Industrias Bachoco Announces First Quarter 2014 Results

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 share1


1.10

1.06

-

-

Basic and diluted earnings per ADR2


13.20

12.76

-

-

Weighted average Shares outstanding3


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 Exchange


The New York Stock Exchange


         Ticker Symbol: Bachoco


      Ticker Symbol: IBA


       In nominal pesos per Share


  In U.S. Dollar per ADR

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

Carlos Hermosillo

gteran@actinver.com.mx

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.



RELATED LINKS
http://www.bachoco.com.mx

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