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 FOURTH QUARTER ENDED AS OF DECEMBER 31, 2019

 

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: February 4, 2020

 

 

 

Exhibit 99.1

 

 

 

INDUSTRIAS BACHOCO ANNOUNCES FOURTH QUARTER 2019 RESULTS

 

Celaya, Guanajuato, Mexico – February 4th, 2019

 

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 31st, 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  4Q19   4Q18   Change 
In millions of pesos  $   $   $   % 
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  4Q19   4Q18   Change 
In millions of pesos  $   $   $   % 
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      Change 
In tons  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.

 

2

 

 

             
GROSS PROFIT  4Q19   4Q18   Change 
In millions of pesos  $   $   $   % 
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”)  4Q19   4Q18   Change 
In millions of pesos  $   $   $   % 
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  4Q19   4Q18   Change 
In millions of pesos  $   $   $   % 
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  4Q19   4Q18   Change 
In millions of pesos  $   $   $   % 
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  4Q19   4Q18   Change 
In millions of pesos  $   $   $   % 
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 

 

3

 

 

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  4Q19   4Q18   Change 
In millions of pesos  $   $   $   % 
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  4Q19   4Q18   Change 
In millions of pesos  $   $   $   % 
Net income   160.8    711.4    (550.6)   (77.4)
Net margin   1.1%   4.6%   -    - 
Basic and diluted earnings per share1   0.26    1.18    (0.9)   n/a 
Basic and diluted earnings per ADR2   3.09    14.20    (11.1)   n/a 
Weighted average Shares outstanding3   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  4Q19   4Q18   Change 
In millions of pesos  $   $   $   % 
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  2019   2018   Change 
In millions of pesos  $   $   $   % 
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)

 

4

 

 

NET SALES BY SEGMENT  2019   2018   Change 
In millions of pesos  $   $   $   % 
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 

 

NET VOLUME SOLD BY SEGMENT      Change 
In metric tons  2019   2018   Volume   % 
Total sales volume:   2,254,819    2,206,240    48,579    2.20 
Poultry   1,739,448    1,752,930    (13,482.2)   (0.8)
Others   515,371    453,310    62,061    13.69 

 

In 2019, net sales totaled $61,658.6 million; $606.5 million or 1.0% more than the $61,052.1 million reported in the same period of 2018.

 

In 2019, sales of our U.S. operations represented 27.5% of our total sales, compared with 28.8% in 2018.

 

OPERATING RESULTS  2019   2018   Change 
In millions of pesos  $   $   $   % 
Cost of Sales   51,558.1    51,422.4    135.8    0.3 
Gross Profit   10,100.5    9,629.7    470.8    4.9 
Total SG&A   6,094.4    6,024.4    70.0    1.2 
Other Income (expense)   (83.3)   102.7    (185.9)   (181.1)
Operating Income   3,922.8    3,708.0    214.8    5.8 
Net Financial Income   363.2    808.6    (445.3)   (55.1)
Income Tax   1,117.7    1,155.0    (37.3)   (3.2)
Net Income   3,168.4    3,361.6    (193.2)   (5.7)

 

In the 2019, the cost of sales totaled $51,558.1 million; $135.8 million or 0.3% higher than $51,422.4 million reported in the 2018.

 

As a result, we reached a gross profit of $10,100.5 million and a gross margin of 16.4% in 2019, when compare to $9,629.7 million of gross profit and a gross margin of 15.8% reached in the same period of 2018.

 

Total SG&A in 2019 were $6,094.4 million; $70.0 million or 1.2% higher than the $6,024.4 million reported in 2018. In 2019 total SG&A expenses as a percentage of net sales represented 9.9%, the same rate as 2018.

 

In 2019 we had other expenses of $83.3 million, compared with other income of $102.7 million reported in 2018.

 

The operating income in 2019 was $3,922.8 million, which represents an operating margin of 6.4%, an increase from an operating income of $3,708.0 million and an operating margin of 6.1% in 2018.

 

The net financial income in 2019 was $363.2 million lower when compared to a net financial income of $808.6 million in 2018.

 

5

 

 

Total taxes were $1,117.7 million as of December 31st, 2019. These taxes include $802.0 million of income tax and $315.7 million of deferred income taxes. This figure compares to total taxes of $1,155.0 million in 2018.

 

All the above resulted in a net income of $3,168.4 million or 5.1% of net margin in 2019, which represents $5.26 pesos of earnings per share; while in the 2018 the net income totaled $3,361.6 million, 5.5% of net margin and $5.58 pesos of net income per share.

 

EBITDA  2019   2018   Change 
In millions of pesos  $   $   $   % 
Net controlling interest profit   3,153.4    3,350.0    (196.6)   (5.9)
Income tax expense (benefit)   1,117.7    1,155.0    (37.3)   (3.2)
Result in associates   15.0    11.6    3.3    28.8 
Net finance (income) expense   (363.2)   (808.6)   445.3    (55.1)
Depreciation and amortization   1,292.8    1,285.1    7.7    0.6 
EBITDA   5,215.6    4,993.1    222.5    4.5 
EBITDA Margin (%)   8.5%   8.2%   -    - 
Net revenues   61,658.6    61,052.1    606.5    1.0 

 

EBITDA in 2019 reached $5,215.6 million, representing an EBITDA margin of 8.5%, compared to an EBITDA of $4,993.1 million in 2018, with an EBITDA margin of 8.2%.

 

BALANCE SHEET

 

BALANCE SHEET DATA  Dec 31st, 2019   Dec. 31st, 2018   Change 
In millions of pesos  $   $   $   % 
TOTAL ASSETS   55,763.0    52,865.6    2,897.4    5.5 
Cash and cash equivalents   19,182.9    18,458.5    724.4    3.9 
Accounts receivable   3,880.8    3,486.5    394.3    11.3 
TOTAL LIABILITIES   15,493.6    14,699.9    793.7    5.4 
Accounts payable   4,198.2    4,228.4    (30.2)   (0.7)
Short-term debt   3,440.4    3,492.8    (52.4)   (1.5)
Long-term debt   1,488.2    1,544.8    (56.6)   (3.7)
TOTAL STOCKHOLDERS’ EQUITY   40,269.3    38,165.7    2,103.6    5.5 
Capital stock   1,174.3    1,174.3    (0.0)   (0.0)

 

Cash and equivalents as of December 31st, 2019 totaled $19,182.9 million vs $18,458.6 million as of December 31st, 2018.

 

Total debt as of December 31st, 2019 was $4,928.6 million, compared to $5,037.6 million reported as of December 31st, 2018.

 

Net cash as of December 31st, 2019 was $14,254.3 million, compared to net cash of $13,420.9 million as of December 31st, 2018.

 

CAPITAL EXPENDITURES  2019   2018   Change 
In millions of pesos  $   $   $   % 
Capital Expenditures   2,025.1    1,982.6    42.5    2.1 

 

6

 

 

Total CAPEX for 2019 was $2,025.1 million vs $1,982.6 million in 2018, mainly allocated toward organic growth and productivity projects across all of our facilities.

 

STOCK INFORMATION    
As of December 31, 2019    
Total Shares   600,000,000 
Total free float   26.75%
Market cap (millions of pesos)  $48,858 

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 
December   83.46    79.77    81.43    52.99    51.09    52.00 
November   85.92    80.00    84.69    53.72    49.26    51.18 
October   84.46    81.35    86.38    54.99    49.56    53.84 
September   92.44    84.51    86.86    56.34    51.68    53.23 
August   91.65    82.89    91.65    55.01    50.41    55.01 
July   86.70    80.00    86.70    54.18    50.09    54.04 
June   84.98    79.99    80.40    52.92    50.11    50.67 
May   87.22    77.68    86.25    55.01    49.42    52.50 
April   78.67    71.14    77.68    49.75    45.23    49.00 
March   75.88    70.51    74.59    47.98    45.72    46.10 
February   76.06    72.83    74.84    47.74    45.17    46.93 
January   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 Placido  jorge.placido@apalache.mx
BBVA BANCOMER  Pablo Abraham Peregrina  pablo.abraham@bbva.com
GBM  Miguel Tortolero  matortolero@gbm.com.mx
INTERCAM  Cristian M. Sánchez Arenas  crsancheza@intercam.com.mx
INVEX  Giselle Mojica  gmojica@invex.com
JP MORGAN  Ulises Argote  ulises.argote@jpmorgan.com
MONEX  Blanca Jimena Colin Fernandez  bjcolinf@monex.com.mx
SANTANDER  Hector Maya López  hmmaya@santander.com.mx

 

APPENDICES

 

For reference, some figures have been translated into millions of U.S. dollars (“USD”) using an exchange rate of $18.89 per USD $1.0, which corresponds to the rate at the close of December 31st, 2019 according to Mexico’s National Bank.

 

7

 

 

·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  2019   2019   2018* 
TOTAL ASSETS  $2,952.0    55,763.0    52,865.6 
                
Total current assets   1,646.3    31,098.5    29,775.0 
Cash and cash equivalents   1,015.5    19,182.9    18,458.5 
Total accounts receivable   205.4    3,880.8    3,486.5 
Inventories   357.5    6,753.4    6,649.1 
Other current assets   67.8    1,281.4    1,180.9 
                
Total non current assets   1,305.7    24,664.4    23,090.6 
Net property, plant and equipment   982.1    18,551.2    18,018.2 
Other non current Assets   323.6    6,113.2    5,072.4 
                
TOTAL LIABILITIES  $820.2    15,493.6    14,699.9 
                
Total current liabilities   475.4    8,981.2    9,084.9 
Notes payable to banks   182.1    3,440.4    3,492.8 
Accounts payable   222.2    4,198.2    4,228.4 
Other taxes payable and other accruals   71.1    1,342.6    1,363.7 
                
Total long-term liabilities   344.8    6,512.4    5,614.9 
Long-term debt   78.8    1,488.2    1,544.8 
Other  non current liabilities   59.3    1,119.7    302.8 
Deferred income taxes   206.7    3,904.5    3,767.3 
                
TOTAL STOCKHOLDERS' EQUITY  $2,131.8    40,269.3    38,165.7 
                
Capital stock   62.2    1,174.3    1,174.3 
Commission in shares issued   21.9    414.5    414.5 
Retained earnings   1,993.8    37,662.3    35,354.5 
Others accounts   49.4    933.8    1,153.0 
Non controlling interest   4.5    84.4    69.5 
                
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $2,952.0    55,763.0    52,865.6 

 

 

 *Audited

 

8

 

 

CONSOLIDATED STATEMENT OF INCOME

Fourth Quarter Results, ended December 31st:

-Unaudited-      

 

   U.S. Dollar         
In millions pesos  2019   2019   2018* 
Net sales  $801.4    15,138.0    15,421.0 
Cost of sales   697.3    13,171.4    13,272.7 
Gross profit   104.1    1,966.6    2,148.3 
SG&A   83.2    1,571.6    1,650.7 
Other income (expenses), net   (8.1)   (152.9)   (8.0)
Operating income   12.8    242.1    489.6 
Net finance income   (11.1)   (210.0)   403.8 
Income tax   (6.8)   (128.8)   182.0 
Net Income  $8.5    160.8    711.4 
                
Non-controlling interest   0.34    6.4    1.7 
Net controlling interest profit   8.2    154.5    709.7 
Basic and diluted earnings per share   0.01    0.26    1.18 
Basic and diluted earnings per ADR   0.16    3.09    14.20 
Weighted average Shares outstanding1   599,967    599,967    599,943 
                
EBITDA Result  $30.3    571.5    817.2 
                
Gross margin   13.0%   13.0%   13.9%
Operating margin   1.6%   1.6%   3.2%
Net margin   1.0%   1.1%   4.6%
EBITDA margin   3.8%   3.8%   5.3%

 

 

1 In thousands

* Audited

 

9

 

 

CONSOLIDATED STATEMENT OF INCOME

Annual Results

-Unaudited-

 

   U.S. Dollar         
In millions pesos  2019   2019   2018* 
Net sales  $3,264.1    61,658.6    61,052.1 
Cost of sales   2,729.4    51,558.1    51,422.4 
Gross profit   534.7    10,100.5    9,629.7 
Selling, general and administrative expenses   322.6    6,094.4    6,024.4 
Other income (expenses), net   (4.4)   (83.3)   102.7 
Operating income   207.7    3,922.8    3,708.0 
Net finance income   19.2    363.2    808.6 
Income tax   59.2    1,117.7    1,155.0 
Net income  $167.7    3,168.4    3,361.6 
                
Non-controlling interest   0.8    15.0    11.6 
Net controlling interest profit   166.9    3,153.4    3,350.0 
Basic and diluted earnings per share   0.28    5.26    5.58 
Basic and diluted earnings per ADR   3.34    63.1    67.0 
Weighted average Shares outstanding1   599,973    599,973    599,981 
                
EBITDA Result  $276.1    5,215.6    4,993.1 
                
Gross margin   16.4%   16.4%   15.8%
Operating margin   6.4%   6.4%   6.1%
Net margin   5.1%   5.1%   5.5%
EBITDA margin   8.5%   8.5%   8.2%

 

 

1 In thousands

* Audited

 

10

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

In million of pesos

-Unaudited-

 

   U.S. Dollar   December 31, 
    2019    2019    2018* 
NET MAJORITY INCOME BEFORE INCOME TAX  $226.9    4,286.0    4,516.6 
                
ITEMS RELATING TO INVESTING ACTIVITIES:   34.2    646.8    526.2 
Depreciation and others   68.4    1,292.8    1,226.9 
Income (loss) on sale of plant and equipment   (4.5)   (85.2)   23.2 
Other Items   (29.7)   (560.8)   (723.9)
                
NET CASH GENERATED FROM NET INCOME BEFORE TAXES   261.1    4,932.8    5,042.8 
CASH GENERATED OR USED IN THE OPERATION:   (83.2)   (1,571.3)   (1,561.0)
Decrease (increase) in accounts receivable   34.8    657.5    (498.8)
Decrease (increase) in inventories   (14.7)   (276.9)   149.7 
Increase (decrease) in accounts payable   (38.9)   (734.1)   526.1 
Other Items   (64.5)   (1,217.8)   (1,738.1)
                
NET CASH FLOW FROM OPERATING ACTIVITIES   178.0    3,361.5    3,481.8 
                
NET CASH FLOW FROM INVESTING ACTIVITIES   (46.8)   (884.5)   (895.6)
Acquisition of property, plant and equipment   (107.2)   (2,025.1)   (1,977.6)
Proceeds from sales of property plant and equipment   10.4    197.1    32.5 
Other Items   49.9    943.5    1,049.5 
                
CASH FLOW SURPLUS (REQUIREMENTS OF) TO BE USED IN FINANCING ACTIVITIES   131.1    2,477.0    2,586.2 
                
Net cash provided by financing activities:   (93.4)   (1,764.1)   (1,374.4)
Proceeds from loans   259.9    4,909.0    3,370.4 
Principal payments on loans   (257.2)   (4,858.6)   (3,588.1)
Dividends paid   (44.5)   (840.0)   (852.0)
Other items   (51.6)   (974.6)   (304.7)
Net increase (decrease) in cash and equivalents   37.7    712.9    1,211.8 
                
Cash and investments at the beginning of year  $976.8    18,451.9    17,240.1 
CASH AND INVESTMENTS AT END OF PERIOD  $1,014.5    19,164.8    18,451.9 

 

*Audited

 

11

 

 

DERIVATIVES POSITION REPORT

 

Fourth Quarter 2019

Thousands of Mexican Pesos, as of December 31, 2019

 

TYPE OF FINANCIAL
INSTRUMENT
OBJECTIVE NOTIONAL VALUE OF THE RELATED COMMODITY REASONABLE VALUE AMOUNTS DUE
BY YEAR
GUARANTIES
REQUIRED
4Q-2019 3Q-2019 4Q-2019 3Q-2019
Forward Vanilla and KO Fwd Hedge  $   23,752 $    18.89   $    19.72   $   -9,431  $      -2,595 100% in 2020 The deals consider the possibility of margin calls but not another kind of guarantee
Futures for corn and soybean meal Hedge  $   713,867  CORN  CORN  $   8,557  $      4,898 100% in 2020
In USD per Bushel In USD per Bushel
 month  price  month  price
Mar-20 $   3.878 Mar-20 $   3.995
May-20 $   3.948 May-20 $   4.053
Jul-20 $   4.010 Jul-20 $   4.085
Sep-20 $   4.010    
Dec-20 $   4.025 Dec-19 $   3.880
 SOYBEAN MEAL  SOYBEAN MEAL
 In USD per ton  In USD per ton
 month  price  month  price
    Jan-20 $   302.8
Mar-20 $   304.7 Mar-20 $   306.2
May-20 $   308.5 May-20 $   310.4
    Jul-20 $   314.8
    Aug-20 $   316.7
    Sep-20 $   317.7
    Oct-20 $   317.7
    Dec-20 $   319.5
Options of Corn Hedge  $     80,663  CORN  CORN  $      622  $         113 100% in 2020
 In USD per Bushel  In USD per Bushel
 month  price  month  price
       
    Dec-19 $   3.880
Mar-20 $   3.878 Mar-20 $   3.995
May-20 $   3.948 May-20 $   4.053
Jul-20 $   4.010 Jul-20 $   4.085
Options of soybean meal Hedge  $     24,316  SOYBEAN MEAL  SOYBEAN MEAL  $        10 -$     1,290 100% in 2020
 In USD per ton  In USD per ton
 month  price  month  price
       
       
    Dec-19 $   301.0
    Jan-20 $   302.8
Mar-20 $   304.7 Mar-20 $   306.2
May-20 $   308.5 May-20 $   310.4
Jul-20 $   312.0 Jul-20 $   314.8
       

 

-The total financial instruments do not exceed 5% of total assets as of December 31, 2019.

-The notional value represents the net position as of December 31, 2019 at the exchange rate of Ps. 18.89 per one dollar.

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

 

12

 

 

Fourth Quarter 2019

 

Thousands of Mexican Pesos, as of December 31, 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 and KO Fwd -$         9,431 $     18.42 $     19.36 $    19.83  Direct -$    20,647 $     1,786 $   11,966
    -5% 5% 10%   -5% 5% 10%
Futures of Corn: (2) $         8,557 $     3.684 $     4.071 $    4.265 The effect will materialize as the inventory is consumed -$    27,137 $   44,250 $   79,943
Futures of Soybean Meal: (2) $     289.5 $     319.9 $    335.2
Futures for Soy Oil (2) $            - $             - $            -
Options for Corn $            622 $     3.684 $     4.071 $    4.265 $         261 $        933 $     1,748
Options of Soybean Meal $             10 $     289.5 $     319.9 $    335.2 -$      1,206 $     1,226 $     2,442

 

(1) The reference value is the exchange rate of Ps. $18.89 per USD as of December 31, 2019.

(2) The reference values are; the future of corn for Mar 2020, $3.8775 USD/bushel and the future of soybeanmeal for Mar 2020, $304.70 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 2019

Thousands of Mexican Pesos, as of December 31, 2019  STRESS SCENARIO

 

TYPE OF FINANCIAL
INSTRUMENT
  VALUE OF THE RELATED COMMODITY EFFECT ON THE
INCOME
STATEMENT
EFFECT ON THE CASH FLOW

REASONABLE

Reference Value
VALUE -50% -25% 25% 50% -50% -25% 25% 50%
Forward Vanilla and KO Fwd -$    9,431 $    9.45 $    14.17 $    23.61 $    28.34 Direct -$    233,768 -$    121,599 $    97,167 $    203,669

 

13

 

 

CONFERENCE CALL INFORMATION

 

The Company will host its fourth quarter 2019 earnings call, on Wednesday, February 4th, 2020. 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=UhggcfoLCxGEOl

 

Confirmation Number: 49321551

 

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.

 

 iba_nyse.JPG LOGOS_BACHOCO_ALTA.JPG 

IR contact information:

maria.jaquez@bachoco.net

andrea.guerrero@bachoco.net

T. +52(461)618 3555

 

14