INDUSTRIAS BACHOCO, S.A.B. DE C.V. 
By CELAYA, Mexico, April 29, 2014 /PRNewswire/ -- Industrias Bachoco, S.A.B. de C.V., "Bachoco" or "the Company", (NYSE: IBA; BMV: Bachoco) announced today its unaudited results for the first quarter 2014 results ("1Q14") ended March 31, 2014. All figures have been prepared in accordance with International Financial Reporting Standard ("IFRS"), and are presented in nominal million Mexican Pesos ("$").
HIGHLIGHTS- 1Q14 vs 1Q13
-- Net sales decreased 3.5% in 1Q14.
-- EBITDA margin was 11.5% for 1Q14 up from 9.5% in 1Q13.
-- Earnings per basic and diluted share totaled $1.10 or $13.2 per ADR for
1Q14 compared with $1.06 or $12.76 per ADR for 1Q13.
CEO COMMENTS
Mr. Rodolfo Ramos Arvizu, Chief Executive Officer of Bachoco, stated: "In the first quarter of 2014 the Mexican poultry industry observed a good balance between supply and demand. In our US market, after a weak start of the year, conditions improved through the quarter.
Even when our total volumes improved when compared to first quarter 2013, the lower cost in our main raw materials, drove our main product prices down so that net sales posted a decrease of 3.5%. On the other hand, lower raw material prices more than compensated the price reduction; as a result, our operating performance improved with respect to the same quarter of previous year.
In accordance with the new tax regime in Mexico, as of January 1, 2014, our Mexican operation is subject to a higher tax rate, which negatively impacted our net income in the first quarter. However, despite these conditions, we achieved higher earnings per share.
Furthermore, Bachoco maintains a very solid financial position with a negative net debt of $5,665 million."
EXECUTIVE SUMMARY
The following financial information is expressed in millions of nominal pesos, except for amounts per share or per ADR, with comparative figures for the same period in 2013.
NET SALES BY GEOGRAPHY
In millions of pesos 1Q14 1Q13 Change
------
$ $ $ %
--- --- --- ---
Net Sales 9,643.4 9,988.8 (345.4) (3.5)
--------- ------- ------- ------ ----
Net sales in Mexico 7,746.8 7,719.8 27.0 0.4
------------------- ------- ------- ---- ---
Net sales in the U.S. 1,896.6 2,269.0 (372.4) (16.4)
--------------------- ------- ------- ------ -----
NET SALES BY SEGMENT
In millions of pesos 1Q14 1Q13 Change
------
$ $ $ %
--- --- --- ---
Net Sales 9,643.4 9,988.8 (345.4) (3.5)
--------- ------- ------- ------ ----
Poultry 8,790.1 9,172.1 (382.0) (4.2)
------- ------- ------- ------ ----
Other 853.3 816.7 36.6 4.5
----- ----- ----- ---- ---
NET VOLUME SOLD BY SEGMENT
In thousands of tons Change
------
1Q14 1Q13 Volume %
---- ---- ------ ---
Total sales volume: 441.9 426.5 15.4 3.6
------------------- ----- ----- ---- ---
Poultry 358.9 347.2 11.7 3.4
------- ----- ----- ---- ---
Others 83.0 79.3 3.7 4.3
------ ---- ---- --- ---
The Company's 1Q14 net sales totaled $9,643.4 million, $345.3 million or 3.5% below the $9,988.8 million reported in 1Q13. In 1Q14, sales of our U.S. operations represented 19.7% of total sales, compared with 22.7% in 1Q13.
The reduction in sales is mainly attributed to lower prices mainly in chicken and balanced feed, partially offset by higher volume sold of these products.
GROSS PROFIT
In millions of pesos 1Q14 1Q13 Change
------
$ $ $ %
--- --- --- ---
Cost of sales 7,854.1 8,509.8 655.7 (7.7)
------------- ------- ------- ----- ----
Gross profit 1,789.3 1,479.1 310.2 21.0
------------ ------- ------- ----- ----
Gross margin 18.6% 14.8% - -
------------ ---- ---- --- ---
In 1Q14 the cost of sales totaled $7,854.1 million, $655.7 million or 7.7% lower than $8,509.8 million reported 1Q13; the decrease in cost of sales is mainly attributed to the decline in prices of our main raw material.
As a result, the Company reached a gross profit of $1,789.3 million and a gross margin of 18.6% in 1Q14; this profit is 21.0% higher, compared to a gross profit of $1,479.1 million, and a gross margin of 14.8% in 1Q13.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A")
In
millions
of
pesos 1Q14 1Q13 Change
------
$ $ $ %
--- --- --- ---
Total
SG&A 871.4 795.0 76.4 9.6
----- ----- ----- ---- ---
Total SG&A expenses in 1Q14 reached $871.4 million, $76.4 million or 9.6% more than the $795.0 million reported 1Q13. This increase is mainly attributed to larger volume sold and higher expenses as we strengthened our operating structure.
Total SG&A expenses as a percentage of net sales represented 9.0% in 1Q14 compared to 8.0% in 1Q13.
OTHER INCOME (EXPENSE), NET
In millions of pesos 1Q14 1Q13 Change
------
$ $ $ %
--- --- --- ---
Other income (expense),
net (35.0) 77.1 (112.1) (145.4)
----------------------- ----- ---- ------ ------
This item includes mainly the sale of unused assets as well as hens and other by-products. We record such sales as expenses when the sale price is below the book value of those assets.
In 1Q14, the amount was an expense of $35.0 million, compared with other income of $77.1 million reported in 1Q13; the negative variation is mainly attributed to losses in the sale of several unused assets.
OPERATING INCOME
In millions of pesos 1Q14 1Q13 Change
------
$ $ $ %
--- --- --- ---
Operating income 882.9 761.1 121.8 16.0
---------------- ----- ----- ----- ----
Operating margin 9.2% 7.6% - -
---------------- --- --- --- ---
Operating income in 1Q14 totaled $882.9 million, which represents an operating margin of 9.2%, a positive comparison when compared to operating income of $761.1 million and a 7.6% operating margin in 1Q13.
The increase in operating income is mainly due to higher gross profit, resulting from higher volume and lower cost of sales in 1Q14.
NET FINANCIAL INCOME
In millions of pesos 1Q14 1Q13 Change
------
$ $ $ %
--- --- --- ---
Net Financial Income 50.8 19.3 31.5 163.4
-------------------- ---- ---- ---- -----
Financial Income 90.1 64.2 25.9 40.3
---------------- ---- ---- ---- ----
Financial Expense 39.4 44.9 (5.5) (12.2)
----------------- ---- ---- ---- -----
In 1Q14, the Company reported net financial income of $50.8 million, compared to income of $19.3 million reported in the same period of 2013. The increase is mainly as a result of higher interest income and lower interest expenses.
TAXES FOR THE PERIOD
In millions of pesos 1Q14 1Q13 Change
------
$ $ $ %
--- --- --- ---
Total Taxes 274.1 140.1 134.0 95.6
----------- ----- ----- ----- ----
Income tax 128.4 296.2 (167.8) (56.7)
---------- ----- ----- ------ -----
Deferred income tax 145.7 (156.1) 301.8 193.3
------------------- ----- ------ ----- -----
As we have stated in previous releases, Industrias Bachoco and all of its subsidiaries file separate income tax returns. In this regard, Bachoco, S.A. de C.V., the Company's main subsidiary is subject to a higher tax rate of 30% effective January 1, 2014 (before it was 21%), as a result of the Mexican Tax Reform approved in 2013.
As a result, total taxes were $274.1 million as of March 31, 2014, compared with total taxes of $140.1 million in the same period of 2013.
NET INCOME
In millions of pesos 1Q14 1Q13 Change
------
$ $ $ %
--- --- --- ---
Net income 659.7 637.7 22.0 3.4
---------- ----- ----- ---- ---
Net margin 6.8% 6.4% - -
---------- --- --- --- ---
Basic and diluted
earnings per
share(1) 1.10 1.06 - -
----------------- ---- ---- --- ---
Basic and diluted
earnings per ADR(2) 13.20 12.76 - -
-------------------- ----- ----- --- ---
Weighted average
Shares
outstanding(3) 599,851 599,972 - -
---------------- ------- ------- --- ---
(1) In pesos
(2) in pesos, an ADR
equal to twelve
shares
(3) In thousands of
shares
For 1Q14 the Company recorded a net income of $659.7 million, representing a net income of $1.10 pesos per share; compared with a net income of $637.7 million, which represented $1.06 pesos of net income per share in 1Q13. This variation is mainly attributed better operating results and larger net financial income.
Net margin was 6.8 and 6.4% for 1Q14 and 1Q13, respectively.
EBITDA AND
ADJUSTED
EBITDA
In millions of
pesos 1Q14 1Q13 Change
------
$ $ $ %
--- --- --- ---
Net income 659.7 637.7 22.0 3.4
---------- ----- ----- ---- ---
Income tax
expense
(benefit) 274.1 140.1 134.0 95.6
---------- ----- ----- ----- ----
Result in
associates 0.1 2.6 (2.5) (97.9)
----------- --- --- ---- -----
Net finance
(income)
expense (50.8) (19.3) (31.5) 163.4
----------- ----- ----- ----- -----
Depreciation
and
amortization 223.1 183.1 40.0 21.8
------------- ----- ----- ---- ----
EBITDA 1,106.1 944.2 161.8 17.1
------ ------- ----- ----- ----
EBITDA Margin
(%) 11.5% 9.5% - -
------------- ---- --- --- ---
Other expense
(income) net 35.0 (77.1) 112.1 (145.4)
------------- ---- ----- ----- ------
Adjusted
EBITDA 1,141.1 867.1 263.0 30.3
-------- ------- ----- ----- ----
Adjusted
EBITDA Margin 11.8% 8.7% - -
-------------- ---- --- --- ---
Net revenues 9,643.4 9,988.8 (345.3) (3.5)
------------ ------- ------- ------ ----
EBITDA in 1Q14 reached $1,106.1 million, representing an EBITDA margin of 11.5%, compared to EBITDA of $944.2 million in 1Q13, with an EBITDA margin of 9.5%.
The adjusted EBITDA in 1Q14 reached $1,141.0 million, representing an adjusted EBITDA margin of 11.8%, compared to adjusted EBITDA of $867.1 million in 1Q13, with an adjusted EBITDA margin of 8.7%.
BALANCE SHEET DATA
In millions of
pesos March 31, 2014 Dec. 31, 2013 Change
------
$ $ $ %
--- --- --- ---
TOTAL ASSETS 29,274.1 28,781.6 492.5 1.7
------------ -------- -------- ----- ---
Cash and cash
equivalents 8,121.4 7,721.0 400.4 5.2
------------- ------- ------- ----- ---
Accounts
receivable 2,369.3 2,227.8 141.5 6.4
----------- ------- ------- ----- ---
TOTAL LIABILITIES 8,568.0 8,630.4 (62.5) (0.7)
----------------- ------- ------- ----- ----
Accounts payable 2,488.9 2,818.9 (330.0) (11.7)
---------------- ------- ------- ------ -----
Short-term debt 949.5 557.6 391.9 70.3
--------------- ----- ----- ----- ----
Long-term debt 1,507.2 1,510.2 (3.0) (0.2)
-------------- ------- ------- ---- ----
TOTAL
STOCKHOLDERS'
EQUITY 20,706.1 20,151.1 555.0 2.8
-------------- -------- -------- ----- ---
Capital stock 1,174.3 1,174.4 0.0 0.0
------------- ------- ------- --- ---
Cash and equivalents as of March 31, 2014 totaled $8,121.4 million, up $400.4 million or 5.2% from $7,721.0 million as of December 31, 2013.
Total debt as of March 31, 2014 was $2,456.7 million, compared to $2,067.8 million reported as of December 31, 2013, mainly as a result of higher short-term bank debt.
Net debt as of March 31, 2014 was negative $5,664.7 million, compared with a negative net debt of $5,653.2 million as of December 31, 2013.
CAPITAL EXPENDITURES
In millions of pesos 1Q14 1Q13 Change
------
$ $ $ %
--- --- --- ---
Capital Expenditures 290.4 111.2 179.2 161.1
-------------------- ----- ----- ----- -----
Total CAPEX was $290.4 million in 1Q14, mainly allocated toward productivity projects across all of our facilities and growing capacity.
STOCK INFORMATION
As of March 31, 2014
--------------------
Total Shares 600,000,000
------------ -----------
Total free float 26.75%
---------------- -----
Total shares in treasury 149,475
------------------------ -------
Market cap (millions of pesos) $28,674
------------------------ -------
SHARE PRICE
Mexican Stock The New York Stock
Exchange Exchange
-------------- -------------------
Ticker Symbol:
Bachoco Ticker Symbol: IBA
In nominal In U.S. Dollar per
pesos per ADR
Share
Month High Low Close High Low Close
----- ---- --- ----- ---- --- -----
Mar 2014 44.79 42.00 44.79 28.03 27.07 27.82
Feb 2014 32.34 28.97 31.80 30.35 27.02 30.01
Jan 2014 34.27 31.82 32.92 33.89 29.91 32.12
Dec 2013 45.12 43.01 44.16 41.84 39.25 40.27
Nov 2013 45.25 43.10 43.11 41.55 39.49 39.73
Oct 2013 44.79 42.00 44.79 41.24 38.43 40.99
-------- ----- ----- ----- ----- ----- -----
Source: yahoo finances
ANALYST COVERAGE
INSTITUTION ANALYST CONTACT INFO
----------- ------- ------------
GBM Miguel Mayorga mmayorga@gbm.com.mx
--- -------------- -------------------
BBVA Bancomer Fernando Olvera fernando.olvera@bbva.com
------------- --------------- ------------------------
Actinver Gustavo Teran gteran@actinver.com.mx
Carlos Hermosillo chermosillo@actinver.com.mx
--- ----------------- ---------------------------
APPENDICES
For reference, some figures have been translated into millions of U.S. dollars ("USD") using an exchange rate of $13.06 per USD$1.0, which corresponds to the rate at the close of March 31, 2014, according to Mexico's National Bank.
-- Consolidated Statement of Financial Position
-- Consolidated Statement of Income
-- Consolidated Statement of Cash Flows
-- Derivatives Position Report
CONFERENCE CALL INFORMATION
The Company will host its first quarter 2014 earnings call, on Friday, May 2, 2014. The earnings call will take place at 10:00 am Central Time (11:00 am ET).
Toll free in the U.S.: +1-(888)-771-4371
Toll free in Mexico: +001-866-779-0965
A current list of available local and international free phone telephone numbers: https://www.yourconferencecenter.com/AlternateNumbers/alternatenumbers.aspx?100374&t=A&o=UEpUWNRbUybgxq
Confirmation Number: 37157226
Visit the following link to access the webcast:
http://www.media-server.com/m/p/68tqyc5p
Consolidated Statement of Financial Position
-
Unaudited-
In U.S. Dollar March 31 December 31
In
million
pesos 2014 2014 2013*
-------- ---- ---- ----
TOTAL
ASSETS 2,241.5 29,274.1 28,781.6
------- ------- -------- --------
Total
current
assets 1,224.0 15,985.3 15,324.3
-------- ------- -------- --------
Cash and
cash
equivalents 621.9 8,121.4 7,721.0
------------ ----- ------- -------
Total
accounts
receivable 181.4 2,369.3 2,227.8
----------- ----- ------- -------
Inventories 308.9 4,034.6 4,158.4
----------- ----- ------- -------
Other
current
assets 111.8 1,459.9 1,217.2
-------- ----- ------- -------
Total non
current
assets 1,017.5 13,288.8 13,457.2
--------- ------- -------- --------
Net
property,
plant
and
equipment 892.4 11,655.2 11,652.4
---------- ----- -------- --------
Other
Assets 125.1 1,633.6 1,804.8
------- ----- ------- -------
TOTAL
LIABILITIES 656.0 8,568.0 8,630.4
------------ ----- ------- -------
Total
current
liabilities 318.5 4,159.9 4,370.8
------------ ----- ------- -------
Notes
payable
to banks 72.7 949.5 557.6
--------- ---- ----- -----
Accounts
payable 190.6 2,488.9 2,818.9
-------- ----- ------- -------
Other
taxes
payable
and
other
accruals 55.2 721.5 994.3
--------- ---- ----- -----
Total
long-
term
liabilities 337.5 4,408.1 4,259.6
------------ ----- ------- -------
Long-
term
debt 115.4 1,507.2 1,510.2
----- ----- ------- -------
Other
non
current
liabilities 4.2 55.4 48.2
------------ --- ---- ----
Deferred
income
taxes 217.9 2,845.5 2,701.2
-------- ----- ------- -------
TOTAL
STOCKHOLDERS'
EQUITY 1,585.5 20,706.1 20,151.1
-------------- ------- -------- --------
Capital
stock 89.9 1,174.3 1,174.4
------- ---- ------- -------
Commission
in
shares
issued 30.6 399.6 399.6
---------- ---- ----- -----
Repurchased
shares 7.1 92.7 99.6
----------- --- ---- ----
Retained
earnings 1,473.7 19,245.9 18,586.2
--------- ------- -------- --------
Others
accounts - 18.7 - 244.8 - 148.1
--------- ------------------ ------------------ ----------------
Non
controlling
interest 2.9 38.4 39.3
------------ --- ---- ----
TOTAL
LIABILITIES
AND
STOCKHOLDERS'
EQUITY 2,241.5 29,274.1 28,781.6
-------------- ------- -------- --------
*Auditied
Consolidated
Statement of
Income
First Quarter
Results,
ended March
31:
-Unaudited-
U.S. Dollar (1)
In millions
pesos 2014 2014 2013 Change
----------- ---- ---- ---- ------
Net revenues 738.4 9,643.4 9,988.8 -3.5%
------------ ----- ------- ------- ----
Cost of sales 601.4 7,854.1 8,509.8 -7.7%
------------- ----- ------- ------- ----
Gross profit 137.0 1,789.3 1,479.1 21.0%
------------ ----- ------- ------- ----
Selling,
general and
administrative
expenses 66.7 871.4 795.0 9.6%
--------------- ---- ----- ----- ---
Other income
(expenses),
net (2.7) (35.0) 77.1 -145.4%
------------ ---- ----- ---- ------
Operating
income 67.6 882.9 761.2 16.0%
--------- ---- ----- ----- ----
Net finance
income 3.9 50.8 19.3 163.4%
----------- --- ---- ---- -----
Income tax 21.0 274.1 140.1 95.6%
---------- ---- ----- ----- ----
Non-
controlling
interest (0.0) (0.1) (2.6) -97.9%
------------ ---- ---- ---- -----
Net
controlling
interest
profit 50.5 659.7 637.7 3.4%
------------ ---- ----- ----- ---
Basic and
diluted
earnings per
share 1.1 1.10 1.06 3.5%
------------- --- ---- ---- ---
Basic and
diluted
earnings per
ADR 13.2 13.20 12.76 3.5%
------------- ---- ----- ----- ---
Weighted
average
Shares
outstanding
(thousands) 599,851 599,851 599,972 0.0%
------------ ------- ------- ------- ---
EBITDA Result 84.7 1,106.1 944.3 17.1%
------------- ---- ------- ----- ----
EBITDA margin 11.5% 11.5% 9.5%
------------- ---- ---- ---
Gross margin 18.6% 18.6% 14.8%
------------ ---- ---- ----
Operating
margin 9.2% 9.2% 7.6%
Net margin 6.8% 6.8% 6.4%
---------- --- --- ---
Consolidated Statement of Cash Flows
First Quarter, ended March 31:
-Unaudited-
U.S. Dollar
In million of pesos 2014 2014 2013
------------------- ---- ---- ----
NET MAJORITY INCOME BEFORE INCOME
TAX 71.5 933.8 777.9
--------------------------------- ---- ----- -----
ITEMS THAT DO NOT REQUIRE CASH: - - -
------------------------------- --- --- ---
ITEMS RELATING TO INVESTING
ACTIVITIES: 19.2 250.2 289.0
--------------------------- ---- ----- -----
Depreciation and others 17.1 223.1 183.1
----------------------- ---- ----- -----
Income (loss) on sale of plant
and equipment 2.1 27.2 105.9
------------------------------ --- ---- -----
Other Items - - -
----------- --- --- ---
ITEMS RELATING TO FINANCING
ACTIVITIES: 2.0 26.1 31.6
--------------------------- --- ---- ----
Interest income (expense) 2.0 26.1 31.6
------------------------ --- ---- ----
Other Items - - -
----------- --- --- ---
NET CASH GENERATED FROM NET
INCOME BEFORE TAXES 92.7 1,210.1 1,098.4
--------------------------- ---- ------- -------
CASH GENERATED OR USED IN THE
OPERATION: (29.3) (382.9) 1,012.4
----------------------------- ----- ------ -------
Decrease (increase) in accounts
receivable (10.8) (141.5) 37.0
------------------------------- ----- ------ ----
Decrease (increase) in
inventories 2.1 27.1 1,347.9
---------------------- --- ---- -------
Decrease (increase) in accounts
payable (25.3) (330.0) (506.3)
------------------------------- ----- ------ ------
Decrease (increase) in other
liabilities 4.7 61.6 133.9
---------------------------- --- ---- -----
NET CASH FLOW FROM OPERATING
ACTIVITIES 63.3 827.2 2,110.8
---------------------------- ---- ----- -------
NET CASH FLOW FROM INVESTING
ACTIVITIES (52.0) (679.3) (80.6)
---------------------------- ----- ------ -----
Acquisition of property, plant
and equipment (22.2) (290.4) (111.2)
------------------------------ ----- ------ ------
Proceeds from sales of property
plant and equipment 0.4 5.6 30.6
------------------------------- --- --- ----
Other Items (30.2) (394.5) -
----------- ----- ------ ---
CASH FLOW SURPLUS (REQUIREMENTS
OF) TO BE USED IN -
------------------------------- ---
FINANCING ACTIVITIES 11.3 147.9 2,030.2
-------------------- ---- ----- -------
Net cash provided by financing
activities: 14.6 191.2 (336.9)
------------------------------ ---- ----- ------
Proceeds from loans 33.8 442.0 200.0
------------------- ---- ----- -----
Principal payments on loans (4.6) (59.9) (513.9)
--------------------------- ---- ----- ------
Dividends paid - - -
-------------- --- --- ---
Other items (14.6) (190.9) (23.0)
----------- ----- ------ -----
Net increase (decrease) in cash
and equivalents 9.7 126.7 919.5
------------------------------- --- ----- -----
Cash and investments at the
beginning of year 514.3 6,716.9 5,138.1
--------------------------- ----- ------- -------
CASH AND INVESTMENTS AT END OF
PERIOD 524.0 6,843.6 6,057.6
------------------------------ ----- ------- -------
DERIVATIVES POSITION REPORT
First Quarter 2014
Thousands of Mexican Pesos, as of March 31, 2014
TYPE OF FINANCIAL INSTRUMENT OBJETIVE NOTIONAL VALUE OF THE RELATED COMMODITY REASONABLE VALUE AMOUNTS DUE BY YEAR GUARANTIES REQUIRED
---------------------------- -------- -------- ------------------------------ ---------------- ------------------- -------------------
1Q-2014 4Q-2013 1Q-2014 4Q-2013
------- ------- ------- -------
Knock Out Forwards. Hedge and Negotiation $52,240 $13.06 $13.09 $244 $ - 2014 The deals consider the possibility
of margin calls but not another
kind of guarantee
------------------- --------------------- ------- ------ ------ ---- ---------------- ---- ----------------------------------
Futures for Corn, Soybean Meal ans Soy Oil. Hedge $26,376 CORN CORN $942 $-372 81% in 2014 and 19% in 2015
------------------------------------------- ----- ------- ---- ----- ----------------------------
In USD per Bushel In USD per Bushel
Month Price Month Price
Mar-2014 Mar-2014 $4.2200
May-2014 $4.9775 May-2014 $ -
Jul-2014 $ -
Sep-2014 $5.0075 Sep-2014 $ -
SOYBEAN MEAL SOYBEAN MEAL
In USD per ton In USD per ton
Month Price Month Price
May-2014 $491.50 May-2014 $ -
Jul-2014 $479.80 Jul-2014 $ -
Jan-2015 $382.10
Mar-2015 $382.70
May-2015 $382.80
Jul-2015 $383.90
SOY OIL SOY OIL
En UScents per pound En UScents per pound
Month Price Month Price
Dec-2013 $ - Dec-2013 $ -
Jan-2014 $ - Jan-2014 $ -
Mar-2014 $ - Mar-2014 $39.13
Options of Corn Hedge and Negotiation $ - CORN CORN $913 $ - 2014
In USD per Bushel In USD per Bushel
Month Price Month Price
May-2014 $4.9775 Dec-2013 $ -
Jul-2014
Dec-2014 $4.9850
-------- -------
Options of Soybean Meal Hedge and Negotiation $ - CORN CORN
----------------------- --------------------- ------------------
In USD per Bushel In USD per Bushel
Month Price Month Price
May-2014 $491.5 2014
-------- ------
Options of Soy Oil Hedge and Negotiation $ - SOY OIL SOY OIL $ - $ - 2014
------------------ --------------------- ------------------ ------------- ---------------- ----
En UScents per pound En UScents per pound
Month Price Month Price
Mar-2014 $39.13
-------- ------
NOTES:
-The total financial instruments not exceed 5% of total assets as of March 31, 2013.
-A negative value means an unfavorable effect for the Company.
-The notional value represents the net position as of March 31, 2014 at the exchange rate of Ps.13.06 per one dolar.
First Quarter 2014
Thousands of Mexican Pesos, as of March 31, 2014 PROBABLE SCENARIO
TYPE OF FINANCIAL INSTRUMENT REASONABLE VALUE VALUE OF THE RELATED COMMODITY EFFECT ON THE INCOME STATEMENT EFFECT ON THE CASH FLOW(3)
---------------------------- ---------------- ------------------------------ -------------------------
Reference Value
---------------
-2.5% 2.5% 5.0% -2.5% 2.5% 5.0%
---- --- --- ---- --- ---
Knock Out Forwards (1) $244 $12.74 $13.39 $13.72 Direct -$ 1,062 $ - $ -
--------------------- ---- ------ ------ ------ ------ ---------- ---------- ----------
-5% 5% 10% -5% 5% 10%
--- --- --- --- --- ---
Futures of Corn: (2) $942 $4.729 $5.226 $5.475 The effect will materialize as the inventory is consumed -$ 377 $2,261 $3,579
---- -------------------------------------------------------- ----------- ------ ------
Futures of Soybean Meal: (2) $466.93 $516.08 $540.65
--------------------------- ------- ------- -------
Futures for Soy Oil (2) $ - $ - $ -
---------------------- ---------------- ---------------- ----------------
Options for Corn (2) $ - $4.729 $5.226 $5.475 $ - $3,072 $4,448
------ ------ ------
Options of Soybean Meal $ - $466.9 $516.1 $540.7
----------------------- -------------------- ------ ------ ------
Notes:
(1) The reference value is the exchange rate of Ps. $13.06 per USD as of March 31, 2014.
(2) The reference value is the Futures of corn and soybean meal for may 2014: $4.9775 USD/bushel and $491.5 USD/ton respectively.
(3) The Company has credit lines with the majority of its counterparts, so that the effect in cash flow is lower than the amount shown.
-A negative value means an unfavorable effect for the Company.
First Quarter 2014
Thousands of Mexican Pesos, as of March 31, 2014 STRESS SCENARIO
TYPE OF FINANCIAL INSTRUMENT REASONABLE VALUE VALUE OF THE RELATED COMMODITY EFFECT ON THE INCOME STATEMENT EFFECT ON THE CASH FLOW
---------------------------- ---------------- ------------------------------ -----------------------
Reference Value
---------------
-50% -25% 25% 50% -50% -25% 25% 50%
--- --- --- --- --- --- --- ---
Forwards and Knock Out Forwards $244 $6.53 $9.80 $16.33 $19.59 Direct -$25,876 -$12,816 $ - $ -
------------------------------- ---- ----- ----- ------ ------ ------ -------- -------- ------------ ------------
COMPANY DESCRIPTION
Industrias Bachoco is the leader in the Mexican poultry industry, and one of the largest poultry producers globally. The Company was founded in 1952, and became a public company in 1997, via a public offering of shares on the Mexican and The New York Stock Exchange. Bachoco is a vertically integrated company headquartered in Celaya, Guanajuato located in Central Mexico. Its main business lines are: chicken, eggs, balanced feed, swine, and turkey and beef value-added products. Bachoco owns and manages more than a thousand facilities, organized in nine production complexes and 64 distribution centers in Mexico, and a production complex in the United States. Currently the Company employs more than 25,000 people.
The Company is rated AA+ (MEX), representing high credit quality by Fitch Mexico, S.A. de C.V., and HR AA+ which signals that the Company and the offering both have high credit quality by HR Ratings de Mexico S.A. de C.V.
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.
SOURCE Industrias Bachoco, S.A.B. de C.V.
