Highlights:
* Sales for fourth quarter increased 17.4% to Ps. 3,995.3 million;
* Gross profit was Ps. 1,047.8 million for the quarter;
* Fourth quarter operating margin was 13.14%;
* EBITDA reached Ps. 656.7 million, the highest in a fourth quarter for
the company, representing an EBITDA margin of 16.4%;
* Volume of balanced feed increased by 14.6%, compared to fourth quarter
of 2005;
* Achieved an EPS of Ps. 0.18 (US $0.20 per ADS) for the fourth quarter
compared to an EPS of Ps. 0.10 (US $0.11 per ADS) in the same period
last year.
Comments from the CEO:
Cristobal Mondragon, CEO of Bachoco stated, "We achieved significant results in the fourth quarter in a challenging environment. The effects of hurricane Lane on our northwestern complex and the increase in price of grain, one of our main feed ingredients, were offset by a strong level of demand and consistent supply in our chicken and table egg markets.
"Our efficiency, flexibility, rapid response and coordinated efforts to mitigate the effects of the hurricane enabled us to satisfy the robust level of demand we foresaw in the quarter and achieve strong operating results compared to the same quarter of 2005.
"Bachoco's balanced feed business also continued to grow significantly during the quarter.
"Capital expenditures continue to be internally financed through our operations.
"We continue to execute on our growth strategies. During the quarter we announced the acquisition of farms and the leasing of a processing plant and feed mill from "Del Mezquital" located in northern Mexico, as a first step for a complex, based in Hermosillo, Sonora.
"In addition, we recently announced that the Company is in the process of negotiating a business agreement with "Grupo Libra", a poultry company located in the state of Nuevo Leon in Northeast Mexico."
FOURTH QUARTER 2006 RESULTS
Net Sales
Net sales for the quarter reached Ps. 3,995.3 million, an increase of 17.4% compared to the Ps. 3,403.1 million reported for 4Q05. This increase was mainly driven by increases of 18.4% in chicken sales, 15.0% in table egg sales and 20.5% in balanced feed sales; which were slightly offset by an 8.7% decrease in swine sales.
Net Sales by Product Line 4Q05 4Q06
% %
CHICKEN 77.41 78.04
EGGS 9.58 9.38
BALANCED FEED 8.55 8.78
SWINE AND OTHER LINES 4.46 3.80
TOTAL COMPANY 100.00% 100.00%
Operating Results
Bachoco's fourth quarter gross margin was 26.2%, compared to 18.2% in 4Q05, mainly due to a 21.3% increase in the price of chicken and a 13.3% increase in the price of table eggs. The Company's operating margin was 13.1%, compared to 2.9% for the same quarter of 2005. EBITDA during the quarter reached Ps. 656.7 million.
Taxes
Taxes recognized by the Company during the quarter were Ps. 109.0 million.
Net Income
Net income for 4Q06 was Ps. 109.2 million, or Ps. 0.18 per share (US $0.20 per ADS), compared to net income of Ps. 57.5 million, or Ps. 0.10 per share (US $0.11 per ADS) reported in the same period of 2005. The Company recognized a one-time Ps. 322.6 million deferred tax effect in the fourth quarter, as a result of the change in the rate of income tax for the agricultural sector in Mexico that will take effect in 2007. This effect does not affect the cash flow of the Company.
RESULTS BY BUSINESS SEGMENT
Chicken
Chicken sales increased 18.4% during 4Q06 as a result of a 21.4% increase in prices compared with 4Q05. Increase in pricing was mainly due to normalized supply and strong demand conditions, while a 2.5% decrease in volume was mainly due to the effects of hurricane Lane on the southern part of the State of Sinaloa.
Table Eggs
Sales of table eggs increased by 15.0% and volume improved by 1.5% during 4Q06 as a result of a 13.3% increase in prices compared to 4Q05. Prices and supply continued to be normalized in the market during the quarter.
Balanced Feed
Sales of balanced feed increased 20.5% when compared to the fourth quarter of last year, as a result of a 14.6% increase in volume and 5.1% increase in pricing.
Swine and Other Lines
Sales of swine decreased 8.7% in the fourth quarter. This decline is mainly the result of a 12.5% reduction in the price of swine compared to 4Q05, due to larger supplies in the Mexican market, and was offset in part by a volume increase of 4.3%.
FULL YEAR 2006 RESULTS
Net Sales
Net sales for fiscal 2006 reached Ps. 14,974.6 million, compared to Ps. 15,022.6 million reported for fiscal 2005, representing a decrease of 0.3%. This decrease was mainly the result of decreases in sales of 3.5% in chickens and 18.5% in swine, which were partially offset by increases of 25.4% in balanced feed and 5.9% in table eggs.
Net Sales by Product Line Year 2005 Year 2006
% %
CHICKEN 80.12 77.58
EGGS 8.68 9.22
BALANCED FEED 7.16 9.01
SWINE AND OTHER LINES 4.04 4.19
TOTAL COMPANY 100.00% 100.00%
Operating Results
Bachoco's gross margin reached 22.4% during fiscal 2006, which is lower than the 27.92% gross margin reported for 2005. This decrease was primarily due to a reduction in sales and pricing of chickens and swine and a 7.3% increase in cost of sales. Bachoco's operating margin was 9.1%, compared with a 15.1% operating margin for 2005. EBITDA for the year reached Ps. 1,737.5 million.
Taxes
Taxes recognized by the Company during the year were Ps. 318.1 million.
Net Income
Net income for the year ended December 31, 2006, was Ps. 891.7 million, or Ps. 1.49 per share, (U.S. $1.65 per ADS), compared to net income of Ps. 1,847.9 million, or Ps. 3.08 per share (U.S. $3.42 per ADS) reported in 2005. This result includes a one-time Ps. 322.6 million deferred tax effect, resulting from the change in the rate of income tax for the agricultural sector in Mexico that will take effect in 2007. This effect does not affect the cash flow of the Company.
Balance Sheet
The Company maintained a healthy financial structure at the end of the year. Liquidity remained solid with cash and cash equivalents of Ps. 3,455.1 million as of December 31, 2006. Debt was Ps. 43.6 million as of December 31, 2006.
Capital expenditures during the year were Ps. 943.3 million, financed entirely through resources generated by operations.
Company Description
Industrias Bachoco S.A. de C.V. -- also referred to in this report as Bachoco or the Company -- was founded by the Robinson Bours family in 1952, in the state of Sonora. Since then, it has grown into the largest poultry company in Mexico, with over 700 production and distribution facilities currently organized in seven complexes throughout the country. Bachoco's main business lines are: chicken, eggs, swine, and the Company also is an important player in the balanced feed industry in Mexico. The Company's headquarters are based in Celaya, Guanajuato, located in Mexico's central region.
Industrias Bachoco made an initial public stock offering in September 1997. Its securities are listed and traded on the Mexican Stock Exchange (Bolsa Mexicana de Valores or BMV) under the ticker symbol Bachoco B, and on the New York Stock Exchange (NYSE) under the ticker symbol IBA.
The Company posted net sales of $1.39 billion USD for 2006, divided among the Company's four main product lines as follows: 77.6% chicken, 9.2% table eggs, 9.0% balanced feed, and 4.2% swine and other lines.
For more information, please visit Bachoco's website at http://www.bachoco.com.mx .
This press release contains certain forward-looking statements that are subject to a number of uncertainties, assumptions and risk factors that may influence its accuracy. Actual results may differ. Factors that could cause these projections to differ, include, but are not limited to: supply and demand, industry competition, environmental risks, economic and financial market conditions in Mexico and operating cost estimates. For more information regarding Bachoco and its outlook, please contact the Company's Investor Relations Department.
INDUSTRIAS BACHOCO, S.A. DE C.V. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(millions of constant pesos as of December 31, 2006, and millions of
U.S. dollars, except per share data)
Fourth Quarter Full Year
Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31
2006(1) 2006 2005 2006(1) 2006 2005
Net Sales US 370 Ps3,995 Ps3,403 US 1,387 Ps14,975 Ps15,023
Cost of Sales 273 2,947 2,783 1,076 11,616 10,828
Gross Profit 97 1,048 620 311 3,358 4,195
Selling,
general and
administrative
expenses 48 523 520 185 1,997 1,925
Operating
Income 49 525 100 126 1,361 2,270
Comprehensive
Financing
Cost (income)
Interest
Expense (Income) 1 9 39 (4) (39) 128
Foreign Exchange
Loss (gain) (5) (57) (38) (16) (177) (171)
Gain from
Monetary
Position 3 30 29 7 76 56
Total
Comprehensive
Financing Cost
(income) (2) (18) 30 (13) (140) 13
Other Income Net (2) (18) (6) 1 15 (38)
Income before
Provisions
for Income
Tax, Employee
Profit Sharing
and Minoritary
Interest 49 525 63 140 1,516 2,219
Provisions for:
Income Tax,
Asset Tax
& Employee
Profit
Sharing (7) (76) (20) (23) (246) (315)
Deferred
Income
Taxes (33) (355) (6) (36) (388) (79)
Income before
Minority
Interest 9 94 36 82 882 1,825
Minority
Interest 0 1 (1) (0) (1) (2)
Net Income 9 95 36 82 881 1,824
Effects of
Bulletin E-1 1 15 22 1 11 24
Net income
after
Bulletin e-1 10 109 57 83 892 1,848
Weighted
Average Units
Outstanding
(Thousand) 600,000 600,000 599,080 599,571 599,571 599,693
Net Income
per Share 0.20 0.18 0.10 1.65 1.49 3.08
Dividend
per Share -- -- -- 0.06 0.61 0.42
(1) Peso amounts have been translated into U.S. dollars, solely for the
convenience of the reader, at the rate of Ps. 10.7995 per U.S.
dollar, the noon buying rate at December 29, 2006.
INDUSTRIAS BACHOCO, S.A. DE C.V. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(millions of constant pesos as of December 31, 2006, and millions of
U.S. dollars)
Dec '31 Dec '31 Dec '31
2006(1) 2006 2005
ASSETS
Current Assets:
Cash and Cash
Equivalents US 320 Ps 3,455 Ps 3,296
Accounts Receivable
less allowance for
Doubtful Accounts 45 489 493
Inventories 264 2,849 1,878
Other Current Assets 31 335 380
Total Current Assets 660 7,127 6,047
Net Property, Plant and
Equipment 877 9,472 9,541
Other Non Current Assets 35 377 344
Total Non Current Assets 912 9,849 9,885
TOTAL ASSETS 1,572 16,977 15,932
LIABILITIES
Current Liabilities:
Notes Payable to Banks 1 9 96
Trade Accounts Payable 77 835 456
Other Accrued Liabilities 31 337 461
Total Current Liabilities 109 1,181 1,013
Long-Term Debt 3 34 54
Labor Obligations 6 63 88
Deferred Income Taxes and
Others 196 2,119 1,763
Total Long-Term Liabilities 205 2,216 1,905
TOTAL LIABILITIES 315 3,397 2,918
STOCKHOLDERS' EQUITY
Capital stock 203 2,189 2,212
Premium in Public Offering
of Shares 59 636 700
Retained Earnings 1,350 14,575 13,100
Net Income for the Year 83 892 1,839
Deficit from Restatement of
Stockholders' Equity (336) (3,627) (3,668)
Reserve for Repurchase of
Shares 22 235 154
Minimum Seniority Premium
Liability Adjustment -- -- (3)
Effect of Deferred Income
Taxes (126) (1,364) (1,364)
Total Majority
Stockholder's Equity 1,253 13,535 12,969
Minority Interest 4 44 45
TOTAL STOCKHOLDERS' EQUITY 1,257 13,579 13,014
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY 1,572 16,977 15,932
(1) Peso amounts have been translated into U.S. dollars, solely for
the convenience of the reader, at the rate of Ps. 10.7995 per
U.S. dollar, the noon buying rate at December 29, 2006.
INDUSTRIAS BACHOCO, S.A. DE C.V. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Financial Position
(millions of constant pesos as of December 31, 2006, and millions of
U.S. dollars)
Dec '31 Dec '31 Dec '31
2006(1) 2006 2005
Operating Activities:
Net Income US$ 83 Ps. 893 Ps. 1,850
Adjustments to
Reconcile Net
Income to Resources
Provided by Operating
Activities:
Depreciation and Others 48 519 478
Changes in Operating
Assets and Liabilities (18) (194) (486)
Deferred Income Taxes 33 356 121
Resources Provided by
Operating Activities 146 1,573 1,963
Financing Activities:
Increase of Capital Stock 0 0 (0)
Proceeds from
Long-term Debt -- -- (0)
Proceeds from
Short-term Debt 4 42 170
Repayment of Long-term
Debt and Notes Payable (14) (149) (205)
Decrease in Long-term Debt
in Constant Pesos -- -- --
Cash Dividends Paid (34) (365) (254)
Resources Provided by
(Used in)
Financing Activities (44) (471) (289)
Investing Activities:
Acquisition of Property,
Plant and Equipment (86) (926) (833)
Minority Interest (0) (1) 0
Others (1) (16) (59)
Resources Used in Investing
Activities (87) (943) (892)
Net (Decrease) Increase
in Cash and Cash
Equivalents 15 159 782
Cash and Cash Equivalents
at Beginning of Period 305 3,296 2,514
Cash and Cash Equivalents
at End of Period US$ 320 Ps. 3,455 Ps. 3,296
(1) Peso amounts have been translated into U.S. dollars, solely
for the convenience of the reader, at the rate of Ps. 10.7995
per U.S. dollar, the noon buying rate at December 29, 2006.
