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Highlights:
- The Company recorded, once again, the highest sales level for a quarter
in the Company's history, with total sales increasing 23.7% when
compared with the same quarter of 2008.
- Bachoco sales rose across its main business lines: 28.2% in chicken,
11.0% in table eggs and 45.9% in swine, as supply conditions improved in
the market.
- Operating profit increased 102.5% during the quarter, while EBITDA was
66.3% higher at Ps. 654.3 million in 1Q09 from Ps. 393.3 million in
1Q08.
- EPS was Ps. 0.46 (US$ 0.39 per ADS) versus Ps. 0.38 (US$ 0.32 per ADS)
in 1Q08.
CEO's Comments:
Cristobal Mondragon, Bachoco's CEO, stated, "During the quarter, the Mexican economy continued slowing down following the global trend, and we continued to experience a further depreciation of the Mexican peso against the U.S. dollar.
"In our industry, however, there was a favorable balance between supply and demand that allowed us to transfer part of our past cost increases to our prices in our main product lines. This, combined with our internal efforts to serve our clients properly by optimizing the product mix (we made adjustments to our supply relative to the same quarter of 2008), and improved efficiency, allowed us to increase total sales to a new historical record and achieve positive results in terms of operating and net income.
"In terms of EBITDA, we achieved a positive margin of 11.2%, larger than the 8.3% margin registered in 1Q08.
"As we reported last quarter, our comprehensive financial cost continued to be affected by the depreciation of the Mexican peso against the U.S. dollar given our hedging position. However, we have already restructured most of our derivative portfolio to mitigate this effect and expect minor effects in the second half of the year.
"We expect to continue delivering positive results in the second quarter of the year," concluded Mr. Mondragon.
FIRST QUARTER 2009 RESULTS
Net Sales
Net sales for the first quarter were Ps. 5,866.8 million, 23.7% above the Ps. 4,743.3 million reported in 1Q08. This increase was mainly driven by higher sales in the main business lines: chicken sales rose 28.2%, while table eggs sales increased 11.0%, and swine sales rose 45.9%.
Net Sales 1Q09 (%) 1Q08 (%)
CHICKEN 79.0 76.2
EGGS 10.2 11.4
BALANCED FEED 5.8 7.8
SWINE 1.0 0.9
OTHER LINES 4.0 3.7
TOTAL COMPANY 100.0 100.0
Operating Results
Bachoco's first quarter gross margin was 18.8%, higher than the 17.4% reached in the same quarter of 2008. The increase in the gross margin is attributed to a 34.2% increase in sales prices, which partially offset the 21.6% increase in our cost of sales, mainly driven by higher cost inventories of corn and soy bean meal.
The Company had an operating profit of Ps. 494.8 million, compared to an operating profit of Ps. 244.4 million in the same quarter 2008. Said result represents an operating margin of 8.4% for the first quarter 2009, compared to an operating margin of 5.2% in the same period of 2008.
Operating expenses amounted to Ps. 606.8 million. Even when operating expenses increased by 4.5% during the first quarter, operating expenses as a percentage of sales decreased when compared to the same period of 2008.
EBITDA was positive and amounted to Ps. 654.3 million, 66.3% above the Ps. 393.3 million recorded in the same period of 2008.
Taxes
Total taxes recognized by the Company during the quarter were Ps. 67.1 million.
Comprehensive Financial Income (Cost)
The Company's financial comprehensive cost amounted to Ps. 119.8 million during the quarter, compared to a financial comprehensive income of Ps. 30.6 million reported in the same quarter last year.
Net Income
Net majority income for the first quarter was Ps. 273.9 million, or Ps. 0.46 per share (US$0.39 per ADS), compared to a net majority income of Ps. 230.8 million, or Ps. 0.38 per share (US$0.32 per ADS) reported in the same period 2008.
Balance Sheet
Cash and cash equivalents were Ps. 2,448.8 million as of March 31, 2009, compared with Ps. 3,162.0 million reported on the same date of 2008. Said decrease was mainly driven by larger inventories. The total debt outstanding as of March 31, 2009 amounted to Ps. 616.8 million.
RESULTS BY BUSINESS SEGMENT
Chicken
Results for the chicken business line were strong during the first quarter. Sales of chicken products increased 28.2% as chicken prices rose 30.0%; however, this result was partially offset by a 1.3% decrease in volume from the previous year. During this quarter the Company was able to transfer part of its cost increases to chicken prices.
Table Eggs
Sales of eggs increased by 11.0% during the first quarter as egg prices rose 17.3% from the previous year, but were partially offset by a 5.4% decrease in volume mainly driven by the adjustment in the production level of the company.
Balanced Feed
The balanced feed business line remained affected by higher costs in the inventories of raw materials. Sales of balanced feed decreased by 8.0%, while balanced feed prices increased by 19.6%, but were offset by a strong decrease in volume sold of 23.1%, as demand in the sector declined.
Swine
Demand and supply were stable during this quarter. Swine sales significantly increased by 45.9% from 1Q08, and were driven by a 50.3% increase in swine prices, partially offset by a 2.9% decrease in volume.
Other Lines
Sales of other lines increased 30.1% mainly due to higher by-product sales, such as poultry manure.
Outlook
- The Company expects the peso-USD exchange rate to remain volatile.
- The worldwide decrease in the costs of raw material will benefit the
Company's cost of sales during 2009.
- We expect a good balance between supply and demand in 2009's second
quarter.
Company Description
Industrias Bachoco S.A.B. de C.V. (also referred to in this report as Bachoco or the Company) is the largest poultry company in Mexico, with over 700 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 in Celaya, Guanajuato, located in Mexico's central region. For more information, please visit Bachoco's website at http://www.bachoco.com.mx or contact our IR department.
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.
Consolidated Statements of Income
-unaudited-
FIRST QUARTER
U.S.D. Mexican Pesos
2009(1) 2009(2) 2008(2)
Net sales $ 413 Ps 5,867 Ps 4,743
Cost of sales 335 4,765 3,918
Gross profit (loss) 78 1,102 825
Selling, general and
administrative expenses 43 607 581
Operating income (loss) 35 495 244
Comprehensive financing
(cost) income (8) (120) 31
Interest income 36 512 67
Interest expense and
financing cost 45 637 22
Foreign exchange gain
(loss), net 0 5 (14)
Loss on net monetary
position -- -- --
Other income (expense) net (2) (32) 20
Income before income tax,
asset tax 24 343 295
Total income taxes 5 67 63
Income tax, asset tax 2 24 102
Deferred income taxes 3 43 (39)
Net income $ 19 Ps 276 Ps 231
Minority net income 0 2 1
Majority net income 19 274 231
Weighted average shares
outstanding (in thousands) 600,000 599,945 600,000
Net majority Income per
share (in U.S.D per ADR) 0.39 0.46 0.38
(1) For reference, in millions of U.S. dollars using an exchange rate of
$14.21 as of March 31, 2009
(2) Millions of nominal pesos
Industrias Bachoco, S.A.B. de C.V.
Condensed Consolidated Balance Sheets
U.S.D. Mexican Pesos
2009(1) 2009(2) 2008(2)
As of As of
March 31 March 31
ASSETS
Current assets
Cash and cash equivalents $ 172 Ps 2,449 Ps 3,162
Total accounts receivable 94 1,332 1,270
Inventories 272 3,862 4,098
Other current assets -- -- --
Total current assets 538 7,643 8,530
Net property, plant and
equipment 752 10,684 10,488
Other non current assets 36 516 373
TOTAL ASSETS $ 1,326 Ps 18,842 Ps 19,391
LIABILITIES
Current liabilities
Notes payable to banks 17 235 59
Accounts payable 77 1,099 1,215
Other taxes payable and
other accruals 27 381 412
Total current liabilities 121 1,714 1,686
Long-term debt 27 382 44
Labor obligations 6 86 57
Deferred income taxes and
others 163 2,317 2,102
Total long-term liabilities 196 2,785 2,202
TOTAL LIABILITIES $ 317 Ps 4,499 Ps 3,888
STOCKHOLDERS' EQUITY
Majority stockholder's
equity:
Capital stock 161 2,295 2,295
Pain-in capital 52 744 660
Reserve for repurchase of
shares 11 158 244
Retained earnings 762 10,829 11,802
Net majority income of the
year 19 274 231
Deficit from restatement of
stockholder's equity -- -- --
Derivate financial
instruments -- -- 226
Total majority
stockholder's equity 1,006 14,299 15,458
Minority interest 3 45 46
TOTAL STOCKHOLDERS' EQUITY 1,009 14,344 15,504
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,326 Ps 18,842 Ps 19,391
(1) For reference, in millions of U.S. dollars using an exchange rate of
$14.21 as of March 31, 2009
(2) Millions of nominal pesos
Industrias Bachoco, S.A.B. de C.V.
Condensed Consolidated Statements of Changes in Financial Position
U.S.D. Mexican Pesos
2009(1) 2009(2) 2008(2)
Operating activities:
Net income $ 20 Ps. 276 Ps. 231
Adjustments to reconcile net
income to resources
Provided by operating
activities:
Depreciation and others 11 157 148
Changes in operating assets
and liabilities 44 608 412
Deferred income taxes (25) (347) (274)
Resources provided by
operating activities $50 Ps. 694 Ps. 518
Financing activities:
Increase of capital stock (0) (0) 0
Proceeds from long and short-
term debt 1 15 40
Repayment of Long-term debt
and notes payable (2) (24) 47
Decrease in long-term debt in
constant pesos 0 0 (94)
Cash dividends paid -- -- --
Resources provided by (used
in) financing activities $ (1) Ps. (9) Ps. (7)
Investing activities:
Acquisition of property,
plant and equipment (10) (140) (368)
Minority interest 0 2 (1)
Others (5) (70) (20)
Resources used in investing
activities $ (15) Ps. (209) Ps. (389)
Net (decrease) increase in
cash and cash
equivalents $34 Ps. 476 Ps. 122
Cash and cash equivalents at
beginning of period 143 1,972 3,040
Cash and cash equivalents at
end of period $ 177 Ps. 2,448 Ps. 3,162
(1) For reference, in millions of U.S. dollars using an exchange rate of
$14.21 as of March 31, 2009
(2) Millions of nominal pesos
Industrias Bachoco, S.A.B. de C.V.
Thousands of Mexican Pesos, as of March 31, 2009
Table 1
Type of Financial Instrument Objective of the Notional
Instrument
Forwards, knock out forwards, Hedge and $1,165,220
puts and buying and negotiation
selling TARNS and USD under
different amounts and
conditions*
Corn futures and Hedge $ 4,534
soybean meal futures**
Options for corn*** Hedge and $ 13,412
negotiation
Options for soybean meal**** Hedge and $ 8,572
negotiation
Type of Financial Value of the Related Community
Instrument 1Q-2009 4Q-2008
Forwards, knock out forwards, $14.21 $13.82
puts and buying and
selling TARNS and USD under
different amounts and
conditions*
Corn futures and Corn of May, $4.0475 Corn of March, $4.07
soybean meal futures** USD/bushel. USD/bushel.
Soybean meal $295.3 Soybean meal $300.5
per ton for May and $299.8 USD
per ton for January
and March,
respectively
Options for corn*** Corn: $4.0475, Corn of March
$4.1475, $4.240 and $4.07 USD per
$4.3575 USD/per bushel bushel
for May, July,
September and December,
respectively
Options for soybean meal**** Soybean meal: $295.3, Soybean meal $300.5
$291.6, $285.3 and and $299.8 USD
$265.4 USD/per bushel per ton for January
for May, July, August and March,
and October, respectively
respectively
Type of Financial Reasonable Value Amounts Due Guaranties
Instrument by Year Required
1Q-2009 4Q-2008
Forwards, knock -$440,456 -$808,441
out forwards, puts
and buying and
selling TARNS
of USD under
different
amounts and
conditions*
Corn futures and -$ 4,534 -$ 1,150
soybean meal
futures** The deals consider
2009 the possibility
Options for of margin calls
corn*** $ 992 - $55,191 but not another
kind of guaranty
Options for -$ 534 - $3,286
soybean meal****
* All of the financial instruments do not exceed 5% of total assets as
of March 31, 2009
* All instruments will be due in 2009
** All instruments will be due in 2009
*** All instruments will be due in 2009
**** All instruments will be due in 2009
A negative value means an unfavorable effect for the Company
Industrias Bachoco, S.A.B. de C.V.
Thousands of Mexican Pesos, as of March 31, 2009
Table 2
Kind of Financial Reasonable Value Value of the Related
Instrument As of March 31 Commodity/Reference Value
3% 6% 10%
Forwards, knock -$440,456 $ 14.64 $ 15.06 $ 15.63
out forwards and
puts and buying
and selling
TARNS of USD
under different
amounts and
conditions*
10% 15% 20%
Corn futures and -$ 4,534 $ 3.64 $ 3.44 $ 3.24
soybean meal futures $265.77 $251.01 $236.24
Options for corn** $ 992 $ 3.64 $ 3.44 $ 3.24
Options for soybean
meal*** -$ 534 $265.77 $251.01 $236.24
Kind of Financial Effect on the Effect on the Cash Flow****
Instrument Income Statement 3% 6% 10%
Forwards, knock Direct -$456,996 -$500,946 -$514,116
out forwards and
puts and buying
and selling
TARNS of USD
under different
amounts and
conditions*
10% 15% 20%
Corn futures and -$ 4,534 -$ 4,534 -$ 4,534
soybean meal
futures
Options for corn** The effect will -$ 353 -$ 1,026 -$ 1,699
materialize as
the inventory is
consumed
Options for soybean -$ 1,744 -$ 2,348 -$ 2,953
meal***
* The reference value is the exchange rate of the Mexican peso and USD,
$14.21 pesos per USD as of March 31 of 2009
** The reference value is the future in USD per bushel, here referenced to
corn, $4.0475
*** The reference value is the future in USD per ton, here referenced to
soybean meal $295.3
**** 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
IR contacts:
Daniel Salazar, CFO
Claudia Cabrera, IRO
Ph. 011 52 (461) 618 3555
inversionistas@bachoco.net
In New York:
Grayling
Lucia Domville
Ph. (646) 284-9416
ldomville@hfgcg.com
Headquarters:
Industrias Bachoco, SAB de CV
Av. Tecnologico 401, Celaya
Gto. Mexico, 38010
www.bachoco.com.mx
SOURCE Industrias Bachoco, S.A.B. de C.V.
http://www.bachoco.com.mx
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