Industrias Bachoco S.A.B. de C.V., has announced its unaudited results for the third quarter 2012 (3Q12) and first nine months (9M12) ended 30 September 2012. All figures have been prepared in accordance with International Financial Reporting Standard and are presented in nominal million Mexican Pesos (MXP).

For 3Q12, net sales increased 52.0 per cent compared to the same period of 2011, and EBITDA margin reached 9.6 per cent. Earnings per share totalled MXP1.05 (MXP12.55 per ADS), compared to a net loss per share of MXP0.18 (-MXP2.10 per ADS) in 3Q11.

CEO comments

"Bachoco's third quarter results were sound, due to an adequate balance between supply and demand in the Company's main business lines, improvements in production efficiencies as a result of investments in productivity projects, as well as a reduction in operating expenses as a percentage of sales, which allowed Bachoco to offset cost increases, which have been driven by sustained raw materials price increases.

"The Company was able to sell all of its chicken and egg production, and recovered a portion of price lags within these business lines.

"In addition, Bachoco's US complex continued to operate with positive results, with its integration into the Company in-line with Bachoco's overall strategy.

"Furthermore, the Company successfully issued its first local bond during the third quarter, which will be mainly used to pre-pay some debt as well as to diversify and make the Company's debt structure more efficient. It is worth nothing that the Company's financial position remains strong, with negative debt net."

Executive summary

The Company's 3Q12 net sales totalled MXP9,901.0 million, 52.0 per cent higher than the MXP6,514.7 million reported in 3Q11. This resulted from strong increases in sales across all business lines. In particular, chicken sales increased year-over-year mainly as a result of the integration of Bachoco's US subsidiary, OK Foods, which was consolidated in November 2011.

The Company's production costs continued to be negatively impacted by persistently high input costs, primarily grain and soybean meal.

Gross profit in 3Q12 was MXP1,558.4 million resulting in a gross margin of 15.7 per cent compared to a gross profit of MXP559.6 million with a margin of 8.6 per cent in 3Q11. Meanwhile, gross margin totalled 15.4 per cent in 9M12, compared to 12.0 per cent in the same period 2011.

In 3Q12, total expenses represented 8.5 per cent over total sales, compared to 10.9 per cent over total sales in 3Q11. This was as a result of strict expense control across all of Bachoco's operations.

EBITDA in 3Q12 reached MXP955.0 million, for a margin of 9.6 per cent compared to EBITDA of MXP28.7 million, for a margin of 0.4 per cent in 3Q11. EBITDA margin in 9M12 was 9.3 per cent compared to 3.8 per cent reported in the same period 2011.

The comprehensive financial result was income of MXP19.9 million in 3Q12 and MXP113.3 million in the first nine months 2012. This was mainly due to interest earned on the Company's cash position.

Total taxes in 3Q12 reached MXP172.4 million, resulting from MXP117.0 million in income taxes and MXP55.3 million in deferred income taxes.

Net majority income was MXP627.5 million in 3Q12 (MXP1.05 per share) compared to a net majority loss of MXP105.6 (-MXP0.18 per share) reported in 3Q11. Meanwhile, net majority income in the first nine months 2012 was MXP1,604.9 million (MXP2.67 per share), compared to net majority income of MXP190.2 million (MXP0.32 per share) reported in the same period 2011.

Balance sheet

Cash and equivalents as of 30 September 2012 totalled MXP4,526.0 million compared to MXP3,036.4 million reported as of 31 December 2011. Total cash increased during the quarter mainly due to the income from the bond issuance as well as cash generated by the Company.

As of 30 September 2012, total debt was MXP2,717.4 million, compared to MXP1,837.4 million reported as of 31 December 2011.

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 productive complexes and 64 distribution centers in Mexico, and a productive complex in the United States. Currently, the Company employs more than 25,000 people. In 2011, the Company reported net sales of MXP27.7 billion.