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INDUSTRIAS BACHOCO SAB DE CV
Symbol U : IBA
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Industrias Bachoco Announces Fourth Quarter and Full Year 2012 Results

2013-02-13 12:55 ET - News Release

REPEAT to include ticker symbols: (NYSE: IBA; BMV: Bachoco)

CELAYA, Mexico, Feb. 7, 2013 /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 ("4Q12") and full year 2012 ("Y12") ended December 31, 2012. All figures have been prepared in accordance with International Financial Reporting Standard ("IFRS"), and are presented in nominal million Mexican Pesos ("Peso" or "Ps.").

HIGHLIGHTS (comparison with the same periods in 2011)

  • Net sales increased 25.0% and 41.8% in 4Q12 and Y12 respectively, mainly as a result of the integration of the Company's new operation in the United States.
  • EBITDA margin was 8.5% in 4Q12 and 8.7% in Y12.
  • Earnings per share totaled Ps. 0.92 in 4Q12, and Ps. 3.60 in Y12 compared to a negative result Ps. 0.04 in 4Q11 and earnings of Ps. 0.28 in 2011.

CEO COMMENTS

"Supply and demand remained balanced across our main product lines, with sound prices during most part of the quarter, helped by the holiday season at the end of this period, which fostered consumption mainly of chicken products.

Fourth quarter results concluded a positive year for the Company in terms of operating and financial results, a recovery from results reported in 2011, which was one of the most difficult years in the Company's history.

It has been one year since Bachoco entered the United States market through the acquisition of OK Industries. We continue to integrate OK Industries into the Company's operations, in line with Bachoco's overall strategy.

In addition, it is important to highlight that Bachoco had a solid financial structure throughout 2012, reporting negative net debt on the Balance Sheet, which we consider one of Bachoco's primary strengths."

EXECUTIVE SUMMARY

The following financial information is expressed in millions of nominal Pesos with comparative figures for the same periods in 2011.


      QUARTERLY

      YEAR

In millions of pesos

        4Q11

       4Q12

2011

2012

Net sales

Ps.    8,564.3

Ps.    10,705.3

Ps.       27,740.6

 Ps.  39,348.1

Net sales Mexico

7,191.1

8,007.3

26,364.9

31,228.9

Net sales in the U.S.

1,373.2

2,698.0

1,373.2

8,119,1

Cost of sales

Ps.     7,887.1

Ps.       9,135.0

Ps.        24,754.7

 Ps.   33,357.7

Gross profit

677.2

1,570.3

2,985.9

5,990.4

Total expenses

851.1

872.6

2,951.9

3,371.1

Net income (loss)

-26.9

554.2

165.2

2,159.1

NET SALES

Net sales increased 25.0% during 4Q12 and, 41.8% during Y12, mainly as a result of the integration of the Company's new operation in the United States, which was acquired in November 2011.

Quarterly Sales (4Q12 vs. 4Q11)

Net sales in 4Q12 totaled Ps. 10,705.3 million, higher than the Ps. 8,564.3 million in net sales reported the same period in 2011. The increase was due to increases across all main business lines, with balanced and stable demand and supply.

Annual Sales (Y12 vs. Y11)

Net Sales in Y12 totaled Ps. 39,348.1, 41.8% more than Ps. 27,740.6 million in net sales in Y11, mainly as a result of 45.6% increase in chicken sales, due to the integration of OK Industries sales to Bachoco.

OPERATING RESULTS

Gross profit in 4Q12 was Ps. 1,570.4 million resulting in a gross margin of 14.7%, compared to a gross profit of Ps. 677.2 million with a gross margin of 7.9% in 4Q11. Meanwhile, the gross margin totaled 15.2% in 2012, compared to 10.8% in 2011.

As a result of strict control of operating expenses, Bachoco reported improvements in 2012; in 4Q12, total expenses represented 8.2% of total sales compared to 9.9% of total sales in 4Q11. For 2012, total expenses represented 8.6% of total sales compared to 10.6% reported in 2011.


 QUARTERLY

YEAR

In million of pesos

4Q11

4Q12

Var.

2011

2012

Var.

Financial income (expense) net

Ps.  40.0  

Ps.  46.5  

16.1%

Ps.   177.8   

Ps.  159.5  

-10.3%

   Financial income 

88.5

86.0

-2.8%

280.8

293.3

4.5%

   Financial expense

48.4

39.5

-18.4%

102.9

133.8

30.0%

The Company reported comprehensive financial income of Ps. 46.5 million for 4Q12, and Ps. 159.5 million for 2012. This was mainly due to interest earned on the Company's cash position, which remained strong throughout the year.

Total taxes for 4Q12 were Ps. 140.4 million and Ps. 583.5 million for 2012.


QUARTERLY

YEAR

In million of pesos

4Q11

4Q12

2011

2012

Total tax expense (benefit)

-Ps.  84.7

Ps.  140.4

Ps.  632.3

Ps.  583.5

Net income was Ps. 554.2 million in 4Q12 (Ps. 0.92 per share), compared to a net loss of Ps. 26.9 million (-Ps. 0.04 per share) reported in 4Q11. Meanwhile, net income for 2012 was Ps. 2,159.1 million (Ps. 3.60 per share), compared to net income of Ps. 165.2 million (Ps. 0.28 per share) reported in 2011.

Adjusted EBITDA

Adjusted EBITDA in 4Q12 reached Ps. 911.2 million, representing a margin of 8.5%, compared to adjusted EBITDA of Ps. 79.0 million in 4Q11. Adjusted EBITDA margin in 2012 was 8.7%, compared to 2.9% in 2011.

The following chart shows reconciliation of adjusted EBITDA and adjusted EBITDA margin to consolidated net income.


Fourth Quarter

Full Year

In million of pesos as of December 31: 

2011

2012

2011

2012

Net income (loss)

-$        27

$      554

$      165

$  2,159

  Income tax expense (benefit)

(85)

140

632

583

  Share of results in associates

1

3

2

7

  Comprehensive financial (income) expense, net

(40)

(46)

(178)

(160)

  Depreciation and amortization

253

214

778

815

EBITDA RESULT

102

864

1,400

3,404

EBITDA margin

1.2%

8.1%

5.05%

8.65%

  Other expense (income) net

(23)

47

(588)

29

Adjusted EBITDA result

79

911

812

3,434

Adjusted EBITDA margin

0.9%

8.5%

2.9%

8.7%

Net revenues

8,564

10,705

27,741

39,348

BALANCE SHEET

Cash and equivalents as of December 31, 2012 totaled Ps. 5,138.1 million compared to Ps. 3,036.4 million reported as of December 31, 2011, while net debt was a negative Ps. 2,396.8 million.

As of December 31, 2012, total debt was Ps. 2,741.2 million pesos compared to Ps. 1,837.4 million reported as of December 31, 2011. The Company's debt is broken down as follows:


In millions of pesos

As of Dec 31, 2011

As of Dec 31, 2012

Var.

Short term debt

Ps.             1,453.0

Ps.             1,207.1   

-16.9%

Long term debt

384.4

34.1

-91.1%

Long term debt (Bond issue)

0.0

1,500.0

100.0%

Total debt

1,837.4

2,741.2

49.2%

Net debt2

-1,199.0

-2,396.8

99.9%

2 Net debts equal to: total debt minus total cash and equivalents.

CAPITAL EXPENDITURES

Total CAPEX as of December 31, 2012 was Ps. 835.9 million, mainly allocated toward productivity projects and maintenance.

STOCK INFORMATION  

As of December 31, 2012


Total Shares

600,000,000


Total free float

17.25%


Total shares in treasury (as of December 31, 2012)

0


Total shares in treasury (as of February 07, 2012)

0


Market cap (millions)

Ps. 18,078


STOCK

BMV

NYSE

Ticker Symbol

Bachoco

IBA

Closing price as of December 31, 2012

Ps. 30.13   

USD$ 27.92

Maximums closing price within the 52 weeks

Ps. 30.13   

   USD$ 27.97   

Minimums closing price within the last 52 weeks

Ps. 20.59   

 USD$ 18.86 

Pricing yield in 2012

35.1%

46.4%

APPENDICES TO FOLLOW

For reference, some figures have been translated in millions of U.S. dollars ("USD") using an exchange rate of $12.87, that corresponds to the close of December 31, 2012, according to Mexico's National Bank.

1.      Consolidated Statement of Financial Position  


-Unaudited-





In million of pesos

As of Dec 31, 2011

As of Dec 31, 2012

U.S. Dollar
As of Dec 31, 2012


ASSETS





Cash and cash equivalents

$         3,036

$         5,138

$            399


Total accounts receivable

2,333

2,387

185


Inventories

4,780

6,258

486


Other current assets

712

306

24


Total current assets

10,860

14,089

1,095


Net property, plant and equipment

11,755

11,509

894


Other non current assets

1,869

2,051

159


TOTAL ASSETS

$       24,484

$       27,649

$         2,148


LIABILITIES





Notes payable to banks

1,453

1,207

94


Accounts payable

2,411

2,926

227


Other taxes payable and other accruals

606

668

52


Total current liabilities

4,470

4,801

373


Long-term debt 

384.4

1,534

119


Other  non current liabilities

69

68

5


Deferred income taxes

2,522

2,521

196


Total long-term liabilities

2,976

4,123

320


TOTAL LIABILITIES

$         7,446

$         8,925

$            693


STOCKHOLDERS' EQUITY





Capital stock

1,393

1,393

108


Commission in shares issued

459

459

36


Repurchased shares

93

104

8


Retained earnings

13,975

15,835

1,230


Others accounts

1,059

875

68


Total majority stockholder's equity

16,978

18,665

1,450


Minority interest

60

60

5


TOTAL STOCKHOLDERS' EQUITY

$       17,038

$       18,724

$         1,455


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$       24,485

$       27,649

$         2,148






2.      Consolidated Statement of Income  



-Unaudited-










Fourth Quarter

U.S. Dollar (1)


Full Year

U.S. Dollar (1)


In million of pesos as of December 31:  

2011

2012

2012


2011

2012

2012


Net sales

$ 8,564

$ 10,705

$      831.8


$ 27,741

$  39,348

$      3,057


Cost of sales

7,887

9,135

$      709.8


24,755

33,358

2,592


Gross profit

677

1,570

$      122.0


2,986

5,990

465


total expenses

851

873

$        67.8


2,952

3,371

262


Operating income

(174)

698

$        54.2


34

2,619

204


Other income (expense) net

23

(47)

-$          3.6


588

(29)

(2)


Comprehensive financing (cost) income

40

46

$           3.6


178

160

12


Share of results in associates

(1)

(3)

-$          0.2


(2)

(7)

(1)


Income before income tax, asset tax

(112)

695

$        54.0


798

2,743

213


Total income taxes

(85)

140

$        10.9


632

583

12


Net income

(27)

554

$        43.1


165

2,159

201


   Net controlling interest income

3

3

$           0.3


5

10

201


   Non-controlling interest income

(30)

551

$        42.8


160

2,149

(188)


Net income per share (EPS)

(0.04)

0.92

$           0.1


0.28

3.60

0.33


Total Shares outstanding (million)

600

600

$      600.0


600

600

600











EBITDA Result

$       79

$   911.2

$            71


$       812

$ 3,433.9

$         267


EBITDA margin

0.9%

8.5%



2.9%

8.7%












Gross margin

7.9%

14.7%



10.8%

15.2%



Operating margin

-2.0%

6.5%



0.1%

6.7%



Net margin

-0.3%

5.2%



0.6%

5.5%












3.      Consolidated Statement of Cash Flows  


-Unaudited-









U.S. Dollar




As of Dec 31,

As of Dec 31,

As of Dec 31,



In million of pesos

2011

2012

2012 (1)



NET MAJORITY INCOME BEFORE INCOME TAX

798

2,743

213



ITEMS THAT DO NOT REQUIRE CASH:

-

-

-



ITEMS RELATING TO INVESTING ACTIVITIES:

781

728

57



      Depreciation and others

778

815

63



      Income (loss) on sale of plant and equipment

5

115

9



      Other Items

(3)

(202)

(16)



ITEMS RELATING TO FINANCING ACTIVITIES:

255

90

7



      Interest income (expense)

58

90

7



      Other Items

197

-

-



NET CASH GENERATED FROM NET INCOME BEFORE TAXES

1,834

3,560

277



CASH GENERATED OR USED IN THE OPERATION:

(1,593)

(1,738)

(135)



   Decrease (increase) in accounts receivable

-

(168)

(13)



   Decrease (increase) in inventories

(1,696)

(1,576)

(122)



   Decrease (increase) in accounts payable

594

515

40



   Decrease (increase) in other liabilities

(491)

(509)

(40)



NET CASH FLOW FROM OPERATING ACTIVITIES

241

1,822

142



INVESTING ACTIVITIES






NET CASH FLOW FROM INVESTING ACTIVITIES

(854)

(549)

(43)



      Acquisition of property, plant and equipment

(662)

(836)

(65)



      Proceeds from sales of property plant and equipment

(84)

30

2



      Other Items

(108)

257

20



CASH FLOW SURPLUS (REQUIREMENTS OF) TO BE USED IN






FINANCING ACTIVITIES

(612)

1,273

99



Net cash provided by financing activities:

919

626

49



   Proceeds from loans

1,995

2,939

228



   Principal payments on loans

(777)

(2,046)

(159)



   Dividends paid

(300)

(300)

(23)



   Other items

2

33

3



NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS

(1,141)

2,102

163



CASH AND INVESTMENTS AT THE BEGINNING OF YEAR

4,177

3,036

236



CASH AND INVESTMENTS AT END OF PERIOD

3,036

5,138

399




















4.      Derivatives Financial Position

Thousands of Mexican Pesos, as of December 31, 2012








Type of Financial Instrument

Objective



Reasonable Value

Amounts Due
By Year



Notional

Value of the Related Commodity

Guaranties Required



4Q-2012

3Q-2012

4Q-2012

3Q-2012



None

Hedge and negotiation

$             -

$0.00

$12.86

$           -

$      2,458


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




Futures for corn and
Soybean meal.

Hedge

$    143,761

Month

Price

Month

Price

$         273

$    15,892

2013


Corn

Corn


in USD per bushel

in USD per bushel


MAR-2013

$6.9825

DEC-2012

$7.5625


MAY-2013

$7.0030

MAR-2013

$7.5950


JUL-2013

$6.9725

MAY-2013

$7.5650


SEP-2013

$6.2125

JUL-2013

$7.4900




SEP-2013

$6.5900







Soybean Meal

Soybean Meal


In USD per ton

In USD per ton


MAR-2013

$419.40

DEC-2012

$486.90


MAY-2013

$411.80

JAN-2013

$483.90


JUL-2013

$407.30

MAR-2013

$468.40




MAY-2013

$447.00




JUL-2013

$435.40

















Options for corn and
Soybean meal

Hedge and negotiation

-$       1,648

Month

Price



-$     1,648

$           -

2013


Corn



in USD per bushel



MAR-2013

$6.9825



MAY-2013

$7.0030



JUL-2013

$6.9725



SEP-2013

$6.2125



Soybean Meal



In USD per ton



MAR-2013

$419.40



MAY-2013

$411.80



JUL-2013

$407.30



SWAP, interest rate.

Hedge

$    151,910

TIIE to  28 days

4.8475%

TIIE to  28 days

4.8075%

$         151

$         490

2013








Notes:
- The total financial instruments not exceed 5% of total assets as of December 31, 2012.
- A negative value means an unfavorable effect for the Company.
- The notional value represents the net position as of December 31, 2012 at the exchange rate of Ps.12.8704 per USD.

Thousands of Mexican Pesos, as of December 31, 2012




 

PROBABLE SCENARIO


Type of Financial Instrument

Reasonable Value

Value of the Related Commodity

Effect on the Income Statement



As of December 31, 2012

Reference Value

Effect on the Cash Flow(3)



-2.5%

2.5%

5.0%

-2.5%

2.5%

5.0%


None

$                      -

$            -

$            -

$            -

 Direct

$         -

$         -

$         -







-5%

5%

10%


-5%

5%

10%


Futures of corn: (2)

$                    273

$       6.633

$       7.332

$       7.681

 The effect will materialize as the inventory is consumed

-$   6,929

$   7,474

$ 14,675







Futures of soybean meal: (2)

$     398.43

$     440.37

$     461.34







Options for corn and soybean meal (2)

-$                1,648




-$   2,990

-$      305

$   1,038







-2%

-1%

1%


-2%

-1%

1%


SWAP interest rate(4)

$                    151

2.8475%

3.8475%

5.8475%

 Direct

-$      832

-$      340

$      642





Notes:
- A negative value means an unfavorable effect for the Company.
- Corn and soybean meal are presented in US dollars per bushel in the case of corn and per short-tones in the case of soybean meal
- Even when table set above shows corn and soybean prices for contracts of March 2013, the effect on the cash flow corresponds to the total positions effects.

  1. The reference value is the exchange rate of Ps. $12.8704 per USD as of December 31, 2012
  2. The reference value is the Futures of corn for March 2013, $6.9825 USD/bushel and Soybean meal for March 2013, $419.400 USD/ton.
  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.
  4. The reference value is the 28 days TIIE rate of 4.7550%, as of Dec 31, 2012

ANALYST COVERAGE

INSTITUTION

ANALYST

CONTACT INFO

GBM- Grupo Bursatil Mexicano, Casa de Bolsa

Miguel Mayorga Tena

mmayorga@gbm.com.mx

BBVA Research – Food & Beverage Analyst

Fernando Olvera Espinosa de los Monteros

fernando.olvera@bbva.com

Actinver, Casa de Bolsa

Eduardo Fonseca Fons

efonseca@actinver.com.mx

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. In 2012, the Company reported net sales of Ps. 39.3 billion.

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.

Media Contact: IR Contacts, Daniel Salazar, CFO, and Claudia Cabrera, IRO, +011-52-461-618-3555, inversionistas@bachoco.net, both of Industrias Bachoco

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

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