Industrias Bachoco Announces Fourth Quarter And Full Year 2015 Results

04 Feb, 2016, 17:00 ET from Industrias Bachoco, S.A.B. de C.V.

CELAYA, Mexico, Feb. 4, 2016 /PRNewswire/ -- Industrias Bachoco, S.A.B. de C.V., "Bachoco" or "the Company," (NYSE: IBA; BMV: Bachoco) announced today its unaudited results for the fourth quarter ("4Q15") and 2015 year ("2015") results ending December 31, 2015. All figures have been prepared in accordance with International Financial Reporting Standard ("IFRS"), and are presented in nominal million Mexican Pesos ("$").

HIGHLIGHTS- 2015 vs. 2014

  • Net sales increased 6.9% in 4Q15 and 10.7% for the whole year 2015.
  • EBITDA margin was 6.4% for 4Q15 and 12.8% for year 2015.
  • Earnings per basic and diluted share totaled $0.75 for 4Q15 and $6.49 for 2015.

CEO COMMENTS

Mr. Rodolfo Ramos Arvizu, Chief Executive Officer of Bachoco, stated, "Conditions prevailing in the poultry industry in the third quarter continued throughout the fourth quarter of 2015.  We observed an important increase in supply in Mexico, creating an over-supply condition, which put pressure on prices. In the US markets, we also observed lower prices, mainly in leg quarters, as compared with the equivalent quarter of 2014.  Even though we observed a stronger supply in our main product lines, we also saw a good level of demand in the Mexican markets during the fourth quarter enabling us to sell the largest volume for a quarter.    

For the quarter, our total sales increased and the volume in all our main product lines continued growing in both markets.  Overall, we increased our total sales by 6.9%.

On the other side, volatility in the Mexican peso had an effect in our cost of sales in Mexico during the quarter, as a result, our operating margins were lower when compared with the fourth quarter of the previous year.

Our US operation continues delivering positive results while recording historical volume sold of chicken for 2015.

For the whole year 2015, we reach what we consider satisfactory results, with an increase of 10.7% in total sales and an EBITDA margin of 12.8%. The Company remained in a healthy financial condition with a net cash of $11,161.9 million, as the cash and equivalents has increased more than 20.0% since the beginning of the year."

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 2014.

QUARTERLY RESULTS

NET SALES BY GEOGRAPHY

In millions of pesos

4Q15

4Q14

Change

$

$

$

%

Net sales

11,650.2

10,899.3

750.9

6.9

Net sales in Mexico

8,805.4

8,661.4

144.0

1.7

Net sales in the U.S.

2,844.9

2,238.0

606.9

27.1

 

NET SALES BY SEGMENT

In millions of pesos

4Q15

4Q14

Change

$

$

$

%

Net sales

11,650.2

10,899.3

750.9

6.9

Poultry

10,395.4

9,796.6

598.8

6.1

Other

1,254.8

1,102.7

152.0

13.8

 

NET VOLUME SOLD BY SEGMENT

In tons

Change

4Q15

4Q14

Volume

%

Total sales volume:

538,139

495,923

42,216

8.5

Poultry

429,808

404,565

25,243

6.2

Others

108,331

91,358

16,973

18.5

 

The Company's 4Q15 net sales totaled $11,650.2 million, $750.9 million or 6.9% more than $10,899.3 million reported in 4Q14.  The increase is a result of more volume sold in our main product lines during this quarter; partially compensated by weaker poultry prices than the same quarter of 2014.

In 4Q15, sales of our U.S. operations remained strong and represented 24.7% of our total sales; this compares with 20.5% in 4Q14.

GROSS PROFIT

In millions of pesos

4Q15

4Q14

Change

$

$

$

%

Cost of sales

9,989.0

8,376.5

1,612.5

19.3

Gross profit

1,661.2

2,522.9

(861.7)

(34.2)

Gross margin

14.3%

23.1%

-

-

 

In 4Q15 the cost of sales totaled $9,989.0 million, $1,612.5 million or 19.3% higher than $8,376.5 million reported in 4Q14; the increase in cost of sales is mainly attributed to more volume sold and depreciation of the Mexican peso.

The gross profit was $1,661.2 million with a gross margin of 14.3% in 4Q15; this profit is lower than the gross profit of $2,522.9 million and gross margin of 23.1% reported in 4Q14.  This is mainly due to weaker prices in our poultry products and an increase in our unit cost of sales.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A")

In millions of pesos

4Q15

4Q14

Change

$

$

$

%

Total SG&A

1,137.9

1,038.0

99.9

9.6

 

Total SG&A expenses in 4Q15 were $1,137.9 million, $99.9 million or 9.6% more than the $1,038.0 million reported 4Q14. This increase is mainly attributed to higher volume.

Total SG&A expenses as a percentage of net sales represented 9.8% in 4Q15 compared to 9.5% in 4Q14.

OTHER INCOME (EXPENSE), NET

In millions of pesos

4Q15

4Q14

Change

$

$

$

%

Other income (expense), net

2.8

(59.5)

62.3

(104.8)

                                                                                                                                                             

This item mainly includes 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 4Q15, we recorded other income of $2.8 million, compared with other expenses of $59.5 million reported in 4Q14.

OPERATING INCOME

In millions of pesos

4Q15

4Q14

Change

$

$

$

%

Operating income

526.1

1,425.4

(899.3)

(63.1)

Operating margin

4.5%

13.1%

-

-

 

Operating income in 4Q15 totaled $526.1 million; an operating margin of 4.5%, a decrease when compared to operating income of $1,425.4 million and a 13.1% operating margin reported in 4Q14.

The lower operating income was mainly attributed to lower gross profit than in 4Q14.

NET FINANCIAL INCOME

In millions of pesos

4Q15

4Q14

Change

$

$

$

%

Net Financial Income

113.1

68.2

44.9

65.9

Financial Income

159.0

99.9

59.1

59.2

Financial Expense

45.9

31.7

14.2

44.9

 

In 4Q15, the Company reported net financial income of $113.1 million, compared to income of $68.2 million reported in the same period of 2014.  This is mainly due to higher financial income as we have higher levels of cash.

TAXES FOR THE PERIOD

In millions of pesos

4Q15

4Q14

Change

$

$

$

%

Total Taxes

187.8

426.4

(238.7)

(56.0)

Income tax

346.1

513.9

(167.8)

(32.7)

Deferred income tax

(158.31)

(87.45)

- 70.9

81.0

 

Total taxes for the 4Q15 were $187.8 million, compared with total taxes of $426.4 million in the same period of 2014. 

NET INCOME

In millions of pesos

4Q15

4Q14

Change

$

$

$

%

Net income

451.5

1,067.2

(615.7)

(57.7)

Net margin

3.9%

9.8%

-

-

Basic and diluted income per share1

0.75

1.77

-

n/a

Basic and diluted income per ADR2

9.01

21.28

-

n/a

Weighted average Shares outstanding3

599,994

600,000

-

-

1 In pesos 2 in pesos, an ADR equal to twelve shares 3 In thousands of shares

The net income for 4Q15 was $451.5 million, representing a basic and diluted income of $0.75 pesos per share, compared with a higher net income of $1,067.2 million, which represented $1.77 pesos of basic and diluted income per share in 4Q14. This income represents a net margin of 3.9% and 9.8% for 4Q15 and 4Q14, respectively.

EBITDA AND ADJUSTED EBITDA

In millions of pesos

4Q15

4Q14

Change

$

$

$

%

Net controlling interest income

450.7

1,064.1

(613.4)

(57.6)

   Income tax expense (benefit)

187.8

426.4

(238.7)

n/a

   Result in associates

0.8

3.1

(2.3)

n/a

   Net finance (income) expense

(113.1)

(68.2)

(44.9)

n/a

   Depreciation and amortization

217.7

204.6

13.0

6.4

EBITDA

743.8

1,630.0

(886.2)

(54.4)

EBITDA Margin (%)

6.4

15.0

(8.6)

(57.3)

  Other expense (income) net

(2.8)

59.5

(62.3)

(104.8)

Adjusted EBITDA

741.0

1,689.5

(948.5)

(56.1)

Adjusted EBITDA Margin

6.4%

15.5%

-

-

Net  sales

11,650.2

10,899.3

750.9

6.9

 

EBITDA in 4Q15 reached $743.8 million, representing an EBITDA margin of 6.4%, compared to EBITDA of $1,630.0 million in 4Q14, with an EBITDA margin of 15.0%.

The adjusted EBITDA in 4Q15 reached $741.0 million, representing an adjusted EBITDA margin of 6.4%, compared to adjusted EBITDA of $1,689.5 million in 4Q14, with an adjusted EBITDA margin of 15.5%.

ACCUMULATED RESULTS

NET SALES BY GEOGRAPHY

In millions of pesos

2015

2014

Change

$

$

$

%

Net Sales

46,229.0

41,779.1

4,450.0

10.7

Net sales in Mexico

35,125.8

33,340.6

1,785.1

5.4

Net sales in the U.S.

11,103.3

8,438.5

2,664.8

31.6

 

NET SALES BY SEGMENT

In millions of pesos

2015

2014

Change

$

$

$

%

Net Sales

46,229.0

41,779.1

4,450.0

10.7

Poultry

41,765.0

37,994.7

3,770.3

9.9

Other

4,464.1

3,784.4

679.6

18.0

 

NET VOLUME SOLD BY SEGMENT

In tons

Change

2015

2014

Volume

%

Total sales volume:

2,034,339

1,841,382

192,957

10.5

Poultry

1,613,435

1,495,023

118,412

7.9

Others

420,904

346,359

74,545

21.5

In 2015, net sales totaled $46,229.0 million, $4,450.0 million or 10.7% more than $41,779.1 million reported in the same period of 2014. The increase in sales is attributed mainly to higher volumes sold.

In 2015, sales of our U.S. operations represented 24.1% of our total sales, compared with 20.2% in 2014.

ACCUMULATED OPERATING RESULTS

In millions of pesos

2015

2014

Change

$

$

$

%

Cost of Sales

36,821.0

32,495.0

4,326.0

13.3

Gross Profit

9,408.1

9,284.1

123.9

1.3

Total SG&A

4,279.5

3,781.3

498.2

13.2

Other Income (expense)

(41.0)

(160.9)

119.9

(74.5)

Operating Income

5,087.6

5,341.9

(254.3)

(4.8)

Net Financial Income

518.5

246.9

271.6

110.0

Income Tax

1,708.1

1,656.1

52.0

3.1

Net Income

3,898.0

3,932.7

(34.7)

(0.9)

In 2015, the cost of sales totaled $36,821.0 million, $4,326.0 million or 13.3% higher than $32,495.0 million reported in 2014.  The increase in the cost of sales is mainly attributable to higher volumes sold and higher unit costs experienced at the end of the year.

As a result, we reached a gross profit of $9,408.1 million and a gross margin of 20.4% in 2015, a higher result than $9,284.1 million of gross profit and a margin of 22.2% reached in year 2014.

Total SG&A expenses in 2015 were $4,279.5 million, $498.2 million or 13.2% more than the $3,781.3 million reported in 2014. Total SG&A expenses as a percentage of sales represented 9.3% in 2015 compared to 9.1% in 2014. This increase is mainly attributed to higher volumes sold and additional expenses incurred in the implementation of projects to further improve the services we provide to our markets.

In 2015, we had other expenses of $41.0 million, compared with other expenses of $160.9 million reported in 2014.

The operating income in 2015 was $5,087.6 million, which represents an operating margin of 11.0%; a 4.8% decrease than the operating income of $5,341.9 million and operating margin of 12.8% in 2014.

The net financial income in 2015 was $518.5 million, higher when compared to the net financial income of $246.9 million in 2014.

Total taxes were $1,708.1 million as of December 31, 2015. These taxes include $1,535.7 million of income tax and $172.4 million of deferred income taxes. This figure compares to total taxes of $1,656.1 million, which includes income taxes of $1,391.3 and $264.8 million of deferred income taxes in 2014.

All of the above results in a net income of $3,898.0 million or 8.4% of net margin for 2015, which represents $6.49 pesos of earnings per share.  In 2014, the net income totaled $3,932.7 million, 9.4% of net margin and $6.55 pesos of net income per share.

EBITDA AND ADJUSTED EBITDA

In millions of pesos

2015

2014

Change

$

$

$

%

Net controlling interest profit

3,891.3

3,926.9

(35.6)

(0.9)

   Income tax expense (benefit)

1,708.1

1,656.1

52.0

n/a

   Result in associates

6.7

5.7

0.9

n/a

   Net finance (income) expense

(518.5)

(246.9)

(271.6)

n/a

   Depreciation and amortization

820.3

805.7

14.7

1.8

EBITDA

5,907.9

6,147.5

(239.6)

(3.9)

EBITDA Margin (%)

12.8

14.7

(1.93)

(13.1)

  Other expense (income) net

41.0

160.9

(119.9)

(74.5)

Adjusted EBITDA

5,948.9

6,308.4

(359.6)

(5.7)

Adjusted EBITDA Margin

12.87%

15.10%

-

-

Net  sales

46,229.0

41,779.1

4,450.0

10.7

EBITDA in 2015 reached $5,907.9 million, representing an EBITDA margin of 12.8%, compared to EBITDA of $6,147.5 million in 2014, with an EBITDA margin of 14.7%.

The adjusted EBITDA in 2015 reached $5,948.9 million, representing an adjusted EBITDA margin of 12.87%, compared to an adjusted EBITDA of $6,308.4 million in 2014, with an adjusted EBITDA margin of 15.10%.

BALANCE SHEET

BALANCE SHEET DATA

In millions of pesos

Dec. 31, 2015

Dec. 31, 2014

Change

$

$

$

%

TOTAL ASSETS

40,527.1

34,793.8

5,733.4

16.5

Cash and cash equivalents

15,288.9

11,961.6

3,327.2

27.8

Accounts receivable

2,776.1

2,976.5

- 200.5

- 6.7

TOTAL LIABILITIES

12,650.7

10,431.7

2,219.0

21.3

Accounts payable

3,966.0

3,384.3

581.7

17.2

Short-term debt

1,631.9

798.0

833.9

104.5

Long-term debt

2,495.1

1,652.5

842.7

51.0

TOTAL STOCKHOLDERS' EQUITY

27,876.4

24,362.1

3,514.3

14.4

Capital stock

1,174.4

1,174.4

- 0.0

- 0.0

 

Cash and equivalents as of December 31, 2015 totaled $15,288.9; higher by $3,327.2 million than the level we had on December 31, 2014.

Total debt as of December 31, 2015 was $4,127.0 million, compared to $2,450.5 million reported as of December 31, 2014.

Net cash as of December 31, 2015 was $11,161.9 million, compared with a net cash of $9,511.2 million as of December 31, 2014.

CAPITAL EXPENDITURES

In millions of pesos

2015

2014

Change

$

$

$

%

Capital Expenditures

1,662.8

1,288.5

374.3

29.0

Total CAPEX for 2015 was $1,662.8 million and $1,288.5 million in 2014; mainly allocated toward organic growth and productivity projects across all of our facilities.

STOCK INFORMATION

As of December 31, 2015

Total Shares

600,000,000

Total free float

26.75%

Market cap (millions of pesos)

$42,552

 

SHARE PRICE IN 2015

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

December

71.03

65.95

70.92

50.99

45.64

49.23

November

78.97

69.37

69.37

57.22

49.87

50.18

October

85.80

75.18

75.18

61.13

54.72

54.72

September

89.73

80.27

85.79

63.49

56.77

61.10

August

79.42

72.72

79.42

57.79

50.51

56.83

July

78.03

69.23

77.00

58.69

52.72

57.09

June

73.07

70.50

70.50

56.36

54.11

54.11

May

73.70

68.32

73.70

58.14

54.34

57.37

April

69.69

64.38

68.32

54.40

50.87

53.79

March

67.40

63.33

63.36

53.78

48.84

49.85

February

64.00

60.20

63.26

51.58

48.97

51.02

January

63.60

59.23

61.50

51.55

47.97

48.84

Source: yahoo finances

 

ANALYST COVERAGE

Institution

Analyst name

E-mail

ACTINVER

Carlos Hermosillo

chermosillo@actinver.com.mx

BBVA BANCOMER

Fernando Olvera

fernando.olvera@bbva.com

GBM

Miguel Mayorga

mmayorga@gbm.com.mx

INTERACCIONES CASA DE BOLSA

Brian Flores

Ibflorese@interacciones.com

JPMORGAN

Pedro Leduc

pedro.a.leduc@jpmorgan.com

INTERCAM GRUPO FINANCIERO

Fernanda Simon

fsimon@intercam.com.mx

SIGNUM RESEARCH

Emma Ochoa

Emma.ochoa@signumresearch.com

 

APPENDICES For reference, some figures have been translated into millions of U.S. dollars ("USD") using an exchange rate of $17.21 per USD $1.00, which corresponds to the rate at the close of December 31, 2015, according to Mexico's National Bank.

  • Consolidated Statement of Financial Position
  • Consolidated Statement of Income
  • Consolidated Statement of Cash Flows
  • Derivatives Position Report

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 

-Unaudited-

In U.S. Dollar

December 31,

December 31,

In million pesos

2015

2015

2014*

TOTAL ASSETS

$      2,354.9

40,527.1

34,793.8

Total current assets

1,442.9

24,832.5

20,852.0

   Cash and cash equivalents

888.4

15,288.9

11,961.6

   Total accounts receivable

161.3

2,776.1

2,976.5

   Inventories

293.8

5,056.1

4,469.5

   Other current assets

99.4

1,711.5

1,444.3

Total non current assets

911.9

15,694.7

13,941.8

   Net property, plant and equipment

767.4

13,206.7

12,054.8

   Other non current Assets

144.6

2,487.9

1,887.0

TOTAL LIABILITIES

$         735.1

12,650.7

10,431.7

Total current liabilities

388.9

6,692.9

5,655.5

   Notes payable to banks

94.8

1,631.9

798.0

   Accounts payable

230.4

3,966.0

3,384.3

   Other taxes payable and other accruals

63.6

1,095.0

1,473.2

Total long-term liabilities

346.2

5,957.9

4,776.2

   Long-term debt 

145.0

2,495.1

1,652.5

   Other  non current liabilities

6.6

114.2

90.9

   Deferred income taxes

194.6

3,348.5

3,032.8

TOTAL STOCKHOLDERS' EQUITY

$      1,619.8

27,876.4

24,362.1

Capital stock

68.2

1,174.4

1,174.4

Commission in shares issued

24.1

414.0

399.6

Repurchased shares

45.2

777.6

101.1

Retained earnings

1,442.6

24,827.2

22,513.2

Others accounts

36.7

631.8

129.1

Non controlling interest

3.0

51.3

44.6

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$      2,354.9

40,527.1

34,793.8

*Audited

 

CONSOLIDATED STATEMENT OF INCOME

Fourth Quarter Results, ended December 31:

-Unaudited-

U.S. Dollar

In millions pesos

2015

2015

2014

Net sales

$     676.9

11,650.2

10,899.3

Cost of sales

580.4

9,989.0

8,376.5

Gross profit

96.5

1,661.2

2,522.9

SG&A

66.1

1,137.9

1,038.0

Other income (expenses), net

0.2

2.8

(59.5)

Operating income 

30.6

526.1

1,425.4

Net finance income

6.6

113.1

68.2

Income tax 

10.9

187.8

426.4

Net Income

$       43.7

451.5

1,067.2

Non-controlling interest

0.0

0.8

3.06

Net controlling interest profit

26.3

450.7

1,064.1

Basic and diluted earnings per share

0.04

0.75

1.77

Basic and diluted earnings per ADR

0.52

9.01

21.28

Weighted average Shares outstanding1

599,997

599,997

600,000

EBITDA Result

$       43.2

743.8

1,630.0

Gross margin

14.3%

14.3%

23.1%

Operating margin

4.5%

4.5%

13.1%

Net margin

3.9%

3.9%

9.8%

EBITDA margin

6.4%

6.4%

15.0%

1In thousands

 

Consolidated Statement of Income

Annual Results

-Unaudited-

U.S. Dollar

In millions pesos

2015

2015

2014

Net sales

$ 2,686.2

46,229.0

41,779.1

Cost of sales

2,139.5

36,821.0

32,495.0

Gross profit

546.7

9,408.1

9,284.1

Selling, general and administrative expenses

248.7

4,279.5

3,781.3

Other income (expenses), net

(2.4)

(41.0)

(160.9)

Operating income 

295.6

5,087.6

5,341.9

Net finance income

30.1

518.5

246.9

Income tax 

99.3

1,708.1

1,656.1

Net income

$     355.9

3,898.0

3,932.7

Non-controlling interest

0.4

6.7

5.7

Net controlling interest profit

226.9

3,891.3

3,926.9

Basic and diluted earnings per share

0.38

6.49

6.55

Basic and diluted earnings per ADR

4.52

77.9

78.54

Weighted average Shares outstanding1

599,631

599,631

599,955

EBITDA Result

$     343.3

5,907.9

6,147.5

Gross margin

20.4%

20.4%

22.2%

Operating margin

11.0%

11.0%

12.8%

Net margin

8.4%

8.4%

9.4%

EBITDA margin

12.8%

12.8%

14.7%

1In thousands

 

CONSOLIDATED STATEMENT OF CASH FLOWS

In million of pesos

-Unaudited-

U.S. Dollar

December 31,

2015

2015

2014

NET MAJORITY INCOME BEFORE INCOME TAX

$     325.7

5,606.1

5,588.8

ITEMS THAT DO NOT REQUIRE CASH:

-

-

-

ITEMS RELATING TO INVESTING ACTIVITIES:

24.3

418.9

611.1

      Depreciation and others

47.7

820.3

805.7

      Income (loss) on sale of plant and equipment

4.5

77.5

152.8

      Other Items

(27.8)

(479.0)

(347.4)

ITEMS RELATING TO FINANCING ACTIVITIES:

8.3

142.4

200.2

      Interest income (expense)

8.3

142.4

118.1

      Other Items

-

-

82.1

NET CASH GENERATED FROM NET INCOME BEFORE TAXES

358.4

6,167.4

6,400.1

CASH GENERATED OR USED IN THE OPERATION:

(135.4)

(2,331.0)

(1,414.1)

   Decrease (increase) in accounts receivable

(39.8)

(685.8)

(746.4)

   Decrease (increase) in inventories

(25.4)

(437.7)

(329.5)

   Decrease (increase) in accounts payable

(70.5)

(1,213.1)

(453.8)

   Decrease (increase) in other liabilities

0.3

5.6

115.6

NET CASH FLOW FROM OPERATING ACTIVITIES

222.9

3,836.5

4,986.0

NET CASH FLOW FROM INVESTING ACTIVITIES

(89.1)

(1,533.3)

(982.0)

      Acquisition of property, plant and equipment

(96.6)

(1,662.8)

(1,288.5)

      Proceeds from sales of property plant and equipment

4.2

71.5

62.3

      Other Items

3.4

58.1

244.1

CASH FLOW SURPLUS (REQUIREMENTS OF) TO BE USED IN FINANCING ACTIVITIES

133.8

2,303.2

4,004.0

Net cash provided by financing activities:

41.1

707.0

315.2

   Proceeds from loans

234.6

4,038.2

1,454.1

   Principal payments on loans

(133.8)

(2,303.3)

(1,098.6)

   Dividends paid

(52.2)

(899.2)

(0.8)

   Other items

(7.5)

(128.8)

(39.5)

Net increase (decrease) in cash and equivalents

174.9

3,010.2

4,319.2

Cash and investments at the beginning of year

$     641.3

11,036.1

6,716.9

CASH AND INVESTMENTS AT END OF PERIOD

$     816.2

14,046.3

11,036.1

 

DERIVATIVES POSITION REPORT

Fourth Quarter 2015

Thousands of Mexican Pesos, as of December 31, 2015

TYPE OF FINANCIAL INSTRUMENT

OBJECTIVE

NOTIONAL

VALUE OF THE RELATED COMMODITY

REASONABLE VALUE

AMOUNTS DUE BY YEAR

GUARANTIES REQUIRED

4Q-2015

3Q-2015

4Q-2015

3Q-2015

Knock out forwards.

Hedge

$206,520

$17.21

$   16.93

$        -

$     320

in 2016

The deals consider the possibility of margin calls but not another kind of guarantee

Futures for corn and soybean meal

Hedge

$       329,002

 CORN 

 CORN 

-$      5,851

$          784

All in 2016

 In USD per Bushel 

 In USD per Bushel 

 month 

 price 

 month 

 price 

Dec-2015

$     3.588

Mar-2016

$     3.588

May-2016

$     3.645

May-2016

$     3.645

Dec-2016

$            -

 SOYBEAN MEAL 

 SOYBEAN MEAL 

 In USD per ton 

 In USD per ton 

 month 

 price 

 month 

 price 

Oct-2015

$264.300

Dec-2015

$265.500

Jan-2016

$264.300

Jan-2016

$269.000

Mar-2016

$265.500

March-2016

$274.200

May-2016

$269.000

Aug-2016

$274.200

Options of Corn

Hedge

$     4,655

 CORN 

 CORN 

-$          121

$              -

2016

 In USD per Bushel 

 In USD per Bushel 

 month 

 price 

 month 

 price 

Mar-2016

$     3.588

Oct-2015

$       4.13

May-2016

$     3.645

Options of soybean meal

Hedge

$           4,130

 SOYBEAN MEAL 

 SOYBEAN MEAL 

-$          110

$              -

in 2016

 In USD per ton 

 In USD per ton 

 month 

 price 

 month 

 price 

Mar-2016

$   265.50

May-2016

$   269.00

NOTES -The total financial instruments not exceed 5% of total assets as of December 31, 2015. -The notional value represents the net position as of December 31, 2015 at the exchange rate of Ps.17.21 per one dollar. -A negative value means an unfavorable effect for the company.

 

PROBABLE SCENARIO

Fourth Quarter 2015

Thousands of Mexican Pesos, as of December 31, 2015

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)

$                     -

$16.78

$       17.64

$       18.07

 Direct 

$   2,333

$          -

$          -

-5%

5%

10%

-5%

5%

10%

Futures of Corn: (2)

-$              5,851

$       3.408

$       3.767

$       3.946

 The effect will materialize as the inventory is consumed 

-$22,301

$ 10,599

$ 27,049

Futures of Soybean Meal: (2)

$       251.1

$       277.5

$       290.7

Options for Corn

-$                 121

$       3.408

$       3.767

$       3.946

-$      353

$       112

$      345

Options of Soybean Meal

-$                 110

$       252.2

$       278.8

$       292.1

-$      317

$         97

$      305

    NOTES     (1) The reference value is the exchange rate of Ps. $17.21 per USD as of December 31, 2015.     (2) The reference values are; the future of corn for March 2016, $3.5875 USD/bushel and the future of soybean meal for January 2016, $264.30 USD/ton.     All the evaluations are performed according with the corresponding future, here only the first month futures are shown.     (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.

 

Fourth Quarter 2015

Thousands of Mexican Pesos, as of December 31, 2015

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%

Forward and Knock Out Forwards

$                -

$8.61

$12.91

$21.51

$25.82

 Direct 

-$46,716

-$20,901

$0

$0

 

CONFERENCE CALL INFORMATION

The Company will host its fourth quarter 2015 earnings call, on Friday, February 5th, 2016. The earnings call will take place at 9:00 am Central Time (10:00 am ET). 

To participate in the earnings call, please dial:

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=UntoxClKkGHFnc

Confirmation Number: 41684895

Visit the following link to access the webcast: http://edge.media-server.com/m/p/knp2rtvi

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 AAA (MEX), the highest rating awarded by Fitch Mexico, S.A. de C.V., and HR AAA which signals that the Company and the offering both have the highest 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