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Highlights:
(In millions of pesos)
2Q-09 2Q-08 1H-09 1H-08
Net sales Ps. 5,991.1 4,987.5 11,857.9 9,730.8
Gross profit Ps. 1,455.4 894.6 2,557.0 1,719.9
Gross margin 24.3% 17.9% 21.6% 17.7%
Operating Income Ps. 858.6 311.6 1,353.4 556.0
Operating margin 14.3% 6.2% 11.4% 5.7%
EBITDA Ps. 1,019.3 460.3 1,673.6 853.7
EBITDA margin 17.0% 12.7% 14.1% 8.8%
Net majority
income Ps. 695.7 194.4 969.7 425.2
Net margin 11.6% 3.9% 8.2% 4.4%
- The Company registered a 20.1% increase in sales when compared with the same quarter of 2008, recording its highest sales level for any given quarter.
- Bachoco's sales increased across all its business lines, and were particularly strong for chicken and eggs.
- EPS for the quarter were Ps. 1.16 (US$ 1.06 per ADS) versus Ps. 0.32 (US$ 0.30 per ADS) in 2Q08.
CEO's Comments:
Cristobal Mondragon, Bachoco's CEO, stated: "Even when the Mexican economy continued slowing down and is expected to record one of the worst performing quarters ever, the Company's performance remained strong and we continued delivering positive results to our holders by taking the opportunities the industry offered.
"The poultry market showed a good balance between supply and demand, which together with our focus on properly serving our market channels, allowed us to record the highest sales level in a quarter.
"Our operating margin improved and good results in the quarter were boosted by the good operating environment, a more stable Mexican peso, and the strategies implemented by the Company, such as productivity improvements, optimizing sales mix and control of our expense.
"Furthermore, our comprehensive financial result also improved also during this quarter as a result of the restructuring of our derivatives portfolio and the maturity of most of the instruments we had in place," concluded Mr. Mondragon.
SECOND QUARTER 2009 RESULTS
Net Sales
Net sales for the second quarter amounted to Ps. 5,991.1 million, 20.1% above the Ps. 4,987.5 million reported in 2Q08. This increase was mainly driven by higher sales in the main business lines: chicken sales rose 20.0%, while table eggs sales jumped 30.9%, and balanced feed sales increased 11.3%.
Net sales 2Q09 (%) 2Q08 (%)
Chicken 77.73 77.83
Eggs 10.21 9.36
Balanced feed 6.83 7.37
Swine 0.92 1.10
Other lines 4.31 4.34
100.00% 100.00%
Operating Results
Bachoco's second quarter gross margin was 24.3%, higher than the 17.9% reached in the same quarter of 2008. The increase in the gross margin is attributed to the 18.4% increase in sale prices, which was partially offset by the 10.8% increase in the cost of sales.
The Company had an operating profit of Ps. 858.6 million, compared to an operating profit of Ps. 311.6 million in the same quarter of 2008; the operating margin of 14.3% in the second quarter 2009, was above the 6.2% margin of the same 2008 period.
Operating expenses amounted to Ps. 596.7 million in the quarter. Even when operating expenses increased by 2.4% during the quarter, operating expenses as a percentage of sales decreased to 10.0%, when compared to the same period of 2008.
The EBITDA result was positive and amounted to Ps. 1,019.3 million, and was 121.4% above the Ps. 460.3 million recorded in the same period of 2008.
Taxes
Total taxes recognized for the second quarter were Ps. 168.6 million.
Comprehensive Financial Income (Cost)
The Company's financial comprehensive income was Ps. 13.6 million during the quarter, compared to a financial comprehensive cost of Ps. 47.5 million reported in the same quarter last year.
Net Majority Income
Net majority income for the second quarter totaled PS. 695.7 million, or Ps. 1.16 per share (US$1.06 per ADS), compared to a net majority income of Ps. 194.4 million, or Ps. 0.32 per share (US$0.30 per ADS) reported in the same 2008 period.
RESULTS BY BUSINESS SEGMENT
Chicken
Results for the chicken business line remained strong during the second quarter. Sales of chicken products increased 20.0% as chicken prices rose 18.3% and volume grew 1.4%. During this quarter demand for chicken products was stable in the Mexican market.
Table Eggs
Sales of eggs significantly increased by 30.9% during the second quarter as egg prices rose 31.7% from the previous year, but were partially offset by a slight volume decrease of 0.6% related to the production adjustment made by the Company. Demand for egg products remained strong in the Mexican market.
Balanced Feed
During the second quarter the balanced feed business showed signs of recovery. Sales of balanced feed increased 11.3%, mainly due to an 8.9% increase in prices and a 2.3% increase in volume. This business line was strongly affected during the past quarters given the high cost of raw material prices.
Swine
Swine sales increased 0.3% from 2Q08, mainly driven by a 0.9% increase in volume, which was partially offset by a 0.6% decrease in swine prices.
Other Lines
Sales of other lines increased 19.4% when compared with same quarter of 2008; The main products sold were by-product sales, such as poultry manure.
FIRST HALF OF 2009
Net Sales
Net sales for the first half of 2009 amounted to Ps. 11,857.9 million, and were 21.9% above the Ps. 9,730.8 million reported in 1H08. The increase was mainly driven by the 24.0% increase in chicken sales, 20.2% in table eggs sales, 19.8% in swine sales and 1.7% increase in sales of balanced feed.
Net sales 1H 2009 1H 2008
(%) (%)
Chicken 78.35 77.02
Eggs 10.21 10.35
Balanced feed 6.31 7.57
Swine 0.97 0.98
Other lines 4.16 4.08
100.00% 100.00%
Operating Results
Bachoco's gross margin for the first half of the year was 21.6%, higher than 17.7% in 1H08, and was mainly attributed to higher sales in all of our business lines. The Company's operating profit was Ps. 1,353.4 million, compared to an operating profit of Ps. 556.0 million reached in the same period of 2008. EBITDA was Ps. 1,673.6 million, 96.0% more than the Ps. 853.7 million recorded in the 1H08. EBITDA margin for the first half of 2009 was 14.1%.
Taxes
Taxes for the first half of the year were Ps. 235.7 million.
Net Majority Income
Net majority income for the first half of the year was Ps. 969.7 million, or Ps. 1.62 per share (US$1.47 per ADS), compared to net income of Ps. 425.2 million, or Ps. 0.71 per share (US$0.65 per ADS) reported in the same 2008 period.
Balance Sheet
Liquidity is solid with cash and cash equivalents amounting to Ps. 2,802.4 million as of June 30, 2009. The total debt outstanding was Ps. 640.2 million as of June 30, 2009.
Capital Expenditures
CAPEX during the first half of 2009 amounted to Ps. 223.0 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
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.
Exhibit A: Consolidated Balance Sheets
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 June As of June
30, 30,
ASSETS
Current assets
Cash and cash equivalents $ 213 Ps 2,802 Ps 2,879
Total accounts receivable 103 1,353 1,283
Inventories 307 4,039 4,473
Other current assets 15 202 --
Total current assets 638 8,396 8,634
Net property, plant and
equipment 806 10,620 10,637
Other non current assets 26 336 374
TOTAL ASSETS $1,469 Ps 19,352 Ps 19,645
LIABILITIES
Current liabilities
Notes payable to banks 31 405 67
Accounts payable 96 1,261 1,348
Other taxes payable and
other accruals 38 507 611
Total current liabilities 165 2,172 2,025
Long-term debt 18 236 73
Labor obligations 7 91 56
Deferred income taxes and
others 155 2,047 1,938
Total long-term liabilities 180 2,374 2,066
TOTAL LIABILITIES $ 345 Ps 4,546 Ps 4,091
STOCKHOLDERS' EQUITY
Majority stockholder's
equity:
Capital stock 174 2,295 2,295
Paid-in capital 57 744 660
Reserve for repurchase of
shares 12 159 244
Retained earnings 804 10,591 11,418
Net majority income of the
year 74 970 425
Deficit from restatement of
stockholder's equity -- -- --
Derivate financial
instruments -- -- 469
Total majority stockholder's
equity 1,121 14,759 15,510
Minority interest 4 47 44
TOTAL STOCKHOLDERS' EQUITY 1,124 14,807 15,554
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,469 Ps 19,352 Ps 19,645
(1) For reference, in millions of U.S. dollars using an exchange rate
of $13.17 as of June 30, 2009
(2) Millions of Mexican nominal pesos
Exhibit B: Consolidated Statement of Income
INDUSTRIAS BACHOCO, S.A.B. DE C.V.
Consolidated Statements of Income
-unaudited-
SECOND QUARTER FIRST HALF
U.S.D. Mexican Pesos U.S.D. Mexican Pesos
2009(1) 2009(2) 2008(2) 2009(1) 2009(2) 2008(2)
Net sales $ 455 Ps 5,991 Ps 4,987 US 900 Ps 11,858 Ps 9,731
Cost of sales 344 4,536 4,093 706 9,301 8,011
Gross profit (loss) 111 1,455 895 194 2,557 1,720
Selling, general
and administrative
expenses 45 597 583 91 1,204 1,164
Operating income
(loss) 65 859 312 103 1,353 556
Comprehensive
financing (cost)
income 1 14 (47) (8) (106) (17)
Interest income 2 23 31 6 73 98
Interest expense
and financing
expenses (2) (21) (49) (3) (44) (70)
Foreign exchange
gain (loss), net (2) (23) (30) (1) (18) (45)
Other financial
income (expense)
net 3 35 -- (9) (117) --
Other income
(expense) net (0) (3) (14) (3) (35) 6
Income before
income tax,
asset tax 66 869 250 92 1,212 545
Total income taxes 13 169 54 18 236 117
Income tax,
asset tax 2 28 24 4 51 127
Deferred income
taxes 11 141 30 14 184 (9)
Net income $ 53 Ps700 Ps196 74 976 428
Minority net income 0 5 2 0 6 2
Majority net income 53 696 194 74 970 425
Weighted average
shares
outstanding
(in thousands) 599,891 599,891 600,000 599,918 599,918 600,000
Net majority
Income per share
(in U.S.D
per ADS) 1.06 1.16 0.32 1.47 1.62 0.71
(1) For reference, in millions of U.S. dollars using an exchange rate of
$13.17 as of June 30, 2009
(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
U.S.D. As of June 30,
2009(1) 2009(2) 2008(2)
NET MAJORITY INCOME BEFORE
INCOME TAX $ 92 Ps. 1,212 Ps. 545
ITEMS THAT DO NOT REQUIRE
CASH: (20) (262) (142)
Other Items (20) (262) (142)
ITEMS RELATING TO INVESTING
ACTIVITIES: 22 296 291
Depreciation and others 24 320 298
Income (loss) on sale
of plant and equipment (1) (17) (4)
Other Items (0) (6) (2)
ITEMS RELATING TO FINANCING
ACTIVITIES: 9 117 168
Interest income
(expense) 3 44 70
Other Items 6 73 98
NET CASH GENERATED FROM NET
INCOME BEFORE TAXES $104 Ps. 1,364 Ps. 862
CASH GENERATED OR USED IN THE
OPERATION 1 16 (72)
Decrease (increase) in
accounts receivable 11 145 88
Decrease (increase) in
inventories 82 1,079 (89)
Increase (decrease) in
accounts payable (55) (722) 183
Income taxes paid (37) (487) (254)
NET CASH FLOW FROM FINANCING
ACTIVITIES $105 Ps. 1,380 Ps. 790
INVESTING ACTIVITIES
NET CASH FLOW FROM INVESTING
ACTIVITIES (24) (320) (612)
Acquisition of
property, plant and
equipment (17) (223) (686)
Proceeds from sales of
property plant and
equipment (1) (11) 38
Other Items (7) (87) 36
CASH FLOW SURPLUS
(REQUIREMENTS OF) TO BE USED
IN FINANCING ACTIVITIES $ 80 Ps. 1,059 Ps. 178
FINANCING ACTIVITIES
Net cash provided by
financing activities: (17) (229) (339)
Proceeds from loans 45 588 123
Principal payments on
loans (44) (573) (94)
Dividends paid (9) (125) (118)
Other items (9) (119) (251)
NET INCREASE (DECREASE) IN
CASH AND EQUIVALENTS 63 830 (161)
CASH AND INVESTMENTS AT THE
BEGINNING OF YEAR 150 1,972 3,040
CASH AND INVESTMENTS AT END
OF PERIOD $213 Ps. 2,802 Ps. 2,879
(1) For reference, in millions of U.S. dollars using an exchange rate of
$13.17 as of June 30, 2009
(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 June 30, 2009
Table 1
Type of Financial Instrument Objective of Notional
The instrument
Forwards, knock out forwards, Hedge and $ 579,480
puts and buying and selling negotiation
TARNS of USD under different
amounts and conditions*
Corn Futures and Hedge $ 279,352
soybean meal Futures**
Options for corn*** Hedge and $ 17,569
negotiation
Options for soybean meal**** Hedge and $ 51,292
negotiation
Type of Financial Instrument Value of the Related Commodity
2Q-2009 1Q-2009
Forwards, knock out forwards, $13.17 $14.21
puts and buying and selling
TARNS of USD under different
amounts and conditions*
Corn Futures and Corn of Sep and Dec, Corn: $4.0475 USD/
soybean meal Futures** $3.5450 and $3.6725 per bushel for May.
USD/bushel Soybean meal:
respectively. $295.3 USD/ton
Soybean meal of Aug for May
and Sep $374.30 and
$339.30 USD/ton.
Options for corn*** Corn: $3.5450 USD/ Corn: $4.0475,
per bushel for Sep $4.1475, $4.240
and $3.6725 for and $4.3575 USD/
December per bushel for
May, Jul, Sep
and Dec, respectively
Options for soybean meal**** Soybean meal: $374.30 Soybean meal: $295.3,
USD/per ton for $291.6, $285.3 and
Aug and $314.3 and $265.4 USD/ton
$306.30 USD/ton for for May, Jul, Aug
Oct and Dec and Oct respectively
respectively
Type of Financial Instrument Reasonable Value Amounts Guaranties
2Q-2009 1Q-2009 Due by Required
Year
Forwards, knock out forwards, -$ 74,408 -$ 440,456
puts and buying and selling
TARNS of USD under different
amounts and conditions*
Corn Futures and -$ 22,565 -$ 4,202 The deals
soybean meal Futures** 2009 consider
the
Options for corn*** $ 84 $ 992 possibility
of margin
calls but
not another
kind of
guaranty
Options for soybean meal**** $ 7,044 -$ 534
* None of the financial instruments exceed 5% of total assets as of June 30, 2009
* The 52.3% of the instruments will be due in 2009 and the rest during the first half of 2010.
** All the instruments will be due in 2009
*** All the instruments will be due in 2009
**** All the instruments will be due in 2009
A negative value means an unfavorable effect for the Company
Industrias Bachoco, S.A.B. de C.V.
Thousand of Mexican Pesos, as of June 30, 2009
Table 2
Value of the Related
Kind of Financial Instrument Reasonable Commodity
Value As /reference value
of
March 31 3% 5% 10%
Forwards, knock out forwards, -$ 74,408 $ 13.57 $ 13.83 $ 14.49
puts and buying and selling
TARNS of USD under different
amounts and conditions*
10% 15% 20%
Corn Futures and -$ 22,565 $ 3.19 $ 3.01 $ 2.84
soybean meal Futures** $336.87 $318.16 $299.44
Options for corn*** $ 84 $ 3.19 $ 3.01 $ 2.84
Options for soybean meal**** $ 7,044 $336.87 $318.16 $299.44
Kind of Financial Instrument Effect on the Effect on the
Income Cash Flow*****
Statement 3% 5% 10%
Forwards, knock
out forwards, Direct -$60,008 -$50,648 $95,740
puts and buying
and selling
TARNS of USD
under different
amounts and
conditions*
10% 15% 20%
Corn Futures and
soybean meal -$48,243 -$61,083 -$73,922
Futures**
Options for The effect will -$ 368 -$ 594 -$ 820
corn*** materialize as
the inventory is
consumed.
Options for
soybean meal**** -$ 16 -$ 3,547 - $7,077
* The reference value is the exchange rate of the Mexican peso and USD,
$13.17 pesos per USD as of June 30 of 2009.
** The reference value is the future in USD per bushel, here referenced to
corn, $3.5450 for September and $374.3 USD/ton for Aug for Soybean meal.
*** The reference value is the future in USD per bushel, here references
to corn for September 2009.
**** The reference value is the future in USD per ton, here references to
Soybean meal for August 2009.
***** 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. +52(461) 618 3555
inversionistas@bachoco.net
In New York:
Grayling
Lucia Domville
Ph. (646) 284 9416
Lucia.Domville@us.grayling.com
Headquarters:
Industrias Bachoco, S.A.B. de C.V.
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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