Industrias Bachoco Announces its 2010 First Quarter Results

CELAYA, Mexico, April 26 /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 first quarter ended March 31, 2010. 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 increased 1.1% from 2009's first quarter

-- The Company recorded historic chicken volume sold, increasing 16.6% over 1Q09. Volume sold also increased for table eggs and swine

-- EBITDA margin of 8.6% in 1Q10 was lower than the 11.2% in 2009's first quarter

-- Earnings per share for the quarter reached Ps.$ 0.458, compared to PS$ 0.457 in 1Q09

CEO's Comments:

Cristobal Mondragon, Bachoco's CEO, stated, "While the economic conditions prevailing in Mexico continued to slowly improve, we observed a good demand for our products, impacting our first quarter results and showing an improvement from the previous year in terms of sales and volume sold.

"In particular, the chicken industry was stable with good demand, lower prices and costs than in the previous quarter. The cost was lower mainly due to the strength of the Mexican peso and stable cost for our main imports.

"As a result of the business agreement reached last July, production efficiency and some organic growth registered in the states of Chiapas and Yucatan, the Company recorded an important increase in volume of chicken sold during this quarter.

"Our egg business, swine and balanced feed showed important improvements as seen in the results for the quarter.

"Our results were strong and sound, while our financial position remained solid even after the investments made during the past quarters," concluded Mr. Mondragon.

Releases made during the quarter:

On April 7, 2010, the Company reported to the market that its table eggs facilities located in Mexicali, Baja California, which represent about 9% of its total table eggs production, were affected by the earthquake registered on April 4, 2010.

    FIRST QUARTER 2010 RESULTS

    Net sales             1Q10 (%)        1Q09 (%)
    Chicken                 79.8%           79.0%
    Eggs                    10.1%           10.2%
    Balanced feed            5.5%            5.8%
    Swine                    1.2%            1.0%
    Other lines              3.4%            4.0%
    Total Sales           100.00%         100.00%

Net Sales

Net sales for the first quarter amounted to Ps. 5,931.2 million, and were 1.1% above the Ps. 5,866.8 million reported in the same 2009 quarter. This increase was mainly driven by higher chicken, eggs and swine sales.

Operating Results

Bachoco's first quarter gross margin was 17.2%, lower than 18.8% reported in 1Q09. This result is directly attributed to a decrease in the sale prices of Bachoco's main line products.

The Company registered an operating profit of Ps. 342.0 million, which is lower than the operating profit of Ps. 494.8 million registered in the same 2009 quarter. The operating margin for the first quarter of 2010 was 5.8%.

EBITDA amounted to Ps. 511.9 million, below the Ps. 654.3 million reported in the same 2009 quarter.

    Taxes
    Total taxes for the first quarter were Ps. 62.5 million.

Comprehensive Financial Income (Cost)

The Company's comprehensive financial cost was Ps. 2.9 million during the quarter, which was substantially below the comprehensive financial cost of Ps. 119.8 million reported in the same year-ago quarter.

Net Majority Income (loss)

Net majority income for the first quarter amounted to PS. 274.9 million, or Ps. 0.46 per share (US$0.44 per ADS), compared to a net majority income of Ps. 273.9 million, or Ps. 0.46 per share (US$0.44 per ADS) reported in the same 2009 period.

Balance Sheet

The financial position of the Company remained solid with cash and cash equivalents amounting to Ps. 2,851.9 million as of March 31, 2010. The total debt outstanding for the same period was of Ps. 863.4 million.

    Capital Expenditures
    CAPEX during the first quarter of 2010 amounted to Ps.60.8 million.

    RESULTS BY BUSINESS SEGMENT

Chicken

Sales of chicken products increased 2.1%, when compared to 1Q09, as a result of the 16.6% increase in volume, which is mainly attributed to productivity achievements, organic growth and the integration of the new business agreements. This increase in volume was partially offset by the 12.4% decline in chicken prices.

Table Eggs

Sales of table eggs products increased 0.2% during the first quarter, mainly stemming from a 2.4% increase in the volume sold. This growth was partially offset by the 2.0% decrease in table eggs prices. This business line remained solid with a good level between demand and supply.

Balanced Feed

Sales of balanced feed decreased 3.8%, mainly due to the 0.8% decrease in prices and 3.1% decrease in balance feed volume.

Swine

The swine business line was stable during the first quarter. Sales were strong and rose 15.8%, as a result of a 20.1% gain in volume sold; which was partially offset by a 3.6% decrease in swine prices when compared to the same 2009 quarter.

Other Lines

Sales of other lines decreased 13.6% when compared with 1Q09, as sales of turkey and by-products declined.

    Exhibits:
    A.- Consolidated Balanced Sheets
    B.- Consolidated Statement of Income
    C.- Consolidated Statement Cash Flow
    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.



    Exhibit A: Consolidated Balance Sheets

    INDUSTRIAS BACHOCO, S.A.B. DE C.V.
    Consolidated Statements of Income
    -unaudited-
                                            FIRST QUARTER
                                    U.S.D.       Mexican Pesos
                                   2010(1)    2010(2)     2009(2)

    Net sales                          $480   Ps  5,931   Ps  5,867
    Cost of sales                       397       4,911       4,765
    Gross profit (loss)                  83       1,020       1,102
    Selling, general and
     administrative expenses             55         678         607
    Operating income (loss)              28         342         495
       Other income (expense) net        (0)         (1)        (32)
    Comprehensive financing (cost)
     income                              (0)         (3)       (120)
       Interest income                    3          34         512
       Interest expense and
        financing expenses               (2)        (19)       (637)
       Foreign exchange gain
        (loss), net                       0           4           5
       Other financial income
        (expense) net                    (2)        (22)        -
    Income before income tax,
     asset tax                           27         338         343
    Total income taxes                    5          62          67
       Income tax, asset tax              4          46          24
       Deferred income taxes              1          17          43
    Net income                          $22   Ps    276   Ps    276
    Minority net income                   0           1           2
    Majority net income                  22         275         274
    weighted average shares
     outstanding (in thousands)     600,000     600,000     600,000
    Net majority Income per share
     (in U.S.D. per ADS)               0.44        0.46        0.46

    (1) For reference, in millions of U.S. dollars using an exchange rate of
        $12.357
        Source: Mexico's National Bank, as of March 31, 2010.
    (2) Millions of Mexican nominal pesos



    Exhibit B: Consolidated Statement of Income

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

                                      U.S.D.            Mexican Pesos
                                      2010(1)      2010(2)          2009(2)
                                                  As of March     As of March
                                                     31,              31,
    ASSETS
    Current assets
    Cash and cash equivalents         $231      Ps   2,852       Ps   2,449
    Total accounts receivable          121           1,495            1,332
    Inventories                        346           4,278            3,862
    Other current assets               -               -                -
    Total current assets               698           8,625            7,643
    Net property, plant and
     equipment                         875          10,812           10,684
    Other non current assets            34             417              516
    TOTAL ASSETS                    $1,607      Ps  19,853       Ps  18,842

    LIABILITIES
    Current liabilities
    Notes payable to banks              49             611              235
    Accounts payable                   117           1,441            1,099
    Other taxes payable and
     other accruals                     36             446              381
    Total current liabilities          202           2,498            1,714
    Long-term debt                      20             253              382
    Labor obligations                    8             100               86
    Deferred income taxes and
     others                            169           2,088            2,317
    Total long-term liabilities        198           2,441            2,785
    TOTAL LIABILITIES                 $400      Ps   4,938       Ps   4,499
    STOCKHOLDERS' EQUITY
    Majority stockholder's
     equity:
    Capital stock                      186           2,295            2,295
    Paid-in capital                     60             745              744
    Reserve for repurchase of
     shares                             13             159              158
    Retained earnings                  922          11,389           10,829
    Net majority income of the
     year                               22             275              274
    Deficit from restatement of
     stockholder's equity               -               -                -
    Derivate financial
     instruments                        -               -                -
    Total majority stockholder's
     equity                          1,203          14,863           14,299
    Minority interest                    4              51               45
    TOTAL STOCKHOLDERS' EQUITY       1,207          14,914           14,344
    TOTAL LIABILITIES AND
     STOCKHOLDERS' EQUITY           $1,607      Ps  19,853       Ps  18,842

    (1) For reference, in millions of U.S. dollars using an exchange rate of
        $12.357
        Source: Mexico's National Bank, as of March 31, 2010.
    (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.         2010(2)          2009(2)
                                 2010(1)    As of March 31,  As of March 31,

    NET MAJORITY INCOME BEFORE
     INCOME TAX                     $27     Ps.    338     Ps.    343
    ITEMS THAT DO NOT REQUIRE
     CASH:                           (3)           (33)           (70)
          Other Items                (3)           (33)           (70)
    ITEMS RELATING TO INVESTING
     ACTIVITIES:                     13            162            148
          Depreciation and others    14            170            160
          Income (loss) on sale
           of plant and equipment    (1)            (7)           (10)
          Other Items                (0)            (1)            (2)
    ITEMS RELATING TO FINANCING
     ACTIVITIES:                      4             53             76
          Interest income
           (expense)                  2             19             25
          Other Items                 3             34             51

    NET CASH GENERATED FROM NET
     INCOME BEFORE TAXES            $42     Ps.    521     Ps.    496

    CASH GENERATED OR USED IN THE
     OPERATION                        6             77            164

       Decrease (increase) in
        accounts receivable           5             68            183
       Decrease (increase) in
        inventories                  19            235          1,256
       Increase (decrease) in
        accounts payable            (23)          (280)          (883)
       Income taxes paid              4             54           (391)

    NET CASH FLOW FROM FINANCING
     ACTIVITIES                     $48     Ps.    598     Ps.    661

    INVESTING ACTIVITIES

    NET CASH FLOW FROM INVESTING
     ACTIVITIES                     (11)          (142)          (176)
          Acquisition of
           property, plant and
           equipment                 (5)           (61)          (140)
          Proceeds from sales of
           property plant and
           equipment                 (0)            (4)            (4)
          Other Items                (6)           (78)           (31)

    CASH FLOW SURPLUS
     (REQUIREMENTS OF) TO BE USED
     IN FINANCING ACTIVITIES        $37     Ps.    456     Ps.    485

    FINANCING ACTIVITIES

    Net cash provided by
     financing activities:           (8)           (99)            (8)
       Proceeds from loans           18            226             15
       Principal payments on
        loans                       (26)          (326)           (24)
       Dividends paid                -              -              -
       Other items                    0              1              1

    NET INCREASE (DECREASE) IN
     CASH AND EQUIVALENTS            28            349            476

    CASH AND INVESTMENTS AT THE
     BEGINNING OF YEAR              203          2,503          1,972

    CASH AND INVESTMENTS AT END
     OF PERIOD                     $231     Ps.  2,852     Ps.  2,449

    (1) For reference, in millions of U.S. dollars using an exchange rate of
        $12.357
        Source: Mexico's National Bank, as of March 31, 2010.
    (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 March 31, 2010
    Table 1

    Type of Financial       Objective of the
     Instrument               Instrument            Notional

    Forwards, knock out
     forwards, puts,
     collares and others      Hedge and
     under different         negotiation            $468,454
     amounts and
     conditions

    Futures for corn and
     Soybean meal             Hedge                 $48,158

                             Hedge and
    Options for corn        negotiation              $-


    Type of Financial            Value of the Related Commodity
     Instrument                  1Q-2010                 4Q-2009

    Forwards, knock out
     forwards, puts,
     collares and others
     under different              $12.36                 $13.08
     amounts and
     conditions

                              Corn for May 2010:
    Futures for corn and      $ 3.45 USD/bushel.      Corn of March 2010:
     Soybean meal             Soybean meal; $265.8    $4.145 USD/bushel
                              and $248.6 USD/ton
                              for May and December
                              2010 respectively

    Options for corn               -                  Corn of March 2010:
                                   -                  $4.145 USD/bushel


    Type of Financial Instrument           Reasonable Value

                                         1Q-2010         4Q-2009
    Forwards, knock out
     forwards, puts,
     collares and others
     under different
     amounts and conditions             -$24,664          $2,004

    Futures for corn and
     Soybean meal                        -$2,068         -$1,404

    Options for corn                      $-              $1,651


    Type of Financial
     Instrument              Amounts Due by Year    Guaranties Required

    Forwards, knock out
     forwards, puts,             99.6% in 2010 and
     collares and others           0.4% in 2011
     under different
     amounts and                                        The deals consider
     conditions                                         the possibility of
                                                         margin calls but
                                                         not another kind
                                                           of guarantee
    Futures for corn and
     Soybean meal                    2010


    Options for corn

    None of the financial instruments exceed 5% of total assets as of March
     31, 2010.
    A negative value means an unfavorable effect for the Company.
    The notional value represents the net position as of March 31, 2010 at the
     exchange rate of Ps.12.357 per USD.



    Industrias Bachoco, S.A.B. de C.V.
    Thousands of Mexican Pesos, as of March 31, 2010
    Table 2

                                                Reasonable
                                               Value as of
                                                March 31,
    Type of Financial Instrument                  2010

    Forwards, knock out forwards,
     puts, collares and others under
     different amounts and
     conditions*                                -$24,664

    Futures for corn and Soybean meal**          -$2,068

    Options for corn**                              $-


    Type of Financial Instrument           Value of the Related Commodity -
                                                  reference value
                                         -2.5%           2.5%            5.0%
    Forwards, knock out forwards,
     puts, collares and others under
     different amounts and
     conditions*                        $12.05         $12.67          $12.97

                                           -5%             5%             10%

    Futures for corn and Soybean       $3.2775        $3.6225         $3.7950
     meal**                            $252.51        $279.09         $292.38

    Options for corn**                   -            -              -


    Type of Financial Instrument            Effect on the Income Statement

    Forwards, knock out forwards,
     puts, collares and others under                Direct
     different amounts and
     conditions*

    Futures for corn and Soybean
     meal**                                     The effect will
                                               materialize as the
                                                 inventory is
    Options for corn**                             consumed


    Type of Financial Instrument               Effect on the Cash Flow ***
                                             -2.5%       2.5%            5.0%
    Forwards, knock out forwards,
     puts, collares and others under
     different amounts and
     conditions*                          -$40,933   -$12,952          $1,382

                                               -5%         5%             10%
    Futures for corn and Soybean
     meal**                                -$4,372       $237          $2,541

    Options for corn**                        $-         $-              $-

    A negative value means an unfavorable effect for the Company.
    * The reference value for the peso/USD as of March 31, 2010 is $12.357
    ** The reference value is the Futures of corn for May 2010, $3.45 USD per
    bushel and of soybean meal for may 2010, $265.8 USD per ton
    *** 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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