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Industrias Bachoco Announces Third Quarter 2019 Results

CELAYA, Mexico, Oct. 23, 2019 /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 ("3Q19") and first nine months of 2019 ("9M19") ended on September 30th, 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 increased 8.5% in 3Q19 and 1.9% in 9M19
  • SG&A expenses as a percentage of net sales were 9.8% in 3Q19 and 9.7% in 9M19
  • EBITDA margin was 9.8% for 3Q19 and 10.0% in 9M19
  • Earnings per basic and diluted share were $1.85 for 3Q18 and $5.00 for 9M19.

CEO COMMENTS

Mr. Rodolfo Ramos Arvizu, Chief Executive Officer of Bachoco, stated: "We entered the third quarter with good demand conditions in the poultry market which resulted in good unseasonal prices for the first part of the quarter. Mainly, as a result of a good balance between supply and demand and due to less uncertain conditions in the economic environment in Mexico, when compared to the same period of 2018.

This allowed us to reach an increase in total sales of 8.5% in the quarter, and an increase of 1.9% for the 9M19, when compared to the same periods of 2018 respectively.

In terms of cost of sales, prices of our main raw material for both corn and soybean meal, started at high levels and dropped by the end of the quarter, which combined with our hedging strategy allowed us to report a lower cost for 3Q19 when compared to the same period of 2018.

As a result, we reached an EBITDA of $1,505.8 million in 3Q19, significantly higher than the EBITDA in the same quarter of 2018. For the third quarter, our EBITDA margin in 3Q19 was 9.8% versus a 0.5% margin in 3Q18. As a result, our EBITDA margin for the nine months of this year was 10.0%, higher when compared to 9.1% EBITDA margin of the same period of 2018.

We reached an income per share of $1.85 pesos, which one of the highest for the previous five years for a third quarter. For the first 9M19 our income per share was $5.00 pesos higher than the $4.43 pesos for the same period of 2018.

On the other hand, SG&A expenses in 3Q19 were $1,497.6, meaning a reduction of $1.4 million vs 3Q18 that were $1,499.1 million. Total SG&A expenses as a percentage of net sales represented 9.8% in 3Q19 and 10.6% in 3Q18.

Our financial structure continued strong as we ended the quarter with a net cash of $13,275.3 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 2018.

QUARTERLY RESULTS

NET SALES BY GEOGRAPHY





In millions of pesos


3Q19

3Q18

Change



$

$

$

%

Net Sales


15,312.9

14,114.4

1,198.4

8.5

Net sales in Mexico


10,981.4

9,865.0

1,116.4

11.3

Net sales in the U.S.


4,331.5

4,249.4

82.1

1.9


 

NET SALES BY SEGMENT





In millions of pesos


3Q19

3Q18

Change



$

$

$

%

Net Sales


15,312.9

14,114.4

1,198.4

8.5

Poultry


13,879.8

12,844.7

1,035.0

8.1

Other


1,433.1

1,269.7

163.4

12.9


 

NET VOLUME SOLD BY SEGMENT





In tons




Change


3Q19

3Q18

Volume

%

Total sales volume:

550,640

539,823

10,816.4

2.0

Poultry

424,645

441,135

(16,490.0)

(3.7)

Others

125,994

98,688

27,306.4

27.7


 

 

The Company's 3Q19 net sales totaled $15,312.9 million; $1,198.4 million or 8.5% more than   $14,114.4 million reported in 3Q18.  The increase is a result of better prices in poultry and higher volume sold in our Other segment, particularly in balance feed.

In 3Q19, sales of our U.S. operations represented 28.3% of our total sales compared to 30.1% in 3Q18.

 

GROSS PROFIT





In millions of pesos


3Q19

3Q18

Change



$

$

$

%

Cost of sales


12,706.5

12,955.6

(249.0)

(1.9)

Gross profit


2,606.4

1,158.9

1,447.5

124.9

Gross margin


17.0%

8.2%

-

-

 

In 3Q19, cost of sales was $12,706.5 million; $249.0 million or 1.9% lower than $12,955.6 million reported in 3Q18. This decrease was mainly due to lower unit cost in our main business lines and due to lower volume sold in poultry.

The Company's gross profit in 3Q19 was $2,606.4 million, higher than the gross profit of $1,158.9 million in 3Q18, with a gross margin of 17.0% for 3Q19 vs 8.2% in 3Q18. 

 

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

In millions of pesos


3Q19

3Q18

Change



$

$

$

%

Total SG&A


1,497.6

1,499.1

(1.4)

(0.1)

 

Total SG&A expenses in 3Q19 were $1,497.6 million; $1.4 million lower than the $1,499.1 million reported in 3Q18. Total SG&A expenses as a percentage of net sales represented 9.8% in 3Q19 and 10.6% in 3Q18.

 

OTHER INCOME (EXPENSE), NET

In millions of pesos


3Q19

3Q18

Change



$

$

$

%

Other income (expense), net


73.0

79.7

(6.7)

(8.4)

 

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.

In 3Q19, we recorded other income of $73.0 million, compared with other income of $79.7 million reported in 3Q18.

 

OPERATING INCOME





In millions of pesos


3Q19

3Q18

Change



$

$

$

%

Operating income


1,181.8

(260.5)

1,442.3

(553.7)

Operating margin


7.7%

(1.8)%

-

-

 

Operating income in 3Q19 totaled $1,181.8 million; $1,442.3 million higher than the Operating loss of $260.5 million reported in 3Q18. This represents a positive operating margin of 7.7% for 3Q19, versus a negative operating margin in the same period of 2018. The increase in operating income is mainly attributed to higher Poultry prices and higher volume sold in Other segment, combined with lower cost of sales and lower SG&A.   

 


NET FINANCIAL INCOME





In millions of pesos


3Q19

3Q18

Change



$

$

$

%

Net Financial Income


405.7

(63.6)

469.3

(738.0)

Financial Income


486.7

294.1

192.5

65.5

Financial Expense


81.0

357.7

(276.8)

(77.4)

 

In 3Q19, the Company reported net financial income of $405.7 million, compared to a negative financial income of $63.6 million reported in the same period of 2018. The increase is mainly attributed to higher exchange rate gains.

 

TAXES FOR THE PERIOD





In millions of pesos


3Q19

3Q18

Change



$

$

$

%

Total Taxes


474.4

(136.6)

611.0

(447.3)

Income tax


48.2

(208.4)

256.6

(123.1)

Deferred income tax


426.1

71.8

354.4

493.8








 

Total taxes for the 3Q19 were $474.4 million, which is higher when compared with total taxes of the same period of 2018. This is attributed to higher operating income in 3Q19.

 

NET INCOME





In millions of pesos


3Q19

3Q18

Change



$

$

$

%

Net income


1,113.1

(187.5)

1,300.6

(693.8)

Net margin


7.3%

(1.3%)

-

-

Basic and diluted earnings per share1


1.85

(0.32)

2.2

n/a

Basic and diluted earnings per ADR2


22.23

(3.79)

26.0

n/a

Weighted average Shares outstanding3


600,000

600,000

-

-

1In pesos






2in pesos, one ADR equals to twelve shares






3In thousands of shares






 

The net income for 3Q19 was $1,113.1 million, representing a basic and diluted income of $1.85 pesos per share, compared with a net loss of $187.5 million, which represented a $0.32 pesos of net loss per share in 3Q18.  This increase is mainly attributed to higher operating results. Net margin in 3Q19 was 7.3% compared to a negative margin of 1.3% reported in 3Q18.

 

EBITDA



In millions of pesos


3Q19

3Q18

Change



$

$

$

%

Net income


1,111.3

(189.7)

1,301.1

(685.8)

   Income tax expense (benefit)


474.4

(136.6)

611.0

(447.3)

   Result in associates


1.8

2.3

(0.5)

(21.8)

   Net finance (income) expense


(405.7)

63.6

(469.3)

(738.0)

   Depreciation and amortization


324.0

336.6

(12.6)

(3.7)

EBITDA


1,505.8

76.2

1,429.7

1,877.3

EBITDA Margin (%)


9.8%

0.5%

-

-

Net revenues


15,312.9

14,114.4

1,198.4

8.5

 

EBITDA in 3Q19 reached $1,505.8 million representing an EBITDA margin of 9.8%, compared to an EBITDA of $76.2 million in 3Q18, with an EBITDA margin of 0.5%.

ACCUMULATED RESULTS

 

NET SALES BY GEOGRAPHY





In millions of pesos


9M19

9M18

Change



$

$

$

%

Net Sales


46,520.6

45,631.1

889.5

1.9

Net sales in Mexico


33,815.4

32,510.5

1,304.9

4.0

Net sales in the U.S.


12,705.2

13,120.6

(415.4)

(3.2)

 

NET SALES BY SEGMENT





In millions of pesos


9M19

9M18

Change



$

$

$

%

Net Sales


46,520.6

45,631.1

889.5

1.9

Poultry


41,991.8

41,335.4

656.4

1.6

Other


4,528.8

4,295.7

233.1

5.4

 

NET VOLUME SOLD BY SEGMENT




In metric tons



Change


9M19

9M18

Volume

%

Total sales volume:

1,679,544

1,637,860

41,684

2.55

Poultry

1,286,960

1,294,632

(7,671)

(0.6)

Others

392,584

343,229

49,355

14.38








 

During the 9M19, net sales totaled $46,520.6 million; $889.5 million or 1.9% more than the $45,631.1 million reported in the same period of 2018.

In 9M19, sales of our U.S. operations represented 27.3% of our total sales, compared with 28.8% in 9M18.

 

OPERATING RESULTS





In millions of pesos


9M19

9M18

Change



$

$

$

%

Cost of Sales


38,386.7

38,149.7

237.1

0.6

Gross Profit


8,133.9

7,481.4

652.5

8.7

Total SG&A


4,522.8

4,373.7

149.1

3.4

Other Income (expense)


69.6

110.7

(41.0)

(37.1)

Operating Income


3,680.7

3,218.4

462.3

14.4

Net Financial Income


573.3

404.8

168.5

41.6

Income Tax


1,246.4

973.0

273.4

28.1

Net Income


3,007.5

2,650.1

357.4

13.5

 

In the 9M19, the cost of sales totaled $38,386.7 million; $237.1 million or 0.6% higher than $38,149.7 million reported in the 9M18.

As a result, we reached a gross profit of $8,133.9 million and a gross margin of 17.5% in 9M19, when compare to $7,481.4 million of gross profit and a gross margin of 16.4% reached in the same period of 2018.

Total SG&A expenses in 9M19 were $4,522.8 million; $149.1 million or 3.4% more than the $4,373.7 million reported in 9M18. In 9M19 total SG&A expenses as a percentage of net sales represented 9.7%, slightly higher compared to the 9.6% on 9M18.

In 9M19 we had other income of $69.6 million, compared with other income of $110.7 million reported in 9M18.

The operating income in 9M19 was $3,680.7 million, which represents an operating margin of 7.9%, an increase from an operating income of $3,218.4 million and an operating margin of 7.1% in 9M18.

The net financial income in 9M19 was $573.3 million, higher when compared to a net financial income of $404.8 million in 9M18.

Total taxes were $1,246.4 million as of September 30th, 2019.  These taxes include $749.8 million of income tax and $496.7 million of deferred income taxes. This figure compares to total taxes of $973.0 million in 9M18; the increase was mainly attributed to a higher income before taxes.

All the above resulted in a net income of $3,007.5 million or 6.5% of net margin in the 9M19, which represents $5.00 pesos of earnings per share; while in the 9M18 the net income totaled $2,650.1 million, 5.8% of net margin and $4.40 pesos of net income per share.

 

EBITDA





In millions of pesos


9M19

9M18

Change



$

$

$

%

Net controlling interest profit


2,998.9

2,640.3

358.7

13.6

   Income tax expense (benefit)


1,246.4

973.0

273.4

28.1

   Result in associates


8.6

9.9

(1.3)

(13.0)

   Net finance (income) expense


(573.3)

(404.8)

(168.5)

41.6

   Depreciation and amortization


963.3

937.4

26.0

2.8

EBITDA


4,644.0

4,155.7

488.3

11.7

EBITDA Margin (%)


10.0%

9.1%

-

-

Net revenues


46,520.6

45,631.1

889.5

1.9

 

EBITDA in 9M19 reached $4,644.0 million, representing an EBITDA margin of 10.0%, compared to EBITDA of $4,155.7 million in 9M18, with an EBITDA margin of 9.1%.

BALANCE SHEET

 

BALANCE SHEET DATA





In millions of pesos


Sep 30, 2019

Dec. 31st, 2018

Change



$

$

$

%

TOTAL ASSETS


55,450.3

52,865.6

2,584.7

4.9

Cash and cash equivalents


18,283.1

18,458.5

(175.4)

(1.0)

Accounts receivable


4,179.9

3,486.5

693.5

19.9

TOTAL LIABILITIES


15,111.2

14,699.9

411.3

2.8

Accounts payable


3,478.9

4,228.4

(749.6)

(17.7)

Short-term debt


3,514.7

3,492.8

21.9

0.6

Long-term debt


1,493.1

1,544.8

(51.7)

(3.3)

TOTAL STOCKHOLDERS' EQUITY


40,339.2

38,165.7

2,173.4

5.7

Capital stock


1,174.4

1,174.3

0.1

0.0

 

Cash and equivalents as of September 30th, 2019 totaled $18,283.1 million vs $18,458.6 million as of December 31, 2018.

Total debt as of September 30th, 2019 was $5,007.8 million, compared to $5,037.6 million reported as of December 31, 2018.

Net cash as of September 30th, 2019 was $13,275.3 million, compared to net cash of $13,420.9 million as of December 31, 2018.

 

 

CAPITAL EXPENDITURES

In millions of pesos


9M19

9M18

Change



$

$

$

%

Capital Expenditures


1,301.2

1,329.0

(27.8)

(2.1 )

 

Total CAPEX for the 9M19 was $1,301.2 million vs $1,329.0 million in 9M18, mainly allocated toward organic growth and productivity projects across all of our facilities.

 

STOCK INFORMATION

As of September 30, 2019

Total Shares


600,000,000

Total free float


26.75%

Market cap (millions of pesos)


$52,116

Source: Yahoo Finances



 

 

SHARE PRICE






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-19

92.44

84.51

86.86


56.34

51.68

53.23


Aug-19

91.65

82.89

91.65


55.01

50.41

55.01


Jul-19

86.70

80.00

86.70


54.18

50.09

54.04


Jun-19

84.98

79.99

80.40


52.92

50.11

50.67


May-19

87.22

77.68

86.25


55.01

49.42

52.50


Apr-19

78.67

71.14

77.68


49.75

45.23

49.00


Mar-19

75.88

70.51

74.59


47.98

45.72

46.10


Feb-19

76.06

72.83

74.84


47.74

45.17

46.93


Jan-19

74.37

65.38

73.31


46.53

40.07

46.00
















 

 

ANALYST COVERAGE

 






Institution

Analyst name

E-mail

ACTINVER

José Antonio Cebeira

jcebeira@actinver.com.mx

APALACHE ANALISIS

Jorge Plácido

jorge.placido@apalache.mx

BBVA BANCOMER

Pablo Abraham Peregrina

pablo.abraham@bbva.com

GBM

Miguel Tortolero

matortolero@gbm.com.mx

INVEX

Giselle Mojica

gmojica@invex.com

JP MORGAN

Ulises Argote

ulises.argote@jpmorgan.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 $19.72 per USD $1.0, which corresponds to the rate at the close of September 30, 2019, 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 INCOME


Third Quarter Results, ended September 30th:



-Unaudited-





U.S. Dollar



In millions pesos

2019

2019

2018*

Net sales

$         776.5

15,312.9

14,114.4

Cost of sales

644.3

12,706.5

12,955.6

Gross profit

132.2

2,606.4

1,158.9

SG&A

75.9

1,497.6

1,499.1

Other income (expenses), net

3.7

73.0

79.7

Operating income 

59.9

1,181.8

-260.5

Net finance income

20.6

405.7

-63.6

Income tax 

24.1

474.4

(136.6)

Net Income

$           56.4

1,113.1

(187.5)





Non-controlling interest

0.09

1.8

2.3

Net controlling interest profit

56.4

1,111.3

(189.7)

Basic and diluted earnings per share

0.09

1.85

(0.32)

Basic and diluted earnings per ADR

1.13

22.23

(3.79)

Weighted average Shares outstanding1

600,000

600,000

600,000





EBITDA Result

$           76.4

1,505.8

76.2





Gross margin

17.0%

17.0%

8.2%

Operating margin

7.7%

7.7%

-1.8%

Net margin

7.3%

7.3%

-1.3%

EBITDA margin

9.8%

9.8%

0.5%





1 In thousands




* Audited









 

CONSOLIDATED STATEMENT OF INCOME


Accumulated results, for the nine months ended September 30.


-Unaudited-





U.S. Dollar



In millions pesos

2019

2019

2018*

Net sales

$     2,359.1

46,520.6

45,631.1

Cost of sales

1,946.6

38,386.7

38,149.7

Gross profit

412.5

8,133.9

7,481.4

Selling, general and administrative expenses

229.4

4,522.8

4,373.7

Other income (expenses), net

3.5

69.6

110.7

Operating income 

186.6

3,680.7

3,218.4

Net finance income

29.1

573.3

404.8

Income tax 

63.2

1,246.4

973.0

Net income

$         152.5

3,007.5

2,650.1





Non-controlling interest

0.4

8.6

9.9

Net controlling interest profit

152.1

2,998.9

2,640.3

Basic and diluted earnings per share

0.25

5.00

0.00

Basic and diluted earnings per ADR

3.04

60.0

0.05

Weighted average Shares outstanding1

599,973

599,973

599,993





EBITDA Result

$         235.5

4,644.0

4,155.7





Gross margin

17.5%

17.5%

16.4%

Operating margin

7.9%

7.9%

7.1%

Net margin

6.4%

6.5%

5.8%

EBITDA margin

10.0%

10.0%

9.1%





1 In thousands




* Audited








 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 

-Unaudited-





In U.S. Dollar

September 30,

December 31,

In million pesos

2019

2019

2018*





TOTAL ASSETS

$           2,811.9

55,450.3

52,865.6





Total current assets

1,556.2

30,689.1

29,775.0

   Cash and cash equivalents

927.1

18,283.1

18,458.5

   Total accounts receivable

212.0

4,179.9

3,486.5

   Inventories

349.8

6,897.7

6,649.1

   Other current assets

67.4

1,328.3

1,180.9





Total non current assets

1,255.6

24,761.3

23,090.6

   Net property, plant and equipment

927.6

18,291.6

18,018.2

   Other non current Assets

328.1

6,469.7

5,072.4





TOTAL LIABILITIES

$               766.3

15,111.2

14,699.9





Total current liabilities

418.6

8,254.1

9,084.9

   Notes payable to banks

178.2

3,514.7

3,492.8

   Accounts payable

176.4

3,478.9

4,228.4

   Other taxes payable and other accruals

63.9

1,260.4

1,363.7





Total long-term liabilities

347.7

6,857.1

5,614.9

   Long-term debt 

75.7

1,493.1

1,544.8

   Other  non current liabilities

63.7

1,256.0

302.8

   Deferred income taxes

208.3

4,108.0

3,767.3





TOTAL STOCKHOLDERS' EQUITY

$           2,045.6

40,339.2

38,165.7





Capital stock

59.6

1,174.4

1,174.3

Commission in shares issued

21.0

414.5

414.5

Retained earnings

1,902.6

37,519.8

35,354.5

Others accounts

58.4

1,152.4

1,153.0

Non controlling interest

4.0

78.0

69.5





TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$              2,811.9

55,450.3

52,865.6





*Audited





 

CONSOLIDATED STATEMENT OF CASH FLOWS



In million of pesos




-Unaudited-









U.S. Dollar

September 30,


2019

2019

2018*





NET MAJORITY INCOME BEFORE INCOME TAX

$                  215.7

4,254.0

3,623.2





ITEMS RELATING TO INVESTING ACTIVITIES:

17.4

343.8

362.1

      Depreciation and others

48.9

963.3

937.4

      Income (loss) on sale of plant and equipment

(5.0)

(99.1)

20.3

      Other Items

(26.4)

(520.4)

(595.6)





NET CASH GENERATED FROM NET INCOME BEFORE TAXES

233.2

4,597.8

3,985.2

CASH GENERATED OR USED IN THE OPERATION:

(164.2)

(3,238.9)

(2,147.3)

   Decrease (increase) in accounts receivable

24.8

489.6

111.2

   Decrease (increase) in inventories

(20.2)

(398.1)

50.0

   Increase (decrease) in accounts payable

(111.5)

(2,199.0)

(578.0)

   Other Items

(57.4)

(1,131.5)

(1,730.6)





NET CASH FLOW FROM OPERATING ACTIVITIES

68.9

1,358.9

1,837.9





NET CASH FLOW FROM INVESTING ACTIVITIES

(29.6)

(583.1)

(353.5)

      Acquisition of property, plant and equipment

(66.0)

(1,301.2)

(1,329.0)

      Proceeds from sales of property plant and equipment

9.5

186.9

12.8

      Other Items

26.9

531.2

962.7





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

39.3

775.7

1,484.4





Net cash provided by financing activities:

(50.3)

(992.1)

(1,538.1)

   Proceeds from loans

246.4

4,859.0

3,237.5

   Principal payments on loans

(246.4)

(4,858.6)

(3,456.1)

   Dividends paid

(42.6)

(840.0)

(852.0)

   Other items

(7.7)

(152.5)

(467.4)

Net increase (decrease) in cash and equivalents

(11.0)

(216.3)

(53.7)





Cash and investments at the beginning of year

$                  961.0

18,451.9

17,240.1

CASH AND INVESTMENTS AT END OF PERIOD

$                  924.7

18,23050.6

17,1086.4





*Audited









DERIVATIVES POSITION REPORT

Third Quarter 2019










Thousands of Mexican Pesos, as of September 30, 2019



















TYPE OF FINANCIAL INSTRUMENT

OBJECTIVE

NOTIONAL

VALUE OF THE RELATED COMMODITY

REASONABLE VALUE

AMOUNTS DUE BY YEAR

GUARANTIES REQUIRED

3Q-2019

2Q-2019

3Q-2019

2Q-2019

Forward Vanilla

Hedge

$   20,798

$19.72


$19.20


$-2,595

$-11,503

70% in 2019 and 30% in 2020

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

Futures for corn and soybean meal

Hedge

$   218,171

 CORN 

 CORN 

$   4,898

$      5,654

55% in 2019; 45% in 2020

 In USD per Bushel 

 In USD per Bushel 

 month 

 price 

 month 

 price 

Mar-20

$   3.995

Mar-20

$     4.395

May-20

$   4.053



Jul-20

$   4.085





Sep-19

$     4.248

Dec-19

$   3.880

Dec-19

$     4.315

 SOYBEAN MEAL 

 SOYBEAN MEAL 

 In USD per ton 

 In USD per ton 

 month 

 price 

 month 

 price 

Jan-20

$   302.8

Aug-19

$     315.3

Mar-20

$   306.2

Jan-20

$     324.8

May-20

$   310.4

Mar-20

$     327.0

Jul-20

$   314.8

May-20

$     329.0

Aug-20

$   316.7

Jul-20

$     331.0

Sep-20

$   317.7

Aug-20

$     331.4

Oct-20

$   317.7

Sep-20

$     331.6

Dec-20

$   319.5

Oct-20

$     330.4

Options of Corn

Hedge

$ 727,945

 CORN 

 CORN 

$      113

$    11,339

92% in 2019; 8% in 2020

 In USD per Bushel 

 In USD per Bushel 

 month 

 price 

 month 

 price 

Dec-19

$   3.880

Jul-19

$     3.752

Mar-20

$   3.995

Sep-19

$     4.248

May-20

$   4.053

Dec-19

$     4.315

Jul-20

$   4.085

Jan-20

$     4.395

Options of soybean meal

Hedge

$     73,521

 SOYBEAN MEAL 

 SOYBEAN MEAL 

-$   1,290

$      2,738

52% in 2019; 48% in 2020

 In USD per ton 

 In USD per ton 

 month 

 price 

 month 

 price 

Dec-19

$   301.0

Aug-19

$     315.3

Jan-20

$   302.8

Sep-19

$     313.0

Mar-20

$   306.2

Oct-19

$     325.9

May-20

$   310.4

Dec-19

$     316.8

Jul-20

$   314.8

Jan-20

$     324.8



Mar-20

$     327.0












-The total financial instruments do not exceed 5% of total assets as of September 30, 2019.




-The notional value represents the net position as of September 30, 2019 at the exchange rate of Ps. 19.72 per one dollar.


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








 

Third Quarter 2019









Thousands of Mexican Pesos, as of September 30, 2019






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%

Forward Vanilla

-$               2,595

$19.23

$       20.21

$       20.71

 Direct 

-$   12,848

$     7,659

$ 17,912



-5%

5%

10%


-5%

5%

10%

Futures of Corn: (2)

$               4,898

$       3.686

$       4.074

$       4.268

 The effect will materialize as the inventory is consumed 

-$     5,976

$   20,432

$ 33,636

Futures of Soybean Meal: (2)

$       287.7

$       317.9

$       333.1

Options for Corn

$                  113

$       3.686

$       4.074

$       4.268

-$     1,918

$     3,589

$   7,329

Options of Soybean Meal

-$               1,290

$       287.7

$       317.9

$       333.1

-$     4,966

$     2,386

$   6,062










(1) The reference value is the exchange  rate of Ps. $19.72 per USD as of September 30, 2019.




(2) The reference values are; the future of corn for Dec 2019, $3.880 USD/bushel and the future of soybean meal for Jan 2020, $302.80  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 2019











Thousands of Mexican Pesos, as of September 30, 2019








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

-$          2,595

$9.86

$14.79

$24.65

$29.58

 Direct 

-$207,664

-$105,129

$99,940

$202,474













CONFERENCE CALL INFORMATION
The Company will host its third quarter 2019 earnings call, on Thursday, October 23rd, 2019. The earnings call will take place at 9:00 am Central Time (10:00 am ET). 

Toll free in the U.S.: 1 (888) 771-4371
Toll free in Mexico: 001 866 779 0965

A current list of available local and international free phone telephone numbers:
http://web.meetme.net/r.aspx?p=12&a=UNFLnKAclbtcKD
 

Confirmation Number: 49094800

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.


IR contact information:
maria.jaquez@bachoco.net 
andrea.guerrero@bachoco.net 
T. +52(461)618 3555

Cision

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