Industrias Bachoco Announces Second Quarter 2015 Results

Jul 23, 2015, 17:00 ET from Industrias Bachoco, S.A.B. de C.V.

CELAYA, Mexico, July 23, 2015 /PRNewswire/ -- Industrias Bachoco, S.A.B. de C.V., "Bachoco" or "the Company", (NYSE: IBA; BMV: Bachoco) announced today its unaudited results for the second quarter ("2Q15") and first half ("1H15") 2015 results ended June 30, 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 11.6% in 2Q15.
  • EBITDA margin was 17.6% for 2Q15 and 17.0% in the 1H15.
  • Earnings per basic and diluted share totaled $2.32 for 2Q15 and $4.43 for the 1H15.

CEO COMMENTS

Mr. Rodolfo Ramos Arvizu, Chief Executive Officer of Bachoco, stated: "In this second quarter, our company was able to take advantage of the conditions the poultry industry offered; mainly a strong demand, which is a seasonal characteristic of this quarter, as well as stable price of our main raw materials. We observed a balanced supply and demand in our main product lines in both our Mexican and US markets, even when we are observing a growth rate above the historical level of the poultry industry in both countries.

We were able to increase our total sales by 11.6% in the quarter, due mainly to increases in volume in our main product lines, while reaching double-digit profit margins, and above those reached in the same quarter of 2014. We improved our profit margins in both of our operations, in Mexico and in the USA.   

In particular, we reached an EBITDA of $2,081.0 million, the highest reached by our company for a quarter.

The Company's net cash reached $12,184.4 million, strengthening our financial condition."

RECENT DEVELOPMENTS On July 13th, 2015, the company announced the acquisition of the breeding assets in the state of Georgia, USA, of Morris Hatchery Inc. This operation has a capacity of around one million laying hens that produce hatching eggs.  

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

2Q15

2Q14

Change

$

$

$

%

Net Sales

11,837.2

10,608.8

1,228.4

11.6

Net sales in Mexico

9,123.9

8,468.6

655.3

7.7

Net sales in the U.S.

2,713.3

2,140.2

573.1

26.8

 

NET SALES BY SEGMENT

In millions of pesos

2Q15

2Q14

Change

$

$

$

%

Net Sales

11,837.2

10,608.8

1,228.4

11.6

Poultry

10,703.9

9,672.7

1,031.2

10.7

Other

1,133.3

936.1

197.2

21.1

 

NET VOLUME SOLD BY SEGMENT

In tons

Change

2Q15

2Q14

Volume

%

Total sales volume:

499,355

450,563

48,792

10.8

Poultry

392,749

362,806

29,943

8.3

Others

106,606

87,757

18,849

21.5

The Company's 2Q15 net sales totaled $11,837.2 million, $1,228.4 million or 11.6% more than $10,608.8 million reported in 2Q14.  The increase is a result of more volume sold in all of our product lines and solid chicken and balanced feed prices during most of the quarter; this was partially offset with lower prices in eggs and pork when compared to 2Q14.

In 2Q15, sales of our U.S. operations represented 22.9% of our total sales compared to 20.2% in 2Q14.

GROSS PROFIT

In millions of pesos

2Q15

2Q14

Change

$

$

$

%

Cost of sales

8,914.2

8,151.6

762.6

9.4

Gross profit

2,923.1

2,457.2

465.8

19.0

Gross margin

24.7%

23.2%

-

-

In 2Q15 the cost of sales was $8,914.2 million, $762.6 million or 9.4% higher than $8,151.6 million reported in 2Q14; the increase in the cost of sales is mainly attributed to more volume sold, as our average cost per unit was lower than the average cost per unit in 2Q14, as a result of decreases in main raw material prices and productivity improvements.

Therefore, we were able to post a gross profit of $2,923.1 million and a gross margin of 24.7% in 2Q15; this profit is 19.0% higher than a gross profit of $2,457.2 million and a gross margin of 23.2% in 2Q14.

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

In millions of pesos

2Q15

2Q14

Change

$

$

$

%

Total SG&A

1,044.5

920.6

123.9

13.5

Total SG&A expenses in 2Q15 were $1,044.5 million, $123.9 million or 13.5% more than the $920.6 million reported in 2Q14. This increase is mainly attributed to higher sales and administrative expenses as our volume sold increased, as well a slight increase in our unit delivery expenses.

Total SG&A expenses as a percentage of net sales represented 8.8% in 2Q15 compared to 8.7% in 2Q14.

OTHER INCOME (EXPENSE), NET

In millions of pesos

2Q15

2Q14

Change

$

$

$

%

Other income (expense), net

5.0

(6.5)

11.5

(176.5)

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 2Q15, we recorded other income of $5.0 million, compared with other expense of $6.5 million reported in 2Q14; this is mainly attributed to profits of some unused assets, as well as insurance recoveries.

OPERATING INCOME

In millions of pesos

2Q15

2Q14

Change

$

$

$

%

Operating income

1,883.5

1,530.1

353.4

23.1

Operating margin

15.9%

14.4%

-

-

Operating income in 2Q15 totaled $1,883.5 million, which represents an operating margin of 15.9%, a higher margin when compared to operating income of $1,530.1 million and a 14.4% operating margin reported in 2Q14.

The increase in operating income is mainly attributed to higher gross income in 2Q15.

NET FINANCIAL INCOME

In millions of pesos

2Q15

2Q14

Change

$

$

$

%

Net Financial Income

132.1

60.2

71.9

119.5

Financial Income

161.7

94.6

67.1

70.9

Financial Expense

29.6

34.4

(4.8)

(14.0)

In 2Q15, the Company reported net financial income of $132.1 million, compared to income of $60.2 million reported in the same period of 2014. The increase is mainly attributed to higher interest income and lower interest expenses.

TAXES FOR THE PERIOD

In millions of pesos

2Q15

2Q14

Change

$

$

$

%

Total Taxes

621.1

501.3

119.8

23.9

Income tax

580.5

354.0

226.5

64.0

Deferred income tax

40.6

147.3

(106.7)

(72.4)

Total taxes for the 2Q15 were $621.1 million, compared with total taxes of $501.3 million in the same period of 2014; the increase is attributed to a higher income before taxes, when compared with 2Q14.

NET INCOME

In millions of pesos

2Q15

2Q14

Change

$

$

$

%

Net income

1,394.5

1,088.9

305.6

28.1

Net margin

11.8%

10.3%

-

-

Basic and diluted earnings per share1

2.32

1.81

-

-

Basic and diluted earnings per ADR2

27.89

21.73

-

-

Weighted average Shares outstanding3

599,442

599,875

-

-

1 In pesos

2 in pesos, one ADR equals to twelve shares

3 In thousands of shares

The net income for 2Q15 was $1,394.5 million, representing a net income of $2.32 pesos per share, compared with a net income of $1,088.9 million, which represented $1.81 pesos of net income per share in 2Q14. The increase is mainly attributed to better operating results.   

Net margin was 11.8% and 10.3% for 2Q15 and 2Q14, respectively.

EBITDA AND ADJUSTED EBITDA

In millions of pesos

2Q15

2Q14

Change

$

$

$

%

Net income

1,393.5

1,086.5

307.0

28.3

   Income tax expense (benefit)

621.1

501.3

119.8

23.9

   Result in associates

1.0

2.4

(1.4)

(58.3)

   Net finance (income) expense

(132.1)

(60.2)

(71.9)

119.5

   Depreciation and amortization

197.5

215.6

(18.1)

(8.4)

EBITDA

2,081.0

1,745.7

335.3

19.2

EBITDA Margin (%)

17.6%

16.5%

-

-

  Other expense (income) net

(5.0)

6.5

11.5

(176.5)

Adjusted EBITDA

2,076.0

1,752.2

323.9

18.5

Adjusted EBITDA Margin

17.5%

16.5%

-

-

Net revenues

11,837.2

10,608.8

1,228.4

11.6

EBITDA in 2Q15 reached $2,081.0 million, representing an EBITDA margin of 17.6%, compared to an EBITDA of $1,745.7 million in 2Q14, with an EBITDA margin of 16.5%.

The adjusted EBITDA in 2Q15 reached $2,076.0 million, representing an adjusted EBITDA margin of 17.5%, compared to adjusted EBITDA of $1,752.2 million in 2Q14, with an adjusted EBITDA margin of 16.5%.

ACCUMULATED RESULTS

NET SALES BY GEOGRAPHY

In millions of pesos

2H15

2H14

Change

$

$

$

%

Net Sales

23,243.2

20,252.2

2,991.0

14.8

Net sales in Mexico

17,768.5

16,215.5

1,553.0

9.6

Net sales in the U.S.

5,474.7

4,036.7

1,438.0

35.6

  

NET SALES BY SEGMENT

In millions of pesos

2H15

2H14

Change

$

$

$

%

Net Sales

23,243.2

20,252.2

2,991.0

14.8

Poultry

21,117.2

18,462.9

2,654.3

14.4

Other

2,126.0

1,789.3

336.7

18.8

   

NET VOLUME SOLD BY SEGMENT

In metric tons

Change

2H15

2H14

Volume

%

Total sales volume:

983,855

892,502

91,353

10.2

Poultry

780,444

721,745

58,699

8.1

Others

203,411

170,757

32,654

19.1

During the first half of 2015, net sales totaled $23,243.2 million; $2,991.0 million or 14.8% more than $20,252.2 million reported in the same period of 2014. The increase in sales is attributed to higher volume sold and higher weighted average price as compared with the first half of 2014.

In 1H15, sales of our U.S. operations represented 23.6% of our total sales, compared with 19.9% in 1H14.

Operating Results

In millions of pesos

1H15

1H14

Change

$

$

$

%

Cost of Sales

17,636.6

16,005.7

1,630.9

10.2

Gross Profit

5,606.6

4,246.5

1,360.1

32.0

Total SG&A

2,052.7

1,792.0

260.8

14.6

Other Income (expense)

(8.2)

(41.5)

33.2

(80.1)

Operating Income

3,545.6

2,413.1

1,132.6

46.9

Net Financial Income

313.1

110.9

202.2

182.3

Income Tax

1,198.5

775.4

423.1

54.6

Net Income

2,660.2

1,748.5

911.7

52.1

In 1H15 the cost of sales totaled $17,636.6 million, $1,630.9 million or 10.2% higher than $16,005.7  million reported 1H14; the increase in the cost of sales is mainly attributed to higher volume as weighted average unit cost of sales showed a small variation as compare with the weighted unit cost of the same period of 2014.

As a result, we reached a gross profit of $5,606.6 million and a gross margin of 24.1% in 1H15, a higher result than $4,246.5 million of gross profit and a margin of 21.0% reached in the same period of 2014.

Total SG&A expenses in 1H15 were $2,052.7 million, $260.8 million or 14.6% more than the $1,792.0 million reported in 1H14. This increase is mainly attributed to the higher volume sold.  Total SG&A expenses as a percentage of net sales represented 8.8% in 1H15; the same percentage reported in 1H14.

In 1H15 we had other expenses of $8.2 million, compared with other expenses of $41.5 million reported in 1H14.

The operating income in 1H15 was $3,545.6 million, which represents an operating margin of 15.3%, an increase of 46.9% from an operating income of $2,413.1 million and an operating margin of 11.9% in 1H14.

The net financial income in 1H15 was $313.1 million, higher when compared to net financial income of $110.9 million in 1H14, mainly attributed to a higher interest income resulting from the high levels of cash and lower interest expenses.

Total taxes were $1,198.5 million as of June 30, 2015.  These taxes include $1,123.2 million of income tax and $75.3 million of deferred income taxes; this figure compares to total taxes of $775.4 million in 1H14; the increase was due to a higher income before taxes.

All the above result in a net income of $2,660.2 million or 11.4% of net margin in the 1H15, which represents $4.43 pesos of earnings per share, while in the 1H14 the net income totaled $1,748.5 million, 8.6% of net margin and $2.91 pesos of net income per share.

EBITDA AND ADJUSTED EBITDA

In millions of pesos

1H15

1H14

Change

$

$

$

%

Net income

2,656.9

1,746.2

910.7

52.2

   Income tax expense (benefit)

1,198.5

775.4

423.1

54.6

   Result in associates

3.4

2.4

1.0

41.2

   Net finance (income) expense

(313.1)

(110.9)

(202.2)

182.3

   Depreciation and amortization

396.9

438.7

(41.8)

(9.5)

EBITDA

3,942.5

2,851.7

1,090.8

38.3

EBITDA Margin (%)

17.0%

14.1%

-

-

  Other expense (income) net

8.2

41.5

(33.2)

(80.1)

Adjusted EBITDA

3,950.8

2,893.2

1,057.6

36.6

Adjusted EBITDA Margin

17.0%

14.3%

-

-

Net revenues

23,243.2

20,252.2

2,991.0

14.8

EBITDA in 1H15 reached $3,942.5 million, representing an EBITDA margin of 17.0%, compared to EBITDA of $2,851.7 million in 1H14, with an EBITDA margin of 14.1%.

The adjusted EBITDA in 1H15 reached $3,950.8 million, representing an adjusted EBITDA margin of 17.0%, compared to adjusted EBITDA of $2,893.2 million in 1H14, with an adjusted EBITDA margin of 14.3%.

BALANCE SHEET

BALANCE SHEET DATA

In millions of pesos

June 30, 2015

Dec. 31, 2014

Change

$

$

$

%

TOTAL ASSETS

37,943.9

34,793.8

3,141.1

9.0

Cash and cash equivalents

15,263.5

11,961.6

3,301.9

27.6

Accounts receivable

2,104.9

2,976.5

(871.6)

(29.3)

TOTAL LIABILITIES

11,655.3

10,431.7

1,223.6

11.7

Accounts payable

3,118.6

3,384.3

(265.7)

(7.9)

Short-term debt

579.9

798.0

(218.1)

(27.3)

Long-term debt

2,499.2

1,652.5

846.8

51.2

TOTAL STOCKHOLDERS' EQUITY

26,279.6

24,362.1

1,917.6

7.9

Capital stock

1,173.9

1,174.4

(0.5)

(0.0)

Cash and equivalents as of June 30, 2015 totaled $15,263.5 million, up $3,301.9 million or 27.6% from $11,961.6 million as of December 31, 2014.

Total debt as of June 30, 2015 was $3,079.1 million, compared to $2,450.5 million reported as of December 31, 2014, mainly as a result of higher long-term bank debt.

Net cash as of June 30, 2015 was $12,184.4 million, compared to net cash of $9,511.2 million as of December 31, 2014.

CAPITAL EXPENDITURES

In millions of pesos

1H15

1H14

Change

$

$

$

%

Capital Expenditures

605.0

474.9

130.2

27.4

Total CAPEX for the 1H15 was $605.0 million and $474.9 million in 1H14, mainly allocated toward organic growth and productivity projects across all of our facilities.

STOCK INFORMATION

As of June 30, 2015

Total Shares

600,000,000

Total free float

26.75%

Market cap (millions of pesos)

$42,300

Source: yahoo finances

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

Average

Close

High

Low

Average

Close

Jun-15

73.07

70.50

71.72

70.50

56.36

54.11

55.52

54.11

May-15

73.70

68.32

71.37

73.70

58.14

54.34

56.06

57.37

Apr-15

69.69

64.38

66.87

68.32

54.40

50.87

52.76

53.79

Mar-15

67.40

63.33

64.87

63.36

53.78

48.84

51.12

49.85

Feb-15

64.00

60.20

63.03

63.26

51.58

48.97

50.67

51.02

Jan-15

63.60

59.23

60.75

61.50

51.55

47.97

49.51

48.84

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 $15.70 per USD $1.0, which corresponds to the rate at the close of June 30, 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

June 30,

December 31,

In million pesos

2015

2015

2014*

TOTAL ASSETS

$           2,417.0

37,934.9

34,793.8

Total current assets

1,487.0

23,338.2

20,852.0

   Cash and cash equivalents

972.5

15,263.5

11,961.6

   Total accounts receivable

134.1

2,104.9

2,976.5

   Inventories

278.6

4,373.3

4,469.5

   Other current assets

101.7

1,596.4

1,444.3

Total non current assets

930.0

14,596.7

13,941.8

   Net property, plant and equipment

789.4

12,390.3

12,054.8

   Other non current Assets

140.6

2,206.4

1,887.0

TOTAL LIABILITIES

$              742.6

11,655.3

10,431.7

Total current liabilities

377.9

5,931.8

5,655.5

   Notes payable to banks

36.9

579.9

798.0

   Accounts payable

198.7

3,118.6

3,384.3

   Other taxes payable and other accruals

142.3

2,233.3

1,473.2

Total long-term liabilities

364.7

5,723.5

4,776.2

   Long-term debt

159.2

2,499.2

1,652.5

   Other  non current liabilities

6.4

100.8

90.9

   Deferred income taxes

199.0

3,123.4

3,032.8

TOTAL STOCKHOLDERS' EQUITY

$           1,674.4

26,279.6

24,362.1

Capital stock

74.8

1,173.9

1,174.4

Commission in shares issued

25.5

399.6

399.6

Repurchased shares

47.5

745.8

101.1

Retained earnings

1,503.4

23,596.2

22,513.2

Others accounts

20.1

316.1

129.1

Non controlling interest

3.1

48.0

44.6

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$           2,417.0

37,934.9

34,793.8

*Audited

   

CONSOLIDATED STATEMENT OF INCOME

Second Quarter Results, ended June 30:

-Unaudited-

U.S. Dollar

In millions pesos

2015

2015

2014

Net sales

$          754.2

11,837.2

10,608.8

Cost of sales

568.0

8,914.2

8,151.6

Gross profit

186.2

2,923.1

2,457.2

SG&A

66.5

1,044.5

920.6

Other income (expenses), net

0.3

5.0

(6.5)

Operating income

120.0

1,883.5

1,530.1

Net finance income

8.4

132.1

60.2

Income tax

39.6

621.1

501.3

Net Income

$          136.8

1,394.5

1,088.9

Non-controlling interest

0.1

1.0

2.44

Net controlling interest profit

88.9

1,393.5

1,086.5

Basic and diluted earnings per share

0.15

2.32

1.81

Basic and diluted earnings per ADR

1.78

27.90

21.73

Weighted average Shares outstanding1

599,442

599,442

599,875

EBITDA Result

$          132.6

2,081.0

1,745.7

Gross margin

24.7%

24.7%

23.2%

Operating margin

15.9%

15.9%

14.4%

Net margin

11.8%

11.8%

10.3%

EBITDA margin

17.6%

17.6%

16.5%

1 In thousands

CONSOLIDATED STATEMENT OF INCOME

Accumulated results, for the six months ended  June 30.

-Unaudited-

U.S. Dollar

In millions pesos

2015

2015

2014

Net sales

$       1,480.9

23,243.2

20,252.2

Cost of sales

1,123.7

17,636.6

16,005.7

Gross profit

357.2

5,606.6

4,246.5

Selling, general and administrative expenses

130.8

2,052.7

1,792.0

Other income (expenses), net

(0.5)

(8.2)

(41.5)

Operating income

225.9

3,545.6

2,413.1

Net finance income

19.9

313.1

110.9

Income tax

76.4

1,198.5

775.4

Net income

$          265.8

2,660.2

1,748.5

Non-controlling interest

0.2

3.4

2.4

Net controlling interest profit

169.7

2,656.9

1,746.2

Basic and diluted earnings per share

0.28

4.43

2.91

Basic and diluted earnings per ADR

3.39

53.2

34.93

Weighted average Shares outstanding1

599,488

599,488

599,910

EBITDA Result

$          251.2

3,942.5

2,851.7

Gross margin

24.1%

24.1%

21.0%

Operating margin

15.3%

15.3%

11.9%

Net margin

11.5%

11.4%

8.6%

EBITDA margin

17.0%

17.0%

14.1%

1 In thousands

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

In million of pesos

-Unaudited-

U.S. Dollar

June 30,

2015

2015

2014

NET MAJORITY INCOME BEFORE INCOME TAX

$                  245.9

3,858.8

2,524.0

ITEMS THAT DO NOT REQUIRE CASH:

-

-

-

ITEMS RELATING TO INVESTING ACTIVITIES:

27.6

433.9

483.3

      Depreciation and others

25.3

396.9

438.7

      Income (loss) on sale of plant and equipment

2.4

37.0

47.0

      Other Items

-

-

(2.4)

ITEMS RELATING TO FINANCING ACTIVITIES:

3.6

57.3

73.8

      Interest income (expense)

3.6

57.3

73.8

      Other Items

-

-

-

NET CASH GENERATED FROM NET INCOME BEFORE TAXES

277.2

4,349.9

3,081.0

CASH GENERATED OR USED IN THE OPERATION:

33.7

528.4

(370.1)

   Decrease (increase) in accounts receivable

34.2

536.9

(55.1)

   Decrease (increase) in inventories

6.0

94.5

216.0

   Decrease (increase) in accounts payable

(7.4)

(115.9)

(521.5)

   Decrease (increase) in other liabilities

0.8

12.9

(9.6)

NET CASH FLOW FROM OPERATING ACTIVITIES

310.8

4,878.4

2,710.9

NET CASH FLOW FROM INVESTING ACTIVITIES

(38.9)

(611.0)

(416.0)

      Acquisition of property, plant and equipment

(38.5)

(605.0)

(474.9)

      Proceeds from sales of property plant and equipment

2.5

39.7

13.4

      Other Items

(2.9)

(45.6)

45.5

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

271.9

4,267.4

2,294.9

Net cash provided by financing activities:

3.3

52.0

469.4

   Proceeds from loans

119.4

1,874.5

492.0

   Principal payments on loans

(79.9)

(1,254.0)

(69.4)

   Dividends paid

(28.6)

(449.6)

-

   Other items

(7.6)

(118.9)

46.8

Net increase (decrease) in cash and equivalents

202.8

3,183.0

1,999.2

Cash and investments at the beginning of year

$                  703.2

11,036.1

6,716.9

CASH AND INVESTMENTS AT END OF PERIOD

$                  906.0

14,219.1

8,716.1

DERIVATIVES POSITION REPORT

Second Quarter 2015

Thousands of Mexican Pesos, as of June 30, 2015

TYPE OF FINANCIAL INSTRUMENT

OBJETIVE

NOTIONAL

VALUE OF THE RELATED COMMODITY

REASONABLE VALUE

AMOUNTS DUE BY YEAR

GUARANTIES REQUIRED

2Q-2015

1Q-2015

2Q-2015

1Q-2015

Knock out forwards.

Hedge

$    -

$     15.70

$    15.26

$         -

$  8,248

0

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

Futures for corn and soybean meal

Hedge

$ 240,036

 CORN

 CORN

$ 25,382

-$ 771

in 2015

 In USD per Bushel

 In USD per Bushel

 month

 price

 month

 price

May-2015

$ 3.763

Jul-2015

$ 4.140

Jul-2015

$ 3.843

Sep-2015

$ 4.220

Sep-2015

$ 3.920

Dec-2015

$ 4.315

Dec-2015

$ 4.008

 SOYBEAN MEAL

 SOYBEAN MEAL

 In USD per ton

 In USD per ton

 month

 price

 month

 price

May-2015

$           326.8

Jul-2015

$           359.5

Aug-2015

$           351.9

Sep-2015

$           348.3

Oct-2015

$           345.5

Options of Corn

Hedge

$ -

 CORN

 CORN

$ -

-$ 92

2015

 In USD per Bushel

 In USD per Bushel

 month

 price

 month

 price

Jul-2015

$ 3.84

Sep-2015

$ 3.92

Dec-2015

$ 4.01

Options of soybean meal

Hedge

$ 246

 SOYBEAN MEAL

 SOYBEAN MEAL

$ 246

$ 55

2015

 In USD per ton

 In USD per ton

 month

 price

 month

 price

May-2015

$ 326.80

Jul-2015

$ 325.20

Aug-2015

$ 351.90

Aug-2015

$ 323.70

Options of Heating Oil

Hedge

$ -

 Heating Oil

 Heating Oil

$ -

$ 216

2015

 In USD per gallon

 In US cents per pound

 month

 price

 month

 price

Jul-2015

$ 1.73

Aug-2015

$ 1.89

Aug-2015

$ 1.75

Sep-2015

$ 1.89

Sep-2015

$ 1.77

Oct-2015

$ 1.90

Oct-2015

$ 1.79

Nov-2015

$ 1.92

Nov-2015

$ 1.81

Dec-2015

$ 1.94

-The total financial instruments not exceed 5% of total assets as of June 30, 2015.

-The notional value represents the net position as of June 30, 2015 at the exchange rate of Ps.15.70 per one dollar.

-A negative value means an unfavorable effect for the Company.

PROBABLE SCENARIO

Second Quarter 2015

Thousands of Mexican Pesos, as of June 30, 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)

$ -

$15.31

$ 16.09

$ 16.49

 Direct

$ 4,252

$ -

$ -

-5%

5%

10%

-5%

5%

10%

Futures of Corn: (2) Futures of Soybean Meal: (2)

$ 25,382

$ 3.9 $ 341.5

$  4.3 $ 377.5

$  4.6 $ 395.5

 The effect will materialize as the inventory is consumed

$ 13,380

$ 37,383

$ 49,385

Options for Corn

$  -

$  -

$  -

$  -

$ -

$ -

$ -

Options of Soybean Meal

$ 246

$ 334.3

$ 369.5

$ 387.1

$ 135

$  356

$ 467

Options of Heating Oil

$ -

$  1.79

$  1.98

$  2.08

$ 56

$  -

$  -

(1) The reference value is the exchange  rate of Ps. $15.70 per USD as of June 30, 2015.

(2) The reference values are; the future of corn for July 2015, $4.1400 USD/bushel, the future of soybean meal for July 2015, $359.50  USD/ton, and the future for heating oil for August 2015, $1.89 USD per gallon.

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.

CONFERENCE CALL INFORMATION The Company will host its second quarter 2015 earnings call, on Friday, July 24, 2015. The earnings call will take place at 9:00 am Central Time (10:00 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=P&o=UsUlXpdnvTgWzV

Confirmation Number: 40130524

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.

Contact Information:  Maria Guadalupe Jaquez, IR Maria.jaquez@bachoco.net T. +52(461)618 3555

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



RELATED LINKS

http://www.bachoco.com.mx