Industrias Bachoco, S.A.B. de C.V., has announced its unaudited results for the fourth quarter (4Q13) and full year 2013 results (FY13) ended 31 December 2013. All figures have been prepared in accordance with International Financial Reporting Standard (IFRS), and are presented in nominal million Mexican Pesos (MXP).

Compared with 2012, in FY13, Bachoco achieved record net sales, up 0.9 per cent in FY13. EBITDA reached a historic high of MXP3,935.9 million for FY13, with a 9.9 per cent EBITDA margin. Net income reached MXP3.18 per share for FY13.

CEO Comments

Rodolfo Ramos Arvizu, Chief Executive Officer of Bachoco, stated: "The fourth quarter began with a weak prices scenario in our main business lines, mostly in chicken sales, due to oversupply conditions; however, by the close of the quarter, chicken prices improved due to increased consumption stemming from the Holiday Season. This effect was partially offset by more stable production costs, with positive operating results for the quarter.

"The balance for the full year of 2013 was positive, and we were able to achieve efficiencies in key processes, while maintaining a continuous supply to our customers; at the same time, we kept solid finances across throughout the entire year and reached historical EBITDA levels.

"During the year, we faced several challenges along the way, the most significant was the outbreak of avian flu that, for several months, was affecting some facilities located in the central region of Mexico. This situation tested our potential of response; and the result was positive as we were able to quickly recover to our normal production levels, proving that we are a strong Company, not only on our Balance Sheet but also in our operations and processes, all during which we assured the constant supply of products to our customers.

"Lastly, throughout all of 2013, we maintained a solid financial structure. Our Company remains a leader of the poultry industry in Mexico and an important player worldwide, with a solid and trusted brand."

Net Sales

The Company’s 4Q13 net sales totalled MXP9,738.3 million, 9.0 per cent below the MXP10,705.3 million reported in 4Q12. This mainly resulted from a reduction in prices across the Company’s main business lines; this result was partially offset by a 3.7 per cent increase in chicken volume sold.

In 4Q13, sales of its US operations represented 21.3 per cent of total sales, compared with 20.5 per cent in 4Q12.

Total sales for the 2013 increased slightly, by 0.9 per cent when compared with 2012, mainly due to better prices in our main product lines, partially offset by lower volume sold during the second and third quarters of 2013.

Gross Profit

Cost of sales totalled MXP8,524.1 million, 6.7 per cent lower than MXP9,135.0 million reported in 2012, the decrease in cost of sales is mainly attributed to lower volume sold and more stable raw material costs.

As a result, the Company reached a gross profit of MXP1,214.3 million and a gross margin of 12.5 per cent in 4Q13, compared to a gross profit of MXP1,570.4 million, and a gross margin of 14.7 per cent in 4Q12.

Meanwhile, gross profit for 2013 was MXP6,481.4, or a 16.3 per cent gross margin, 8.2 per cent higher than MXP6,049.2 million and a 15.4 per cent gross margin reached in 2012.3

Selling and General Administrative Expenses

Total SG&A expenses in 4Q13 totalled MXP924.3 million, 5.9 per cent more than the MXP872.6 million reported 4Q12. Total SG&A expenses as a percentage of net sales represented 9.5 per cent and 8.2 per cent, respectively.

Meanwhile, total SG&A expenses in 2013 totalled MXP3,373.0 million, practically the same level than the MXP3,396.7 million reported in 2012. This represented 8.5 per cent and 8.6 per cent over sales in 2013 and 2012, respectively.

Operating Income

Operating income in 4Q13 totalled MXP290.0 million, which represents an operating margin of 2.6 per cent, compared with MXP697.8 million of income and 6.1 per cent margin reported in 4 Q12; the decrease in the operating income is mainly attributed to lower gross profit, resulting from low net sales in 4Q13.

In 2013, operating income was MXP3,108.4 million, representing an operating margin of 7.8 per cent, compared with MXP2,652.6 million of income and a 6.7 per cent margin reported in the same period of 2012. 2013 as a whole reflected a positive performance by the Company when compared to 2012.

EBITDA

EBITDA in 4Q13 reached MXP582.7 million, representing an EBITDA margin of 6.0 per cent, compared to EBITDA of MXP864.5 million in 4Q12, with an EBITDA margin of 8.1 per cent.

Meanwhile EBITDA for 2013 totalled MXP3,935.9 million, or 9.9 per cent of margin, compared with EBITDA of MXP3,466.6 million or 8.8 per cent EBITDA margin in the same period of 2012.