CELAYA, Mexico, July 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 second quarter ended June 30th, 2010. All figures have been prepared in accordance with Mexican GAAP. In line with the Mexican Accounting Principles, all data is presented in nominal Mexican pesos.
Highlights: -- The Company registered a 3.6% increase in total sales when compared with the same quarter of 2009. -- Bachoco's EBITDA totaled Ps. 953.7 million, with a margin of 15.4% in 2Q10 vs. an EBITDA margin of 17.0% in 2Q09. -- Chicken, eggs and swine volume sold increased 14.3%, 0.5% and 10.0%, respectively. -- EPS for the quarter were Ps. 1.03 (US$ 0.96 per ADS) versus Ps. 1.16 (US$ 1.08 per ADS) in 2Q09. CEO's Comments:
Cristobal Mondragon, Bachoco's CEO, stated, "The second quarter of the year is typically affected by seasonal effects, it used to be good for the Mexican poultry industry, and this year was no exception.
"We saw an adequate demand for our chicken products, our main product line, and by keeping a close control of expenses and productivity improvements it allowed us to achieve sound results during the quarter.
"In addition, we obtained good results in the swine, balance feed and other lines businesses, but weaker results in our egg business line.
"Since the second quarter of last year, we have had extraordinary strong prices and results, which affect comparisons; however, we reached a two-digit EBITDA and net margin for the second quarter.
"Following the business agreement made during the second half of last year, our Northeast operation is practically integrated and well coordinated with the rest of the company," concluded Mr. Mondragon.
SECOND QUARTER 2010 RESULTS Net sales 2Q09 (%) 2Q10 (%) Chicken 77.7% 81.4% Eggs 10.2% 8.2% Balanced feed 6.8% 5.9% Swine 0.9% 1.2% Other lines 4.3% 3.3% ----------- --- --- Total Sales 100.0% 100.0% ----------- ----- ----- Net Sales
Net sales for the second quarter amounted to Ps. 6,204.1 million, and were 3.6% above the Ps. 5,991.1 million reported in the same 2009 quarter. This increase was mainly driven by higher chicken and swine sales, which were partially offset by a decrease in eggs and balance feed sales.
Operating Results
Bachoco's second quarter gross margin, of 23.4%, was lower than 24.3% reported in 2Q09. This result is directly attributed to lower sale prices of Bachoco's main line products.
The Company registered an operating profit of Ps. 783.1 million, which is lower than the operating profit of Ps. 858.6 million registered in the same 2009 quarter. The operating margin for the quarter was 12.6%.
EBITDA amounted to Ps. 953.7 million, below the Ps. 1,019.3 million reported in the same 2009 quarter.
Net Majority Income (loss)
Net majority income for the second quarter amounted to PS. 617.7 million, or Ps. 1.03 per share (US$0.96 per ADS), compared to a net majority income of Ps. 695.7 million, or Ps. 1.16 per share (US$1.08 per ADS) reported in the same 2009 period.
RESULTS BY BUSINESS SEGMENT Chicken
Sales of chicken products increased 8.5%, when compared to 2Q09, producing as a result a 14.3% increase in volume, which is mainly attributed to the business arrangement made during the second half of last year. This increase in volume was partially offset by the 5.1% decline in chicken prices.
Table Eggs
Sales of table eggs products decreased by 16.6% during the second quarter, due to a 17.0% decrease in eggs prices. However, lower prices were partially offset by a 0.5% increase in the volume sold.
Balanced Feed
Sales of balanced feed decreased 11.0% mainly due to the 1.9% decrease in prices and 9.3% decrease in balance feed volume sold.
Swine
The swine business line was stable during the second quarter. Sales were strong and rose 33.8%, as a result of a 21.6% gain in swine prices and 10.0% increase in volume sold.
Other Lines
Sales of other lines decrease 20.6% when compared with the same quarter of 2009, as sales of by-products declined.
FIRST HALF OF 2009 Net Sales
Net sales for the first half of 2010 amounted to Ps. 12,135.3 million, and were 2.3% above the Ps. 11,857.9 million reported in 1H09. The increase was mainly driven by the 5.3% increase in chicken sales, 24.4% in swine sales, which were partially offset by the 8.3% decrease in table eggs sales and 7.8% decrease in balanced feed sales.
Net sales 1H10 (%) 1H09 (%) --------- -------- Chicken 80.6% 78.3% ---- Eggs 9.1% 10.2% --- Balanced feed 5.7% 6.3% --- Swine 1.2% 1.0% --- Other lines 3.4% 4.2% ----------- --- --- Total Sales 100.0% 100.0% ----------- ----- ----- Operating Results
Bachoco's gross margin for the first half of the year was 20.4%, lower than 21.6% in 1H09, which was mainly attributed to lower eggs and balanced feed sales. The Company's operating profit was Ps. 1,125.0 million, compared to an operating profit of Ps. 1,353.4 million reached in the same period of 2009. EBITDA was Ps. 1,465.7 million, 12.4% lower than the Ps. 1,673.6 million recorded in the 1H09. EBITDA margin for the first half of 2010 was 12.1%.
Taxes Taxes for the first half of the year were Ps. 233.3 million. Net Majority Income
Net majority income for first half of the year was Ps. 892.6 million, or Ps. 1.49 per share (US$1.38 per ADS), compared to net income of Ps. 969.7 million, or Ps. 1.62 per share (US$1.50 per ADS) reported in the same 2009 period.
Balance Sheet
Liquidity is solid with cash and cash equivalents amounting to Ps. 3,590.6 million as of June 30, 2010. The total debt outstanding was Ps. 790.3 million as of June 30, 2010.
Capital Expenditures
CAPEX during the first half of 2010 amounted to Ps. 203.2 million, and was entirely financed with internally generated resources.
Exhibits: A.- Consolidated Balanced Sheets B.- Consolidated Statement of Income C.- Consolidated Statement Cash Flow D.- Derivatives Position Report A.- Consolidated Balance Sheets 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 June As of June 30, 30, ----------- ----------- ASSETS Current assets Cash and cash equivalents $279 Ps 3,591 Ps 2,802 Total accounts receivable 122 1,578 1,353 Inventories 311 4,012 4,039 Other current assets - - 202 Total current assets 712 9,181 8,396 Net property, plant and equipment 837 10,789 10,620 Other non current assets 32 418 336 TOTAL ASSETS $1,582 Ps 20,388 Ps 19,352 ------ ------ ------ LIABILITIES Current liabilities Notes payable to banks 36 465 405 Accounts payable 113 1,457 1,261 Other taxes payable and other accruals 57 734 507 Total current liabilities 206 2,656 2,172 Long-term debt 25 325 236 Labor obligations 8 106 91 Deferred income taxes and others 157 2,017 2,047 Total long-term liabilities 190 2,449 2,374 TOTAL LIABILITIES $396 Ps 5,106 Ps 4,546 --- ----- ----- STOCKHOLDERS' EQUITY Majority stockholder's equity: Capital stock 178 2,295 2,295 Paid-in capital 58 745 744 Reserve for repurchase of shares 12 159 159 Retained earnings 864 11,139 10,591 Net majority income of the year 69 893 970 Deficit from restatement of stockholder's equity - - - Derivate financial instruments - - - Total majority stockholder's equity 1,182 15,231 14,759 Minority interest 4 52 47 TOTAL STOCKHOLDERS' EQUITY 1,186 15,282 14,807 ----- ------ ------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,582 Ps 20,388 Ps 19,352 --------------------- ------ --- ------ --- ------ (1) For reference, in millions of U.S. dollars using an exchange rate of $12.89 Source: Mexico's National Bank, as of June 30, 2010. (2) Millions of Mexican nominal pesos B.- Consolidated Statement of Income INDUSTRIAS BACHOCO, S.A.B. DE C.V. Consolidated Statements of Income -unaudited- SECOND QUARTER -------------- U.S.D. Mexican Pesos ------------- 2010(1) 2010(2) 2009(2) ------ ------ ------ Net sales $481 Ps 6,204 Ps 5,991 Cost of sales 369 4,751 4,536 Gross profit (loss) 113 1,453 1,455 Selling, general and administrative expenses 52 670 597 Operating income (loss) 61 783 859 Other income (expense) net (2) (30) (3) Comprehensive financing (cost) income 3 35 14 Interest income 3 39 23 Interest expense and financing expenses (1) (19) (21) Foreign exchange gain (loss), net (0) (0) (23) Other financial income (expense) net 1 16 35 Income before income tax, asset tax 61 789 869 Total income taxes 13 171 169 Income tax, asset tax 16 202 28 Deferred income taxes (2) (32) 141 Net income $48 Ps 618 Ps 700 Minority net income 0 0 5 Majority net income 48 618 696 weighted average shares outstanding (in thousands) 600,000 600,000 599,891 Net majority Income per share (in U.S.D per ADS) 0.96 1.03 1.16 --------------------------------- ---- ---- ---- FIRST HALF ---------- U.S.D. Mexican Pesos ------------- 2010(1) 2010(2) 2009(2) ------ ------ ------ Net sales US 941 Ps 12,135 Ps 11,858 Cost of sales 750 9,662 9,301 Gross profit (loss) 192 2,473 2,557 Selling, general and administrative expenses 105 1,348 1,204 Operating income (loss) 87 1,125 1,353 Other income (expense) net (2) (30) (35) Comprehensive financing (cost) income 3 33 (106) Interest income 6 73 73 Interest expense and financing expenses (3) (39) (44) Foreign exchange gain (loss), net 0 4 (18) Other financial income (expense) net (0) (6) (117) Income before income tax, asset tax 87 1,127 1,212 Total income taxes 18 233 236 Income tax, asset tax 19 248 51 Deferred income taxes (1) (15) 184 Net income 69 894 976 Minority net income 0 1 6 Majority net income 69 893 970 weighted average shares outstanding (in thousands) 600,000 600,000 599,918 Net majority Income per share (in U.S.D per ADS) 1.38 1.49 1.62 ----------------------------- ---- ---- ---- (1) For reference, in millions of U.S. dollars using an exchange rate of $12.89 Source: Mexico's National Bank, as of June 30, 2010. (2) Millions of Mexican nominal pesos C.- Consolidated Statement Cash Flow Industrias Bachoco, S.A.B. de C.V. Consolidated Statement of Cash Flows Mexican Pesos ------------- U.S.D. 2010(2) 2009(2) As of As of 2010(1) June 30, June 30, ------ --------- --------- NET MAJORITY INCOME BEFORE INCOME TAX $61 Ps. 789 Ps. 869 ITEMS THAT DO NOT REQUIRE CASH: (7) (88) (262) Other Items (7) (88) (262) ITEMS RELATING TO INVESTING ACTIVITIES: 26 330 296 Depreciation and others 26 341 320 Income (loss) on sale of plant and equipment (1) (9) (17) Other Items (0) (1) (6) ITEMS RELATING TO FINANCING ACTIVITIES: 9 112 117 Interest income (expense) 3 39 44 Other Items 6 73 73 NET CASH GENERATED FROM NET INCOME BEFORE TAXES $89 Ps. 1,142 Ps. 1,021 CASH GENERATED OR USED IN THE OPERATION 30 384 16 Decrease (increase) in accounts receivable 6 77 145 Decrease (increase) in inventories 39 501 1,079 Increase (decrease) in accounts payable (21) (264) (722) Income taxes paid 5 71 (487) NET CASH FLOW FROM FINANCING ACTIVITIES $118 Ps. 1,527 Ps. 1,037 INVESTING ACTIVITIES NET CASH FLOW FROM INVESTING ACTIVITIES (30) (382) (320) Acquisition of property, plant and equipment (16) (203) (223) Proceeds from sales of property plant and equipment (1) (7) (11) Other Items (13) (171) (87) CASH FLOW SURPLUS (REQUIREMENTS OF) TO BE USED IN FINANCING ACTIVITIES $89 Ps. 1,145 Ps. 717 FINANCING ACTIVITIES Net cash provided by financing activities: (33) (422) (229) Proceeds from loans 60 770 588 Principal payments on loans (73) (944) (573) Dividends paid (10) (125) (125) Other items (10) (124) (119) NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 84 1,088 830 CASH AND INVESTMENTS AT THE BEGINNING OF YEAR 194 2,503 1,972 CASH AND INVESTMENTS AT END OF PERIOD $279 Ps. 3,591 Ps. 2,802 (1) For reference, in millions of U.S. dollars using an exchange rate of $12.89 Source: Mexico's National Bank, as of June 30, 2010. (2) Millions of Mexican nominal pesos D.- Derivatives Position Report Industrias Bachoco, S.A.B. de C.V. Thousands of Mexican Pesos, as of June 30, 2010 Quarter: 2 TABLE 1 Type of Objective of Financial the Value of the Related Instrument Instrument Notional Commodity 2Q-2010 1Q-2010 ------- ------- Forwards, knock out forwards, puts, collares Hedge and $269,530 $12.89 $12.36 and others negotiation under different amounts and conditions Corn for Corn for September 2010: May 2010: $3.45 $3.6275 USD/ USD/bushel. Futures for corn Hedge $70,580 bushel. Soybean Soybean meal; and Soybean meal meal; $259.40 $265.8 and USD/ton for $248.6 USD/ton December 2010 . for May and December 2010 respectively Options for Hedge and corn negotiation $- ------- ----------- --- --------------- ----------- Type of Financial Reasonable Amounts Due Guaranties Instrument Value by Year Required 2Q-2010 1Q-2010 ------- ------- Forwards, knock out $2,450 -$ 24,664 99.3% in The deals forwards, puts, 2010 and consider the collares and others 0.7% in possibility of under different 2011 margin calls amounts and but not conditions another kind of guarantee Futures for corn and Soybean meal $3,634 -$ 2,068 2010 Options for corn $- $- ---------------- --- --- None of the financial instruments exceed 5% of total assets as of June 30, 2010. A negative value means an unfavorable effect for the Company. The notional value represents the net position as of June 30, 2010 at the exchange rate of Ps.12.89 per USD. Industrias Bachoco, S.A.B. de C.V. Thousands of Mexican Pesos, as of June 30, 2010 Quarter: 2 Table 2 Reasonable Type of Financial Value as of Value of the Related Commodity- Instrument June 30, 2010 reference value ------------------------------- -2.5% 2.5% 5.0% ---- --- --- Forwards, knock out forwards, puts, collares and others under different amounts and conditions* $2,450 $12.57 $13.21 $13.53 -------------------- ------ ------ ------ ------ -5% 5% 10% --- --- --- Futures for corn and Soybean $3.4461 $3.8089 $3.9903 $3,634 $246.43 $272.37 $285.34 Options for corn** $- ------------------ --- Type of Financial Effect on the Effect on the Cash Flow Instrument Income Statement *** ----------------------- -2.5% 2.5% 5.0% ---- --- --- Forwards, knock out forwards, puts, collares and others under different amounts and conditions* Direct -$ 561 $9,141 $15,935 --------------- ------ --------------- ------ ------- -5% 5% 10% --- --- --- The effect will Futures for materialize as the corn and inventory is Soybean consumed -$ 77 $7,345 $11,055 Options for corn** $- $- $- ----------- --- --- --- A negative value means an unfavorable effect for the Company. ** The reference value is the Futures of corn for September, $3.6275 USD for bushel and of soybean meal for December 2010, $259.40 USD/ 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. 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.
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
This press release contains certain forward-looking statements that are subject to a number of uncertainties, assumptions and risk factors that may influence its accuracy. Actual results may differ. Factors that could cause these projections to differ include, but are not limited to: supply and demand, industry competition, environmental risks, economic and financial market conditions in Mexico, and operating cost estimates. For more information regarding Bachoco and its outlook, please contact the Company's Investor Relations Department.
Industrias Bachoco, S.A.B. de C.V.
CONTACT: Daniel Salazar, CFO, or Claudia Cabrera, IRO,
+011-52-461-618-3555, inversionistas@bachoco.net, both of Industrias Bachoco;
or In New York, Lucia Domville, Grayling, +1-646-284-9416,
Lucia.Domville@us.grayling.com, for Industrias Bachoco
Web Site: http://www.bachoco.com.mx/
