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Industrias Bachoco Announces Fourth Quarter 2019 Results

Cision

CELAYA, Mexico , Feb. 4, 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 fourth quarter ("4Q19") and full year ("2019") ending on December 31 st , 2019. All figures have been prepared in accordance with International Financial Reporting Standard ("IFRS") and are presented in nominal million Mexican Pesos ("$").

HIGHLIGHTS 2019

  • Net sales decreased 1.8% in 4Q19 and increased 1.0% in year 2019 vs equivalent periods of 2018.
  • EBITDA margin was 3.8% for 4Q19 and 8.5% for the whole year.
  • Earnings per basic and diluted share totaled $0.26 for 4Q19 and $5.26 for the year.

CEO COMMENTS

Mr. Rodolfo Ramos Arvizu , Chief Executive Officer of Bachoco , stated: "Under challenging conditions by the end of the year, particularly regarding economic growth in Mexico , we managed to end 2019 with positive results vs 2018 in terms of profitability, despite a difficult 4Q19.

In Mexico , during the quarter, we observed some oversupply conditions in poultry which, in combination with a softer demand, pressured down our prices and volume, particularly in our traditional channels.

On the other hand, in the U.S. industry, towards the end of the quarter, we observed some recovery in prices particularly for leg quarters. However, lower volume sold and the appreciation of the Mexican peso vs the U.S. dollar negatively impacted us in this segment.

As a result, we reported a decrease in total sales of 1.8% in 4Q19 when compared to 4Q18. For the full year, we reached an increase of 1.0% vs 2018. 

Regarding cost of sales, even when prices of grain negatively impacted our feed cost quarter over quarter, efficiencies in our feed conversion and the appreciation of the Mexican peso vs the U.S. dollar allowed us to offset the increase in raw materials.

In terms of volume sold, our Others segment, particularly Balance Feed, exceeded our expectations by reaching a double digit increase for both the quarter and full year when compared to the same periods of 2018.

Through our efforts and projects to keep SG&A under control, we saw a decrease of almost 5% quarter over quarter in Mexican peso terms.

As a result, our EBITDA was $517.5 million with a margin of 3.8% which is lower than the EBITDA of the same quarter of 2018.

For the full year of 2019, our EBITDA was $5,215.6 with a margin of 8.5% which is higher than the same figures of 2018. 

Our financial structure remained solid and allowed us to keep with our growth plans. We reported a net cash position of $14,254.3 and CAPEX of $2,025.1 million .

We continue to be very focused on capturing efficiencies across all our processes and being close to better serve our customers as we know this is key for our growth."

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 2019.

QUARTERLY RESULTS

NET SALES BY GEOGRAPHY





In millions of pesos


4Q19

4Q18

Change



$

$

$

%

Net Sales


15,138.0

15,421.0

(283.0)

(1.8)

Net sales in Mexico


10,911.5

10,989.4

(77.9)

(0.7)

Net sales in the U.S.


4,226.5

4,431.6

(205.1)

(4.6)

 

NET SALES BY SEGMENT





In millions of pesos


4Q19

4Q18

Change



$

$

$

%

Net Sales


15,138.0

15,421.0

(283.0)

(1.8)

Poultry


13,661.2

13,972.8

(311.5)

(2.2)

Other


1,476.8

1,448.3

28.5

2.0

 

NET VOLUME SOLD BY SEGMENT




In tons



Change


4Q19

4Q18

Volume

%

Total sales volume:

575,274.6

568,379.8

6,894.8

1.2

Poultry

452,487.2

458,298.2

(5,811.0)

(1.3)

Others

122,787.4

110,081.6

12,705.8

11.5








The Company's 4Q19 net sales totaled $15,138.0 million ; $283 million or 1.8% less than $15,421.0 million reported in 4Q19.  The decrease is a result of lower prices in our main business lines and lower volume sold in poultry.

In 4Q19, sales of our U.S. operations represented 27.9% of our total sales compared to 28.7% in 4Q18.

GROSS PROFIT





In millions of pesos


4Q19

4Q18

Change



$

$

$

%

Cost of sales


13,171.4

13,272.7

(101.3)

(0.8)

Gross profit


1,966.6

2,148.3

(181.7)

(8.5)

Gross margin


13.0%

13.9%

-

-

In 4Q19, cost of sales was $13,171.4 million ; $101.3 million or 0.8% lower than $13,272.7 million reported in 4Q18. This decrease was mainly due to lower unit cost in our main business lines.

The Company´s gross profit in 4Q19 was $1,966.6 million , lower than the gross profit of $2,148.3 million in 4Q18, with a gross margin of 13.0% for 4Q19 vs 13.9% in 4Q18.

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

 

In millions of pesos


4Q19

4Q18

Change



$

$

$

%

Total SG&A


1,571.6

1,650.7

(79.1)

(4.8)

Total SG&A expenses in 4Q19 were $1,571.6 million ; $79.1 million lower than the $1,650.7 million reported in 4Q18. Total SG&A expenses as a percentage of net sales represented 10.4% in 4Q19 and 10.7% in 4Q18.

OTHER INCOME (EXPENSE), NET

In millions of pesos


4Q19

4Q18

Change



$

$

$

%

Other income (expense), net


(152.9)

(8.0)

(144.9)

1,812.3

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 4Q19, we recorded other expenses of $152.9 million , compared with other expenses of $8.0 million reported in 4Q18. Most of the difference is a one-time charge related to intangible asset write-offs.

OPERATING INCOME





In millions of pesos


4Q19

4Q18

Change



$

$

$

%

Operating income


242.1

489.6

(247.5)

(50.5)

Operating margin


1.6%

3.2%

-

-

Operating income in 4Q19 totaled $242.1 million ; $247.5 million lower than the Operating income of $489.6 million reported in 4Q18. This represents a positive operating margin of 1.6% for 4Q19, versus a 3.2% operating margin in the same period of 2018. The decrease in operating income is mainly attributed to lower prices and volume in Poultry, higher volume sold in Other segment, combined with lower cost of sales and lower SG&A.     


NET FINANCIAL INCOME





In millions of pesos


4Q19

4Q18

Change



$

$

$

%

Net Financial Income


(210.0)

403.8

(613.8)

(152.0)

Financial Income


(88.4)

492.6

(581.0)

(117.9)

Financial Expense


121.7

88.8

32.8

37.0

In 4Q19, the Company reported net financial loss $210.0 million , compared to a financial income of $403.8 million reported in the same period of 2018. The decrease is mainly attributed to lower exchange rate gains as a result of the appreciation of the Mexican peso vs the U.S. dollar.

TAXES FOR THE PERIOD





In millions of pesos


4Q19

4Q18

Change



$

$

$

%

Total Taxes


(128.8)

182.0

(310.7)

(170.8)

Income tax


52.2

576.2

(523.9)

(90.9)

Deferred income tax


(181.0)

(394.2)

213.2

(54.1)








Total taxes for the 4Q19 were $128.8 million favorable, compared with total taxes of $182.0 million of the same period of 2018. This is attributed to lower operating income in 4Q19.

NET INCOME





In millions of pesos


4Q19

4Q18

Change



$

$

$

%

Net income


160.8

711.4

(550.6)

(77.4)

Net margin


1.1%

4.6%

-

-

Basic and diluted earnings per share 1


0.26

1.18

(0.9)

n/a

Basic and diluted earnings per ADR 2


3.09

14.20

(11.1)

n/a

Weighted average Shares outstanding 3


599,967

599,943

-

-

1 In pesos 






2 in pesos, one ADR equals to twelve shares






3 In thousands of shares






The net income for 4Q19 was $160.8 million , representing a basic and diluted income of $0.26 pesos per share, compared with a net income of $711.4 million , which represented a $1.18 pesos of net income per share in 4Q18.  This decrease is mainly attributed to lower operating results. Net margin in 4Q19 was 1.1% compared to 4.6% reported in 4Q18.

EBITDA



In millions of pesos


4Q19

4Q18

Change



$

$

$

%

Net income


154.5

709.7

(555.2)

(78.2)

   Income tax expense (benefit)


(128.8)

182.0

(310.7)

(170.8)

   Result in associates


6.4

1.7

4.6

265.8

   Net finance (income) expense


210.0

(403.8)

613.8

(152.0)

   Depreciation and amortization


329.4

327.6

1.8

0.6

EBITDA


571.5

817.2

(245.6)

(30.1)

EBITDA Margin (%)


3.8%

5.3%

-

-

Net revenues


15,138.0

15,421.0

(283.0)

(1.8)

EBITDA in 4Q19 reached $571.5 million representing an EBITDA margin of 3.8%, compared to an EBITDA of $817.2 million in 4Q18, with an EBITDA margin of 5.3%.

ACCUMULATED RESULTS

NET SALES BY GEOGRAPHY





In millions of pesos


2019

2018

Change



$

$

$

%

Net Sales


61,658.6

61,052.1

606.5

1.0

Net sales in Mexico


44,726.9

43,452.9

1,274.0

2.9

Net sales in the U.S.


16,931.7

17,599.2

(667.5)

(3.8)

 

NET SALES BY SEGMENT





In millions of pesos


2019

2018

Change



$

$

$

%

Net Sales


61,658.6

61,052.1

606.5

1.0

Poultry


55,653.0

55,308.1

344.9

0.6

Other


6,005.6

5,744.0

261.6

4.6

 

...