Bachoco Announces First Quarter 2019 Results

CELAYA, Mexico, April 29, 2019 /PRNewswire/ -- Industrias Bachoco, S.A.B. de C.V., "Bachoco" or "the Company", IBA BMV: Bachoco))) announced today its unaudited results for the first quarter ("1Q19") ending March 31, 2019. All figures have been prepared in accordance with International Financial Reporting Standard ("IFRS") and are presented in nominal million Mexican Pesos ("$"), except earnings per share.

HIGHLIGHTS- 2019 vs. 2018

  • Net sales decreased 6.4% in 1Q19.
  • EBITDA margin was 4.6% in 1Q19 vs 13.7% in 1Q18, our EBITDA was $654.9 million.
  • Earnings per basic and diluted share were $0.50.

CEO COMMENTS

Mr. Rodolfo Ramos Arvizu, Chief Executive Officer of Bachoco, stated, "In Mexico, the conditions prevailing in last two quarters of 2018, continued into the first quarter of this year. In general, we saw sluggish demand conditions that kept prices down for most of the quarter. Furthermore, strong results in 1Q18 made it a very challenging to compare with.

In the US market, we observed also relatively low prices for most of 1Q19, with an improvement towards the end of the quarter.  

Prices of our main raw material were stable in USD terms but, volatility in the Mexican peso exchange rate vs the US dollar, did not allow us to completely capture this benefit.  Our SG&A continued to be mainly affected by energy prices in Mexico.

Volume of our main product segments continued growing, but lower prices, mainly in poultry, led us to a decrease of 6.4% in total sales for 1Q19 when compared to the same quarter of 2018.

For 1Q19, we reached an EBITDA of $654.9 for a 4.6% margin.  This EBITDA represents an important decrease when compared with the 1Q18. Earnings per basic and diluted shares were $0.50 for the 1Q19.

The Company remained in a healthy financial condition as we reached a net cash level of $12,434.7 million, which will allow us to continue to support our growth plans.

We will remain focused on continuous improvements and efficiencies across all of our processes and working close to our customers"

Executive Summary

The following financial information is expressed in millions of nominal pesos, except for amounts per share and per ADR, with comparative figures for the same periods of 2018.

QUARTERLY RESULTS

NET SALES BY GEOGRAPHY









In millions of pesos



1Q19

1Q18

Change





$

$

$

%

Net sales



14,323.6

15,303.0

(979.4)

(6.4)

Net sales in Mexico



10,311.3

11,091.5

(780.1)

(7.0)

Net sales in the U.S.



4,012.3

4,211.5

(199.2)

(4.7)

 

NET SALES BY SEGMENT









In millions of pesos



1Q19

1Q18

Change





$

$

$

%

Net sales



14,323.6

15,303.0

(979.4)

(6.4)

Poultry



12,852.8

13,774.5

(921.7)

(6.7)

Other



1,470.8

1,528.4

(57.6)

(3.8)

 

NET VOLUME SOLD BY SEGMENT







In tons





Change



1Q19

1Q18

Volume

%

Total sales volume:

553,175

546,750

6,425

1.2

Poultry

425,745

422,181

3,564

0.8

Others

127,430

124,569

2,861.3

2.3

 

In 1Q19, the Company's net sales totaled $14,323.6 million; $979.4 million or 6.4% less than $15,303.0 million reported in 1Q18.  This was a result of price decreases in our main product lines.

In 1Q19, sales of our U.S. operations represented 28.0% of our total sales compared with 27.5% in 1Q18.

GROSS PROFIT









In millions of pesos



1Q19

1Q18

Change





$

$

$

%

Cost of sales



12,515.7

12,085.8

429.9

3.6

Gross profit



1,807.9

3,217.2

(1,409.3)

(43.8)

Gross margin



12.6%

21.0%

-

-

 

The cost of sales totaled $12,515.7 million, representing $429.9 million or 3.6% higher than $12,085.8 million reported in the same period of 2018. This increase was a result of more volume sold, and an increase in our feed costs expressed in Mexican pesos.  

The Company's gross profit in 1Q19 was $1,807.9 million, with a gross margin of 12.6%. This result is lower when compared to a gross profit of $3,217.2 million and a gross margin of 21.0% reported in 1Q18.

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

In millions of pesos













1Q19

1Q18

Change





$

$

$

%

Total SG&A



1,474.4

1,385.5

88.9

6.4

 

Total SG&A expenses in 1Q19 were $1,474.4 million; $88.9 million or 6.4% more than the $1,385.5 million reported 1Q18. Total SG&A expenses, as a percentage of net sales, represent 10.3% in 1Q19 and 9.1% in 1Q18.

OTHER INCOME (EXPENSE), NET

In millions of pesos



1Q19

1Q18

Change





$

$

$

%

Other income (expense), net



1.6

(9.2)

10.8

(117.6)

 

Other income or other expenses include the sale of byproducts and unused assets. We register such sales as expenses when the sales price is below the book value of those assets.

In 1Q19, we had other income of $1.6 million, compared with other expenses of $9.2 million reported in 1Q18.

OPERATING INCOME









In millions of pesos



1Q19

1Q18

Change





$

$

$

%

Operating income



335.2

1,822.5

(1,487.3)

(81.6)

Operating margin



2.3%

11.9%

-

-

 

Operating income in 1Q19 totaled $335.2 million for an operating margin of 2.3%; lower than an operating income of $1,822.5 million and a 11.9% operating margin reported in 1Q18. The decrease in operating income is mainly attributed to lower gross profit than in 1Q18.



NET FINANCIAL INCOME









In millions of pesos



1Q19

1Q18

Change





$

$

$

%

Net Financial Income (Expense)



76.0

(93.8)

169.8

(181.1)

Financial Income



135.4

204.6

(69.3)

(33.8)

Financial Expense



59.4

298.4

(239.0)

(80.1)

 

In 1Q19, the Company reported net financial income of $76.0 million, compared to net financial expense of $93.8 million reported in the same period of 2018, mainly due to lower financial expense.  

TAXES FOR THE PERIOD









In millions of pesos



1Q19

1Q18

Change





$

$

$

%

Total Taxes



108.7

467.8

(359.2)

(76.8)

Income tax



49.3

315.9

(266.6)

(84.4)

Deferred income tax



59.3

151.9

(92.6)

(61.0)

 

Total taxes for the 1Q19 were $108.7 million, compared to $467.8 million in the same period of 2018. 

NET INCOME









In millions of pesos



1Q19

1Q18

Change





$

$

$

%

Net income



302.5

1,260.9

(958.4)

(76.0)

Net margin



2.1%

8.2%

-

-

Non-Controlling Interest income



3.8

5.3

(1.5)

n/a

Net controlling interest income



298.8

1,255.6

(956.9)

 n/a

Basic and diluted income per share1



0.50

2.09

(1.6)

n/a

Basic and diluted income per ADR2



5.98

25.11

(19.1)

n/a

Weighted average Shares outstanding3



599,920

600,000

-

-

1 In pesos











2 in pesos, an ADR is equal to twelve shares











3 In thousands of shares























 

The net income for 1Q19 was $302.5 million, representing a basic and diluted income of $0.50 pesos per share. This result compares to a net income of $1,260.9 million, which represented a net income of $2.09 pesos of basic and diluted income per share in 1Q18. Net margin for the 1Q19 was 2.1% compared to 8.2% reported in 1Q18.

EBITDA AND ADJUSTED EBITDA









In millions of pesos



1Q19

1Q18

Change





$

$

$

%

Net controlling interest income



298.8

1,255.6

(956.9)

(76.2)

   Income tax expense (benefit)



108.7

467.8

(359.2)

(76.8)

   Result in associates



(3.8)

5.3

(1.5)

(28.6)

   Net finance (income) expense



(76.0)

93.8

(169.8)

(181.1)

   Depreciation and amortization



319.7

268.5

51.2

(19.1)

EBITDA



654.9

2,091.0

(1,436.1)

(68.7)

EBITDA Margin (%)



4.6%

13.7%

-

-

Net sales



14,323.6

15,303.0

(979.4)

(6.4)

 

EBITDA in 1Q19 reached $654.9 million, representing an EBITDA margin of 4.6%, compared to an EBITDA of $2,091.0 million in 1Q18 with an EBITDA margin of 13.7%.

BALANCE SHEET DATA

BALANCE SHEET DATA









In millions of pesos



Mar 31, 2019

Dec. 31, 2018

Change





$

$

$

%

TOTAL ASSETS



50,564.8

52,865.6

(2,300.8)

(4.4)

Cash and cash equivalents



16,201.4

18,458.5

(2,257.1)

(12.2)

Accounts receivable



3,935.3

3,486.5

448.9

12.9

TOTAL LIABILITIES



12,148.1

14,699.9

(2,551.8)

(17.4)

Accounts payable



3,181.3

4,228.4

(1,047.1)

(24.8)

Short-term debt



2,227.4

3,492.8

(1,265.4)

(36.2)

Long-term debt



1,539.3

1,544.8

(5.5)

(0.4)

TOTAL STOCKHOLDERS' EQUITY



38,416.7

38,165.7

251.0

0.7

Capital stock



1,174.4

1,174.3

0.1

0.0

 

Cash and equivalents as of March 31, 2019 totaled $16,201.4 million; $2,257.1 million or 12.2% lower  than $18,458.5 million as of December 31, 2018.

Total debt as of March 31, 2019 totaled $3,766.7 million, compared to $5,037.6 million reported as of December 31, 2018.

Net cash as of March 31, 2019 was $12,434.7 million, compared to net cash of $13,420.9 million as of December 31, 2018.

CAPEX

CAPITAL EXPENDITURES

In millions of pesos



2019

2018

Change





$

$

$

%

Capital Expenditures



409.9

304.0

105.9

34.8

 

Total CAPEX for the 1Q19 was $409.9 million, which was mainly allocated toward organic growth and productivity projects across all our facilities.

STOCK INFORMATION

As of March 31, 2019

Total Shares



600,000,000

Total free float



26.75%

Market cap (millions of pesos)



$44,754

 

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

Close



High

Low

Close



Mar-19

75.88

70.51

74.59



47.98

45.72

46.10



Feb-19

76.06

72.83

74.84



47.74

45.17

46.93



Jan-19

74.37

65.38

73.31



46.53

40.07

46.00



Dec-18

70.53

63.50

64.52



41.60

38.08

39.56



Nov-18

75.14

66.38

70.90



45.43

39.00

41.72



Oct-18

87.37

74.14

74.51



55.23

43.83

43.86































 

Source: Yahoo Finances

 

ANALYST COVERAGE











Institution

Analyst name

E-mail

ACTINVER

José Antonio Cebeira

jcebeira@actinver.com.mx

BBVA BANCOMER

Miguel Ulloa

miguel.ulloa@bbva.com

GBM

Miguel Tortolero

matortolero@gbm.com.mx

MIRANDA-GR

Martin Lara

martin.lara@miranda-gr.com

JPMORGAN

Ulises Argote

ulises.argote@jpmorgan.com

INVEX

Giselle Mojica

gmojica@invex.com

SANTANDER

Luis Miranda

lmiranda@santander.com.mx

 

APPENDICES

For reference, some figures have been translated into millions of U.S. dollars ("USD") using an exchange rate of $19.41 per USD $1.0, which corresponds to the rate at the close of March 29, 2019, 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

March 31,

December 31,

In million pesos

2019

2019

2018*









TOTAL ASSETS

$           2,646.3

51,364.5

52,865.6









Total current assets

1,397.9

27,132.4

29,775.0

   Cash and cash equivalents

834.7

16,201.4

18,458.5

   Total accounts receivable

202.7

3,935.3

3,486.5

   Inventories

322.5

6,259.7

6,649.1

   Other current assets

37.9

736.0

1,180.9









Total non current assets

1,248.4

24,232.1

23,090.6

   Net property, plant and equipment

930.9

18,069.7

18,018.2

   Other non current Assets

317.5

6,162.4

5,072.4









TOTAL LIABILITIES

$              667.1

12,947.8

14,699.9









Total current liabilities

330.2

6,409.2

9,084.9

   Notes payable to banks

114.8

2,227.4

3,492.8

   Accounts payable

158.5

3,075.8

4,228.4

   Other taxes payable and other accruals

57.0

1,106.0

1,363.7









Total long-term liabilities

336.9

6,538.6

5,614.9

   Long-term debt 

79.3

1,539.3

1,544.8

   Other  non current liabilities

63.0

1,223.2

302.8

   Deferred income taxes

194.5

3,776.1

3,767.3









TOTAL STOCKHOLDERS' EQUITY

$           1,979.2

38,416.7

38,165.7









Capital stock

60.5

1,174.4

1,174.3

Commission in shares issued

21.4

414.5

414.5

Retained earnings

1,837.2

35,659.6

35,354.5

Others accounts

56.4

1,094.9

1,153.0

Non controlling interest

3.8

73.2

69.5









TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$           2,646.3

51,364.5

52,865.6









*Audited







 

CONSOLIDATED STATEMENT OF INCOME



First Quarter Results, ended March 31st:







-Unaudited-









U.S. Dollar





In millions pesos

2019

2019

2018

Net sales

$         738.0

14,323.6

15,303.0

Cost of sales

644.8

12,515.7

12,085.8

Gross profit

93.1

1,807.9

3,217.2

SG&A

76.0

1,474.4

1,385.5

Other income (expenses), net

0.1

1.6

(9.2)

Operating income 

17.3

335.2

1,822.5

Net finance income

3.9

76.0

(93.8)

Income tax 

5.6

108.7

467.8

Net Income

$           15.6

302.5

1,260.9









Non-controlling interest

0.19

3.8

5.3

Net controlling interest profit

15.4

298.8

1,255.6

Basic and diluted earnings per share

0.03

0.50

2.09

Basic and diluted earnings per ADR

0.31

5.98

25.11

Weighted average Shares outstanding1

599,920

599,920

600,000









EBITDA Result

$           33.7

654.9

2,091.0









Gross margin

12.6%

12.6%

21.0%

Operating margin

2.3%

2.3%

11.9%

Net margin

2.1%

2.1%

8.2%

EBITDA margin

4.6%

4.6%

13.7%









1In thousands







 

CONSOLIDATED STATEMENT OF CASH FLOWS





In million of pesos







-Unaudited-

















U.S. Dollar

March 31,



2019

2019

2018









NET MAJORITY INCOME BEFORE INCOME TAX

$                    21.2

411.2

1,728.7









ITEMS RELATING TO INVESTING ACTIVITIES:

7.8

151.6

172.0

      Depreciation and others

16.5

319.7

305.0

      Income (loss) on sale of plant and equipment

(0.2)

(3.2)

3.7

      Other Items

(8.5)

(164.9)

(136.7)









NET CASH GENERATED FROM NET INCOME BEFORE TAXES

29.0

562.7

1,900.8

CASH GENERATED OR USED IN THE OPERATION:

(67.5)

(1,310.4)

(589.6)

   Decrease (increase) in accounts receivable

(23.6)

(458.0)

119.3

   Decrease (increase) in inventories

18.8

364.6

498.1

   Increase (decrease) in accounts payable

(136.7)

(2,653.0)

(380.9)

   Other Items

74.0

1,436.0

(826.2)









NET CASH FLOW FROM OPERATING ACTIVITIES

(38.5)

(747.7)

1,311.1









NET CASH FLOW FROM INVESTING ACTIVITIES

(5.2)

(100.0)

(61.6)

      Acquisition of property, plant and equipment

(21.1)

(409.2)

(304.0)

      Proceeds from sales of property plant and equipment

1.7

33.0

4.4

      Other Items

14.2

276.3

238.0









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

(43.7)

(847.6)

1,249.5









Net cash provided by financing activities:

(72.7)

(1,410.9)

(632.4)

   Proceeds from loans

102.6

1,992.4

3,006.8

   Principal payments on loans

(165.4)

(3,211.2)

(3,201.5)

   Other items

(9.9)

(192.1)

(437.6)

Net increase (decrease) in cash and equivalents

(116.4)

(2,258.5)

617.1









Cash and investments at the beginning of year

$                  950.6

18,451.9

17,240.1

CASH AND INVESTMENTS AT END OF PERIOD

$                  834.3

16,193.4

17,857.3









 

DERIVATIVES POSITION REPORT

First Quarter 2019



















Thousands of Mexican Pesos, as of March 31, 2019















TYPE OF FINANCIAL INSTRUMENT

OBJECTIVE

NOTIONAL

VALUE OF THE RELATED COMMODITY

REASONABLE VALUE

AMOUNTS DUE BY YEAR

GUARANTIES REQUIRED

1Q-2019

4Q-2018

1Q-2019

4Q-2018

Forward Vanilla, Calls and Puts

Hedge

$    901,574

$         19.41



$         19.67



$     -4,655

$      2,051

90% in 2019 and 10% in 2020

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

Futures for corn and soybean meal

Hedge

$      233,218

 CORN 

 CORN 

-$        2,474

-$          104

100% in 2019

 In USD per Bushel 

 In USD per Bushel 

 month 

 price 

 month 

 price 





Mar-19

$           3.750

May-19

$           3.565

May-19

$           3.830

Jul-19

$           3.663

Jul-19

$           3.908

Sep-19

$           3.750

Sep-19

$           3.935

Dec-19

$           3.848

Dec-19

$           3.975

 SOYBEAN MEAL 

 SOYBEAN MEAL 

 In USD per ton 

 In USD per ton 

 month 

 price 

 month 

 price 

May-19

$           306.5

May-19

$           313.3

Jul-19

$           310.0





Aug-19

$           311.5





Sep-19

$           313.0









Dec-19

$           321.2

Options of Corn

Hedge

$    130,523

 CORN 

 CORN 

-$        2,846

$             65

92% in 2019; 8% in 2020

 In USD per Bushel 

 In USD per Bushel 

 month 

 price 

 month 

 price 

May-19

$           3.565





Jul-19

$           3.663





Sep-19

$           3.750

Mar-19

$           3.750

Dec-19

$           3.848

May-19

$           3.830

Jan-20

$           3.970

Jul-19

$           3.908

Options of soybean meal

Hedge

$      134,833

 SOYBEAN MEAL 

 SOYBEAN MEAL 

$             97

-$          267

80% in 2019; 20% in 2020

 In USD per ton 

 In USD per ton 

 month 

 price 

 month 

 price 

May-19

$           306.5





 Jul-19

$           310.0





Aug-19

$           311.5





Sep-19

$           313.0





Oct-19

$           314.1





Dec-19

$           316.8

Mar-19

$           309.9

Jan-20

$           317.7

May-19

$           313.3

Mar-20

$           317.8

 Jul-19

$           316.6























-The total financial instruments do not exceed 5% of total assets as of March 31, 2019.











-The notional value represents the net position as of March 31, 2019 at the exchange rate of Ps. 19.41 per one dollar.





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



































 

First Quarter 2019

Thousands of Mexican Pesos, as of March 31, 2019









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 (1)

-2.5%

2.5%

5.0%

-2.5%

2.5%

5.0%

Forward Vanilla, Calls and Puts

-$               4,655

$18.92

$       19.90

$       20.38

 Direct 

-$   27,194

$   17,885

$ 40,424





-5%

5%

10%



-5%

5%

10%

Futures of Corn: (2)

-$               2,474

$       3.387

$       3.743

$       3.922

 The effect will materialize as the inventory is consumed 

-$     2,234

-$     2,713

-$   2,953

Futures of Soybean Meal: (2)

$       291.2

$       321.8

$       337.2

Options for Corn

-$               2,846

$       3.387

$       3.743

$       3.922

-$     9,372

$     3,680

$ 10,206

Options of Soybean Meal

$                     97

$       291.2

$       321.8

$       337.2

-$     6,645

$     6,839

$ 13,580



















(1)The reference value is the exchange  rate of Ps. $19.41 per USD as of March 31, 2019.









(2)The reference values are; the future of corn for May 2019, $3.565 USD/bushel and the future of soybean meal for May 2019, $306.5  USD/ton.

    '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.





























 

First Quarter 2019



















Thousands of Mexican Pesos, as of March 31, 2019











STRESS SCENARIO 

TYPE OF FINANCIAL INSTRUMENT

REASONABLE VALUE

VALUE OF THE RELATED COMMODITY

EFFECT ON THE INCOME STATEMENT

EFFECT ON THE CASH FLOW

Reference Value

-50%

-25%

25%

50%

-50%

-25%

25%

50%

Forward Vanilla, Calls and Puts

-$               4,655

$9.71

$14.56

$24.26

$29.12

 Direct 

-$455,441

-$230,048

$220,739

$446,132























CONFERENCE CALL INFORMATION

The Company will host its first quarter 2019 earnings call, on Tuesday, April 30th, 2019. The earnings call will take place at 9:00 am Central Time (10:00 am ET). 

To participate in the earnings call, please dial:

Toll free in the U.S.: 1 (888) 771-4371

Toll free in Mexico: 001 866 779 0965

Toll Local Mexico: 52 55 6722 5257

Toll in the Brazil: 0800 761 0710

A current list of available local and international free phone telephone numbers: http://web.meetme.net/r.aspx?p=12&a=UOfFJZMLdjzbnt

Confirmation Number: 48509855

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 27,000 people.

The Company is rated AAA (MEX), the highest rating awarded by Fitch Mexico, S.A. de C.V., and HR AAA which signals that the Company and the offering both have the highest 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.

IR contact information:

Maria Guadalupe Jaquez

maria.jaquez@bachoco.net 

Andrea Guerrero

andrea.guerrero@bachoco.net

T. +52(461)618 3555

Cision View original content:http://www.prnewswire.com/news-releases/bachoco-announces-first-quarter-2019-results-300839986.html

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

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