• Net profit reaches MXN2.01bn
  • Operating profit grows to MXN2.48bn
  • Net sales up 9.6%
Industrias Bachoco saw its profits rise in H1

Industrias Bachoco saw its profits rise in H1

Industrias Bachoco saw first-half profits increase, despite what the Mexican poultry processor said was a "complicated" start to the year.

In the six months to the end of June, net profit reached MXN2.01bn (US$161.1m). This compared to a profit of MXN977.4m.

Operating profit climbed to MXN1.48bn from MXN1.16bn in the prior year. The increase was mainly attributed to greater sales across most of the firm's business lines.

Sales in the period grew 9.6% to MXN20.53bn, boosted by increases across Bachoco's main business lines, together with a "stable supply and good price levels", it said.

"After a complicated start to the year, the company was able to surpass various difficulties and achieve positive results," said CEO Rodolfo Ramos Arvizu. "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."

Show the press release

 

 
 
Jul 23, 2013 16:00 ET
Click this link to view linked Blogging Services
 
RSS

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.

 


 

QUARTER

ACCUMULATED

In millions of pesos

2Q13

2Q12

Var.

2013

2012

Var.

Net sales

Ps.

10,546.6

Ps.

9,404.0

12.1%

Ps.

20,535.4

Ps.

18,741.7

9.6%

Net sales Mexico


8,511.2


7,494.2

80.7%


16,231.0


14,963.3

79.0%

Net sales in the U.S.


2,035.4


1,909.8

19.3%


4,304.4


3,778.4

21.0%

Cost of sales


8,040.0


8,127.3

(1.1)%


16,549.8


15,880.0

4.2%

Gross profit


2,506.6


1,276.8

96.3%


3,985.6


2,861.6

39.3%

SG&A


826.5


857.3

(3.6)%


1,621.5


1,658.6

(2.3)%

Other income (expense)


35.4


(40.2)

(188.1)%


112.5


(46.3)

(343.2)%

Operating Income


1,715.5


379.3

352.3%


2,476.9


1,156.8

114.1%

Net profit


1,371.8


316.8

333.0%


2,009.7


977.4

105.6%

Weighted average Shares


600,000


597,843



599,986


598,093













 

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.

 

EBITDA









Second Quarter


First Half



As of June 30,


As of June 30,

In million of pesos : 


2013

2012


2013

2012

Net income


1,371.8

316.8


2,009.7

977.4

  Income tax expense (benefit)


374.9

85.2


515.0

270.7

  Share of results in associates


0.4

(0.8)


3.1

1.9

Net finance (income) expense


(31.6)

(21.8)


(50.9)

(93.1)

  Depreciation and amortization


182.9

243.5


366.0

493.6

EBITDA RESULT


1,898.4

622.8


2,842.9

1,650.4

EBITDA margin


18.0%

6.6%


13.8%

8.8%

  Other expense (income) net


(35.4)

40.2


(112.5)

46.3

Adjusted EBITDA result


1,863.0

663.0


2,730.4

1,696.6

Adjusted EBITDA Margin


17.7%

7.0%


13.3%

9.1%

Net revenues


10,546.6

9,404.0


20,535.4

18,741.7

 

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

INSTITUTION

ANALYST

CONTACT INFO

GBM

Miguel Mayorga

mmayorga@gbm.com.mx

BBVA Bancomer

Fernando Olvera

fernando.olvera@bbva.com

Actinver

Toe Matsumura

tmatsumura@actinver.com.mx

 

STOCK INFORMATION

As of June 30, 2013

Total Shares



600,000,000

Total free float



17.25%

Total shares in treasury



0

Market cap (millions)


Ps.

22,194


BMV

NYSE

Ticker Symbol

Bachoco

IBA

Closing price

Ps.

36.99

USD$

34.70

Maximum closing price in 2013


37.20


28.80

Minimum closing price in 2013


35.30


27.02

Stock price yield in 2013


22.8%


24.3%

 

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

 

Original source: Industrias Bachoco