Industrias Bachoco reports Q4 net loss of 452.5M Mexican pesos, compared to year-ago earnings of U554.2M pesos, mainly due to tax charges; net sales fall 9% to 9.78B pesos
February 7, 2014
– 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 ("4Q13") and full year 2013 results ("FY13") ended December 31, 2013. All figures have been prepared in accordance with International Financial Reporting Standard ("IFRS"), and are presented in nominal million Mexican Pesos ("$").
HIGHLIGHTS- 2013 vs 2012
Bachoco achieved record net sales, up 0.9% in FY13.
EBITDA reached a historic high of $3,935.9 million for FY13, with a 9.9% EBITDA margin.
Net income reached $3.18 pesos per share for FY13.
Mr. 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."
The Company's 4Q13 net sales totaled $9,738.3 million, 9.0% below the $10,705.3 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% increase in chicken volume sold.
In 4Q13, sales of our U.S. operations represented 21.3% of total sales, compared with 20.5% in 4Q12.
Total sales for the 2013 increased slightly, by 0.9% 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.
Cost of sales totaled $8,524.1 million, 6.7% lower than $9,135.0 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 $1,214.3 million and a gross margin of 12.5% in 4Q13, compared to a gross profit of $1,570.4 million, and a gross margin of 14.7% in 4Q12.
Meanwhile, gross profit for 2013 was $6,481.4, or a 16.3% gross margin, 8.2% higher than $6,049.2 million and a 15.4% gross margin reached in 2012.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A")
Total SG&A expenses in 4Q13 totaled $924.3 million, 5.9% more than the $872.6 million reported 4Q12. Total SG&A expenses as a percentage of net sales represented 9.5% and 8.2%, respectively.
Meanwhile, total SG&A expenses in 2013 totaled $3,373.0 million, practically the same level than the $3,396.7 million reported in 2012. This represented 8.5% and 8.6% over sales in 2013 and 2012, respectively.
Operating income in 4Q13 totaled $290.0 million, which represents an operating margin of 2.6%, compared with $697.8 million of income and 6.1% margin reported in 4Q12; 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 $3,108.4 million, representing an operating margin of 7.8%, compared with $2,652.6 million of income and a 6.7% margin reported in the same period of 2012. 2013 as a whole reflected a positive performance by the Company when compared to 2012.
EBITDA in 4Q13 reached $582.7 million, representing an EBITDA margin of 6.0%, compared to EBITDA of $864.5 million in 4Q12, with an EBITDA margin of 8.1%.
Meanwhile EBITDA for 2013 totaled $3,935.9 million, or 9.9% of margin, compared with EBITDA of $3,466.6 million or 8.8% EBITDA margin in the same period of 2012.
NET FINANCING INCOME
In 4Q13, the Company reported net financing income of $0.9 million, compared to income of $46.5 million reported in the same period of 2012. These amounts are mainly attributed to higher interest income and exchange rate gains, partially compensated by larger financial expenses.
Net finance income for 2013 totaled $112.6 million, compared with income of $165.0 million in 2012. Due to strong cash and investment levels, the Company has reported net financing income in both years.
Industrias Bachoco and all of its subsidiaries file separate income tax returns. In this regard, Bachoco, S.A. de C.V., the Company's main subsidiary, is subject to the simplified regime.
This simplified regime is applicable to agriculture, cattle-raising and fishing, among others, and until December 31, 2013 was subject to a preferred tax rate of 21% instead of a general tax rate which is 30%.
As a result of the Mexican Tax Reform approved in 2013, and applicable from January 1, 2014, the preferred rate of 21% to the Simplified Regime has been phased out, and now the Company is subject to the general rate of 30%. Consequently, in 4Q13, the Company recognized an extraordinary one-time charge as a result of the tax rate change. This amount totaled $668.1 million and will not affect the Company's cash flow.
Total taxes were $709.2 million in 4Q13 and $1,304.6 million in FY13. These amounts include the charge described above.
For 4Q13 the Company recorded a net loss of $452.5 million, representing a net loss of $0.75 pesos per share, or net loss of $9.05 pesos per ADR; compared with a net income of $554.2 million, which represented $0.92 pesos of net income per share or $11.09 pesos per ADR reported in 4Q12. This variation is mainly attributed to the extraordinary tax charges.
Net income for year 2013 totaled $1,910.4 million, or $3.18 and $38.20 pesos per share and per ADR respectively, compared to net income of $2,184.6 million or $3.65 or $43.80 pesos per share and per ADR in 2012.
BALANCE SHEET DATA
Cash and equivalents as of December 31, 2013, totaled $7,714.5 million compared to $5,141.5 million reported as of December 31, 2012.
As of December 31, 2013, total debt was $2,075.5 million compared to $2,723.7 million reported as of December 31, 2012.
Net debt was negative $5,639.1 million as of December 31, 2013, compared with a negative net debt of $2,417.9 million as of December 31, 2012.
Total CAPEX was $322.5 million in 4Q13 and $741.9 million for FY13. CAPEX was mainly allocated toward productivity projects and maintenance.
On December 9, 2013, the Company announced that it was notified by the Underwriting Trust, which has members of the founding family as beneficiaries, that such trust sold 9.5% of its shares; this transaction was carried out through the Mexican Stock Exchange at the market price. As a result of this transaction, the Company's free float increased to 26.75% over the total shares outstanding.
On December 6, 2013, during the Company's Shareholder Meeting the Board of Directors approved an extraordinary cash dividend payment of $1.00 peso (ONE PESO) per share outstanding or $12.00 pesos (TWELVE PESOS) per ADR. The payment was made on December 23, 2013.
For reference, some figures have been translated into millions of U.S. dollars ("USD") using an exchange rate of Ps. 13.09 per USD$1.0, which corresponds to the rate at the close of December 31, 2013, according to Mexico's National Bank.