Industrias Bachoco Announces Second Quarter 2016 Results

CELAYA, Mexico, July 25, 2016 /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 (“2Q16”) and first half (“1H16”) 2016 ended June 30, 2016. All figures have been prepared in accordance with International Financial Reporting Standard (“IFRS”), and are presented in nominal million Mexican Pesos (“$”).

HIGHLIGHTS- 2016 vs 2015

CEO COMMENTS

Mr. Rodolfo Ramos Arvizu, Chief Executive Officer of Bachoco, stated: “This second quarter was in line with the seasonal behavior of the poultry industry. We observed a normalized growth rate in both of the markets in which we compete, and a strong demand in the Mexican market, resulting in a better balance between supply and demand.

An increase in our volume sold and prices recovered, mainly in chicken, allowed us to increase our total sales by 12.9% in the quarter when compared to the same period of 2015.

The effects on the cost of raw materials we saw in 1Q16 due to the Mexican peso depreciation versus the US dollar, continued for the second quarter of 2016, increasing our cost of sales.

At the end of the quarter, we were able to reach an EBITDA of $2,329.6 million, 11.9% higher than the EBITDA of the same quarter of 2015. Our EBITDA margin for 2Q16 was 17.4% versus 17.6% of 2Q15.

Our earnings per basic and diluted share for 2Q16 was $2.63, higher than the $2.32 for same quarter of 2015. 

The Company’s net cash reached $11,283.0 million, strengthening our financial position.”

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 2015.

QUARTERLY RESULTS

 

 

NET VOLUME SOLD BY SEGMENT

 

The Company’s 2Q16 net sales totaled $13,362.1 million, $1,524.9 million or 12.9% more than $11,837.2 million reported in 2Q15.  The increase is a result of more volume sold in our main product lines and price increases in chicken, and swine. This was partially offset by lower prices in table eggs when compared to 2Q15.

In 2Q16, sales of our U.S. operations represented 24.3% of our total sales compared to 22.9% in 2Q15.

 

In 2Q16, cost of sales was $10,079.1 million; $1,164.9 million or 13.1% higher than $8,914.2 million reported in 2Q15. This increase was due to higher volume sold and higher raw material costs in Mexican peso terms, in part due to depreciation of the Mexican peso versus US dollar.

The Company´s gross profit in 2Q16 was $3,283.0 million, 12.3% higher than the gross profit of $2,923.1 million with a gross margin of 24.6% for 2Q16 vs 24.7% in 2Q15.

 

Total SG&A expenses in 2Q16 were $1,185.0 million, $140.5 million higher than the $1,044.5 million reported in 2Q15. Total SG&A expenses as a percentage of net sales represented 8.9% in 2Q16, similar to the one in 2Q15.

 

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 2Q16, we recorded other expense of $6.4 million, compared with other income of $5.0 million reported in 2Q15.This is mainly attributed to a loss on the sale of unused assets.

 

Operating income in 2Q16 totaled $2,091.6 million, $208.1 higher than $1,883.5 million reported in 2Q15. This represents an operating margin of 15.7% for 2Q16, slightly lower when compared to the same period of 2015.

The increase in operating income is mainly attributed to higher gross income in 2Q16.

 

In 2Q16, the Company reported net financial income of $197.3 million, compared to $132.1 million reported in the same period of 2015. The increase is mainly attributed to higher interest income.

 

Total taxes for the 2Q16 were $708.9 million, compared with total taxes of $621.1 million in the same period of 2015.This increase is attributed to higher income before taxes.

1 In pesos
2 in pesos, one ADR equals to twelve shares
3 In thousands of shares

 

The net income for 2Q16 was $1,580.0 million, representing a net income of $2.63 pesos per share, compared with a net income of $1,394.5 million, which represented $2.32 pesos of net income per share in 2Q15.This increase is mainly attributed to better operating and financial results.   

Net margin in 2Q16 was 11.8%, same percentage as reported in 2Q15.

 

EBITDA in 2Q16 reached $2,329.6 million, representing an EBITDA margin of 17.4%, compared to an EBITDA of $2,081.0 million in 2Q15, with an EBITDA margin of 17.6%.

The adjusted EBITDA in 2Q16 reached $2,336.1 million, representing an adjusted EBITDA margin of 17.5%, compared to adjusted EBITDA of $2,076.0 million in 2Q15, with an adjusted EBITDA margin of 17.5%.

ACCUMULATED RESULTS

 

 

NET VOLUME SOLD BY SEGMENT

 

During the first half of 2016, net sales totaled $25,201.5 million; $1,958.2 million or 8.4% more than $23,243.2 million reported in the same period of 2015. The increase in sales is mainly attributable to higher volume sold in our main product lines as compared with the first half of 2015.

In 1H16, sales of our U.S. operations represented 24.9% of our total sales, compared with 23.6% in 1H15.

 

In 1H16, the cost of sales totaled $20,091.3 million; $2,454.7 million or 13.9% higher than $17,636.6 million reported in 1H15. The increase in cost of sales is mainly attributed to higher volume sold and higher raw material costs in Mexican peso terms when compared to the same period of 2015.

As a result, we reached a gross profit of $5,110.2 million and a gross margin of 20.3% in 1H16, a lower result than $5,606.6 million of gross profit and a margin of 24.1% reached in the same period of 2015.

Total SG&A expenses in 1H16 were $2,306.8 million, $254.0 million or 12.4% more than the $2,052.7million reported in 1H15. In 1H16 total SG&A expenses as a percentage of net sales represented 9.2% compare with 8.8% in 1H15. This increase is mainly attributed to higher volume sold.   

In 1H16 we had other expenses of $15.5 million, compared with other expenses of $8.2 million reported in 1H15.

The operating income in 1H16 was $2,787.9 million, which represents an operating margin of 11.1%, a decrease of 21.4% from an operating income of $3,545.6 million and an operating margin of 15.3% in 1H15.

The net financial income in 1H16 was $333.7 million, higher when compared to a net financial income of $313.1 million in 1H15, mainly attributed to higher interest income.

Total taxes were $944.7 million as of June 30, 2016.  These taxes include $704.6 million of income tax and $240.1 million of deferred income taxes. This figure compares to total taxes of $1,198.5 million in 1H15; the decrease was due to lower income before taxes.

All the above resulted in a net income of $2,176.9 million or 8.6% of net margin in the 1H16, which represents $3.62 pesos of earnings per share, while in the 1H15 the net income totaled $2,660.2 million, 11.4% of net margin and $4.43 pesos of net income per share.

EBITDA in 1H16 reached $3,250.7 million, representing an EBITDA margin of 12.9%, compared to EBITDA of $3,942.5 million in 1H15, with an EBITDA margin of 17.0%.

The adjusted EBITDA in 1H16 reached $3,266.2 million, representing an adjusted EBITDA margin of 13.0%, compared to adjusted EBITDA of $3,950.8 million in 1H15, with an adjusted EBITDA margin of 17.0%.

BALANCE SHEET

 

Cash and equivalents as of June 30, 2016 totaled $15,243.0 million vs $15,288.9 million as of December 31, 2015.

Total debt as of June 30, 2016 was $3,960.0 million, compared to $4,127.0 million reported as of December 31, 2015, mainly as a result of lower short-term bank debt.

Net cash as of June 30, 2016 was $11,283.0 million, compared to net cash of $11,161.9 million as of December 31, 2015.

 

Total CAPEX for the 1H16 was $1,188.2 million and $605.0 million in 1H15, mainly allocated toward organic growth and productivity projects across all of our facilities.

STOCK INFORMATION

Source: yahoo finances

SHARE PRICE

 

ANALYST COVERAGE

 

APPENDICES

For reference, some figures have been translated into millions of U.S. dollars (“USD”) using an exchange rate of $18.26 per USD $1.0, which corresponds to the rate at the close of June 30, 2016, according to Mexico’s National Bank.

  

  

 

 

 

  

 

 

CONFERENCE CALL INFORMATION
The Company will host its second quarter 2016 earnings call, on Tuesday, July 26, 2016. 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: https://www.yourconferencecenter.com/AlternateNumbers/alternatenumbers.aspx?100374&t=P&o=ULACEtBoBQAtcp

Confirmation Number: 42944364

Visit the following link to access the webcast:
http://edge.media-server.com/m/p/b5z95ddu

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.

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

Kathy Chaurand
kathy.chaurand@bachoco.net
T. +52(461)618 3555
T. +52(461)618 3500 Ext. 10146

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

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