------------------- ---------- --- ----
Options
for
corn
and
soybean Hedge and
meal negotiation $- $- -$ 889 2011
---------- ------------ --- --- ------------- ----
None of the financial instruments exceed 5% of total assets as of September 30, 2011.
A negative value means an unfavorable effect for the Company.
The notional value represents the net position as of September 30, 2011 at the exchange rate of Ps. 13.88 per USD.
Industrias Bachoco, S.A.B. de C.V.
Thousands of Mexican Pesos, as of September 30, 2011
Quarter: 3
Table 2
Reasonable
Type of Value as of
Financial September 30, Effect on the
Instrument 2011 Value of the related commodity-reference value Income Statement Effect on the Cash Flow ***
----------------------------------------- ---------------------------
-2.5% 2.5% 5.0% -2.5% 2.5% 5.0%
---- --- --- ---- --- ---
Forwards,
calls,
knock out
calls,
knock out
forwards
and puts* -$ 3,420 $13.53 $14.23 $14.57 Direct -$ 1,012 -$ 5,828 -$ 8,236
---------- -------------------------------- ------ ------ ------ ------ -------------- -------------- --------------
-5% 5% 10% -5% 5% 10%
--- --- --- --- --- ---
Futures for corn and,
--------------------- -$ 3,357 $5.6288 $6.2213 $6.5175 -$ 3,830 -$ 2,884 -$ 2,411
The effect will
materialize as the
inventory is
soybean consumed
--------------- -------------------
$293.17 $324.03 $339.46
------- ------- -------
Options
for corn
and
soybean
meal** $- $- $- $-
--------- --- --- --- ---
A negative value means an unfavorable effect for the Company.
* The reference value is the exchange rate of Ps. 13.88 per USD as of September 30, 2011
** The reference value is the Futures of corn for Dec 2011: $5.9250 USD/bushel and soybean meal for Dec 2011, $308.6 USD/ton.
Note: even when table set above shows corn and soybean prices for contracts of Dec 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.
SOURCE Industrias Bachoco, S.A.B. de C.V.
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