Industrias Bachoco Announces Third Quarter 2017 Results
CELAYA, Mexico, Oct. 23, 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 third quarter ("3Q17") and accumulated ("9M17") 2017 results ending September 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 vs. 2016
- Net sales increased 12.7% in 3Q17 compared to 3Q16.
- EBITDA margin was 10.2% for 3Q17 vs 9.8% in 3Q16.
- Earnings per basic and diluted share totaled $1.66 for 3Q17 higher than $1.35 in 3Q16.
CEO COMMENTS
Mr. Rodolfo Ramos Arvizu, Chief Executive Officer of Bachoco, stated "In México, we continued observing a normalized supply in the poultry industry and as it is typical for the third quarter, lower prices than in 2Q17, we also continued with good demand levels. In the U.S. industry, we observed solid prices for most of the quarter. In both markets where we participate we observed a price adjustment at the end of the quarter.
During the quarter, we announced the acquisition of "La Perla" a Pet Food company located in the Mexican state of Queretaro and of "Albertville Quality Foods (AQF)" a further processing company located in Alabama USA., We are in the process of integrating both companies into our whole operations and consider that most of the benefits are to come.
For the quarter, we reached an increase in total sales of 12.7% in 3Q17 when compared to 3Q16, and an EBITDA of $1,449.6 million, 17.6% higher that the EBITDA of the same quarter of 2016. For the third quarter, our EBITDA margin was 10.2% and our earnings per basic and diluted share were $1.66.
We continued investing in the growth of our company, as our CAPEX reached $2,937.6 million for the year.
Our financial structure continued strong as we end the quarter with a net cash of $10,787.5 million, which will allow us to continue supporting our growth plans".
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.
QUARTERLY RESULTS
NET SALES BY GEOGRAPHY | |||||
In millions of pesos | 3Q17 | 3Q16 | Change | ||
$ | $ | $ | % | ||
Net sales | 14,216.2 | 12,612.3 | 1,603.9 | 12.7 | |
Net sales in Mexico | 9,918.5 | 9,436.0 | 482.5 | 5.1 | |
Net sales in the U.S. | 4,297.7 | 3,176.2 | 1,121.4 | 35.3 | |
NET SALES BY SEGMENT | |||||
In millions of pesos | 3Q17 | 3Q16 | Change | ||
$ | $ | $ | % | ||
Net sales | 14,216.2 | 12,612.3 | 1,603.9 | 12.7 | |
Poultry | 12,970.1 | 11,348.1 | 1,622.1 | 14.3 | |
Other | 1,246.1 | 1,264.2 | (18.1) | (1.4) | |
NET VOLUME SOLD BY SEGMENT | ||||||
In tons | Change | |||||
3Q17 | 3Q16 | Volume | % | |||
Total sales volume: | 541,710 | 526,343 | 15,367 | 2.92 | ||
Poultry | 422,278 | 411,710 | 10,568 | 2.57 | ||
Others | 119,432 | 114,632 | 4,799 | 4.19 | ||
The Company's 3Q17 net sales totaled $14,216.2 million, $1,603.9 million or 12.7% more than $12,612.3 million reported in 3Q16. The increase is a result of more volume sold and price increases in poultry when compared to 3Q16.
In 3Q17, sales of our U.S. operations remained strong and represented 30.2% of our total sales; this compares with 25.2 % it represented in 3Q16 of our total sales. In this quarter, we are including sales of Albertville Quality Foods (AQF) for the first time.
GROSS PROFIT | |||||
In millions of pesos | 3Q17 | 3Q16 | Change | ||
$ | $ | $ | % | ||
Cost of sales | 11,732.3 | 10,657.9 | 1,074.4 | 10.1 | |
Gross profit | 2,483.9 | 1,954.3 | 529.5 | 27.1 | |
Gross margin | 17.5% | 15.5% | - | - | |
In 3Q17 the cost of sales totaled $11,732.3 million, $1,074.4 million or 10.1% higher than $10,657.9 million reported in 3Q16. The increase in cost of sales is mainly attributed to higher volume sold and a mix effect due to higher percentage of our US operation as we integrated AQF.
The gross profit was $2,483.9 million with a gross margin of 17.5% in 3Q17. This profit is higher than the gross profit of $1,954.3 million and gross margin of 15.5% reported in 3Q16.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A") | |||||
In millions of pesos | |||||
3Q17 | 3Q16 | Change | |||
$ | $ | $ | % | ||
Total SG&A | 1,346.7 | 1,219.2 | 127.6 | 10.5 | |
Total SG&A expenses in 3Q17 were $1,346.7 million, $127.6 million or 10.5% more than the $1,219.2 million reported in 3Q16. Total SG&A expenses as a percentage of net sales represented 9.5% in 3Q17 compared to 9.7% in 3Q16.
OTHER INCOME (EXPENSE), NET | |||||
In millions of pesos | 3Q17 | 3Q16 | Change | ||
$ | $ | $ | % | ||
Other income (expense), net | 23.7 | 257.4 | (233.6) | (90.8) | |
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 3Q17 we reported other income of $23.7 million, compared with other income of $257.4 million reported in 3Q16. The reduction is due to in 3Q16 we got an extraordinary gain in the sale of some unused assets.
OPERATING INCOME | |||||
In millions of pesos | 3Q17 | 3Q16 | Change | ||
$ | $ | $ | % | ||
Operating income | 1,160.9 | 992.5 | 168.4 | 17.0 | |
Operating margin | 8.2% | 7.9% | - | - | |
Operating income in 3Q17 totaled $1,160.9 million with an operating margin of 8.2%, an increase when compared to operating income of $992.5 million and a 7.9% operating margin reported in 3Q16.
The higher operating income is mainly attributed to higher gross profit than in 3Q16.
NET FINANCIAL INCOME | |||||
In millions of pesos | 3Q17 | 3Q16 | Change | ||
$ | $ | $ | % | ||
Net Financial Income | 193.2 | 136.2 | 57.0 | 41.8 | |
Financial Income | 208.8 | 178.8 | 30.0 | 16.8 | |
Financial Expense | 15.6 | 42.6 | (27.0) | (63.4) | |
In 3Q17, the Company reported net financial income of $193.2 million, compared to income of $136.2 million reported in the same period of 2016, mainly due to higher interest income.
TAXES FOR THE PERIOD | |||||
In millions of pesos | 3Q17 | 3Q16 | Change | ||
$ | $ | $ | % | ||
Total Taxes | 356.2 | 319.1 | 37.1 | 11.6 | |
Income tax | 515.1 | 289.7 | 225.4 | 77.8 | |
Deferred income tax | (158.9) | 29.4 | (188.3) | (641.1) | |
Total taxes for the 3Q17 were $356.2 million, compared with total taxes of $319.1 million in the same period of 2016.
NET INCOME | |||||
In millions of pesos | 3Q17 | 3Q16 | Change | ||
$ | $ | $ | % | ||
Net income | 997.9 | 809.7 | 188.2 | 23.2 | |
Net margin | 7.0% | 6.4% | - | - | |
Basic and diluted income per share1 | 1.66 | 1.35 | - | - | |
Basic and diluted income per ADR2 | 19.91 | 16.18 | - | - | |
Weighted average Shares outstanding3 | 600,000 | 600,000 | - | - | |
1 In pesos | |||||
The net income for 3Q17 was $997.9 million, representing a basic and diluted income of $1.66 pesos per share, compared with a lower net income of $809.7 million, which represented $1.35 pesos of basic and diluted income per share in 3Q16. This income represents a net margin of 7.0% and 6.4% for 3Q17 and 3Q16, respectively.
EBITDA | |||||
In millions of pesos | 3Q17 | 3Q16 | Change | ||
$ | $ | $ | % | ||
Net controlling interest income | 995.6 | 809.0 | 186.5 | 23.1 | |
Income tax expense (benefit) | 356.2 | 319.1 | 37.1 | 11.6 | |
Result in associates | 2.3 | 0.6 | 1.7 | 272.8 | |
Net finance (income) expense | (193.2) | (136.2) | (57.0) | 41.8 | |
Depreciation and amortization | 288.8 | 240.5 | 48.3 | 20.1 | |
EBITDA | 1,449.6 | 1,233.0 | 216.6 | 17.6 | |
EBITDA Margin (%) | 10.2% | 9.8% | - | - | |
Net sales | 14,216.2 | 12,612.3 | 1,603.9 | 12.7 | |
EBITDA in 3Q17 reached $1,449.6 million, representing an EBITDA margin of 10.2%, compared to an EBITDA of $1,233.0 million in 3Q16, with an EBITDA margin of 9.8%.
ACCUMULATED RESULTS
NET SALES BY GEOGRAPHY | |||||
In millions of pesos | 9M17 | 9M16 | Change | ||
$ | $ | $ | % | ||
Net Sales | 43,017.4 | 37,813.7 | 5,203.7 | 13.8 | |
Net sales in Mexico | 31,254.5 | 28,373.1 | 2,881.4 | 10.2 | |
Net sales in the U.S. | 11,762.9 | 9,440.6 | 2,322.3 | 24.6 | |
NET SALES BY SEGMENT | |||||
In millions of pesos | 9M17 | 9M16 | Change | ||
$ | $ | $ | % | ||
Net Sales | 43,017.4 | 37,813.7 | 5,203.7 | 13.8 | |
Poultry | 38,919.5 | 34,060.3 | 4,859.2 | 14.3 | |
Other | 4,097.9 | 3,753.4 | 344.5 | 9.2 | |
NET VOLUME SOLD BY SEGMENT | ||||||
In tons | Change | |||||
9M17 | 9M16 | Volume | % | |||
Total sales volume: | 1,615,409 | 1,571,843 | 43,566 | 2.77 | ||
Poultry | 1,262,101 | 1,226,386 | 35,715 | 2.91 | ||
Others | 353,308 | 345,457 | 7,850 | 2.27 | ||
During the first 9M17, net sales totaled $43,017.4 million, $5,203.7 million or 13.8% more than the $37,813.7 million reported in the same period of 2016. The sales increase is mainly attributed to higher volume sold and higher prices in both poultry and others.
In 9M17, sales of our U.S. operations represented 27.3% of our total sales, compared with 25.0% in 9M16.
ACCUMULATED OPERATING RESULTS | |||||
In millions of pesos | 9M17 | 9M16 | Change | ||
$ | $ | $ | % | ||
Cost of Sales | 34,727.8 | 30,749.2 | 3,978.5 | 12.9 | |
Gross Profit | 8,289.6 | 7,064.5 | 1,225.1 | 17.3 | |
Total SG&A | 3,905.6 | 3,526.0 | 379.7 | 10.8 | |
Other Income (expense) | 36.6 | 241.8 | (205.2) | (84.9) | |
Operating Income | 4,420.7 | 3,780.4 | 640.3 | 16.9 | |
Net Financial Income | 220.3 | 470.0 | (249.7) | (53.1) | |
Income Tax | 1,267.4 | 1,263.8 | 3.6 | 0.3 | |
Net Income | 3,373.6 | 2,986.6 | 387.0 | 13.0 | |
In 9M17 the cost of sales totaled $34,727.8 million, $3,978.5 million or 12.9% higher than the $30,749.2 million reported in 9M16. This increase is mainly attributed to higher volume sold.
As a result, we reached a gross profit of $8,289.6 million and a gross margin of 19.3% in 9M17, which is higher than $7,064.5 million of gross profit and a margin of 18.7% reached in the same period of 2016.
Total SG&A expenses in 9M17 were $3,905.6 million, $379.7 million or 10.8% more than the $3,526.0 million reported 9M16. Total SG&A expenses as a percentage of sales represented 9.1% in 9M17 compared to 9.3% in 9M16. This increase is mainly attributed to higher volume sold.
In 9M17 we had other income of $36.6 million, compared with other income of $241.8 million reported in 9M16.
The operating income in 9M17 was $4,420.7 million, which represents an operating margin of 10.3%, which is higher than the operating income of $3,780.4 million and an operating margin of 10.0% in 9M16.
The net financial income in 9M17 was $220.3 million, this was lower when compared to net financial income of $470.0 million in 9M16.
Total taxes were $1,267.4 million as of September 30, 2017. These taxes include $1,192.4 million of income tax and $74.9 million of deferred income taxes. This figure compares to total taxes of $1,263.8 million, which includes income taxes of $994.3 and $269.5 million of deferred income taxes in 9M16.
All the above result in a net income of $3,373.6 million or 7.8% of net margin for the 9M17, which represents $5.62 pesos of earnings per share, meanwhile in the 9M16, the net income totaled $2,986.6 million, 7.9% of the net margin and $4.97 pesos of net income per share.
EBITDA | |||||
In millions of pesos | 9M17 | 9M16 | Change | ||
$ | $ | $ | % | ||
Net controlling interest profit | 3,369.1 | 2,981.4 | 387.7 | 13.0 | |
Income tax expense (benefit) | 1,267.4 | 1,263.8 | 3.6 | 0.3 | |
Result in associates | 4.5 | 5.2 | (0.7) | (12.9) | |
Net finance (income) expense | (220.3) | (470.0) | 249.7 | (53.1) | |
Depreciation and amortization | 824.0 | 703.3 | 120.7 | 17.2 | |
EBITDA | 5,244.7 | 4,483.7 | 761.0 | 17.0 | |
EBITDA Margin (%) | 12.2% | 11.9% | - | - | |
Net sales | 43,017.4 | 37,813.7 | 5,203.7 | 13.8 | |
EBITDA in 9M17 reached $5,244.7 million, representing an EBITDA margin of 12.2%, compared to an EBITDA of $4,483.7 million in 9M16, with an EBITDA margin of 11.9%.
BALANCE SHEET
BALANCE SHEET DATA | |||||
In millions of pesos | Sept, 2017 | Dec. 31, 2016 | Change | ||
$ | $ | $ | % | ||
TOTAL ASSETS | 49,081.8 | 45,090.5 | 3,991.4 | 8.9 | |
Cash and cash equivalents | 15,746.5 | 15,651.5 | 95.0 | 0.6 | |
Accounts receivable | 2,999.2 | 3,778.0 | (778.8) | (20.6) | |
TOTAL LIABILITIES | 15,259.1 | 13,374.3 | 1,884.8 | 14.1 | |
Accounts payable | 4,404.3 | 3,836.4 | 567.9 | 14.8 | |
Short-term debt | 3,405.0 | 3,097.5 | 307.5 | 9.9 | |
Long-term debt | 1,554.0 | 950.4 | 603.6 | 63.5 | |
TOTAL STOCKHOLDERS' EQUITY | 33,822.7 | 31,716.2 | 2,106.6 | 6.6 | |
Capital stock | 1,174.4 | 1,174.4 | - | - | |
Cash and equivalents as of September 30, 2017 totaled $15,746.5; $95.0 million more than the level we had on December 31, 2016.
Total debt as of September 30, 2017 was $4,959.0 million, which is higher when compared to $4,047.9 million reported as of December 31, 2016.
Net cash as of September 30, 2017 was $10,787.5 million, which is lower when compared with a net cash of $11,603.6 million as of December 31, 2016, as we used part of our cash to pay our recent acquisitions.
CAPITAL EXPENDITURES | |||||
In millions of pesos | 9M16 | 9M16 | Change | ||
$ | $ | $ | % | ||
Capital Expenditures | 2,937.6 | 1,827.4 | 1,110.2 | 60.7 | |
Total CAPEX for the 9M17 was $2,271.4 million and $1,827.4 million in 9M16. This was primarily allocated towards organic growth and productivity projects across all of our facilities and as we also include here part of our recent acquisitions.
STOCK INFORMATION | ||
As of September 30, 2017 | ||
Total Shares | 600,000,000 | |
Total free float | 26.75% | |
Market cap (millions of pesos) | $60,918 | |
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 | |||
Sep-17 | 101.53 | 94.02 | 101.53 | 67.29 | 63.28 | 66.50 | |||
Aug-17 | 95.14 | 88.33 | 94.89 | 64.26 | 59.42 | 63.47 | |||
Jul-17 | 90.99 | 85.13 | 88.76 | 61.95 | 55.76 | 59.81 | |||
Jun-17 | 86.79 | 84.44 | 86.74 | 57.98 | 54.75 | 57.98 | |||
May-17 | 86.98 | 83.69 | 85.28 | 56.43 | 52.81 | 55.00 | |||
Apr-17 | 86.30 | 82.53 | 84.02 | 54.97 | 52.06 | 53.45 | |||
Mar-17 | 85.84 | 80.23 | 84.97 | 54.55 | 48.32 | 54.24 | |||
Feb-17 | 83.53 | 79.53 | 80.08 | 49.08 | 46.20 | 47.88 | |||
Jan-17 | 87.48 | 80.47 | 80.98 | 49.02 | 46.42 | 46.43 | |||
ANALYST COVERAGE
Institution | Analyst name | |
ACTINVER | José Antonio Cebeira | |
BBVA BANCOMER | Miguel Ulloa | |
GBM | Miguel Mayorga | |
INTERACCIONES CASA DE BOLSA | Martin Lara | |
JPMORGAN | Pedro Leduc |
APPENDICES
For reference, some figures have been translated into millions of U.S. dollars ("USD") using an exchange rate of $18.18 per USD $1.00, which corresponds to the rate at the close of September 30th , 2017, 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 | September 30, | December 31, | |
In million pesos | 2017 | 2017 | 2016* |
TOTAL ASSETS | $ 2,699.8 | 49,081.8 | 45,090.5 |
Total current assets | 1,515.1 | 27,544.2 | 26,930.4 |
Cash and cash equivalents | 866.1 | 15,746.5 | 15,651.5 |
Total accounts receivable | 165.0 | 2,999.2 | 3,778.0 |
Inventories | 361.4 | 6,570.5 | 5,931.9 |
Other current assets | 122.6 | 2,228.1 | 1,569.0 |
Total non current assets | 1,184.7 | 21,537.7 | 18,160.1 |
Net property, plant and equipment | 926.6 | 16,844.9 | 15,081.1 |
Other non current Assets | 258.1 | 4,692.8 | 3,079.0 |
TOTAL LIABILITIES | $ 839.3 | 15,259.1 | 13,374.3 |
Total current liabilities | 516.7 | 9,393.2 | 8,316.3 |
Notes payable to banks | 187.3 | 3,405.0 | 3,097.5 |
Accounts payable | 242.3 | 4,404.3 | 3,836.4 |
Other taxes payable and other accruals | 87.1 | 1,583.9 | 1,382.4 |
Total long-term liabilities | 322.7 | 5,865.9 | 5,058.0 |
Long-term debt | 85.5 | 1,554.0 | 950.4 |
Other non current liabilities | 12.8 | 232.0 | 195.0 |
Deferred income taxes | 224.4 | 4,080.0 | 3,912.6 |
TOTAL STOCKHOLDERS' EQUITY | $ 1,860.4 | 33,822.7 | 31,716.2 |
Capital stock | 64.6 | 1,174.4 | 1,174.4 |
Commission in shares issued | 22.8 | 414.4 | 414.4 |
Repurchased shares | - | - | - |
Retained earnings | 1,725.3 | 31,366.3 | 28,694.6 |
Others accounts | 44.5 | 809.2 | 1,378.9 |
Non controlling interest | 3.2 | 58.4 | 53.9 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 2,699.8 | 49,081.8 | 45,090.5 |
*Audited | |||
CONSOLIDATED STATEMENT OF INCOME | |||
Third Quarter Results, ended September 30: | |||
-Unaudited- | |||
U.S. Dollar | |||
In millions pesos | 2017 | 2017 | 2016 |
Net sales | $ 782.0 | 14,216.2 | 12,612.3 |
Cost of sales | 645.3 | 11,732.3 | 10,657.9 |
Gross profit | 136.6 | 2,483.9 | 1,954.3 |
SG&A | 74.1 | 1,346.7 | 1,219.2 |
Other income (expenses), net | 1.3 | 23.7 | 257.4 |
Operating income | 63.9 | 1,160.9 | 992.5 |
Net finance income | 10.6 | 193.2 | 136.2 |
Income tax | 19.6 | 356.2 | 319.1 |
Net Income | $ 54.9 | 997.9 | 809.7 |
Non-controlling interest | 0.13 | 2.3 | 0.6 |
Net controlling interest profit | 54.8 | 995.6 | 809.0 |
Basic and diluted earnings per share | 0.09 | 1.66 | 1.35 |
Basic and diluted earnings per ADR | 1.10 | 19.91 | 16.18 |
Weighted average Shares outstanding1 | 600,000 | 600,000 | 600,000 |
EBITDA Result | $ 79.7 | 1,449.6 | 1,233.0 |
Gross margin | 17.5% | 17.5% | 15.5% |
Operating margin | 8.2% | 8.2% | 7.9% |
Net margin | 7.0% | 7.0% | 6.4% |
EBITDA margin | 10.2% | 10.2% | 9.8% |
1In thousands | |||
Consolidated Statement of Income | |||
Accumulated results, for the nine months ended September 30. | |||
-Unaudited- | |||
U.S. Dollar | |||
In millions pesos | 2017 | 2017 | 2016 |
Net sales | $ 2,366.2 | 43,017.4 | 37,813.7 |
Cost of sales | 1,910.2 | 34,727.8 | 30,749.2 |
Gross profit | 456.0 | 8,289.6 | 7,064.5 |
Selling, general and administrative expenses | 214.8 | 3,905.6 | 3,526.0 |
Other income (expenses), net | 2.0 | 36.6 | 241.8 |
Operating income | 243.2 | 4,420.7 | 3,780.4 |
Net finance income | 12.1 | 220.3 | 470.0 |
Income tax | 69.7 | 1,267.4 | 1,263.8 |
Net income | $ 267.4 | 3,373.6 | 2,986.6 |
Non-controlling interest | 0.2 | 4.5 | 5.2 |
Net controlling interest profit | 185.8 | 3,369.1 | 2,981.4 |
Basic and diluted earnings per share | 0.31 | 5.62 | 4.97 |
Basic and diluted earnings per ADR | 3.71 | 67.4 | 59.63 |
Weighted average Shares outstanding1 | 599,973 | 599,973 | 599,973 |
EBITDA Result | $ 288.5 | 5,244.7 | 4,483.7 |
Gross margin | 19.3% | 19.3% | 18.7% |
Operating margin | 10.3% | 10.3% | 10.0% |
Net margin | 7.9% | 7.8% | 7.9% |
EBITDA margin | 12.2% | 12.2% | 11.9% |
1In thousands | |||
CONSOLIDATED STATEMENT OF CASH FLOWS | |||
In million of pesos | |||
-Unaudited- | |||
U.S. Dollar | September 30, | ||
2017 | 2017 | 2016 | |
NET MAJORITY INCOME BEFORE INCOME TAX | $ 255.3 | 4,640.9 | 4,250.4 |
ITEMS THAT DO NOT REQUIRE CASH: | - | - | - |
ITEMS RELATING TO INVESTING ACTIVITIES: | 28.6 | 519.4 | 220.2 |
Depreciation and others | 45.3 | 824.0 | 703.3 |
Income (loss) on sale of plant and equipment | 1.5 | 27.1 | (135.0) |
Other Items | (18.2) | (331.8) | (348.0) |
ITEMS RELATING TO FINANCING ACTIVITIES: | - | - | - |
NET CASH GENERATED FROM NET INCOME BEFORE TAXES | 283.8 | 5,160.3 | 4,470.6 |
CASH GENERATED OR USED IN THE OPERATION: | (36.4) | (662.6) | (2,651.0) |
Decrease (increase) in accounts receivable | 19.7 | 357.3 | (107.6) |
Decrease (increase) in inventories | (38.2) | (694.1) | (573.9) |
Decrease (increase) in accounts payable | 46.8 | 851.7 | (1,142.2) |
Decrease (increase) in other liabilities | (64.8) | (1,177.6) | (827.3) |
NET CASH FLOW FROM OPERATING ACTIVITIES | 247.4 | 4,497.7 | 1,819.6 |
NET CASH FLOW FROM INVESTING ACTIVITIES | (209.5) | (3,808.2) | (1,117.4) |
Acquisition of property, plant and equipment | (255.7) | (4,649.4) | (1,827.4) |
Proceeds from sales of property plant and equipment | 1.3 | 23.5 | 220.7 |
Other Items | 45.0 | 817.7 | 489.3 |
CASH FLOW SURPLUS (REQUIREMENTS OF) TO BE USED IN FINANCING ACTIVITIES | 37.9 | 689.5 | 702.2 |
Net cash provided by financing activities: | (32.7) | (594.5) | (705.4) |
Proceeds from loans | 290.1 | 5,274.4 | 1,992.5 |
Principal payments on loans | (233.5) | (4,244.9) | (2,245.9) |
Dividends paid | (42.9) | (780.0) | (780.0) |
Other items | (46.4) | (844.0) | 328.1 |
Net increase (decrease) in cash and equivalents | 5.2 | 95.0 | (3.2) |
Cash and investments at the beginning of year | $ 860.9 | 15,651.5 | 15,288.9 |
CASH AND INVESTMENTS AT END OF PERIOD | $ 866.1 | 15,746.5 | 15,285.7 |
DERIVATIVES POSITION REPORT
Third Quarter 2017 | ||||||||||
Thousands of Mexican Pesos, as of September 30, 2017 | ANEXO 1 | |||||||||
TYPE OF FINANCIAL INSTRUMENT | OBJECTIVE | NOTIONAL | VALUE OF THE RELATED COMMODITY | REASONABLE VALUE | AMOUNTS DUE | GUARANTIES REQUIRED | ||||
3Q-2017 | 2Q-2017 | 3Q-2017 | 2Q-2017 | |||||||
Forward Vanilla | Hedge | $ 543,031 | $ 18.18 | $ 18.14 | $ -63,253 | $-122,590 | in 2017 | The deals consider the possibility of margin calls but not another kind of guarantee | ||
Futures for corn and soybean meal | Hedge | $ 118,035 | CORN | CORN | $ 638 | $ 8 | 91% in 2017 and 9% in 2018 | |||
In USD per Bushel | In USD per Bushel | |||||||||
month | price | month | price | |||||||
Sep-17 | $ 3.810 | |||||||||
Dec-17 | $ 3.553 | Dec-17 | $ 3.920 | |||||||
Mar-18 | $ 3.763 | Mar-18 | $ 4.013 | |||||||
Jul-18 | $ 4.125 | |||||||||
Sep-18 | $ 4.103 | |||||||||
Dec-18 | $ 4.135 | |||||||||
SOYBEAN MEAL | SOYBEAN MEAL | |||||||||
In USD per ton | In USD per ton | |||||||||
month | price | month | price | |||||||
Aug-17 | $ 306.2 | |||||||||
Sep-17 | $ 307.9 | |||||||||
Oct-17 | $ 309.3 | |||||||||
Dec-17 | $ 315.8 | Dec-17 | $ 311.2 | |||||||
Jan-18 | $ 317.8 | |||||||||
Options of Corn | Hedge | $ 158,980 | CORN | CORN | -$ 2,237 | $ 1,908 | in 2017 and 2018 | |||
In USD per Bushel | In USD per Bushel | |||||||||
month | price | month | price | |||||||
Sep-17 | $ 3.810 | |||||||||
Dec-17 | $ 3.553 | Dec-17 | $ 3.920 | |||||||
Jan-18 | $ 3.763 | Jan-18 | $ 4.013 | |||||||
Options of soybean meal | Hedge | $ 97,509 | SOYBEAN MEAL | SOYBEAN MEAL | $ 1,157 | -$ 2,473 | in 2017 and 2018 | |||
In USD per ton | In USD per ton | |||||||||
month | price | month | price | |||||||
Aug-17 | $ 306.2 | |||||||||
Sep-17 | $ 307.9 | |||||||||
Oct-17 | $ 309.3 | |||||||||
Dec-17 | $ 315.8 | Dec-17 | $ 311.2 | |||||||
Jan-18 | $ 317.8 | Jan-18 | $ 312.5 | |||||||
Mar-18 | $ 312.7 | Mar-18 | $ 312.7 | |||||||
NOTES
-The total financial instruments do not exceed 5% of total assets as of September 30, 2017.
-The notional value represents the net position as of September 30, 2017 at the exchange rate of Ps. 18.18 per one dolar.
-A negative value means an unfavorable effect for the Company.
PROBABLE SCENARIO
Third Quarter 2017 | ||||||||
Thousands of Mexican Pesos, as of September 30, 2017 | PROBABLE SCENARIO | |||||||
TYPE OF FINANCIAL INSTRUMENT | REASONABLE VALUE | VALUE OF THE RELATED COMMODITY | EFFECT ON THE | EFFECT ON THE CASH FLOW(3) | ||||
Reference Value | ||||||||
-2.5% | 2.5% | 5.0% | -2.5% | 2.5% | 5.0% | |||
Forwards Vanilla | -$ 63,253 | $17.73 | $ 18.63 | $ 19.09 | Direct | -$ 76,829 | -$ 49,677 | -$ 36,101 |
-5% | 5% | 10% | -5% | 5% | 10% | |||
Futures of Corn: (2) | $ 638 | $ 3.375 | $ 3.731 | $ 3.908 | The effect will materialize as the inventory is consumed | -$ 5,264 | $ 6,540 | $ 12,441 |
Futures of Soybean Meal: (2) | $ 300.0 | $ 331.6 | $ 347.4 | |||||
Options for Corn | -$ 2,237 | $ 3.375 | $ 3.731 | $ 3.908 | -$ 4,446 | $ 1 | $ 2,592 | |
Options of Soybean Meal | $ 1,157 | $ 300.0 | $ 331.6 | $ 347.4 | -$ 3,722 | $ 6,035 | $ 10,914 | |
NOTES
(1) The reference value is the exchange rate of Ps. $18.18 per USD as of September 30, 2017.
(2) The reference values are; the future of corn for December 2017, $3.5530 USD/bushel and the future of soybean meal for December 2017, $315.80 USD/ton.
All the evaluations are performed according with the corresponding future, here only the first month futures are shown.
(3) The Company has credit lines with the majority of its counterparts, so that the effect in cash flow is lower than the amount shown.
-A negative value means an unfavorable effect for the Company.
Third Quarter 2017 | ||||||||||
Thousands of Mexican Pesos, as of September 30, 2017 | STRESS | |||||||||
TYPE OF FINANCIAL INSTRUMENT | REASONABLE VALUE | VALUE OF THE RELATED COMMODITY | EFFECT ON THE INCOME STATEMENT | EFFECT ON THE CASH FLOW | ||||||
Reference Value | ||||||||||
-50% | -25% | 25% | 50% | -50% | -25% | 25% | 50% | |||
Forward Vanilla and KOT | -$ 63,253 | $9.09 | $13.64 | $22.73 | $27.27 | Direct | -$334,768 | -$199,011 | $72,505 | $208,263 |
CONFERENCE CALL INFORMATION
The Company will host its third quarter 2017 earnings call, on Tuesday, October 24th, 2017. 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:
https://www.conferenceplus.com/AlternateNumbers/alternatenumbers.aspx?100875&t=P&o=UMtUtHBhmMJzEv
Confirmation Number:45830415
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.
