Industrias Bachoco, the Mexican poultry processor, saw profits jump in 2012 as the company recovered from the commodity pressure it felt in 2011.

Bachoco booked net income of MXN2.16bn (US$169.7m) for last year, a spike from the MXN165.2m it recorded the year before.

Sales were up 41.8% at MXN39.35bn, boosted by Bachoco's entry into the US. In October 2011, it acquired local processor OK Industries.

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Industrias Bachoco Announces Fourth Quarter and Full Year 2012 Results

CELAYA, MexicoFeb. 7, 2013 /PRNewswire/ -- Industrias Bachoco S.A.B. de C.V."Bachoco" or "the Company", announced today its unaudited results for the fourth quarter ("4Q12") and full year 2012 ("Y12") ended December 31, 2012. All figures have been prepared in accordance with International Financial Reporting Standard ("IFRS"), and are presented in nominal million Mexican Pesos ("Peso" or "Ps.").

HIGHLIGHTS (comparison with the same periods in 2011)

  • Net sales increased 25.0% and 41.8% in 4Q12 and Y12 respectively, mainly as a result of the integration of the Company's new operation in the United States.
  • EBITDA margin was 8.5% in 4Q12 and 8.7% in Y12.
  • Earnings per share totaled Ps. 0.92 in 4Q12, and Ps. 3.60 in Y12 compared to a negative result Ps. 0.04 in 4Q11 and earnings of Ps. 0.28 in 2011.

CEO COMMENTS

"Supply and demand remained balanced across our main product lines, with sound prices during most part of the quarter, helped by the holiday season at the end of this period, which fostered consumption mainly of chicken products.

Fourth quarter results concluded a positive year for the Company in terms of operating and financial results, a recovery from results reported in 2011, which was one of the most difficult years in the Company's history.

It has been one year since Bachoco entered the United States market through the acquisition of OK Industries. We continue to integrate OK Industries into the Company's operations, in line with Bachoco's overall strategy.

In addition, it is important to highlight that Bachoco had a solid financial structure throughout 2012, reporting negative net debt on the Balance Sheet, which we consider one of Bachoco's primary strengths."

EXECUTIVE SUMMARY

The following financial information is expressed in millions of nominal Pesos with comparative figures for the same periods in 2011.


      QUARTERLY

      YEAR

In millions of pesos

        4Q11

       4Q12

2011

2012

Net sales

Ps.    8,564.3

Ps.    10,705.3

Ps.       27,740.6

 Ps.  39,348.1

Net sales Mexico

7,191.1

8,007.3

26,364.9

31,228.9

Net sales in the U.S.

1,373.2

2,698.0

1,373.2

8,119,1

Cost of sales

Ps.     7,887.1

Ps.       9,135.0

Ps.        24,754.7

 Ps.   33,357.7

Gross profit

677.2

1,570.3

2,985.9

5,990.4

Total expenses

851.1

872.6

2,951.9

3,371.1

Net income (loss)

-26.9

554.2

165.2

2,159.1

NET SALES

Net sales increased 25.0% during 4Q12 and, 41.8% during Y12, mainly as a result of the integration of the Company's new operation in the United States, which was acquired in November 2011.

Quarterly Sales (4Q12 vs. 4Q11)

Net sales in 4Q12 totaled Ps. 10,705.3 million, higher than the Ps. 8,564.3 million in net sales reported the same period in 2011. The increase was due to increases across all main business lines, with balanced and stable demand and supply.

Annual Sales (Y12 vs. Y11)

Net Sales in Y12 totaled Ps. 39,348.1, 41.8% more than Ps. 27,740.6 million in net sales in Y11, mainly as a result of 45.6% increase in chicken sales, due to the integration of OK Industries sales to Bachoco.

OPERATING RESULTS

Gross profit in 4Q12 was Ps. 1,570.4 million resulting in a gross margin of 14.7%, compared to a gross profit of Ps. 677.2 million with a gross margin of 7.9% in 4Q11. Meanwhile, the gross margin totaled 15.2% in 2012, compared to 10.8% in 2011.

As a result of strict control of operating expenses, Bachoco reported improvements in 2012; in 4Q12, total expenses represented 8.2% of total sales compared to 9.9% of total sales in 4Q11. For 2012, total expenses represented 8.6% of total sales compared to 10.6% reported in 2011.


 QUARTERLY

YEAR

In million of pesos

4Q11

4Q12

Var.

2011

2012

Var.

Financial income (expense) net

Ps.  40.0  

Ps.  46.5  

16.1%

Ps.   177.8   

Ps.  159.5  

-10.3%

   Financial income 

88.5

86.0

-2.8%

280.8

293.3

4.5%

   Financial expense

48.4

39.5

-18.4%

102.9

133.8

30.0%

The Company reported comprehensive financial income of Ps. 46.5 million for 4Q12, and Ps. 159.5 million for 2012. This was mainly due to interest earned on the Company's cash position, which remained strong throughout the year.

Total taxes for 4Q12 were Ps. 140.4 million and Ps. 583.5 million for 2012.


QUARTERLY

YEAR

In million of pesos

4Q11

4Q12

2011

2012

Total tax expense (benefit)

-Ps.  84.7

Ps.  140.4

Ps.  632.3

Ps.  583.5

Net income was Ps. 554.2 million in 4Q12 (Ps. 0.92 per share), compared to a net loss of Ps. 26.9 million (-Ps. 0.04 per share) reported in 4Q11. Meanwhile, net income for 2012 was Ps. 2,159.1 million (Ps. 3.60 per share), compared to net income of Ps. 165.2 million (Ps. 0.28 per share) reported in 2011.

Adjusted EBITDA

Adjusted EBITDA in 4Q12 reached Ps. 911.2 million, representing a margin of 8.5%, compared to adjusted EBITDA of Ps. 79.0 million in 4Q11. Adjusted EBITDA margin in 2012 was 8.7%, compared to 2.9% in 2011.

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


Fourth Quarter

Full Year

In million of pesos as of December 31: 

2011

2012

2011

2012

Net income (loss)

-$        27

$      554

$      165

$  2,159

  Income tax expense (benefit)

(85)

140

632

583

  Share of results in associates

1

3

2

7

  Comprehensive financial (income) expense, net

(40)

(46)

(178)

(160)

  Depreciation and amortization

253

214

778

815

EBITDA RESULT

102

864

1,400

3,404

EBITDA margin

1.2%

8.1%

5.05%

8.65%

  Other expense (income) net

(23)

47

(588)

29

Adjusted EBITDA result

79

911

812

3,434

Adjusted EBITDA margin

0.9%

8.5%

2.9%

8.7%

Net revenues

8,564

10,705

27,741

39,348

BALANCE SHEET

Cash and equivalents as of December 31, 2012 totaled Ps. 5,138.1 million compared to Ps. 3,036.4 million reported as of December 31, 2011, while net debt was a negative Ps. 2,396.8 million.

As of December 31, 2012, total debt was Ps. 2,741.2 million pesos compared to Ps. 1,837.4 million reported as of December 31, 2011. The Company's debt is broken down as follows:


In millions of pesos

As of Dec 31, 2011

As of Dec 31, 2012

Var.

Short term debt

Ps.             1,453.0

Ps.             1,207.1   

-16.9%

Long term debt

384.4

34.1

-91.1%

Long term debt (Bond issue)

0.0

1,500.0

100.0%

Total debt

1,837.4

2,741.2

49.2%

Net debt2

-1,199.0

-2,396.8

99.9%

2 Net debts equal to: total debt minus total cash and equivalents.

Original source: Industrias Bachoco