Industrias Bachoco Announces Second Quarter and First Half 2013 Results

CELAYA, Mexico, July 23, 2013 /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 ("2Q13") and first half periods ("1H13") ended June 30, 2013. All figures have been prepared in accordance with International Financial Reporting Standard ("IFRS"), and are presented in nominal million Mexican Pesos ("Pesos" or "Ps.").

HIGHLIGHTS- 2013 vs 2012.

• Net sales increased 12.1% in 2Q13
• EBITDA margin was 18.0% for the quarter and  13.8% for 1H13
• Earnings per basic and diluted share totaled Ps. 2.29 or Ps. 27.48 per ADR for the quarter.

CEO COMMENTS

Mr. Rodolfo Ramos Arvizu, Chief Executive Officer of Bachoco, stated, "Seasonally, the second quarter is usually the strongest quarter of the year, and it seems this quarter will follow that trend.

After a complicated start to the year, the Company was able to surpass various difficulties and achieve positive results. All this was due to a strict control of expenses and productivity improvements, resulting from a close surveillance of procedures and constant implementation of processes and technologies that make us more productive day to day.

The Company's chicken sales volume decreased this quarter, as a consequence of the outbreak of avian flu that affected our breeding farms in the state of Guanajuato; at this time, this problem is under control but not totally eradicated, and our production is in the process of recovering normalized levels.

On the other hand, the supply of our main products was stable in the markets we operate and prices were at solid levels, both conditions that are common during the second quarter in the poultry industry.

Lastly, the Company maintains a solid Balance Sheet, and we recently announced a strategic acquisition of assets and inventory of a breeder operation in the U.S., which was financed with internal resources."

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 2012.

NET SALES

The Company's 2Q13 net sales totaled Ps. 10,546.6 million, 12.1% higher than the Ps. 9,404.0 million reported in 2Q12. This resulted from increases in sales across our main business lines, mainly due to seasonality, as the second quarter tends to be the strongest quarter of the year, together with a stable supply and good price levels.

2Q13 sales of our U.S. operations accounted for 19.3% of total sales.

Total sales in 1H13 increased 9.6% when compared with the same period of 2012 on the back of a strong 2Q13 performance.

GROSS PROFIT

Cost of sales totaled Ps. 8,040.0 million, 1.1% lower than Ps. 8,127.3 million reported in the same period of 2012. The decrease in cost of sales was mainly due to the decline in chicken volume, as a result of inventory loss caused by the influenza outbreak.

At the same time, the Company recognized a one-time additional charge of Ps. 87.8 million in the production cost, resulting from the loss of inventories described above.

As a result, the Company's gross profit in 2Q13 totaled Ps. 2,506.6 million, resulting in a gross margin of 23.8%, compared to a gross profit of Ps. 1,276.8 million, and a gross margin of 13.6% reached in 2Q12.

Meanwhile, gross margin was 19.4% in 1H13, compared to 15.3% in the same period of 2012.

Selling, general and administrative expenses

In 2Q13 total operating expenses reached Ps. 826.5 million, compared to Ps. 857.3 million reported in 2Q12, this shows an important improvement, as total expenses in 2Q13 represented 7.8% of net sales, compared to 9.1% recorded in 2Q12, this is mainly due to a strict control over all operating expenses.

OTHER INCOME (EXPENSE), NET

The item of "other income (expense)" includes mainly the selling of unused assets as well as the selling of hens and other by-products.  We record such sales as expenses when the sale price is lower than the book value of those assets.

In 2Q13, we recorded other income of Ps. 35.4 million, compared with other expenses of Ps. 40.2 reported in 2Q12; this is mainly attributed to gain in sales of several unused assets.

During 1H13, the Company recorded other income of Ps. 112.5 million compared to other expenses of Ps. 46.3 million recorded in the first half of 2012.

OPERATING INCOME

Operating income in 2Q13 totaled Ps. 1,715.5 million, which represents an operating margin of 16.3%, compared with Ps. 379.3 million and 4.0% reported in 2Q12; the increase is mainly attributed to greater sales across most of our business lines.

During the first half of 2013, operating income was Ps. 2,476.9 million with 12.1% operating margin, compared with Ps. 1,156.8 million and a 6.2% margin reported in the same period of 2012.

NET FINANCING INCOME

The Company reported net financing income of Ps. 31.6 million, more than Ps. 21.8 million of net finance income reported in 2Q12. The change is mainly due to higher exchange rate gains and greater interest income.

TAXES

Industrias Bachoco and all of its subsidiaries file separate income tax returns; Total taxes in 2Q13 were Ps. 374.9 million.

NET INCOME

Net income in 2Q13 was Ps. 1,371.8 million, representing Ps. 2.29 per share or Ps. 27.48 per ADR, compared with a net income of Ps. 316.8 million, which represents Ps. 0.53 pesos per share or Ps. 6.36 pesos per ADR reported in 2Q12.

Net income for 1H13 totaled Ps. 2,009.7 million (Ps. 3.35 per share or Ps. 40.2 per ADR) compared to net income of Ps. 977.4 million (Ps. 1.63 or Ps. 19.56 per ADR).

EBITDA

EBITDA in 2Q13 reached Ps. 1,898.4 million, representing an EBITDA margin of 18.0%, compared to EBITDA of Ps. 622.8 million in 2Q12 with a 6.6% of EBITDA margin.

Meanwhile EBITDA for the first six months of 2013 totaled Ps. 2,842.9 million, or 13.8% of margin, compared with EBITDA of Ps. 1,650.4 million or 8.8% EBITDA margin in the same period of 2012.

The following chart shows reconciliation of EBITDA and adjusted EBITDA to consolidated net income.

BALANCE SHEET data

Cash and equivalents as of June 30, 2013, totaled Ps. 7,813.6 million compared to Ps. 5,138.1 million reported as of December 31, 2012.

As of June 30, 2013, total debt was Ps. 2,300.3 million compared to Ps. 2,741.2 million reported as of December 31, 2012.

Net debt was negative Ps. 5,513.4 million as of June 30, 2013, compared with a negative net debt of Ps. 2,396.9 million as of December 31, 2012.

CAPITAL EXPENDITURES

Total CAPEX as of June 30, 2013 was Ps. 333.2 million, mainly allocated toward productivity projects and maintenance.

ANALYST COVERAGE

STOCK INFORMATION

APPENDICES

For reference, some figures have been translated into millions of U.S. dollars ("USD") using an exchange rate of Ps. 12.9795 per US$1, which corresponds to the rate at the close of June 30, 2013, according to Mexico's National Bank.

• Consolidated Statement of Financial Position
• Consolidated Statement of Income
• Consolidated Statement of Cash Flows
• Derivatives Position Report

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 25,000 people. In 2012, the Company reported net sales of Ps. 39.3 billion.

The Company is rated AA (MEX), representing high credit quality by Fitch Mexico, S.A. de C.V., and HR AA+ which signals that the Company and the offering both have high 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.

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