Industrias Bachoco Announces Second Quarter 2017 Results

CELAYA, Mexico, July 26, 2017 /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 ("2Q17") and first half ("1H17") 2017 ended June 30, 2017. All figures have been prepared in accordance with International Financial Reporting Standard ("IFRS"), and are presented in nominal million Mexican Pesos ("$").

HIGHLIGHTS 2017

• Net sales increased 13.1% in 2Q17.
• EBITDA margin was 17.2% for 2Q17.
• Earnings per basic and diluted share totaled $2.87 for 2Q17.

CEO COMMENTS

Mr. Rodolfo Ramos Arvizu, Chief Executive Officer of Bachoco, stated: "This second quarter was in line with the seasonal behavior for the poultry industry. We continue observing good levels of demand in the Mexican and in the US markets and a normalized growth rate in the supply in both markets in which we participate, resulting in a balance between supply and demand.

"An increase in price and volume in our main product lines allowed us to increase our total sales by 13.1% in the quarter, when compared to the same period of 2016.

"At the end of the quarter, we were able to reach an EBITDA of $2,596.8 million, 11.5% higher than the EBITDA of the same quarter of 2016. Our EBITDA margin for 2Q17 was 17.2% and our earnings per basic and diluted share for 2Q17 was $2.87. 

"We continued investing in the growth of our Company.  Our CAPEX reached $1,092.9 million and our financial structure continued strengthening as we end with a net cash of $13,056.3 millions."

RECENT DEVELOPMENTS

On July 12th, 2017, the company announced the acquisition of "La Perla" a Pet Food company located in the Mexican state of Queretaro. This operation has a capacity to produce over 65,000 tons a year of dry pet food and also comprise a facility for producing Pet Food Treats.

On July 17th, 2017, the company announced the acquisition of "Albertville Quality Foods (AQF)" a further processing company located in Alabama USA. AQF produces and sells value added further processed products, with sales of around $270 million USD a year.

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 2016.

The Company's 2Q17 net sales totaled $15,116.3 million, $1,754.2 million or 13.1% more than   $13,362.1 million reported in 2Q16.  The increase is a result of more volume sold and price recovery in our main product lines.

In 2Q17, sales of our U.S. operations represented 24.7% of our total sales compared to 24.3% in 2Q16.

In 2Q17, cost of sales was $11,502.1 million; $1,423.0 million or 14.1% higher than $10,079.1 million reported in 2Q16. 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 the US dollar.

The Company´s gross profit in 2Q17 was $3,614.2 million, 10.1% higher than the gross profit of $3,283.0 million in 2Q16, with a gross margin of 23.9% for 2Q17 vs 24.6% in 2Q16.

Total SG&A expenses in 2Q17 were $1,297.6 million; $112.7 million higher than the $1,185.0 million reported in 2Q16. Total SG&A expenses as a percentage of net sales represented 8.6% in 2Q17 and 8.9% in 2Q16.

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 2Q17, we recorded other income of $13.4 million, compared with other expense of $6.4 million reported in 2Q16.

Operating income in 2Q17 totaled $2,330.0 million; $238.4 higher than $2,091.6 million reported in 2Q16. This represents an operating margin of 15.4% for 2Q17, slightly lower when compared to the same period of 2016. The increase in operating income is mainly attributed to higher gross income in 2Q17.

In 2Q17, the Company reported net financial income of $96.8 million, compared to $197.3 million reported in the same period of 2016. The decrease is mainly attributed to lower exchange rate gains, as the peso strengthened during the quarter.

Total taxes for the 2Q17 were $703.9 million, compared with total taxes of $708.9 million in the same period of 2016.

The net income for 2Q17 was $1,722.8 million, representing a basic and diluted income of $2.87 pesos per share, compared with a net income of $1,580.0 million, which represented $2.63 pesos of net income per share in 2Q16.This increase is mainly attributed to better operating and financial results. Net margin in 2Q17 was 11.4% compared to 11.8% reported in 2Q16.

EBITDA in 2Q17 reached $2,596.8 million, representing an EBITDA margin of 17.2%, compared to an EBITDA of $2,329.6 million in 2Q16, with an EBITDA margin of 17.4%.

During the first half of 2017, net sales totaled $28,801.2 million; $3,599.7 million or 14.3% more than $25,201.5 million reported in the same period of 2016. The increase in sales is mainly attributable to higher volume sold and price recovery in our main product lines as compared with the first half of 2016.

In 1H17, sales of our U.S. operations represented 25.9% of our total sales, compared with 24.9% in 1H16.

In 1H17, the cost of sales totaled $22,995.4 million; $2,904.1 million or 14.5% higher than $20,091.3 million reported in 1H16. 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 2016.

As a result, we reached a gross profit of $5,805.8 million and a gross margin of 20.2% in 1H17, when compare to $5,110.2 million of gross profit and a margin of 20.3% reached in the same period of 2016.

Total SG&A expenses in 1H17 were $2,558.9 million; $252.1 million or 10.9% more than the $2,306.8 million reported in 1H16. In 1H17 total SG&A expenses as a percentage of net sales represented 8.9% compare with 9.2% in 1H16. This increase is mainly attributed to higher volume sold.   

In 1H17 we had other income of $12.9 million, compared with other expenses of $15.5 million reported in 1H16.

The operating income in 1H17 was $3,259.8 million, which represents an operating margin of 11.3%, an increase of 16.9% from an operating income of $2,787.9 million and an operating margin of 11.1% in 1H16.

The net financial income in 1H17 was $27.0 million, lower when compared to a net financial income of $333.7 million in 1H16, mainly attributed to exchange rate losses as the Mexican peso recovered vs the US dollar during the semester.

Total taxes were $911.2 million as of June 30, 2017.  These taxes include $677.3 million of income tax and $233.8 million of deferred income taxes. This figure compares to total taxes of $944.7 million in 1H16; the decrease was due to lower income before taxes.

All the above resulted in a net income of $2,375.7 million or 8.2% of net margin in the 1H17, which represents $3.96 pesos of earnings per share, while in the 1H16 the net income totaled $2,176.9 million, 8.6% of net margin and $3.62 pesos of net income per share.

EBITDA in 1H17 reached $3,795.1 million, representing an EBITDA margin of 13.2%, compared to EBITDA of $3,250.7 million in 1H16, with an EBITDA margin of 12.9%.

Cash and equivalents as of June 30, 2017 totaled $16,815.0 million vs $15,651.5 million as of December 31, 2016.

Total debt as of June 30, 2017 was $3,758.7 million, compared to $4,047.9 million reported as of December 31, 2016, mainly as a result of lower short-term bank debt.

Net cash as of June 30, 2017 was $13,056.3 million, compared to net cash of $11,603.6 million as of December 31, 2016.

Total CAPEX for the 1H17 was $1,092.9 million and $1,188.2 million in 1H16, mainly allocated toward organic growth and productivity projects across all of our facilities.

APPENDICES
For reference, some figures have been translated into millions of U.S. dollars ("USD") using an exchange rate of $18.14 per USD $1.0, which corresponds to the rate at the close of June 30, 2017, according to Mexico's National Bank.

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

CONFERENCE CALL INFORMATION
The Company will host its second quarter 2017 earnings call, on Thursday, July 27, 2017. 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.conferenceplus.com/AlternateNumbers/alternatenumbers.aspx?100875&t=P&o=UQieChXZoqyKEn

Confirmation Number: 45293719

Visit the following link to access the webcast: http://event.onlineseminarsolutions.com/wcc/r/1466635-1/911A257CD20D8763878FFEB3E50C277F?partnerref=rss-events

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.

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