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Industrias Bachoco Announces Fourth Quarter And Full Year 2018 Results

CELAYA, Mexico, Jan. 30, 2019 /PRNewswire/ -- Industrias Bachoco, S.A.B. de C.V., "Bachoco" or "the Company", (NYSE: IBA; BMV: Bachoco) announced its audited results for the fourth quarter ("4Q18") and full year ("2018") results ending December 31, 2018. All figures have been prepared in accordance with International Financial Reporting Standard ("IFRS"), and are presented in nominal million Mexican Pesos ("$").

HIGHLIGHTS- 2018

  • Net sales increased 2.6% in 4Q18 and 5.2% in year 2018 vs equivalent periods of 2017.
  • EBITDA margin was 5.9% for 4Q18 and 8.3% for the whole year.
  • Earnings per basic and diluted share totaled $1.32 for 4Q18 and $5.72 for the year.

CEO COMMENTS

Mr. Rodolfo Ramos Arvizu, Chief Executive Officer of Bachoco, stated "With 4Q18, we ended a challenging second half of the year in both geographies in which we participate. Even when improving, most of the conditions prevailing in 3Q18 continued into 4Q18.

In Mexico, during the quarter we observed a poultry industry returning to normalized growth rates, improving the balance between supply and demand when compared to 3Q18. These conditions and seasonality effects lead us to better prices vs the previous quarter. Regarding cost of sales, volatility on the exchange rate during the quarter offset the benefits of lower raw material costs in dollar terms. Increases in fuel prices had a negative impact on our SG&A when compared to the same period of 2017.

In the US, we kept observing oversupply conditions on proteins which put pressure on chicken prices. However, this negative impact was partially compensated by the integration of our Albertville operation which, as a meat buyer, captured the benefits of these low-price conditions.

Overall, we reached an increase in total sales of 2.6% in 4Q18 when compared to 4Q17, with positive results in operating and net income.  Our EBITDA was $916.1 million which is lower than the EBITDA of the same quarter of 2017. For the fourth quarter, our EBITDA margin was 5.9% and our earnings per basic and diluted share was $1.32

For the full year of 2018, we continued delivering positive results. We increased total sales by 5.2%, with an EBITDA margin of 8.3% and earnings per share of $5.72.  

Our financial structure remained solid and allowed us to keep with our growth plans. We reported a net cash position of $13,414.3 and CAPEX of $1,996.3 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 2017.

QUARTERLY RESULTS






NET SALES BY GEOGRAPHY





In millions of pesos


4Q18

4Q17

Change



$

$

$

%

Net sales


15,421.0

15,032.6

388.4

2.6

Net sales in Mexico


10,942.4

10,329.4

613.0

5.9

Net sales in the U.S.


4,478.6

4,703.2

(224.6)

(4.8)






NET SALES BY SEGMENT





In millions of pesos


4Q18

4Q17

Change



$

$

$

%

Net sales


15,421.0

15,032.6

388.4

2.6

Poultry


13,972.8

13,559.9

412.9

3.0

Other


1,448.3

1,472.7

(24.5)

(1.7)






NET VOLUME SOLD BY SEGMENT





In tons




Change



4Q18

4Q17

Volume

%

Total sales volume:


568,380

585,965

(17,585)

(3.0)

Poultry


458,298

461,653

(3,355)

(0.7)

Others


110,082

124,312

(14,231)

(11.4)







The Company's 4Q18 net sales totaled $15,421.0 million, $388.4 million or 2.6% more than $15,032.6 million reported in 4Q17.  The increase is mainly a result of higher prices of our main business lines when compared to 4Q17, partially offset by lower volume sold.

In 4Q18, sales of our U.S. operations represented 29.0% of our total sales; this compares with 31.3% it represented in 4Q17.

GROSS PROFIT





In millions of pesos


4Q18

4Q17

Change



$

$

$

%

Cost of sales


13,272.2

12,775.2

497.0

3.9

Gross profit


2,148.8

2,257.4

(108.6)

(4.8)

Gross margin


13.9%

15.0%

-

-

In 4Q18, the cost of sales totaled $13,272.2 million, $497.0 million or 3.9% higher than $12,775.2 million reported in 4Q17. The increase in cost of sales is mainly attributed to higher raw materials cost expressed in Mexican pesos.

As a result, the gross profit was $2,148.8 million with a gross margin of 13.9% in 4Q18.  The gross profit is lower than the $2,257.4 million reported in 4Q17 and lower than the gross margin of 15.0% reported in 4Q17.

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

In millions of pesos







4Q18

4Q17

Change



$

$

$

%

Total SG&A


1,566.3

1,517.7

48.5

3.2

Total SG&A expenses in 4Q18 were $1,566.3 million, $48.5 million or 3.2% more than the $1,517.7 million reported in 4Q17, this increase is mainly due to higher expenses in our Mexican operation. Total SG&A expenses, as a percentage of net sales, represented 10.2% in 4Q18 compared to 10.1% in 4Q17.

OTHER INCOME (EXPENSE), NET

In millions of pesos


4Q18

4Q17

Change



$

$

$

%

Other income (expense), net


6.0

131.0

(125.0)

(95.4)

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.

The main difference, is related to fiscal incentives reported in 4Q17.

OPERATING INCOME





In millions of pesos


4Q18

4Q17

Change



$

$

$

%

Operating income


588.5

870.7

(282.1)

(32.4)

Operating margin


3.8%

5.8%

-

-

Operating income in 4Q18 totaled $588.5 million with an operating margin of 3.8%, a decrease when compared to operating income of $870.7 million and a 5.8% operating margin reported in 4Q17.

NET FINANCIAL INCOME





In millions of pesos


4Q18

4Q17

Change



$

$

$

%

Net Financial Income


389.0

527.3

(138.3)

(26.2)

Financial Income


226.7

579.7

(353.0)

(60.9)

Financial Expense


(162.3)

52.4

(214.7)

(409.9)

In 4Q18, the Company reported net financial income of $389.0 million, compared to income of $527.3 million reported in the same period of 2017.

TAXES FOR THE PERIOD





In millions of pesos


4Q18

4Q17

Change



$

$

$

%

Total Taxes


182.0

(182.9)

364.9

(199.5)

Income tax


508.7

519.1

(10.4)

(2.0)

Deferred income tax


(326.7)

(702.0)

375.3

(53.5)

Total taxes for the 4Q18 were $182.0 million, compared with total negative taxes of $182.9 million in the same period of 2017.  In 4Q17 we recognized a positive effect in deferred tax as a result of the fiscal change approved in the US at the end of the year.  

NET INCOME





In millions of pesos


4Q18

4Q17

Change



$

$

$

%

Net income


795.5

1,580.8

(785.4)

(49.7)

Net margin


5.2%

10.5%

-

-

Basic and diluted income per share1


1.32

2.63

(1.3)

n/a

Basic and diluted income per ADR2


15.88

31.58

(15.7)

n/a

Weighted average Shares outstanding3


599,943

599,991

-

-

1 In pesos






2 in pesos, an ADR equal to twelve shares






3 In thousands of shares






The net income for 4Q18 was $795.5 million, representing a basic and diluted income of $1.32 pesos per share, compared with a net income of $1,580.8 million, $2.63 pesos of basic and diluted income per share in 4Q17. This income represents a net margin of 5.2% and 10.5% for 4Q18 and 4Q17, respectively.

EBITDA





In millions of pesos


4Q18

4Q17

Change



$

$

$

%

Net controlling interest income


793.7

1,579.2

(785.4)

(49.7)

   Income tax expense (benefit)


182.0

(182.9)

364.9

(199.5)

   Result in associates


1.7

1.7

0.1

3.8

   Net finance (income) expense


(389.0)

(527.3)

138.3

(26.2)

   Depreciation and amortization


327.6

308.7

18.9

6.1

EBITDA


916.1

1,179.4

(263.3)

(22.3)

EBITDA Margin (%)


5.9%

7.8%

-

-

Net sales


15,421.0

15,032.6

388.4

2.6

EBITDA in 4Q18 reached $916.1 million, representing an EBITDA margin of 5.9%, compared to an EBITDA of $1,179.4 million in 4Q17, with an EBITDA margin of 7.8%.

ACCUMULATED RESULTS






NET SALES BY GEOGRAPHY





In millions of pesos


2018

2017

Change



$

$

$

%

Net Sales


61,052.1

58,050.0

3,002.1

5.2

Net sales in Mexico


43,452.9

41,583.9

1,869.0

4.5

Net sales in the U.S.


17,599.2

16,466.1

1,133.1

6.9






NET SALES BY SEGMENT





In millions of pesos


2018

2017

Change



$

$

$

%

Net Sales


61,052.1

58,050.0

3,002.1

5.2

Poultry


55,308.1

52,479.4

2,828.7

5.4

Other


5,744.0

5,570.6

173.3

3.1






NET VOLUME SOLD BY SEGMENT





In tons




Change



2018

2017

Volume

%

Total sales volume:


2,206,240

2,201,374

4,866

0.22

Poultry


1,752,930

1,723,754

29,176

1.69

Others


453,311

477,620

-24,309

-5.09







In 2018, net sales totaled $61,052.1 million, $3,002.1 million or 5.2% more than the $58,050.0 million reported in 2017. The sales increase is mainly attributed to higher prices and higher volume sold in poultry, due in part to the integration of our Albertville operation for the full year.  

In 2018, sales of our U.S. operations represented 28.8% of our total sales, compared with 28.4% in 2017.

ACCUMULATED OPERATING RESULTS





In millions of pesos


2018

2017

Change



$

$

$

%

Cost of Sales


51,421.9

47,503.0

3,918.9

8.2

Gross Profit


9,630.2

10,547.1

(916.8)

(8.7)

Total SG&A


5,940.0

5,423.4

516.6

9.5

Other Income (expense)


116.6

167.6

(51.0)

(30.4)

Operating Income


3,806.9

5,291.3

(1,484.4)

(28.1)

Net Financial Income


793.8

747.5

46.2

6.2

Income Tax


1,155.1

1,084.4

70.6

6.5

Net Income


3,445.6

4,954.4

(1,508.8)

(30.5)

In 2018, the cost of sales totaled $51,421.9 million, $3,918.9 million or 8.2% higher than the $47,503.0 million reported in 2017, due in part to higher volume sold and a higher mix of further processed products in our US operation.

As a result, we reached a gross profit of $9,630.2 million and a gross margin of 15.8% in 2018, which is lower than $10,547.1 million of gross profit and a margin of 18.2% reached in 2017.

Total SG&A expenses in 2018 were $5,940.0 million, $516.6 million or 9.5% more than the $5,423.4 million reported in 2017. Total SG&A expenses as a percentage of sales represented 9.7% in 2018 compared to 9.3% in 2017.

In 2018, we had other income of $116.6 million, compared with other income of $167.6 million reported in 2017.

The operating income in 2018 was $3,806.9 million, which represents an operating margin of 6.2%, which is lower than the operating income of $5,291.3 million and margin of 9.1% in 2017.

The net financial income in 2018 was $793.8 million, higher when compared to net financial income of $745.5 million in 2017.

Total taxes were $1,155.1 million for 2018.  This figure compares to total taxes of $1,084.4 million, which includes the adjustment in deferred taxes mentioned above.

All the above resulted in a net income of $3,445.6 million or 5.6% of net margin for 2018, which represents $5.72 pesos of earnings per share; meanwhile in 2017 the net income totaled $4,954.4 million, 8.5% of the net margin and $8.25 pesos of net income per share.

EBITDA





In millions of pesos


2018

2017

Change



$

$

$

%

Net controlling interest profit


3,434.0

4,948.2

(1,514.2)

(30.6)

   Income tax expense (benefit)


1,155.1

1,084.4

70.6

6.5

   Result in associates


11.6

6.2

5.4

87.5

   Net finance (income) expense


(793.8)

(747.5)

(46.2)

6.2

   Depreciation and amortization


1,265.0

1,132.7

132.2

11.7

EBITDA


5,071.9

6,424.1

(1,352.2)

(21.0)

EBITDA Margin (%)


8.3%

11.1%

-

-

Net sales


61,052.1

58,050.0

3,002.1

5.2

EBITDA in 2018 reached $5,071.9 million, representing an EBITDA margin of 8.3%, compared to an EBITDA of $6,424.1 million in 2017, with an EBITDA margin of 11.1%.

BALANCE SHEET






BALANCE SHEET DATA





In millions of pesos


Dec. 31st, 2018

Dec. 31st, 2017

Change



$

$

$

%

TOTAL ASSETS


52,745.7

50,557.4

2,188.3

4.3

Cash and cash equivalents


18,451.9

17,240.1

1,211.8

7.0

Accounts receivable


3,487.0

3,627.2

(140.2)

(3.9)

TOTAL LIABILITIES


14,474.8

14,879.5

(404.7)

(2.7)

Accounts payable


4,228.2

3,739.5

488.7

13.1

Short-term debt


3,492.8

3,695.1

(202.3)

(5.5)

Long-term debt


1,544.8

1,554.0

(9.2)

(0.6)

TOTAL STOCKHOLDERS' EQUITY


38,271.0

35,677.9

2,593.0

7.3

Capital stock


1,174.3

1,174.4

(0.1)

(0.0)

Cash and equivalents as of December 31st, 2018 totaled $18,451.9 million; $1,211.8 million more than the level we had on December 31st, 2017.

Total debt as of December 31st, 2018 was $5,037.6 million, lower when compared to $5,249.0 million reported as of December 31, 2017.

Net cash as of December 31, 2018 was $13,414.3 million, higher when compared with net cash of $11,991.1 million as of December 31, 2017.

CAPITAL EXPENDITURES

In millions of pesos


2018

2017

Change



$

$

$

%

Capital Expenditures


1,996.3

3,513.4

(1,517.1)

(43.2)

Total CAPEX for 2018 was $1,996.3 million and $3,513.4 million in 2017. This was primarily allocated towards organic growth and productivity projects across all our facilities.  

STOCK INFORMATION


As of December 31, 2018

Total Shares


600,000,000

Total free float


26.75%

Market cap (millions of pesos)


$38,712

 

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

December

70.53

63.50

64.52


41.60

38.08

39.56

November

75.14

66.38

70.90


45.43

39.00

41.72

October

87.37

74.14

74.51


55.23

43.83

43.86

September

93.09

84.00

84.02


61.65

57.07

59.32

August

94.99

90.73

92.41


61.73

57.07

58.31

July

96.75

92.46

92.46


58.34

53.52

54.22

June

97.97

90.18

95.19


63.84

53.00

57.75

May

97.44

90.48

91.10


61.63

54.89

54.86

April

97.03

92.41

96.35


63.84

59.80

62.07

March

96.47

92.37

95.30


62.67

58.83

61.95

February

94.06

89.88

91.66


61.46

57.41

58.01

January

98.16

93.03

95.65


63.83

57.88

61.94

Source: yahoo finance








 

ANALYST COVERAGE






Institution

Analyst name

E-mail

ACTINVER

José Antonio Cebeira

jcebeira@actinver.com.mx

BBVA BANCOMER

Miguel Ulloa

miguel.ulloa@bbva.com

GBM

Miguel Tortolero

matortolero@gbm.com.mx

MIRANDA-GR

Martin Lara

martin.lara@miranda-gr.com

JPMORGAN

Ulises Argote

ulises.argote@jpmorgan.com

INVEX

Giselle Mojica

gmojica@invex.com

SANTANDER

Luis Miranda

lmiranda@santander.com.mx

APPENDICES
For reference, some figures have been translated into millions of U.S. dollars ("USD") using an exchange rate of $19.67 per USD $1.00, which corresponds to the rate at the close of December 31st, 2018, 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


December 31,


December 31,

In million pesos

2018


2018


2017*







TOTAL ASSETS

$

2,681.5


52,745.7


50,557.4







Total current assets

1,507.2


29,646.1


28,225.0

   Cash and cash equivalents

938.1


18,451.9


17,240.1

   Total accounts receivable

177.3


3,487.0


3,627.2

   Inventories

338.0


6,649.1


6,669.5

   Other current assets

53.8


1,058.1


688.2







Total non current assets

1,174.4


23,099.6


22,332.4

   Net property, plant and equipment

916.8


18,033.6


17,320.0

   Other non current Assets

257.6


5,066.0


5,012.3







TOTAL LIABILITIES

$

735.9


14,474.8


14,879.5







Total current liabilities

454.6


8,942.2


9,185.7

   Notes payable to banks

177.6


3,492.8


3,695.1

   Accounts payable

215.0


4,228.2


3,739.5

   Other taxes payable and other accruals

62.1


1,221.3


1,751.2







Total long-term liabilities

281.3


5,532.5


5,693.8

   Long-term debt

78.5


1,544.8


1,554.0

   Other  non current liabilities

10.3


202.8


296.4

   Deferred income taxes

192.4


3,784.9


3,843.4







TOTAL STOCKHOLDERS' EQUITY

$

1,945.7


38,271.0


35,677.9







Capital stock

59.7


1,174.3


1,174.4

Commission in shares issued

21.1


414.5


414.4

Retained earnings

1,801.6


35,437.4


32,861.1

Others accounts

59.7


1,174.2


1,169.1

Non controlling interest

3.6


70.6


59.0







TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

2,681.5


52,745.7


50,557.4







*Audited






 

CONSOLIDATED STATEMENT OF INCOME




Fourth Quarter Results, ended December 31st:





-Unaudited-







U.S. Dollar





In millions pesos

2018


2018


2017*

Net sales

$

784.0


15,421.0


15,032.6

Cost of sales

674.7


13,272.2


12,775.2

Gross profit

109.2


2,148.8


2,257.4

SG&A

79.6


1,566.3


1,517.7

Other income (expenses), net

0.3


6.0


131.0

Operating income 

29.9


588.5


870.7

Net finance income

19.8


389.0


527.3

Income tax 

9.3


182.0


(182.9)

Net Income

$

40.4


795.5


1,580.9







Non-controlling interest

0.09


1.7


1.7

Net controlling interest profit

40.4


793.7


1,579.2

Basic and diluted earnings per share

0.07


1.32


2.63

Basic and diluted earnings per ADR

0.81


15.88


31.58

Weighted average Shares outstanding1

599,943


599,943


599,991







EBITDA Result

$

46.6


916.1


1,179.4







Gross margin

13.9%


13.9%


15.0%

Operating margin

3.8%


3.8%


5.8%

Net margin

5.1%


5.2%


10.5%

EBITDA margin

5.9%


5.9%


7.8%







1 In thousands






* Audited







 

CONSOLIDATED STATEMENT OF INCOME




Annual Results






-Unaudited-







U.S. Dollar





In millions pesos

2018


2018


2017*

Net sales

$

3,103.8


61,052.1


58,050.0

Cost of sales

2,614.2


51,421.9


47,503.0

Gross profit

489.6


9,630.2


10,547.1

Selling, general and administrative expenses

302.0


5,940.0


5,423.4

Other income (expenses), net

5.9


116.6


167.6

Operating income 

193.5


3,806.9


5,291.3

Net finance income

40.4


793.8


747.5

Income tax 

58.7


1,155.1


1,084.4

Net income

$

274.2


3,445.6


4,954.4







Non-controlling interest

0.6


11.6


6.2

Net controlling interest profit

175.8


3,434.0


4,948.2

Basic and diluted earnings per share

0.29


5.72


8.25

Basic and diluted earnings per ADR

3.49


68.7


98.97

Weighted average Shares outstanding1

599,981


599,981


599,998







EBITDA Result

$

257.8


5,071.9


6,424.1







Gross margin

15.8%


15.8%


18.2%

Operating margin

6.2%


6.2%


9.1%

Net margin

5.7%


5.6%


8.5%

EBITDA margin

8.3%


8.3%


11.1%







1 In thousands






* Audited







 

CONSOLIDATED STATEMENT OF CASH FLOWS





In million of pesos






-Unaudited-







U.S. Dollar


December 31,


2018


2018


2017*







NET MAJORITY INCOME BEFORE INCOME TAX

$

233.9


4,600.7


6,038.9







ITEMS RELATING TO INVESTING ACTIVITIES:

27.7


544.6


516.6

      Depreciation and others

64.3


1,265.0


1,075.8

      Income (loss) on sale of plant and equipment

1.7


34.1


41.9

      Other Items

(38.4)


(754.5)


(601.1)







NET CASH GENERATED FROM NET INCOME BEFORE TAXES

261.6


5,145.3


6,555.4

CASH GENERATED OR USED IN THE OPERATION:

(114.8)


(2,258.7)


(1,071.2)

   Decrease (increase) in accounts receivable

8.4


165.6


166.9

   Decrease (increase) in inventories

(10.8)


(213.4)


(446.7)

   Increase (decrease) in accounts payable

17.1


335.7


103.1

   Other Items

(129.5)


(2,546.6)


(894.6)







NET CASH FLOW FROM OPERATING ACTIVITIES

146.8


2,886.7


5,484.2







NET CASH FLOW FROM INVESTING ACTIVITIES

(41.7)


(820.2)


(3,606.3)

      Acquisition of property, plant and equipment

(101.5)


(1,996.3)


(2,126.4)

      Proceeds from sales of property plant and equipment

1.1


21.6


35.2

      Other Items

58.7


1,154.5


(1,515.1)







CASH FLOW SURPLUS (REQUIREMENTS OF) TO BE USED IN FINANCING ACTIVITIES

105.1


2,066.5


1,877.9







Net cash provided by financing activities:

(43.4)


(854.6)


(288.2)

   Proceeds from loans

169.7


3,337.5


5,378.9

   Principal payments on loans

(175.9)


(3,460.2)


(4,246.1)

   Dividends paid

(43.3)


(852.0)


(780.0)

   Other items

6.1


120.0


(641.0)

Net increase (decrease) in cash and equivalents

61.6


1,211.8


1,589.7







Cash and investments at the beginning of year

$

876.5


17,240.1


15,651.5

CASH AND INVESTMENTS AT END OF PERIOD

$

938.1


18,451.9


17,241.2







*Audited






 

Fourth Quarter 2018










Thousands of Mexican Pesos, as of December 31, 2018







TYPE OF FINANCIAL INSTRUMENT

OBJECTIVE

NOTIONAL

VALUE OF THE RELATED COMMODITY

REASONABLE VALUE

AMOUNTS DUE BY YEAR

GUARANTIES REQUIRED

4Q-2018

3Q-2018

4Q-2018

3Q-2018

Forward Vanilla and KOT Frward

Hedge

$  16,047

$  19.67

$  18.72

$  2,051

$ -10,992

in 2018

The deals consider the possibility of margin calls but not another kind of guarantee

Futures for corn and soybean meal

Hedge

$  47,234

CORN

CORN

-$  104

$5,430

100% in 2019

In USD per Bushel

In USD per Bushel

month

price

month

price

Mar-19

$  3.750

Dec-18

$  3.563

May-19

$  3.830

Sep-19

$  3.850

Jul-19

$  3.908



Sep-19

$  3.935



Dec-19

$  3.975



SOYBEAN MEAL

SOYBEAN  MEAL

In USD per ton

In USD per ton

month

price

month

price



Dec-18

$  309.0



Jan-19

$  309.4



Mar-19

$  308.6

May-19

$  313.3

May-19

$  306.9



Jul-19

$  308.3



Aug-19

$  309.1



Sep-19

$  309.7



Oct-19

$  309.0

Dec-19

$  321.2

Dec-19

$  309.3

Options of Corn

Hedge

$  5,626

CORN

CORN

$  65



In USD per ton

In USD per ton



month

price

month

price











Dec-18

$  3.563

$  1,416

100% in 2019

Mar-19

$  3.750

Mar-19

$  3.680



May-19

$  3.830

May-19

$  3.758



Jul-19

$  3.908

Jul-19

$  3.813



Options of soybean meal

Hedge

$  13,490

SOYBEAN MEAL

SOYBEAN  MEAL

-$ 267



In USD per ton

In USD per ton



month

price

month

price























Dec-18

$  309.0

$  3,021

100% in 2019



Jan-19

$  309.4



Mar-19

$  309.9

Mar-19

$  308.6



May-19

$  313.3

May-19

$  306.9



Jul-19

$  316.6

Jul-19

$  308.3




















-The total financial instruments do not exceed 5% of total assets as of December 31, 2018.




-The notional value represents the net position as of December 31, 2018 at the exchange rate of Ps. 19.67 per one dolar.


-A negative value means an unfavorable effect for the Company.







 

Fourth Quarter 2018







Thousands of Mexican Pesos, as of December 31, 2018






PROBABLE SCENARIO

TYPE OF FINANCIAL INSTRUMENT

REASONABLE VALUE

VALUE OF THE RELATED COMMODITY

EFFECT ON THE INCOME STATEMENT

EFFECT ON THE CASH FLOW(3)

Reference Value (1)

-2.5%

2.5%

5.0%

-2.5%

2.5%

5.0%

Forwards Vanilla

$

2,051

$

19.18

$

20.16

$

20.65

 Direct

-$

5,840

$

9,942

$

11,089



-5%

5%

10%


-5%

5%

10%

Futures of Corn: (2)

-$

104

$

3.563

$

3.938

$

4.125

The effect will materialize as the inventory is consumed

-$

1,801

$

1,771

$

3,801

Futures of Soybean Meal: (2)

$

297.6

$

329.0

$

344.6

Options for Corn

$

65

$

3.563

$

3.938

$

4.125

$

270

$

346

$

627

Options of Soybean Meal

-$

267

$

297.6

$

329.0

$

344.6

-$

942

$

407

$

1,082

Options of Heating Oil

$

-

$

-

$

-

$

-

$

-

$

-

$

-








(1) The reference value is the exchange  rate of Ps. $19.67 per USD as of December 31, 2018.




(2) The reference values are; the future of corn for March 2019, $3.7500 USD/bushel and the future of soybeanmeal for May 2019, $313.30  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.





 

Fourth Quarter 2018










Thousands of Mexican Pesos, as of December 31, 2018







STRESS SCENARIO

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

$          2,051

$9.84

$14.75

$24.59

$29.51

 Direct

-$155,771

-$76,860

$46,679

$91,168


CONFERENCE CALL INFORMATION

The Company will host its fourth quarter 2018 earnings call, Thursday, January 31st, 2018 at 9:00am 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: http://web.meetme.net/r.aspx?p=12&a=UORbNWykFxGPLD

Confirmation Number:  48122523

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 27,000 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.

Cision

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