Bachoco Announces First Quarter 2020 Results

|Apr 28|magazine42 min read

CELAYA, Mexico, April 28, 2020 /PRNewswire/ -- Industrias Bachoco, S.A.B. de C.V., "Bachoco" or "the Company", (NYSE: IBA; BMV: Bachoco) announced today its unaudited results for the first quarter ("1Q20") ending March 31, 2020. 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- 2020 vs. 2019

  • Net sales increased 9.9% in 1Q20.
  • EBITDA margin was 6.0% in 1Q20 vs 4.6% in 1Q19, our EBITDA was $947.3 million.
  • Earnings per basic and diluted share were $3.61

CEO COMMENTS

Mr. Rodolfo Ramos Arvizu, Chief Executive Officer of Bachoco, stated, "We ended the first quarter of the year with good results, growing in terms of volume both in Mexico and the U.S. Even when we observed a soft demand at the beginning of the year, the industry was able to get back in balance for the remaining period.

As a result, we achieved an overall increase of 6.3% in volume sold and an increase in net sales close to 10%, both when compared to 1Q19.

Prices of our main raw material were stable in USD terms but, volatility by the end of the quarter in the Mexican peso exchange rate vs the US dollar partially offset this benefit.  

We managed to keep our SG&A under control as it represents 10.0% of total sales, a rate slightly lower when compared to the same period of 2019.

For 1Q20, we reached an EBITDA of $947.3 for a 6.0% margin.  This EBITDA represents an increase when compared with the 4.6% of 1Q19. Earnings per basic and diluted shares were $3.61 for the 1Q20.

The Company remained in a healthy financial condition as we reached a net cash level of $16,527.8 million, which will allow us to continue to support our growth plans.

By the end of the quarter, Mexico started experiencing some of the impacts of pandemic COVID-19. Even when during 1Q20 we did not observe a material impact in our results, as the situation quickly evolves, we might see some economic disruptions in the months to come.

As a result, we will remain focused on efficiencies across all of our processes which allow us to supply our markets and customers as best as we can"

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 2019.

QUARTERLY RESULTS

NET SALES BY GEOGRAPHY





In millions of pesos


1Q20

1Q19

Change



$

$

$

%

Net sales


15,738.4

14,323.6

1,414.8

9.9

Net sales in Mexico


11,067.6

10,311.3

756.2

7.3

Net sales in the U.S.


4,670.8

4,012.3

658.5

16.4

 

NET SALES BY SEGMENT





In millions of pesos


1Q20

1Q19

Change



$

$

$

%

Net sales


15,738.4

14,323.6

1,414.8

9.9

Poultry


14,162.8

12,852.8

1,309.9

10.2

Other


1,575.6

1,470.8

104.8

7.1

 

NET VOLUME SOLD BY SEGMENT





In tons



Change


1Q20

1Q19

Volume

%

Total sales volume:

588,018

553,175

34,842.6

6.3

Poultry

457,167

425,745

31,422.0

7.4

Others

130,851

127,430

3,420.7

2.7

In 1Q20, the Company's net sales totaled $15,738.4 million; $1,414.8 million or 9.9% more than $14,323.6 million reported in 1Q19.  This was a result of more volume sold in our main business lines as well as better prices in poultry.

In 1Q20, sales of our U.S. operations represented 29.7% of our total sales compared with 28.0% in 1Q19.

GROSS PROFIT





In millions of pesos


1Q20

1Q19

Change



$

$

$

%

Cost of sales


13,557.3

12,515.7

1,041.6

8.3

Gross profit


2,181.1

1,807.9

373.2

20.6

Gross margin


13.9%

12.6%

-

-

The cost of sales totaled $13,557.3 million, representing $1,041.6 million or 8.3% higher than $12,515.7 million reported in the same period of 2019. This increase was mainly driven by more volume sold.

The Company's gross profit in 1Q20 was $2,181.1 million, with a gross margin of 13.9%. This result is higher when compared to a gross profit of $1,807.9 million and a gross margin of 12.6% reported in 1Q19.

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

In millions of pesos







1Q20

1Q19

Change



$

$

$

%

Total SG&A


1,572.7

1,474.4

98.3

6.7

Total SG&A expenses in 1Q20 were $1,572.7 million; $98.3 million or 6.7% more than the $1,474.4 million reported 1Q19. Total SG&A expenses, as a percentage of net sales, represent 10.0% in 1Q20 and 10.3% in 1Q19.

OTHER INCOME (EXPENSE), NET

In millions of pesos


1Q20

1Q19

Change



$

$

$

%

Other income (expense), net


(4.5)

1.6

(6.1)

(377.8)

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.

OPERATING INCOME





In millions of pesos


1Q20

1Q19

Change



$

$

$

%

Operating income


604.0

335.2

268.8

80.2

Operating margin


3.8%

2.3%

-

-

Operating income in 1Q20 totaled $604.0 million for an operating margin of 3.8%; higher than an operating income of $335.2 million and a 2.3% operating margin reported in 1Q19. The increase in operating income is mainly attributed to higher gross profit than in 1Q19.


NET FINANCIAL INCOME





In millions of pesos


1Q20

1Q19

Change



$

$

$

%

Net Financial Income (Expense)


2,426.5

76.0

2,350.5

3,092.5

Financial Income


2,483.3

135.4

2,348.0

1,734.3

Financial Expense


56.8

59.4

(2.6)

(4.3)

In 1Q20, the Company reported net financial income of $2,426.5 million, compared to net financial income of $76.0 million reported in the same period of 2019.

Given that part of our cash position is in dollar terms, the Mexican peso depreciation with respect to the US dollar by the end of the quarter, resulted in higher financial income when compared to the same period of 2019.  

TAXES FOR THE PERIOD





In millions of pesos


1Q20

1Q19

Change



$

$

$

%

Total Taxes


860.3

108.7

751.7

691.8

Income tax


910.5

49.3

861.2

1,745.5

Deferred income tax


(50.2)

59.3

(109.5)

(184.6)

Total taxes for the 1Q20 were $860.3 million, compared to $108.7 million in the same period of 2019.  This was a result of higher operating income in 1Q20.

NET INCOME





In millions of pesos


1Q20

1Q19

Change



$

$

$

%

Net income


2,170.2

302.5

1,867.6

617.3

Net margin


13.8%

2.1%

-

-

Non-Controlling Interest income


3.5

3.8

(0.2)

n/a

Net controlling interest income


2,166.6

298.8

1,867.9

n/a

Basic and diluted income per share1


3.61

0.50

3.1

n/a

Basic and diluted income per ADR2


43.34

5.98

37.4

n/a

Weighted average Shares outstanding3


599,843

599,920

-

-

1 In pesos

2 in pesos, an ADR is equal to twelve shares

3 In thousands of shares

The net income for 1Q20 was $2,170.2 million, representing a basic and diluted income of $3.61 pesos per share. This result compares to a net income of $302.5 million, which represented a net income of $0.50 pesos of basic and diluted income per share in 1Q19. Net margin for the 1Q20 was 13.8% compared to 2.1% reported in 1Q19.

EBITDA





In millions of pesos


1Q20

1Q19

Change



$

$

$

%

Net controlling interest income


2,166.6

298.8

1,867.9

625.2

   Income tax expense (benefit)


860.3

108.7

751.7

691.8

   Result in associates


3.5

3.8

(0.2)

(6.5)

   Net finance (income) expense


(2,426.5)

(76.0)

(2,350.5)

3,092.5

   Depreciation and amortization


343.3

319.7

23.6

7.4

EBITDA


947.3

654.9

292.4

44.7

EBITDA Margin (%)


6.0%

4.6%

-

-

Net sales


15,738.4

14,323.6

1,414.8

9.9

EBITDA in 1Q20 reached $947.3 million, representing an EBITDA margin of 6.0%, compared to an EBITDA of $654.9 million in 1Q19 with an EBITDA margin of 4.6%.

BALANCE SHEET DATA

BALANCE SHEET DATA





In millions of pesos


Mar 31, 2020

Dec. 31, 2019

Change



$

$

$

%

TOTAL ASSETS


60,095.0

55,702.5

4,392.5

7.9

Cash and cash equivalents


20,895.1

19,182.9

1,712.2

8.9

Accounts receivable


4,535.5

3,880.8

654.7

16.9

TOTAL LIABILITIES


16,493.9

15,442.2

1,051.8

6.8

Accounts payable


4,907.1

5,235.5

(328.5)

(6.3)

Short-term debt


2,692.2

3,440.4

(748.2)

(21.7)

Long-term debt


1,675.1

1,488.2

186.9

12.6

TOTAL STOCKHOLDERS' EQUITY


43,601.1

40,260.3

3,340.8

8.3

Capital stock


1,174.2

1,174.3

(0.1)

(0.0)

Cash and equivalents as of March 31, 2020 totaled $20,895.1 million; $1,712.2 million or 8.9% higher than $19,182.9 million as of December 31, 2019.

Total debt as of March 31, 2020 totaled $4,367.3 million, compared to $4,928.6 million reported as of December 31, 2019.

Net cash as of March 31, 2020 was $16,527.8 million, compared to net cash of $14,254.3 million as of December 31, 2019.

CAPEX

CAPITAL EXPENDITURES

In millions of pesos


2020

2019

Change



$

$

$

%

Capital Expenditures


292.7

409.2

105.2

34.6

Total CAPEX for the 1Q20 was $409.2 million, which was mainly allocated toward organic growth and productivity projects across all our facilities.

STOCK INFORMATION

As of March 31, 2020

Total Shares


600,000,000

Total free float


26.75%

Market cap (millions of pesos)


$40,488

 

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


March

71.07

58.76

67.48


44.14

28.67

34.00


February

75.83

68.57

71.07


48.87

42.67

43.04


January

82.40

75.01

75.82


52.70

47.78

48.34


December

83.46

79.77

81.43


52.99

51.09

52.00


November

85.92

80.00

84.69


53.72

49.26

51.18


October

84.46

81.35

86.38


54.99

49.56

53.84
















Source: Yahoo Finances














ANALYST COVERAGE

Institution

Analyst name

E-mail

ACTINVER

José Antonio Cebeira

[email protected]

BBVA BANCOMER

Pablo Abraham Peregrina

[email protected]

GBM

Miguel Tortolero

[email protected]

INTERCAM

Cristian M. Sánchez Arenas

[email protected] 

INVEX

Giselle Mojica

[email protected]

JP MORGAN

Ulises Argote

[email protected]

MONEX

Blanca Jimena Colin Fernandez

[email protected]

SANTANDER

Hector Maya López

[email protected]

APPENDICES

For reference, some figures have been translated into millions of U.S. dollars ("USD") using an exchange rate of $23.80 per USD $1.0, which corresponds to the rate at the close of March 31, 2020, 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

2020

2020

2019*





TOTAL ASSETS

$           2,525.0

60,095.0

55,702.5





Total current assets

1,438.7

34,241.3

31,097.2

   Cash and cash equivalents

877.9

20,895.1

19,182.9

   Total accounts receivable

190.6

4,535.5

3,880.8

   Inventories

330.8

7,872.0

6,753.4

   Other current assets

39.4

938.6

1,280.1





Total non current assets

1,086.3

25,853.8

24,605.2

   Net property, plant and equipment

805.4

19,169.3

18,556.6

   Other non current Assets

280.9

6,684.5

6,048.6





TOTAL LIABILITIES

$              693.0

16,493.9

15,442.2





Total current liabilities

377.3

8,978.7

8,908.1

   Notes payable to banks

113.1

2,692.2

3,440.4

   Accounts payable

206.2

4,907.1

5,235.5

   Other taxes payable and other accruals

58.0

1,379.4

232.2





Total long-term liabilities

315.8

7,515.3

6,534.0

   Long-term debt

70.4

1,675.1

1,488.2

   Other  non current liabilities

53.2

1,265.2

1,141.3

   Deferred income taxes

192.2

4,574.9

3,904.5





TOTAL STOCKHOLDERS' EQUITY

$           1,832.0

43,601.1

40,260.3





Capital stock

49.3

1,174.2

1,174.3

Commission in shares issued

17.4

414.5

414.5

Retained earnings

1,676.1

39,890.2

37,732.9

Others accounts

85.6

2,038.3

858.2

Non controlling interest

3.5

83.9

80.4





TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$           2,525.0

60,095.0

55,702.5





*Audited








 

CONSOLIDATED STATEMENT OF INCOME




First Quarter Results, ended March 31st:






-Unaudited-







U.S. Dollar





In millions pesos

2020

2020

2019



Net sales

$         661.3

15,738.4

14,323.6



Cost of sales

569.6

13,557.3

12,515.7



Gross profit

91.6

2,181.1

1,807.9



SG&A

66.1

1,572.7

1,474.4



Other income (expenses), net

(0.2)

(4.5)

1.6



Operating income

25.4

604.0

335.2



Net finance income

102.0

2,426.5

76.0



Income tax

36.1

860.3

108.7



Net Income

$           91.2

2,170.2

302.5









Non-controlling interest

0.15

3.5

3.8



Net controlling interest profit

91.0

2,166.6

298.8



Basic and diluted earnings per share

0.15

3.61

0.50



Basic and diluted earnings per ADR

1.82

43.34

5.98



Weighted average Shares outstanding1

599,843

599,843

599,920









EBITDA Result

$           39.8

947.3

654.9









Gross margin

13.9%

13.9%

12.6%



Operating margin

3.8%

3.8%

2.3%



Net margin

13.8%

13.8%

2.1%



EBITDA margin

6.0%

6.0%

4.6%









1 In thousands






 

CONSOLIDATED STATEMENT OF CASH FLOWS



In million of pesos




-Unaudited-









U.S. Dollar

March 31,


2020

2020

2019





NET MAJORITY INCOME BEFORE INCOME TAX

$                  127.3

3,030.5

411.2





ITEMS RELATING TO INVESTING ACTIVITIES:

14.1

336.5

151.6

      Depreciation and others

18.2

433.3

319.7

      Income (loss) on sale of plant and equipment

0.6

14.1

(3.2)

      Other Items

(4.7)

(110.9)

(164.9)





NET CASH GENERATED FROM NET INCOME BEFORE TAXES

141.5

3,367.0

562.7

CASH GENERATED OR USED IN THE OPERATION:

(36.8)

(875.3)

(1,310.4)

   Decrease (increase) in accounts receivable

(23.7)

(564.8)

(458.0)

   Decrease (increase) in inventories

(37.8)

(899.0)

284.0

   Increase (decrease) in accounts payable

58.5

1,393.4

(2,653.0)

   Other Items

(33.8)

(805.0)

1,516.7





NET CASH FLOW FROM OPERATING ACTIVITIES

104.7

2,491.7

(747.7)





NET CASH FLOW FROM INVESTING ACTIVITIES

(9.1)

(216.9)

(100.0)

      Acquisition of property, plant and equipment

(12.3)

(292.7)

(409.2)

      Proceeds from sales of property plant and equipment

0.2

5.6

33.0

      Other Items

3.0

70.2

276.3





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

95.6

2,274.9

(847.6)





Net cash provided by financing activities:

(25.5)

(605.8)

(1,410.9)

   Proceeds from loans

103.4

2,459.7

1,992.4

   Principal payments on loans

(143.5)

(3,415.5)

(3,211.2)

   Other items

14.7

350.0

(192.1)

Net increase (decrease) in cash and equivalents

70.1

1,669.1

(2,258.5)





Cash and investments at the beginning of year

$                  805.2

19,164.8

18,451.9

CASH AND INVESTMENTS AT END OF PERIOD

$                  875.4

20,833.9

16,193.4





 

First Quarter 2020










Thousands of Mexican Pesos, as of March 31, 2020








TYPE OF FINANCIAL INSTRUMENT

OBJECTIVE

NOTIONAL

VALUE OF THE RELATED COMMODITY

REASONABLE VALUE

AMOUNTS DUE BY YEAR

GUARANTIES REQUIRED

1Q-2020

4Q-2019

1Q-2020

4Q-2019

Forward Vanilla and KO Fwd

Hedge

$      45,435

$         23.80


$         18.89


$  111,955

$     -9,431

100% in 2020

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

Futures for corn and soybean meal

Hedge

$      656,372

 CORN

 CORN

-$      33,818

$        8,557

90% in 2020 and 10% in 2021

 In USD per Bushel

 In USD per Bushel

 month

 price

 month

 price

May-20

$           3.408

Mar-20

$           3.878

Jul-20

$           3.460

May-20

$           3.948

Sep-20

$           3.498

Jul-20

$           4.010

Dec-20

$           3.575

Sep-20

$           4.010

Mar-21

$           3.685

Dec-20

$           4.025

May-21

$           3.745



Jul-21

$           3.775



Dec-21

$           3.775



 SOYBEAN MEAL

 SOYBEAN MEAL

 In USD per ton

 In USD per ton

 month

 price

 month

 price

Jul-20

$           318.9



Aug-20

$           314.0



Jan-21

$           305.4



Mar-21

$           295.8

Mar-20

$           304.7

May-21

$           293.0

May-20

$           308.5

Jul-21

$           294.9



Aug-21

$           295.0



Sep-21

$           294.0



Oct-21

$           291.7



Dec-21

$           292.5



Options of Corn

Hedge

$      78,635

 CORN

 CORN

$        1,912

$           622

78% in 2020 and 22% in 2021

 In USD per Bushel

 In USD per Bushel

 month

 price

 month

 price

May-20

$           3.408



Jul-20

$           3.460



Sep-20

$           3.498

Mar-20

$           3.878

Dec-20

$           3.575

May-20

$           3.948

Mar-21

$           3.685

Jul-20

$           4.010

Options of soybean meal

Hedge

$        98,064

 SOYBEAN MEAL

 SOYBEAN MEAL

$        4,059

$             10

73% in 2020 and 27% in 2021

 In USD per ton

 In USD per ton

 month

 price

 month

 price

May-20

$           321.5



Jul-20

$           318.9



Aug-20

$           314.0



Sep-20

$           310.0



Oct-20

$           308.0

Mar-20

$           304.7

Dec-20

$           308.4

May-20

$           308.5

Jan-21

$           305.4

Jul-20

$           312.0

Mar-21

$           295.8



-The total financial instruments do not exceed 5% of total assets as of March 31, 2020.






-The notional value represents the net position as of March 31, 2020 at the exchange rate of Ps. 23.80 per one dollar.



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


















DERIVATIVES POSITION REPORT

First Quarter 2020









Thousands of Mexican Pesos, as of March 31, 2020







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 and KO Fwd

$          111,955

$23.21

$       24.40

$       24.99

 Direct

$   92,656

$ 118,756

$ 134,485



-5%

5%

10%


-5%

5%

10%

Futures of Corn: (2)

-$            33,818

$       3.237

$       3.578

$       3.748

 The effect will materialize as the inventory is consumed

-$     2,800

-$        999

$   31,819

Futures of Soybean Meal: (2)

$       305.4

$       337.6

$       353.7

Options for Corn

$               1,912

$       3.237

$       3.578

$       3.748

-$           85

$     5,844

$      9,776

Options of Soybean Meal

$               4,059

$       305.4

$       337.6

$       353.7

-$           35

$     8,962

$   13,866










(1) The reference value is the exchange  rate of Ps. $23.80 per USD as of March 31, 2020.





(2) The reference values are; the future of corn for May 2020, $3.4075 USD/bushel and the future of soybean meal for May 2020, $321.50  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 2020











Thousands of Mexican Pesos, as of March 31, 2020








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 and KO Fwd

$           111,955

$11.90

$17.85

$29.75

$35.70

 Direct

-$363,903

-$93,565

$218,273

$339,862

CONFERENCE CALL INFORMATION

The Company will host its first quarter 2020 earnings call, on Wednesday, April 29th, 2020. 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=UDQOBydiqguyam

Confirmation Number: 49569210

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 80 distribution centers in Mexico, and a production complex in the United States. Currently the Company employs more than 28,000 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
[email protected] 
Andrea Guerrero
[email protected]
T. +52(461)618 3555

Cision View original content:http://www.prnewswire.com/news-releases/bachoco-announces-first-quarter-2020-results-301048590.html

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