Industrias Bachoco Announces Fourth Quarter and 2009 Full Year Results

CELAYA, Mexico, Feb. 4 /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, announced today its unaudited results for the fourth quarter and full year ended December 31st, 2009. All figures have been prepared in accordance with Mexican GAAP. In line with the Mexican Accounting Principles, data is presented in nominal Mexican pesos.

    Highlights:
    -- Total sales for the fourth quarter rose 2.2% and 15.7% during 2009
    -- The Company continued to record historic chicken volume sales
    -- EBITDA margin was 3.5% for 4Q09 and 8.9% in 2009, up from 4.2% in 2008.

-- Earnings per ADS in 2009 reached $1.23 USD compared to a net loss of $0.84 USD in 2008. Loss per ADS in 4Q09 at $0.17 USD was better than the loss recorded in the same year-ago period.

-- In the fourth quarter, the Company recorded a one-time charge related to deferred taxes following the changes in the Mexican income tax rate

CEO's Comments:

Cristobal Mondragon, Bachoco's CEO, stated, "During the fourth quarter, we observed lower raw materials prices, which coupled with our efficiency strategy, allowed us to improve the cost of sales.

"The chicken industry was also stable during the quarter; there was a good level in the supply and demand balance, especially around the holiday season. However, prices remained under pressure, and were mainly attributed to a weaker purchasing power of the Mexican population as the economy slowed down. We expect prices to improve as the Mexican economy shows signs of recovery.

"Our egg business line was strong during the year given that eggs are the lowest-cost animal protein in Mexico. Also, our balanced feed business line results improved during the year, even when the sales volume continued to be affected.

"At the year end, the balance was positive, reaching significant improvements from last year: we recorded the highest chicken volume sales, and positive operating and net margins, while we increased our chicken market share as a result of our latest business acquisition. Our leadership in Mexico remains solid as well as our financial position," concluded Mr. Mondragon.

        FOURTH QUARTER 2009 RESULTS
      Net sales    4Q09 (%)    4Q08 (%)
    Chicken           77.2        77.7
    Eggs              10.4        10.0
    Balanced feed      6.1         6.4
    Swine              1.1         1.1
    Other lines        5.2         4.8
    Total Sales    100.00%     100.00%

Net Sales

Net sales for the fourth quarter amounted to Ps. 5,800.3 million, 2.2% above the Ps. 5,674.3 million reported in 4Q08. This increase was mainly driven by a 1.6% increase in chicken sales, a 6.3% increase in table eggs sales, and a 2.8% increase in swine sales; which were partially offset by a 2.3% decrease in balanced feed sales.

Operating Results

Bachoco's fourth quarter gross margin was 12.2%, above the 9.8% registered in the same 2008 quarter. The increase in the gross margin is attributed to the 5.5% increase in sales volume, which was partially offset by a 3.2% decrease in the sale prices.

The Company had an operating profit of Ps. 38.0 million, compared to an operating loss of Ps. 79.1 million in the same 2008 quarter. The operating margin for 4Q09 was 0.7%.

EBITDA amounted to Ps. 205.3 million, compared with Ps. 76.8 million reported in the same 2008 quarter.

Taxes

Total taxes for the fourth quarter were Ps. 188.2 million. This amount includes a one-time charge of Ps 188.4 million related to deferred taxes, which resulted from the change in the rate of income tax for the agricultural sector in Mexico that took effect as of January 1st, 2010. This effect does not affect the Company's cash flow.

Comprehensive Financial Income (Cost)

The Company's financial comprehensive cost was Ps. 0.3 million during the quarter, compared to a financial comprehensive cost of Ps. 1,056.0 million reported in the same last year-ago quarter.

Net Majority Income (loss)

Net majority loss for the fourth quarter was PS. 109.5 million, or Ps. 0.18 per share (US$0.17 per ADS), compared to a net majority loss of Ps. 873.5 million, or Ps. 1.46 per share (US$1.34 per ADS) reported in the same 2008 period.

RESULTS BY BUSINESS SEGMENT

Chicken

Sales of chicken products increased 1.6%, while chicken prices decreased 6.2% during the quarter and chicken volume grew 8.4%. Even when the sales and sales volume increased during the quarter, chicken prices remained affected, and declined significantly from 4Q08, mainly due to the weaker purchasing power of Mexican consumers.

Table Eggs

Demand for table egg products remained strong during the fourth quarter. Sales of table eggs increased by 6.3% during the quarter as egg volume rose 6.4% from the previous year; this result was partially offset by a slight decrease in egg prices of 0.1%.

Balanced Feed

Sales of balanced feed decreased by 2.3%, mainly due to a 0.3% increase in prices and 2.0% decrease in balanced feed volume. This business line remained affected by higher costs and decreased demand.

Swine

The swine business line was stable during the 4Q09. Sales rose 2.8% during the fourth quarter, as a result of a 2.4% gain in swine prices and a 0.4% increase in swine volumes when compared to the same 2008 quarter.

Other Lines

Sales of other lines increased 9.5% when compared with 4Q08. The main products sold were turkey and by-products.

                YEAR 2009
      Net sales    2009 (%)   2008 (%)
    Chicken           78.3       76.9
    Eggs              10.1       10.6
    Balanced feed      6.3        7.3
    Swine              1.0        1.0
    Other lines        4.3        4.2
    Total Sales    100.00%    100.00%

Net Sales

Net sales for the year 2009 amounted to Ps. 23,271.8 million, 15.7% above the Ps. 20,109.6 million reported in 2008. The increase was mainly driven by the 17.8% increase in chicken sales, 11.8% in table eggs sales and 11.7% in swine sales; which were partially offset by a slight decrease in balanced feed sales of 0.4%.

Operating Results

The Company's gross margin for 2009 was 16.9%, higher than the 13.1% recorded in 2008, and was attributed to higher sales in most of our business lines, mainly in chicken and table eggs products. The Company's operating profit, of Ps. 1,426.7 million, compares favorably to an operating profit of Ps. 233.2 million recorded in 2008. EBITDA, of Ps. 2,079.5 million, was well above the Ps. 837.8 million recorded in 2008. EBITDA margin for year 2009 was 8.9%.

    Taxes
    Total taxes registered for the year amounted to Ps. 412.2 million.

Net Majority Income

Net majority income for the year was Ps. 807.0 million, or Ps. 1.35 per share (US$1.23 per ADS), compared to net loss of Ps. 548.5 million, or Ps. 0.91 per share (US$0.84 per ADS) reported in 2008.

Balance Sheet

Liquidity is solid with cash and cash equivalents amounting to Ps. 2,502.7 million as of December 31, 2009. The total debt outstanding for the same period was Ps. 963.8 million.

    Capital Expenditures
    CAPEX during the year 2009 amounted to Ps.835.7 million.

    Exhibits:
    A.- Consolidated Balance Sheets
    B.- Consolidated Statement of Income
    C.- Consolidated Statement of Cash Flows
    D.- Derivatives Position Report

Company Description

Industrias Bachoco S.A.B. de C.V. is the largest poultry company in Mexico, with over 800 production and distribution facilities currently organized in nine complexes throughout the country. Bachoco's main business lines are: chicken, eggs and balanced feed, among others. The Company is also present in other businesses like swine, beef, margarine and turkey in Mexico. The Company's headquarters are located in Celaya, Guanajuato, Mexico.

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.


    Exhibit A: Consolidated Balance Sheets

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

                                              U.S.D.         Mexican Pesos
                                             2009(1)      2009(2)      2008(2)
                                                           As of        As of
                                                          December    December
                                                            31,           31,
          ASSETS
          Current assets
          Cash and cash equivalents            $191     Ps 2,503     Ps 1,972
          Total accounts receivable             114        1,498        1,568
          Inventories                           346        4,519        5,157
          Other current assets                  -            -            -
          Total current assets                  651        8,519        8,698
          Net property, plant and
           equipment                            834       10,910       10,689
          Other non current assets               31          409          366
          TOTAL ASSETS                      $ 1,517    Ps 19,838    Ps 19,753

          LIABILITIES
          Current liabilities
          Notes payable to banks                 45          592          229
          Accounts payable                      132        1,723        1,942
          Other taxes payable and other
           accruals                              28          361          365
          Total current liabilities             205        2,675        2,536
          Long-term debt                         28          372          397
          Labor obligations                       8          104           78
          Deferred income taxes and
           others                               156        2,040        2,686
          Total long-term liabilities           192        2,515        3,162
          TOTAL LIABILITIES                   $ 397     Ps 5,191     Ps 5,698
          STOCKHOLDERS' EQUITY
          Majority stockholder's equity:
          Capital stock                         175        2,295        2,295
          Paid-in capital                        57          745          744
          Reserve for repurchase of
           shares                                12          159          159
          Retained earnings                     810       10,591       11,418
          Net majority income of the year        62          807         (549)
          Deficit from restatement of
           stockholder's equity                 -            -            -
          Derivate financial instruments        -            -            (55)
          Total majority stockholder's
           equity                             1,116       14,598       14,013
          Minority interest                       4           50           43
          TOTAL STOCKHOLDERS' EQUITY          1,120       14,648       14,056
          TOTAL LIABILITIES AND
           STOCKHOLDERS' EQUITY             $ 1,517    Ps 19,838    Ps 19,753

    (1) For reference, in millions of U.S. dollars using an exchange rate of
        $13.08
          Source: Mexico's National Bank, as of December 31, 2009.
    (2) Millions of Mexican nominal pesos



    Exhibit B: Consolidated Statement of Income

        INDUSTRIAS BACHOCO, S.A.B. DE C.V.
        Consolidated Statements of Income
        -unaudited-
                                                       FOURTH QUARTER
                                               U.S.D.         Mexican Pesos
                                              2009(1)      2009(2)     2008(2)

        Net sales                             $ 443     Ps 5,800     Ps 5,674
        Cost of sales                           389        5,093        5,118
        Gross profit (loss)                      54          708          556
        Selling, general and
         administrative expenses                 51          670          635
        Operating income (loss)                   3           38          (79)
           Other income (expense) net             3           43           13
        Comprehensive financing (cost)
         income                                  (0)          (0)      (1,056)
           Interest income                        2           24         (539)
           Interest expense and financing
            expenses                             (2)         (25)        (672)
           Foreign exchange gain (loss),
            net                                  (0)          (2)         155
           Other financial income
            (expense) net                         0            3          -
        Income before income tax, asset
         tax                                      6           81       (1,122)
        Total income taxes                       14          188         (247)
           Income tax, asset tax                  2           31            9
           Deferred income taxes                 12          157         (256)
        Net income                             $ (8)     Ps (107)     Ps (875)
        Minority net income                       0            2           (2)
        Majority net income                      (8)        (109)        (873)
        weighted average shares
         outstanding (in thousands)         599,995      599,995      600,000
        Net majority Income per share (in
         U.S.D per ADS)                       (0.17)       (0.18)       (1.46)

    (1) For reference, in millions of U.S. dollars using an exchange rate
        of $13.08
         Source: Mexico's National Bank, as of December 31, 2009.
    (2) Millions of Mexican nominal pesos



        INDUSTRIAS BACHOCO, S.A.B. DE C.V.
        Consolidated Statements of Income
        -unaudited-
                                                        FULL YEAR
                                                U.S.D.        Mexican Pesos
                                               2009(1)    2009(2)     2008(2)

         Net sales                            $ 1,779   Ps 23,272   Ps 20,110
         Cost of sales                          1,478      19,331      17,482
         Gross profit (loss)                      301       3,941       2,628
         Selling, general and
          administrative expenses                 192       2,514       2,395
         Operating income (loss)                  109       1,427         233
            Other income (expense) net             (5)        (63)        (14)
         Comprehensive financing (cost)
          income                                  (10)       (134)     (1,308)
            Interest income                        10         131         -
            Interest expense and financing
             expenses                              (7)        (96)       (853)
            Foreign exchange gain (loss),
             net                                   (3)        (39)        160
            Other financial income
             (expense) net                        (10)       (130)       (615)
         Income before income tax, asset
          tax                                      94       1,230      (1,090)
         Total income taxes                        32         412        (543)
            Income tax, asset tax                   8         103          78
            Deferred income taxes                  24         309        (621)
         Net income                                63         818        (546)
         Minority net income                        1          11           2
         Majority net income                       62         807        (549)
         weighted average shares
          outstanding (in thousands)          599,946     599,946     600,000
         Net majority Income per share (in
          U.S.D per ADS)                         1.23        1.35       (0.91)

    (1) For reference, in millions of U.S. dollars using an exchange rate
        of $13.08
         Source: Mexico's National Bank, as of December 31, 2009.
    (2) Millions of Mexican nominal pesos



    Exhibit C: Consolidated Statement of Cash Flows


           Industrias Bachoco, S.A.B. de C.V.
           Consolidated Statement of Cash Flows
                                                           Mexican Pesos
                                           U.S.D.      2009(2)       2008(2)
                                                       As of         As of
                                         2009(1)    December 31,  December 31,

           NET MAJORITY INCOME BEFORE
            INCOME TAX                    $ 94      Ps. 1,230      Ps. (1,090)
           ITEMS THAT DO NOT REQUIRE
            CASH:                           31            407             559
                 Other Items                31            407             559
           ITEMS RELATING TO INVESTING
            ACTIVITIES:                     48            626             648
                 Depreciation and others    50            653             605
                 Income (loss) on sale
                  of plant and equipment    (1)           (16)             46
                 Other Items                (1)           (11)             (2)
           ITEMS RELATING TO FINANCING
            ACTIVITIES:                     17            227             238
                 Interest income
                  (expense)                  7             96             853
                 Other Items                10            131            (615)

           NET CASH GENERATED FROM NET
            INCOME BEFORE TAXES          $ 190      Ps. 2,489         Ps. 355

           CASH GENERATED OR USED IN THE
            OPERATION                      (33)          (430)           (474)

              Decrease (increase) in
               accounts receivable          (0)            (2)           (115)
              Decrease (increase) in
               inventories                  46            599          (1,298)
              Increase (decrease) in
               accounts payable            (20)          (260)            777
              Income taxes paid            (59)          (768)            161

           NET CASH FLOW FROM FINANCING
            ACTIVITIES                   $ 157      Ps. 2,059        Ps. (119)

           INVESTING ACTIVITIES

           NET CASH FLOW FROM INVESTING
            ACTIVITIES                     (62)          (812)         (1,096)
                 Acquisition of
                  property, plant and
                  equipment                (64)          (836)         (1,053)
                 Proceeds from sales of
                  property plant and
                  equipment                 (2)           (21)             53
                 Other Items                 3             45             (96)

           CASH FLOW SURPLUS
            (REQUIREMENTS OF) TO BE USED
            IN
           FINANCING ACTIVITIES           $ 95      Ps. 1,246      Ps. (1,215)

           FINANCING ACTIVITIES

           Net cash provided by
            financing activities:            7             98             147
              Proceeds from loans          154          2,016             976
              Principal payments on
               loans                      (128)        (1,678)           (459)
              Dividends paid               (19)          (250)           (354)
              Other items                    1             10             (16)

           NET INCREASE (DECREASE) IN
            CASH AND EQUIVALENTS            41            530          (1,068)

           CASH AND INVESTMENTS AT THE
            BEGINNING OF YEAR              151          1,972           3,040

           CASH AND INVESTMENTS AT END
            OF PERIOD                    $ 191      Ps. 2,503       Ps. 1,972

    (1) For reference, in millions of U.S. dollars using an exchange rate of
        $13.08
          Source: Mexico's National Bank, as of December 31, 2009.
    (2) Millions of Mexican nominal pesos



    Exhibit D: Derivatives Position Report

    Industrias Bachoco, S.A.B. de C.V.
    Thousands of Mexican Pesos, as of December 31, 2009             Quarter: 4
    Table 1

    Type of                       Objective
    Financial                     of the
    Instrument                    Instrument            Notional

    Forwards, knock out           Hedge and             $300,840
    forwards, puts,               negotiation
    collars and others
    under different
    amounts and conditions


    Futures for corn              Hedge                  $29,054



    Options for corn              Hedge and               $1,651
                                  negotiation



    Type of
    Financial                              Value of the Related
    Instrument                             Instrument Commodity
                                     4Q-2009                  3Q-2009
    Forwards, knock out               $13.08                   $13.50
    forwards, puts,
    collars and others
    under different
    amounts and conditions


    Futures for corn           Corn of March 2010:       Corn of December and
                               $4.145 USD/bushel         March: $3.4400 and
                                                         $3.5675 USD/bushel
                                                         respectively. Soybean
                                                         meal of Dec and Jan.
                                                         $285.5 and $282.7
                                                         USD/ton.


    Options for corn           Corn of March 2010:       Corn: $3.4400
                               $4.145 USD/per bushel     USD/bushel for
                                                         December and $3.5675
                                                         for January 2010.



    Type of                     Reasonable       Amounts     Guaranties
    Financial                     Value          Due by      Required
    Instrument                                   Year
                           4Q-2009     3Q-2009
    Forwards, knock out     $2,004     $27,246
    forwards, puts,
    collars and others
    under different
    amounts and conditions

    Futures for corn       -$1,404    -$32,870             The deals consider
                                                           the possibility of
                                                 2010      margin calls but
                                                 and       not another kind
                                                 2009      of guarantee


    Options for corn        $1,651        $699

None of the financial instruments exceed 5% of total assets as of December 31, 2009.

A negative value means an unfavorable effect for the Company.

The notional value represents the net position as of December 31, 2009 at the exchange rate of Ps.13.08 per USD.

    All the instruments will be due in 2010.



    Industrias Bachoco, S.A.B. de C.V.
    Thousands of Mexican Pesos, as of December 31, 2009             Quarter: 4
    Table 2

    Type of Financial Instrument   Reasonable
                                   Value as of       Value of the Related
                                   December 31,      Commodity-reference value
                                       2009          -5.0%      2.5%      5.0%

    Forwards, knock out forwards,
     puts, collars and others
     under different amounts and
     conditions*                        $2,004      $12.43    $13.41    $13.73

                                                       -5%        5%       10%

    Futures for corn**                 -$1,404     $3.9378   $4.3523   $4.5595

    Options for corn**                  $1,651       $3.94     $4.35     $4.56


    Type of Financial Instrument   Effect on the   Effect on the Cash Flow ***
                                      Income         -5.0%      2.5%      5.0%
                                    Statement
    Forwards, knock out forwards,
     puts, collars and others
     under different amounts and
     conditions*                       Direct      -$2,332   $15,582   $42,336

                                                       -5%        5%       10%

    Futures for corn**             The effect will
                                   materialize as
                                   the inventory
                                   is consumed      -$2,786     -$21    $1,361

    Options for corn**                               $2,129   $1,620    $1,886


    A negative value means an unfavorable effect for the Company.

*The notional value represents the net position as of December 31, 2009 at an exchange rate of Ps. 13.08 per USD.

** The reference value is the Futures and Options of corn for March 2010. $4.145 USD per bushel.

*** The company has credit lines with the majority of its counterparts, so that the effect in cash flow is lower than the amount shown


    IR Contacts:
    Daniel Salazar, CFO
    Claudia Cabrera, IRO
    Ph. +52 (461) 618 3555
    inversionistas@bachoco.net

    In New York
    Grayling
    Lucia Domville
    Ph. (646) 284 9416
    Lucia.Domville@us.grayling.com

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



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

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