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Industrias Bachoco Announces Second Quarter 2018 Results

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Industrias Bachoco Announces Second Quarter 2018 Results

PR Newswire

CELAYA, Mexico, July 23, 2018 /PRNewswire/ -- Industrias Bachoco, S.A.B. de C.V., "Bachoco" or "the Company", (NYSE:IBA, BMV: Bachoco)) announced today its unaudited results for the second quarter ("2Q18") and first half ("1H18") 2018 ended on June 30, 2018. All figures have been prepared in accordance with International Financial Reporting Standard ("IFRS"), and are presented in nominal million Mexican Pesos ("$").

HIGHLIGHTS 2018

  • Net sales increased 7.3% in 2Q18 and 9.4% in 1H18
  • EBITDA margin was 12.2% for 2Q18 and 13.0% in 1H18
  • Earnings per basic and diluted share totaled $2.62 for 2Q18 and $4.72 for 1H18

CEO COMMENTS

Mr. Rodolfo Ramos Arvizu, Chief Executive Officer of Bachoco, stated: "This second quarter was challenging in both our Mexico and U.S. operations.

"In Mexico, cost of raw materials increased, in part due to a weaker Mexican peso, offsetting the increases in prices leading to pressure in margins.

"In the U.S. we observed atypical lower prices in the white meat market which combined with higher cost of raw materials, resulted in a difficult comparison vs 2Q17.

"Overall, the good balance between supply and demand allowed us to observe a net increase in price of our main products and to increase total sales by 7.3% in the quarter and 9.4% in the semester, compared to the same periods of 2017.

"Our EBITDA margin for the quarter was 12.2% which is lower than the EBITDA of the second quarter of 2017. As a result, our EBITDA for the first half of the year was 13.0%, compared to 13.2% EBITDA margin of the same period of 2017.

"Regarding 1H18, our results improved in general as we increase our EBITDA by 8.3% and our net income by 19.4%.

"We are entering the 3Q and we are observing prices in Mexico trending down as it is typical for a 3Q, however raw material cost is going down and the exchange rate on the Mexican peso vs the US dollar has strengthened. At the same time, we keep working to capture efficiencies across our processes in order to be the best option for our customers."

EXECUTIVE SUMMARY

The following financial information is expressed in millions of nominal pesos, except for amounts per share or per ADR, with comparative figures for the same period in 2017.

QUARTERLY RESULTS






NET SALES BY GEOGRAPHY





In millions of pesos


2Q18

2Q17

Change



$

$

$

%

Net Sales


16,213.6

15,116.3

1,097.4

7.3

Net sales in Mexico


11,553.9

11,386.6

167.3

1.5

Net sales in the U.S.


4,659.7

3,729.7

930.1

24.9











NET SALES BY SEGMENT





In millions of pesos


2Q18

2Q17

Change



$

$

$

%

Net Sales


16,213.6

15,116.3

1,097.4

7.3

Poultry


14,731.9

13,662.8

1,069.2

7.8

Other


1,481.7

1,453.5

28.2

1.9



NET VOLUME SOLD BY SEGMENT






In tons




Change



2Q18

2Q17

Volume

%

Total sales volume:


551,287

545,600

5,687

1.04

Poultry


431,315

420,604

10,711

2.55

Others


119,972

124,996

-5,024

-4.02







The Company's 2Q18 net sales totaled $16,213.6 million, $1,097.4 million or 7.3% more than   $15,116.3 million reported in 2Q17.  The increase is a result of better prices in poultry and balanced feed.

In 2Q18, sales of our U.S. operations represented 28.7% of our total sales compared to 24.7% in 2Q17.

GROSS PROFIT

In millions of pesos


2Q18

2Q17

Change



$

$

$

%

Cost of sales


13,108.3

11,502.1

1,606.2

14.0

Gross profit


3,105.3

3,614.2

(508.9)

(14.1)

Gross margin


19.2%

23.9%

-

-

In 2Q18, cost of sales was $13,108.3 million; $1,606.2 million or 14.0% higher than $11,502.1 million reported in 2Q17. This increase was due higher raw material costs in dollar terms and a depreciation of the Mexican peso versus the US dollar.

The Company´s gross profit in 2Q18 was $3,105.3 million, 14.1% lower than the gross profit of $3,614.2 million in 2Q17, with a gross margin of 19.2% for 2Q18 vs 23.9% in 2Q17.

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


In millions of pesos


2Q18

2Q17

Change



$

$

$

%

Total SG&A


1,489.1

1,297.6

191.5

14.8

Total SG&A expenses in 2Q18 were $1,489.1 million; $191.5 million higher than the $1,297.6 million reported in 2Q17. Total SG&A expenses as a percentage of net sales represented 9.2% in 2Q18 and 8.6% in 2Q17.

OTHER INCOME (EXPENSE), NET

In millions of pesos


2Q18

2Q17

Change



$

$

$

%

Other income (expense), net


40.2

13.4

26.8

199.3

This item mainly includes the sale of unused assets as well as hens and other by-products.  We record such sales as expenses when the sale price is below the book value of those assets.

In 2Q18, we recorded other income of $40.2 million, compared with other income of $13.4 million reported in 2Q17.

OPERATING INCOME

In millions of pesos


2Q18

2Q17

Change



$

$

$

%

Operating income


1,656.4

2,330.0

(673.6)

(28.9)

Operating margin


10.2%

15.4%

-

-

Operating income in 2Q18 totaled $1,656.4 million; $673.6 lower than $2,330.0 million reported in 2Q17. This represents an operating margin of 10.2% for 2Q18, lower when compared to the same period of 2017. The decrease in operating income is mainly attributed to higher cost of sales in 2Q18.

NET FINANCIAL INCOME

In millions of pesos


2Q18

2Q17

Change



$

$

$

%

Net Financial Income


562.1

96.8

465.3

480.8

Financial Income


312.8

254.3

58.5

23.0

Financial Expense


(249.3)

157.5

(406.9)

(258.3)

In 2Q18, the Company reported net financial income of $562.1 million, compared to $96.8 million reported in the same period of 2017. The increase is mainly attributed to higher exchange rate gains, as the peso depreciated during the quarter and higher interest rate earned.

TAXES FOR THE PERIOD

In millions of pesos


2Q18

2Q17

Change



$

$

$

%

Total Taxes


641.8

703.9

(62.1)

(8.8)

Income tax


563.2

546.1

17.1

3.1

Deferred income tax


78.7

157.8

(79.2)

(50.2)

Total taxes for the 2Q18 were $641.8 million, compared with total taxes of $703.9 million in the same period of 2017.

NET INCOME

In millions of pesos


2Q18

2Q17

Change



$

$

$

%

Net income


1,576.9

1,722.8

(146.0)

(8.5)

Net margin


9.7%

11.4%

-

-

Basic and diluted earnings per share1


2.62

2.87

(0.2)

n/a

Basic and diluted earnings per ADR2


31.49

34.43

(2.9)

n/a

Weighted average Shares outstanding3


600,000

600,000

-

-

1 In pesos

2 in pesos, one ADR equals to twelve shares

3 In thousands of shares

The net income for 2Q18 was $1,576.9 million, representing a basic and diluted income of $2.62 pesos per share, compared with a net income of $1,722.8 million, which represented $2.87 pesos of net income per share in 2Q17.  This decrease is mainly attributed to lower operating results. Net margin in 2Q18 was 9.7% compared to 11.4% reported in 2Q17.

EBITDA

In millions of pesos


2Q18

2Q17

Change



$

$

$

%

Net income


1,574.3

1,721.4

(147.0)

(8.5)

   Income tax expense (benefit)


641.8

703.9

(62.1)

(8.8)

   Result in associates


2.3

1.5

0.9

60.5

   Net finance (income) expense


(562.1)

(96.8)

(465.3)

480.8

   Depreciation and amortization


319.6

266.8

52.8

19.8

EBITDA


1,976.0

2,596.8

(620.8)

(23.9)

EBITDA Margin (%)


12.2%

17.2%

-

-

Net revenues


16,213.6

15,116.3

1,097.4

7.3

EBITDA in 2Q18 reached $1,976.0, representing an EBITDA margin of 12.2%, compared to an EBITDA of $2,596.8 million in 2Q17, with an EBITDA margin of 17.2%.

ACCUMULATED RESULTS






NET SALES BY GEOGRAPHY





In millions of pesos


1H18

1H17

Change



$

$

$

%

Net Sales


31,516.6

28,801.2

2,715.4

9.4

Net sales in Mexico


22,645.4

21,335.9

1,309.5

6.1

Net sales in the U.S.


8,871.2

7,465.3

1,405.9

18.8











NET SALES BY SEGMENT





In millions of pesos


1H18

1H17

Change



$

$

$

%

Net Sales


31,516.6

28,801.2

2,715.4

9.4

Poultry


28,490.6

25,949.4

2,541.2

9.8

Other


3,026.0

2,851.8

174.2

6.1



NET VOLUME SOLD BY SEGMENT

In metric tons




Change



1H18

1H17

Volume

%

Total sales volume:


1,098,037

1,073,699

24,338

2.27

Poultry


853,496

839,823

13,673

1.63

Others


244,541

233,876

10,665

4.56







During the first half of 2018, net sales totaled $31,516.6 million; $2,715.4 million or 9.4% more than $28,801.2 million reported in the same period of 2017. The increase in sales is mainly attributable to higher price in our main product lines when compared to the first half of 2017.

In 1H18, sales of our U.S. operations represented 28.1% of our total sales, compared with 25.9% in 1H17.

OPERATING RESULTS

In millions of pesos


1H18

1H17

Change



$

$

$

%

Cost of Sales


25,194.1

22,995.4

2,198.7

9.6

Gross Profit


6,322.5

5,805.8

516.7

8.9

Total SG&A


2,874.6

2,558.9

315.8

12.3

Other Income (expense)


31.0

12.9

18.1

140.1

Operating Income


3,478.9

3,259.8

219.0

6.7

Net Financial Income


468.4

27.0

441.3

1,632.0

Income Tax


1,109.6

911.2

198.5

21.8

Net Income


2,837.6

2,375.7

461.9

19.4

In 1H18, the cost of sales totaled $25,194.1 million; $2,198.7 million or 9.6% higher than $22,995.4 million reported in 1H17. The increase in cost of sales is mainly attributed to higher volume sold and higher raw material costs when compared to the same period of 2017.

As a result, we reached a gross profit of $6,322.5 million and a gross margin of 20.1% in 1H18, when compare to $5,805.8 million of gross profit and a margin of 20.2% reached in the same period of 2017.

Total SG&A expenses in 1H18 were $2,874.6 million; $315.8 million or 12.3% more than the $2,558.9 million reported in 1H17. In 1H18 total SG&A expenses as a percentage of net sales represented 9.1% compare with 8.9% in 1H17.

In 1H18 we had other income of $31.0 million, compared with other income of $12.9 million reported in 1H17.

The operating income in 1H18 was $3,478.9 million, which represents an operating margin of 11.0%, an increase of 6.7% from an operating income of $3,259.8 million and an operating margin of 11.3% in 1H17.

The net financial income in 1H18 was $468.4 million, higher when compared to a net financial income of $27.0 million in 1H17; mainly attributed to exchange rate gains as the Mexican peso depreciated vs the US dollar during the semester.

Total taxes were $1,109.6 million as of June 30, 2018.  These taxes include $879.1 million of income tax and $230.6 million of deferred income taxes. This figure compares to total taxes of $911.2 million in 1H17; the increase was due to higher income before taxes.

All the above resulted in a net income of $2,837.6 million or 9.0% of net margin in the 1H18, which represents $4.72 pesos of earnings per share; while in the 1H17 the net income totaled $2,375.7 million, 8.2% of net margin and $3.96 pesos of net income per share.

EBITDA

In millions of pesos


1H18

1H17

Change



$

$

$

%

Net controlling interest profit


2,830.0

2,373.5

456.5

19.2

   Income tax expense (benefit)


1,109.6

911.2

198.5

21.8

   Result in associates


7.6

2.2

5.4

246.7

   Net finance (income) expense


(468.4)

(27.0)

(441.3)

1,632.0

   Depreciation and amortization


629.3

535.3

94.1

17.6

EBITDA


4,108.2

3,795.1

313.1

8.3

EBITDA Margin (%)


13.0%

13.2%

-

-

Net revenues


31,516.6

28,801.2

2,715.4

9.4

EBITDA in 1H18 reached $4,108.2 million, representing an EBITDA margin of 13.0%, compared to EBITDA of $3,795.1 million in 1H17, with an EBITDA margin of 13.2%.

BALANCE SHEET


BALANCE SHEET DATA

In millions of pesos


June 30, 2018

Dec. 31st, 2017

Change



$

$

$

%

TOTAL ASSETS


52,787.6

50,557.4

2,230.2

4.4

Cash and cash equivalents


18,949.1

17,240.1

1,709.0

9.9

Accounts receivable


3,228.7

3,627.2

(398.5)

(11.0)

TOTAL LIABILITIES


15,022.1

14,879.5

142.6

1.0

Accounts payable


3,747.0

3,739.5

7.6

0.2

Short-term debt


3,351.8

3,695.1

(343.2)

(9.3)

Long-term debt


1,554.0

1,554.0

(0.0)

(0.0)

TOTAL STOCKHOLDERS' EQUITY


37,765.5

35,677.9

2,087.6

5.9

Capital stock


1,174.4

1,174.4

0.0

0.0

Cash and equivalents as of June 30, 2018 totaled $18,949.1 million vs $17,240.1 million as of December 31, 2017.

Total debt as of June 30, 2018 was $4,905.8 million, compared to $5,249.0 million reported as of December 31, 2017, mainly as a result of lower short-term bank debt.

Net cash as of June 30, 2018 was $14,043.34 million, compared to net cash of $11,991.1 million as of December 31, 2017.

CAPITAL EXPENDITURES

In millions of pesos


1H18

1H17

Change



$

$

$

%

Capital Expenditures


780.5

1,092.9

(312.4)

(28.6)

Total CAPEX for the 1H18 was $780.5 million and $1,092.9 million in 1H17, mainly allocated toward organic growth and productivity projects across all of our facilities.

STOCK INFORMATION

As of June 29, 2018

Total Shares


600,000,000

Total free float


26.75%

Market cap (millions of pesos)


$57,114

Source: Yahoo Finances

 

SHARE PRICE


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

Jun-18

97.97

90.18

95.19


63.84

53.00

57.75

May-18

97.44

90.48

91.10


61.63

54.89

54.86

Apr-18

97.03

92.41

96.35


63.84

59.80

62.07

Mar-18

96.47

92.37

95.30


62.67

58.83

61.95

Feb-18

94.06

89.88

91.66


61.46

57.41

58.01

Jan-18

98.16

93.03

95.65


63.83

57.88

61.94









 

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

SIGNUM RESEARCH

Martin Lara

martin.lara@signumresearch.com

JPMORGAN

Ulises Argote

ulises.argote@jpmorgan.com

INVEX

Giselle Mojica

gmojica@invex.com

APPENDICES
For reference, some figures have been translated into millions of U.S. dollars ("USD") using an exchange rate of $19.87 per USD $1.0, which corresponds to the rate at the close of June 30, 2018, 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

June 30,

December 31,

In million pesos

2018

2018

2017*





TOTAL ASSETS

$        2,656.2

52,787.6

50,557.4





Total current assets

1,513.9

30,086.3

28,225.0

   Cash and cash equivalents

953.5

18,949.1

17,240.1

   Total accounts receivable

162.5

3,228.7

3,627.2

   Inventories

352.2

7,000.1

6,669.5

   Other current assets

45.7

908.3

688.2





Total non current assets

1,142.3

22,701.3

22,332.4

   Net property, plant and equipment

881.5

17,518.8

17,320.0

   Other non current Assets

260.8

5,182.5

5,012.3





TOTAL LIABILITIES

$            755.9

15,022.1

14,879.5





Total current liabilities

460.4

9,149.5

9,185.7

   Notes payable to banks

168.7

3,351.8

3,701.9

   Accounts payable

188.5

3,747.0

3,739.5

   Other taxes payable and other accruals

103.2

2,050.7

1,744.3





Total long-term liabilities

295.5

5,872.6

5,693.8

   Long-term debt 

78.2

1,554.0

1,554.0

   Other  non current liabilities

13.7

271.5

296.4

   Deferred income taxes

203.6

4,047.1

3,843.4





TOTAL STOCKHOLDERS' EQUITY

$        1,900.3

37,765.5

35,677.9





Capital stock

59.1

1,174.4

1,174.4

Commission in shares issued

20.9

414.5

414.4

Repurchased shares

-

-

-

Retained earnings

1,753.2

34,840.8

32,861.1

Others accounts

63.9

1,269.2

1,169.1

Non controlling interest

3.4

66.6

59.0





TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$        2,656.2

52,787.6

50,557.4





*Audited




 

 

CONSOLIDATED STATEMENT OF INCOME

Second Quarter Results, ended June 30:




-Unaudited-





U.S. Dollar



In millions pesos

2018

2018

2017*

Net sales

$       815.9

16,213.6

15,116.3

Cost of sales

659.6

13,108.3

11,502.1

Gross profit

156.3

3,105.3

3,614.2

SG&A

74.9

1,489.1

1,297.6

Other income (expenses), net

2.0

40.2

13.4

Operating income

83.3

1,656.4

2,330.0

Net finance income

28.3

562.1

96.8

Income tax

32.3

641.8

703.9

Net Income

$         79.3

1,576.7

1,722.8





Non-controlling interest

0.12

2.3

1.5

Net controlling interest profit

79.2

1,574.3

1,721.4

Basic and diluted earnings per share

0.13

2.62

2.87

Basic and diluted earnings per ADR

1.58

31.49

34.43

Weighted average Shares outstanding1

600,000

600,000

600,000





EBITDA Result

$         99.4

1,976.0

2,596.8





Gross margin

19.2%

19.2%

23.9%

Operating margin

10.2%

10.2%

15.4%

Net margin

9.7%

9.7%

11.4%

EBITDA margin

12.2%

12.2%

17.2%





1 In thousands




* Audited










CONSOLIDATED STATEMENT OF INCOME


Accumulated results, for the six months ended June 30.



-Unaudited-





U.S. Dollar



In millions pesos

2018

2018

2017

Net sales

$   1,585.9

31,516.6

28,801.2

Cost of sales

1,267.8

25,194.1

22,995.4

Gross profit

318.1

6,322.5

5,805.8

Selling, general and administrative expenses

144.6

2,874.6

2,558.9

Other income (expenses), net

1.6

31.0

12.9

Operating income

175.1

3,478.9

3,259.8

Net finance income

23.6

468.4

27.0

Income tax

55.8

1,109.6

911.2

Net income

$       222.2

2,837.6

2,375.7





Non-controlling interest

0.4

7.6

2.2

Net controlling interest profit

143.2

2,830.0

2,373.5

Basic and diluted earnings per share

0.24

4.72

3.96

Basic and diluted earnings per ADR

2.85

56.6

47.47

Weighted average Shares outstanding1

599,990

599,990

599,973





EBITDA Result

$       206.7

4,108.2

3,795.1





Gross margin

20.1%

20.1%

20.2%

Operating margin

11.0%

11.0%

11.3%

Net margin

9.0%

9.0%

8.2%

EBITDA margin

13.0%

13.0%

13.2%





1 In thousands




*Audited




 

 

CONSOLIDATED STATEMENT OF CASH FLOWS



In million of pesos




-Unaudited-









U.S. Dollar

June 30,


2018

2018

2017





NET MAJORITY INCOME BEFORE INCOME TAX

$       198.6

3,947.2

3,286.9





ITEMS RELATING TO INVESTING ACTIVITIES:

11.5

229.3

354.0

      Depreciation and others

30.2

600.7

535.3

      Income (loss) on sale of plant and equipment

0.3

6.9

11.6

      Other Items

(19.0)

(378.4)

(192.9)





NET CASH GENERATED FROM NET INCOME BEFORE TAXES

210.2

4,176.5

3,640.8

CASH GENERATED OR USED IN THE OPERATION:

(78.6)

(1,562.8)

(669.5)

   Decrease (increase) in accounts receivable

(6.1)

(120.7)

472.0

   Decrease (increase) in inventories

(9.2)

(182.8)

(543.5)

   Increase (decrease) in accounts payable

(11.4)

(226.5)

(27.6)

   Increase (decrease) in other liabilities

(52.0)

(1,032.8)

(570.3)





NET CASH FLOW FROM OPERATING ACTIVITIES

131.5

2,613.7

2,971.4





NET CASH FLOW FROM INVESTING ACTIVITIES

(6.5)

(130.1)

(526.2)

      Acquisition of property, plant and equipment

(39.3)

(780.5)

(1,092.9)

      Proceeds from sales of property plant and equipment

0.6

11.4

18.9

      Other Items

32.2

639.0

547.8





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

125.0

2,483.6

2,445.2





Net cash provided by financing activities:

(39.0)

(774.6)

(1,281.7)

   Proceeds from loans

159.9

3,177.5

2,539.6

   Principal payments on loans

(173.9)

(3,455.1)

(2,646.8)

   Dividends paid

(21.4)

(426.0)

(390.0)

   Other items

(3.6)

(70.9)

(784.5)

Net increase (decrease) in cash and equivalents

86.0

1,709.0

1,163.5





Cash and investments at the beginning of year

$       867.5

17,240.1

15,651.5

CASH AND INVESTMENTS AT END OF PERIOD

$       953.5

18,949.1

16,815.0









 

 

DERIVATIVES POSITION REPORT


Second Quarter 2018

Thousands of Mexican Pesos, as of June 30, 2018






TYPE OF FINANCIAL
INSTRUMENT

OBJECTIVE

NOTIONAL

VALUE OF THE RELATED COMMODITY

REASONABLE VALUE

AMOUNTS DUE
BY YEAR

2Q-2018

1Q-2018

2Q-2018

1Q-2018

Forward Vanilla and
KO Forwards

Hedge

$   618,394

$   19.87


$   18.30


$ 22,128

$-41,144

in 2018

Futures for corn and
soybean meal

Hedge

$   266,596

 CORN 

 CORN 

-$22,830

$        842

in 2018

 In USD per Bushel 

 In USD per Bushel 

 month 

 price 

 month 

 price 







May-18

$   3.878

Sep-18

$    3.595

Sep-18

$   4.033

 SOYBEAN MEAL 

 SOYBEAN MEAL 

 In USD per ton 

 In USD per ton 

 month 

 price 

 month 

 price 

Aug-18

$    331.0

May-18

$    384.0

Sep-18

$    330.9



Options of Corn

Hedge

$   886,923

 CORN 

 CORN 

$ 27,537

$        814

99% in 2018
and 1% in 2019

 In USD per Bushel 

 In USD per Bushel 

 month 

 price 

 month 

 price 



May-18

$    3.8775



Jul-18

$   3.678

Sep-18

$    3.595

Sep-18

$   4.033

Dec-18

$    3.713

Dec-18

$   3.970

Mar-19

$    3.813

Mar-19

$   4.183

Options of soybean
meal

Hedge

$     49,045

 SOYBEAN MEAL 

 SOYBEAN MEAL 

-$   2,884

-$        784

73% in 2018
and 27% in
2019

 In USD per ton 

 In USD per ton 

 month 

 price 

 month 

 price 



May-18

$   384.0



Jul-18

$    325.3

Aug-18

$    331.0

Aug-18

$   383.2

Sep-18

$    330.9

Sep-18

$   380.0

Oct-18

$    330.3

Oct-18

$   376.3

Dec-18

$    329.9

Dec-18

$   374.7

Jan-19

$    328.0

Jan-19

$   370.8

Mar-19

$    323.1

Mar-19

$   362.5






-The total financial instruments do not exceed 5% of total assets as of June 30, 2018.

-The notional value represents the net position as of June 30, 2018 at the exchange rate of Ps. 19.87 per one dolar.

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

 

 

PROBABLE SCENARIO


Second Quarter 2018

Thousands of Mexican Pesos, as of June 30, 2018

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

-2.5%

2.5%

5.0%

-2.5%

2.5%

5.0%

Forwards Vanilla and Ko
Forwards

$                         22,128

$19.37

$20.37

$20.86

 Direct 

$   6,668

$35,561

$                        50,524



-5%

5%

10%


-5%

5%

10%

Futures of Corn: (2)

-$                         22,830

$3.415

$3.775

$3.955

 The effect will
materialize as the
inventory is consumed 

-$36,160

-$   9,500

$                         3,830

Futures of Soybean Meal: (2)

$314.5

$347.6

$364.1

Options for Corn

$                         27,537

$3.415

$3.775

$3.955

$ 68,838

$   2,482

$                         2,510

Options of Soybean Meal

-$                           2,884

$314.5

$347.6

$364.1

-$   5,336

-$      431

$                         2,021










(1)  The reference value is the exchange  rate of Ps. $19.87 per USD as of June 30, 2018.

(2)  The reference values are; the future of corn for Sep 2018, $3.595 USD/bushel and the future of soybean meal for Aug 2018, $331.0  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.

 

Second Quarter 2018

Thousands of Mexican Pesos, as of June 30, 2018

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

$               22,128

$9.94

$14.90

$24.84

$29.81

 Direct 

-$287,069

-$132,471

$170,229

$319,860

CONFERENCE CALL INFORMATION
The Company will host its second quarter 2018 earnings call, on Tuesday, July 24th, 2018. The earnings call will take place at 9:00 am Central Time (10:00 am ET). 

Toll free in the U.S.: 1 (888) 771-4371
Toll free in Mexico: 001 866 779 0965
A current list of available local and international free phone telephone numbers:
http://web.meetme.net/r.aspx?p=12&a=UVbMZlJnnVSWrc

Confirmation Number: 47222762

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.jaquez@bachoco.net 
andrea.guerrero@bachoco.net 
T. +52(461)618 3555

Cision View original content:http://www.prnewswire.com/news-releases/industrias-bachoco-announces-second-quarter-2018-results-300684610.html

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

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