Securities and Exchange Commission

Washington, D.C. 20549

 

 

FORM 6-K

 

 

Report of Foreign Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934

 

 

FOR THE FIRST QUARTER ENDED AS OF MARCH 31, 2018

 

BACHOCO INDUSTRIES

(Translation of Registrant’s name into English)

 

 

 

Avenida Tecnológico #401

38010 Celaya, Guanajuato, Mexico

(Address of principal office)

 

 

 

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

 

(Check One) Form 20-F x          Form 40-F ¨

 

(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing information to the Commission pursuant to Rule 12g-3-2(b) under the Securities Exchange Act of 1934.)

 

(Check One) Yes ¨          No x

 

(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b). 82_

 

 

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

Industrias Bachoco, S.A.B. de C.V. (Registrant)

/s/ Daniel Salazar Ferrer, CFO

 

 

 

Date: April 25, 2018

 

 

 

Bachoco Announces First Quarter 2018 Results

CELAYA, Mexico, April 25, 2018 /PRNewswire/ -- Industrias Bachoco, S.A.B. de C.V., "Bachoco" or "the Company", (NYSE: IBA; BMV: Bachoco) announced today its unaudited results for the first quarter ("1Q18") ending March 31, 2018. All figures have been prepared in accordance with International Financial Reporting Standard ("IFRS"), and are presented in nominal million Mexican Pesos ("$"), except earnings per share.

HIGHLIGHTS- 2018 vs. 2017

CEO COMMENTS

Mr. Rodolfo Ramos Arvizu, Chief Executive Officer of Bachoco, stated, "In Mexico, this first quarter started strong. We believe that after the natural events that affected the economic dynamic in some regions of the country, demand for poultry products resumed its normal levels and combined with a moderate supply increase, allowed a balance supply – demand in the market. We did not see oversupply conditions as occurred in 1Q17.

The prices of our main raw material were stable, but we saw some volatility, mainly in soybean meal, in the second part of the quarter.

In the US market, we observed stable conditions when compared with the same quarter of last year. We continued with our process of integrating our 2017 acquisition and to capture synergies.

Sales and volume of our main product lines continued growing in both markets, which led us to an increase of 11.8% in total sales for 1Q18 when compared to the same quarter of 2017.

For 1Q18, we reached an EBITDA of $2,100.2 for 13.7% margin. This EBITDA represents an increase of 74.5% when compared with the 1Q17. Earnings per basic and diluted shares were $2.09 for the quarter.

The Company remained in a healthy financial condition as we reached a net cash level of $12,993.4 million, which will allow us to continue the support of our growth plans.

We will remain focused on continuous improvements and efficiencies across all of our processes and working close to our customers."

Executive Summary
The following financial information is expressed in millions of nominal pesos, except for amounts per share and per ADR, with comparative figures for the same periods of 2017.

QUARTERLY RESULTS

NET SALES BY GEOGRAPHY





In millions of pesos


1Q18

1Q17

Change



$

$

$

%

Net sales


15,303.0

13,684.9

1,618.1

11.8

Net sales in Mexico


11,091.5

9,949.3

1,142.2

11.5

Net sales in the U.S.


4,211.5

3,735.6

475.9

12.7

NET SALES BY SEGMENT





In millions of pesos


1Q18

1Q17

Change



$

$

$

%

Net sales


15,303.0

13,684.9

1,618.1

11.8

Poultry


13,774.5

12,286.6

1,487.9

12.1

Other


1,528.4

1,398.3

130.1

9.3

NET VOLUME SOLD BY SEGMENT




In tons



Change


1Q18

1Q17

Volume

%

Total sales volume:

546,750

528,099

18,651

3.53

Poultry

422,181

419,219

2,963

0.71

Others

124,569

108,880

15,689

14.41






In 1Q18, the Company's net sales totaled $15,303.0 million; $1,618.1 million or 11.8% more than $13,684.9 million reported in 1Q17. This was a result of price increases in peso terms and more volume sold in our main product lines.

In 1Q18, sales of our U.S. operations were also strong and represented 27.5% of our total sales compared with 27.3% in 1Q17.

GROSS PROFIT





In millions of pesos


1Q18

1Q17

Change



$

$

$

%

Cost of sales


12,085.8

11,493.3

592.5

5.2

Gross profit


3,217.2

2,191.6

1,025.6

46.8

Gross margin


21.0%

16.0%

-

-

The cost of sales totaled $12,085.8 million, representing $592.5 million or 5.2% higher than $11,493.3 million reported in the same period of 2017. This increase was a result of more volume sold, and a mix effect in our US operations for higher percentage of further process products.

The Company's gross profit in 1Q18 was $3,217.2 million, with a gross margin of 21.0%. This result is higher when compared to a gross profit of $2,191.6 million and a gross margin of 16.0% reported in 1Q17.

Selling, general and administrative expenses ("SG&A")

In millions of pesos







1Q18

1Q17

Change



$

$

$

%

Total SG&A


1,385.5

1,261.2

124.2

9.8

Total SG&A expenses in 1Q18 were $1,385.5 million; $124.2 million or 9.8% more than the $1,261.2 million reported 1Q17. Total SG&A expenses, as a percentage of net sales, represent 9.1% in 1Q18 and 9.2% in 1Q17.

Other income (expense), net

In millions of pesos


1Q18

1Q17

Change



$

$

$

%

Other income (expense), net


(9.2)

(0.5)

(8.7)

1,637.9

Other income or other expenses include the sale of byproducts and unused assets. We register such sales as expenses when the sales price is below the book value of those assets.

In 1Q18, we had other expenses of $9.2 million, compared with other expenses of $0.5 million reported in 1Q17.

OPERATING INCOME





In millions of pesos


1Q18

1Q17

Change



$

$

$

%

Operating income


1,822.5

929.8

892.7

96.0

Operating margin


11.9%

6.8%

-

-

Operating income in 1Q18 totaled $1,822.5 million for an operating margin of 11.9%; higher than an operating income of $929.8 million and a 6.8% operating margin reported in 1Q17. The increase in operating income is mainly attributed to higher gross profit than in 1Q17.


NET FINANCIAL INCOME





In millions of pesos


1Q18

1Q17

Change



$

$

$

%

Net Financial Income (Expense)


(93.8)

(69.7)

(24.0)

34.4

Financial Income


204.6

143.0

61.7

43.1

Financial Expense


298.4

212.7

85.7

40.3

In 1Q18, the Company reported net financial expenses of $93.8 million, compared to net financial expense of $69.7 million reported in the same period of 2017, mainly due to exchange losses as the Mexican peso strengthened at the end of the quarter.

TAXES FOR THE PERIOD





In millions of pesos


1Q18

1Q17

Change



$

$

$

%

Total Taxes


467.8

207.2

260.6

125.7

Income tax


315.9

131.2

184.7

140.7

Deferred income tax


151.9

76.0

75.9

99.9

Total taxes for the 1Q18 were $467.8 million, compared to $207.2 million in the same period of 2017.

NET INCOME





In millions of pesos


1Q18

1Q17

Change



$

$

$

%

Net income


1,260.9

652.8

608.1

93.1

Net margin


8.2%

4.8%

-

-

Non-Controlling Interest income


5.3

0.7

4.5

n/a

Net controlling interest income


1,255.6

652.1

603.5

n/a

Basic and diluted income per share1


2.09

1.09

1.0

n/a

Basic and diluted income per ADR2


25.11

13.04

12.1

n/a

Weighted average Shares outstanding3


600,000

600,000

-

-

1 In pesos

2 in pesos, an ADR is equal to twelve shares

3 In thousands of shares

The net income for 1Q18 was $1,260.9million, representing a basic and diluted income of $2.09 pesos per share. This result compares to a net income of $652.8 million, which represented a net income of $1.09 pesos of basic and diluted income per share in 1Q17. Net margin for the 1Q18 was 8.2% compared to 4.8% reported in 1Q17.

EBITDA AND ADJUSTED EBITDA





In millions of pesos


1Q18

1Q17

Change



$

$

$

%

Net controlling interest income


1,255.6

652.1

603.5

92.6

   Income tax expense (benefit)


467.8

207.2

260.6

125.7

   Result in associates


5.3

0.7

4.5

611.3

   Net finance (income) expense


93.8

69.7

24.0

34.4

   Depreciation and amortization


268.5

268.5

-

-

EBITDA


2,091.0

1,198.3

892.7

74.5

EBITDA Margin (%)


13.7%

8.8%

-

-

Net  sales


15,303.0

13,684.9

1,618.1

11.8

EBITDA in 1Q18 reached $2,091.0 million, representing an EBITDA margin of 13.7%, compared to an EBITDA of $1,198.3 million in 1Q17 with an EBITDA margin of 8.8%.

BALANCE SHEET DATA

BALANCE SHEET DATA





In millions of pesos


Mar 31, 2017

Dec. 31, 2017

Change



$

$

$

%

TOTAL ASSETS


50,195.0

50,557.4

(362.4)

(0.7)

Cash and cash equivalents


17,857.3

17,240.1

617.1

3.6

Accounts receivable


3,357.4

3,627.2

(269.8)

(7.4)

TOTAL LIABILITIES


14,689.3

14,879.5

(190.2)

(1.3)

Accounts payable


4,306.9

3,739.5

567.4

15.2

Short-term debt


3,309.9

3,701.9

(392.0)

(10.6)

Long-term debt


1,554.0

1,554.0

(0.0)

(0.0)

TOTAL STOCKHOLDERS' EQUITY


36,569.2

35,677.9

891.3

2.5

Capital stock


1,174.4

1,174.4

-

-

Cash and equivalents as of March 31, 2018 totaled $17,857.3 million; $617.1 million or 3.6% more than $17,240.1 million as of December 31, 2017.

Total debt as of March 31, 2017 totaled $4,863.9 million, compared to $5,255.9 million reported as of December 31, 2017.

Net cash as of March 31, 2018 was $12,993.4 million, compared to net cash of $11,984.2 million as of December 31, 2017.

CAPEX

CAPITAL EXPENDITURES

In millions of pesos


2018

2017

Change



$

$

$

%

Capital Expenditures


304.0

643.3

(339.4)

(52.7)

Total CAPEX for the 1Q18 was $304.0 million, which was mainly allocated toward organic growth and productivity projects across all our facilities.

STOCK INFORMATION

As of March 31, 2018

Total Shares


600,000,000

Total free float


26.75%

Market cap (millions of pesos)


$57,180

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


Mar-18

96.47

92.37

95.30


62.67

58.83

61.95


Feb-18

94.06

89.88

91.66


61.46

57.41

58.01


Jan-18

98.16

93.03

95.65


63.83

57.88

61.94


Dec-17

95.56

89.31

93.62


60.06

56.87

57.30


Nov-17

94.10

88.07

90.75


59.15

56.64

58.02


Oct-17

102.00

93.52

94.15


67.61

58.70

58.89




Source: Yahoo Finances


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 Mayorga

mmayorga@gbm.com.mx

INTERACCIONES CASA DE BOLSA

Martin Lara

mlarap@interacciones.com

JPMORGAN  

Ulises Argote

ulises.argote@jpmorgan.com

INVEX

Giselle Mojica

gmojica@invex.com

APPENDICES

For reference, some figures have been translated into millions of U.S. dollars ("USD") using an exchange rate of $18.30 per USD $1.0, which corresponds to the rate at the close of March 28, 2018, according to Mexico's National Bank.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

-Unaudited-



In U.S. Dollar


March 31,


December 31,

In million pesos


2018


2018


2017*








TOTAL ASSETS

$

2,742.9


50,195.0


50,557.4








Total current assets


1,542.2


28,222.9


28,225.0

   Cash and cash equivalents


975.8


17,857.3


17,240.1

   Total accounts receivable


183.5


3,357.4


3,627.2

   Inventories


334.0


6,111.4


6,669.5

   Other current assets


49.0


896.8


688.2








Total non current assets


1,200.7


21,972.1


22,332.4

   Net property, plant and equipment


934.2


17,095.6


17,320.0

   Other non current Assets


266.5


4,876.5


5,012.3








TOTAL LIABILITIES

$

744.6


13,625.9


14,879.5








Total current liabilities


425.2


7,780.3


9,185.7

   Notes payable to banks


180.9


3,309.9


3,701.9

   Accounts payable


177.2


3,243.5


3,739.5

   Other taxes payable and other accruals


67.0


1,226.9


1,744.3








Total long-term liabilities


319.4


5,845.6


5,693.8

   Long-term debt


84.9


1,554.0


1,554.0

   Other  non current liabilities


14.3


262.3


296.4

   Deferred income taxes


220.2


4,029.4


3,843.4








TOTAL STOCKHOLDERS' EQUITY

$

1,998.3


36,569.2


35,677.9








Capital stock


64.2


1,174.4


1,174.4

Commission in shares issued


22.6


414.4


414.4

Repurchased shares


-


-


-

Retained earnings


1,864.3


34,116.7


32,861.1

Others accounts


43.7


799.4


1,169.1

Non controlling interest


3.5


64.3


59.0








TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

2,742.9


50,195.0


50,557.4


*Audited

CONSOLIDATED STATEMENT OF INCOME

First Quarter Results, ended March 31:

-Unaudited-


U.S. Dollar





In millions pesos

2018


2018


2017*

Net sales

$

836.2


15,303.0


13,684.9

Cost of sales


660.4


12,085.8


11,493.3

Gross profit


175.8


3,217.2


2,191.6

SG&A


75.7


1,385.5


1,261.2

Other income (expenses), net


(0.5)


(9.2)


(0.5)

Operating income


99.6


1,822.5


929.8

Net finance income


(5.1)


(93.8)


-69.7

Income tax


25.6


467.8


207.2

Net Income

$

68.9


1,260.9


652.8








Non-controlling interest


0.29


5.3


0.7

Net controlling interest profit


68.6


1,255.6


652.1

Basic and diluted earnings per share


0.11


2.09


1.09

Basic and diluted earnings per ADR


1.37


25.11


13.04

Weighted average Shares outstanding1


600,000


600,000


600,000








EBITDA Result

$

114.3


2,091.0


1,198.3








Gross margin


21.0%


21.0%


16.0%

Operating margin


11.9%


11.9%


6.8%

Net margin


8.2%


8.2%


4.8%

EBITDA margin


13.7%


13.7%


8.8%

1 In thousands

* Audited

CONSOLIDATED STATEMENT OF CASH FLOWS

In million of pesos




-Unaudited-





U.S. Dollar


March 31,


2018


2018


2017







NET MAJORITY INCOME BEFORE INCOME TAX

$

94.5


1,728.7


860.1








ITEMS RELATING TO INVESTING ACTIVITIES:


9.4


172.0


219.5

      Depreciation and others


16.7


305.0


268.5

      Income (loss) on sale of plant and equipment


0.2


3.7


6.0

      Other Items


(7.5)


(136.7)


(55.0)








NET CASH GENERATED FROM NET INCOME BEFORE TAXES


103.9


1,900.8


1,079.5

CASH GENERATED OR USED IN THE OPERATION:


(32.2)


(589.6)


(398.8)

   Decrease (increase) in accounts receivable


6.5


119.3


489.9

   Decrease (increase) in inventories


27.2


498.1


358.9

   Increase (decrease) in accounts payable


(20.8)


(380.9)


(667.9)

   Increase (decrease) in other liabilities


(45.1)


(826.2)


(579.7)








NET CASH FLOW FROM OPERATING ACTIVITIES


71.6


1,311.1


680.7








NET CASH FLOW FROM INVESTING ACTIVITIES


(3.4)


(61.6)


(392.8)

      Acquisition of property, plant and equipment


(16.6)


(304.0)


(643.3)

      Proceeds from sales of property plant and equipment


0.2


4.4


12.9

      Other Items


13.0


238.0


237.7








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


68.3


1,249.5


287.9








Net cash provided by financing activities:


(34.6)


(632.4)


(529.7)

   Proceeds from loans


164.3


3,006.8


-

   Principal payments on loans


(174.9)


(3,201.5)


(1.0)

   Dividends paid


-


-


-

   Other items


(23.9)


(437.6)


(528.6)

Net increase (decrease) in cash and equivalents


33.7


617.1


(241.7)








Cash and investments at the beginning of year

$

942.1


17,240.1


15,651.5

CASH AND INVESTMENTS AT END OF PERIOD

$

975.8


17,857.3


15,409.8















DERIVATIVES POSITION REPORT

First Quarter 2018

Thousands of Mexican Pesos, as of March 31, 2018

ANEXO 1

TYPE OF FINANCIAL

INSTRUMENT

OBJECTIVE

NOTIONAL

VALUE OF THE RELATED COMMODITY

REASONABLE VALUE

AMOUNTS DUE

BY YEAR

GUARANTIES REQUIRED

1Q-2018

4Q-2017

1Q-2018

4Q-2017

Forward Vanilla and KO Forwards

Hedge

$

1,175,566

$

18.30

$

19.66

$

-41,144

$

-8,030

in 2018

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

Futures for corn and soybean meal

Hedge

$

28,669

CORN

 CORN

$

842

-$

3,329

in 2018

In USD per Bushel

 In USD per Bushel

month

 price

 month

 price





May-18

$

3.878

Mar-18

$

3.508

Sep-18

$

4.033

Sep-18

$

3.748

SOYBEAN MEAL

 SOYBEAN MEAL

In USD per ton

 In USD per ton

month

 price

 month

 price

May-18

$

384.0

Mar-18

$

316.8

Options of Corn

Hedge

$

68,384

CORN

 CORN

$

814

$

172

92%  in 2018 and 8% in 2019

In USD per Bushel

 In USD per Bushel

month

 price

 month

 price

Jul-18

$

3.678

Mar-18

$

3.508

Sep-18

$

4.033

May-18

$

3.590

Dec-18

$

3.970




Mar-19

$

4.183

Jul-18

$

3.678

Options of soybean meal

Hedge

$

94,633

SOYBEAN MEAL

 SOYBEAN MEAL

-$

784

$

227

86% in 2018 and 14% in 2019

In USD per ton

 In USD per ton

month

 price

 month

 price

May-18

$

384.0




Aug-18

$

383.2




Sep-18

$

380.0

Mar-18

$

316.8






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

-The notional value represents the net position as of March 31, 2018 at the exchange rate of Ps. 18.30 per one dolar

-A negative value means an unfavorable effect for the Company

First Quarter 2018

Thousands of Mexican Pesos, as of March 31, 2018




PROBABLE SCENARIO

TYPE OF FINANCIAL

NSTRUMENT

REASONABLE VALUE

VALUE OF THE RELATED COMMODITY

EFFECT ON THE

INCOME STATEMENT

EFFECT ON THE CASH FLOW(3)

Reference Value

-2.5%

2.5%

5.0%

-2.5%

2.5%

5.0%

Forwards Vanilla and Ko Forwards

-$

41,144

$

17.85

$

18.76

$

19.22

 Direct 

-$

70,533

-$

11,755

$

17,634



-5%

5%

10%


-5%

5%

10%

Futures of Corn: (2)

$

842

$

3.684

$

4.072

$

4.266

 The effect will materialize as the inventory is consumed 

-$

591

$

2,275

$

3,708

Futures of Soybean Meal: (2)

$

364.8

$

403.2

$

422.4

Options for Corn

$

814

$

3.684

$

4.072

$

4.266

$

1,443

$

4,233

$

7,651

Options of Soybean Meal

-$

784

$

364.8

$

403.2

$

422.4

-$

5,515

$

3,946

$

8,676









(1)The reference value is the exchange  rate of Ps. $18.30 per USD as of March 31, 2018.

(2)The reference values are; the future of corn for May 2018, $3.8780 USD/bushel and the future of soybeanmeal for May 2018, $384.0  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.

 

First Quarter 2018

Thousands of Mexican Pesos, as of March 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

-$

41,144

$9.15

$13.73

$22.88

$27.46

 Direct 

-$628,927

-$335,035

$218,504

$477,616

CONFERENCE CALL INFORMATION

The Company will host its first quarter 2018 earnings call, on Thursday, April 26th, 2018. 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:
http://web.meetme.net/r.aspx?p=12&a=UOLvXrKVZpvjqE

Confirmation Number: 46815920

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.

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