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Industrias Bachoco Announces Fourth Quarter and Full Year 2017 Results


2018-01-31 06:31:44
(MENAFNEditorial) CELAYA, Mexico, Jan. 31,2018 /PRNewswire/ --Industrias Bachoco, S.A.B. de C.V., "Bachoco" or "the Company", (NYSE: ; BMV: Bachoco) announced today its unaudited results for the fourth quarter ("4Q17") and 2017 year ("2017") results ending December 31, 2017. All figures have been prepared in accordance with International Financial Reporting Standard ("IFRS"), and are presented in nominal million Mexican Pesos ("$").

HIGHLIGHTS- 2017

  • Net sales increased 5.9% in 4Q17 and 11.6% in year 2017.
  • EBITDA margin was 7.1% for 4Q17 and 10.9% for the whole year.
  • Earnings per basic and diluted share totaled $2.46 for 4Q17 and $8.07 for the year.
    • CEO COMMENTS

    Mr. Rodolfo Ramos Arvizu, ChiefExecutive Officer of Bachoco, stated "With 4Q17 we ended a year of excellent results with historically high; net sales, EBITDA and earnings per share, among others. All of this, despite the challenges we faced in the fourth quarter.

    In Mexico, during the first part of the quarter, we observed oversupply conditions in the chicken industry, leading to lower prices than we expected. However, by the end of the quarter, we observed a recovery in the demand and a better balance between supply and demand.

    In the US, we observed similar prices to 4Q16 for poultry, despite an industry growing at slightly higher rates than normalized levels during the fourth quarter.

    We reached an increase in total sales of 5.9% in 4Q17 when compared to 4Q16, and an EBITDA of $1,074.3 million, lower than the EBITDA of the same quarter of 2016. For the fourth quarter, our EBITDA margin was 7.1% and our earnings per basic and diluted share were $2.46

    We continue working on the integration of our recent acquisitions, Albertville Quality Foods and La Perla, in order to capitalize the synergies as fast as we can.

    For the full year of 2017, we increased total sales by 11.6%, our EBITDA grew 9.4%, and earnings per share of $8.07; the highest amounts in the company's history.

    We continued with our growth plans as our CAPEX reached $3,479.3 million for the year, including acquisitions.

    Our financial structure continued strong as we ended the quarter with a net cash of $11,979.7 million, which will allow us to continue supporting our growth plans".

    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 2016.

    QUARTERLY RESULTS

    NET SALES BY GEOGRAPHY





    In millions of pesos


    4Q17

    4Q16

    Change



    $

    $

    $

    %

    Net sales


    15,039.1

    14,206.6

    832.6

    5.9

    Net sales in Mexico


    10,268.4

    10,266.9

    1.4

    0.0

    Net sales in the U.S.


    4,770.7

    3,939.6

    831.1

    21.1

    NET SALES BY SEGMENT





    In millions of pesos


    4Q17

    4Q16

    Change



    $

    $

    $

    %

    Net sales


    15,039.1

    14,206.6

    832.6

    5.9

    Poultry


    13,562.0

    12,734.2

    827.8

    6.5

    Other


    1,477.1

    1,472.4

    4.8

    0.3

    NET VOLUME SOLD BY SEGMENT



    In tons


    Change


    4Q17

    4Q16

    Volume

    %

    Total sales volume:

    585,965

    550,991

    34,974

    6.3

    Poultry

    461,653

    442,246

    19,406

    4.4

    Others

    124,312

    108,744

    15,568

    14.3






    The Company's 4Q17 net sales totaled $15,039.1 million, $832.6 million or 5.9% more than $14,206.6 million reported in 4Q16. The increase is a mainly result of more volume sold when compared to 4Q16.

    In 4Q17, sales of our U.S. operations represented 31.7% of our total sales; this compares with 27.7% it represented in 4Q16. Most of the increase comes from the integration of Albertville Quality Foods (AQF).

    GROSS PROFIT





    In millions of pesos


    4Q17

    4Q16

    Change



    $

    $

    $

    %

    Cost of sales


    12,808.8

    11,885.9

    923

    7.8

    Gross profit


    2,230.4

    2,320.7

    (90)

    (3.9)

    Gross margin


    14.8%

    16.3%

    -

    -

    In 4Q17, the cost of sales totaled $12,808.8 million, $923 million or 7.8% higher than $11,885.9 million reported in 4Q16. The increase in cost of sales is mainly attributed to higher volume sold and a mix effect, due to higher percentage of our US operation as we integrated AQF.

    The gross profit was $2,30.4 million with a gross margin of 14.8% in 4Q17. The gross profit is higher than the $2,320.7 million reported in 4Q16 and lower than the gross margin of 16.3% reported in 4Q16.

    Selling, general and administrative expenses ("SG & A")

    In millions of pesos







    4Q17

    4Q16

    Change



    $

    $

    $

    %

    Total SG & A


    1,510.2

    1,321.9

    188.3

    14.2

    Total SG & A expenses in 4Q17 were $1,510.2 million, $188.3 million or 14.2% more than the $1,321.9 million reported in 4Q16, this increase is due mainly to higher volume sold and one-time expenses in our US operation as part of the AQF integration process. Total SG & A expenses as a percentage of net sales represented 10.0% in 4Q17 compared to 9.3% in 4Q16.

    other income (expense), net

    In millions of pesos


    4Q17

    4Q16

    Change



    $

    $

    $

    %

    Other income (expense), net


    45.4

    18.4

    27.0

    147.3

    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.

    The main difference, when compared to 4Q16, is related to fiscal incentives reported in 4Q17.

    OPERATING INCOME





    In millions of pesos


    4Q17

    4Q16

    Change



    $

    $

    $

    %

    Operating income


    765.6

    1,017.2

    (251.6)

    (24.7)

    Operating margin


    5.1%

    7.2%

    -

    -

    Operating income in 4Q17 totaled $765.6 million with an operating margin of 5.1%, a decrease when compared to operating income of $1,017.2 million and a 7.2% operating margin reported in 4Q16.

    NET FINANCIAL INCOME





    In millions of pesos


    4Q17

    4Q16

    Change



    $

    $

    $

    %

    Net Financial Income


    527.3

    327.0

    200.2

    61.2

    Financial Income


    579.7

    353.2

    226.5

    64.1

    Financial Expense


    52.4

    26.1

    26.3

    100.5

    In 4Q17, the Company reported net financial income of $527.3 million, compared to income of $327.0 million reported in the same period of 2016.

    TAXES FOR THE PERIOD





    In millions of pesos


    4Q17

    4Q16

    Change



    $

    $

    $

    %

    Total Taxes


    (182.6)

    379.7

    (562.3)

    (148.1)

    Income tax


    46.1

    266.2

    (220.2)

    (82.7)

    Deferred income tax


    (228.7)

    113.4

    (342.1)

    (301.6)

    Total taxes for the 4Q17 were ($182.6) million, compared with total taxes of $379.7 million in the same period of 2016. In 4Q17 we recognize a positive effect in deferred tax as a result of the fiscal change approved by the US government at the end of the year.

    NET INCOME





    In millions of pesos


    4Q17

    4Q16

    Change



    $

    $

    $

    %

    Net income


    1,475.5

    964.6

    510.9

    53.0

    Net margin


    9.8%

    6.8%

    -

    -

    Basic and diluted income per share1


    2.46

    1.61

    0.8

    -

    Basic and diluted income per ADR2


    29.47

    19.30

    10.2

    -

    Weighted average Shares outstanding3


    599,991

    600,000

    -

    -

    1 In pesos

    2 in pesos, an ADR equal to twelve shares

    3 In thousands of shares

    The net income for 4Q17 was $1,475.5 million, representing a basic and diluted income of $2.46 pesos per share, compared with a net income of $964.6 million, $1.61 pesos of basic and diluted income per share in 4Q16. This income represents a net margin of 9.8% and 6.8% for 4Q17 and 4Q16, respectively.

    EBITDA





    In millions of pesos


    4Q17

    4Q16

    Change



    $

    $

    $

    %

    Net controlling interest income


    1,473.3

    965.2

    508.1

    52.6

    Income tax expense (benefit)


    (182.6)

    379.7

    (562.3)

    (148.1)

    Result in associates


    2.2

    (0.7)

    2.9

    (436.8)

    Net finance (income) expense


    (527.3)

    (327.0)

    (200.2)

    61.2

    Depreciation and amortization


    308.7

    276.2

    32.5

    11.8

    EBITDA


    1,074.3

    1,293.4

    (219.1)

    (16.9)

    EBITDA Margin (%)


    7.1%

    9.1%

    -

    -

    Net sales


    15,039.1

    14,206.6

    832.6

    5.9

    EBITDA in 4Q17 reached $1,074.3 million, representing an EBITDA margin of 7.1%, compared to an EBITDA of $1,293.4 million in 4Q16, with an EBITDA margin of 9.1%.

    ACCUMULATED RESULTS

    NET SALES BY GEOGRAPHY





    In millions of pesos


    2017

    2016

    Change



    $

    $

    $

    %

    Net Sales


    58,056.5

    52,020.30

    6,036.2

    11.6

    Net sales in Mexico


    41,522.9

    38,582.1

    2,940.8

    7.6

    Net sales in the U.S.


    16,533.7

    13,438.22

    3,095.4

    23.0

    NET SALES BY SEGMENT





    In millions of pesos


    2017

    2016

    Change



    $

    $

    $

    %

    Net Sales


    58,056.5

    52,020.3

    6,036.2

    11.6

    Poultry


    52,481.5

    46,852.5

    5,629.0

    12.0

    Other


    5,575.0

    5,167.8

    407.2

    7.9

    NET VOLUME SOLD BY SEGMENT

    In tons



    Change


    2017

    2016

    Volume

    %

    Total sales volume:

    2,201,374

    2,122,834

    78,540

    3.7

    Poultry

    1,723,754

    1,668,633

    55,122

    3.3

    Others

    477,620

    454,202

    23,418

    5.2








    In 2017, net sales totaled $58,056.5 million, $6,036.2 million or 11.6% more than the $52,020.3 million reported in the same period of 2017. The sales increase is mainly attributed to higher volume sold and higher prices in poultry.

    In 2017, sales of our U.S. operations represented 28.5% of our total sales, compared with 25.8% in 2016.

    ACCUMULATED OPERATING RESULTS





    In millions of pesos


    2017

    2016

    Change



    $

    $

    $

    %

    Cost of Sales


    47,536.5

    42,635.1

    4,901.5

    11.5

    Gross Profit


    10,520.0

    9,385.2

    1,134.8

    12.1

    Total SG & A


    5,415.8

    4,847.9

    567.9

    11.7

    Other Income (expense)


    82.1

    260.2

    (178.2)

    (68.5)

    Operating Income


    5,186.3

    4,797.6

    388.7

    8.1

    Net Financial Income


    747.5

    797.0

    (49.5)

    (6.2)

    Income Tax


    1,084.7

    1,643.4

    (558.7)

    (34.0)

    Net Income


    4,849.1

    3,951.2

    897.9

    22.7

    In 2017, the cost of sales totaled $47,536.5 million, $4,901.5 million or 11.5% higher than the $42,635.1 million reported in 2016, mainly as a result of higher volume sold, higher inflation rate in Mexico and a mix effect, due to higher percentage of our US operation.

    As a result, we reached a gross profit of $10,520.0 million and a gross margin of 18.1% in 2017, which is higher than $9,385.2 million of gross profit and a margin of 18.0% reached in the same period of 2016.

    Total SG & A expenses in 2017 were $5,415.8 million, $567.9 million or 11.7% more than the $4,847.9 million reported in 2016. Total SG & A expenses as a percentage of sales represented 9.3% in 2017 compared to 9.3% in 2016.

    In 2017, we had other income of $82.1 million, compared with other income of $260.2 million reported in 2016.

    The operating income in 2017 was $5,186.3 million, which represents an operating margin of 8.9%, which is higher than the operating income of $4,797.6 million but lower than the operating margin of 9.2% in 2016.

    The net financial income in 2017 was $747.5 million, lower when compared to net financial income of $797.0 million in 2016.

    Total taxes were $1,084.7 million for 2017. These taxes include $1,238.5 million of income tax and ($153.8) million of deferred income taxes. This figure compares to total taxes of $1,643.4 million, which includes income taxes of $1,260.5 and $382.9 million of deferred income taxes in 2016.

    All the above result in a net income of $4,849.1 million or 8.4% of net margin for 2017, which represents $8.07 pesos of earnings per share, meanwhile in 2016 the net income totaled $3,951.2 million, 7.6% of the net margin and $6.58 pesos of net income per share.

    EBITDA





    In millions of pesos


    2017

    2016

    Change



    $

    $

    $

    %

    Net controlling interest profit


    4,842.4

    3,946.6

    895.7

    22.7

    Income tax expense (benefit)


    1,084.7

    1,643.4

    (558.7)

    (34.0)

    Result in associates


    6.7

    4.5

    2.2

    48.2

    Net finance (income) expense


    (747.5)

    (797.0)

    49.5

    (6.2)

    Depreciation and amortization


    1,132.7

    979.5

    153.2

    15.6

    EBITDA


    6,319.0

    5,777.1

    541.9

    9.4

    EBITDA Margin (%)


    10.9%

    11.1%

    -

    -

    Net sales


    58,056.5

    52,020.3

    6,036.2

    11.6

    EBITDA in 2017 reached $6,319.0 million, representing an EBITDA margin of 10.9%, compared to an EBITDA of $5,777.1 million in 2016, with an EBITDA margin of 11.1%.

    BALANCE SHEET

    BALANCE SHEET DATA





    In millions of pesos


    Dec. 31st, 2017

    Dec. 31st, 2016

    Change



    $

    $

    $

    %

    TOTAL ASSETS


    51,582.3

    45,090.5

    6,491.8

    14.4

    Cash and cash equivalents


    17,240.1

    15,651.5

    1,588.6

    10.1

    Accounts receivable


    3,639.5

    3,778.0

    (138.5)

    (3.7)

    TOTAL LIABILITIES


    15,910.7

    14,874.3

    1,036.4

    7.0

    Accounts payable


    4,754.7

    3,836.4

    918.3

    23.9

    Short-term debt


    3,706.4

    4,597.5

    (891.1)

    (19.4)

    Long-term debt


    1,554.0

    950.4

    603.6

    63.5

    TOTAL STOCKHOLDERS' EQUITY


    35,671.6

    31,716.2

    3,955.4

    12.5

    Capital stock


    1,318.1

    1,174.4

    143.7

    12.2

    Cash and equivalents as of December 31st, 2017 totaled $17,240.1; $1,588.6 million more than the level we had on December 31st, 2016.

    Total debt as of December 31st, 2017 was $5,260.4 million, lower when compared to $5,547.9 million reported as of December 31, 2016.

    Net cash as of December 31, 2017 was $11,979.7 million, higher when compared with net cash of $10,103.6 million as of December 31, 2016.

    CAPITAL EXPENDITURES

    In millions of pesos


    2017

    2016

    Change



    $

    $

    $

    %

    Capital Expenditures


    3,479.3

    2,459.7

    1,019.5

    41.4

    Total CAPEX for 2017 was $3,479.3 million and $2,459.7 million in 2016. This was primarily allocated towards organic growth and productivity projects across all our facilities and as we also include here our recent acquisitions.

    STOCK INFORMATION

    As of December 31, 2017

    Total Shares


    600,000,000

    Total free float


    26.75%

    Market cap (millions of pesos)


    $56,172

    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

    95.56

    89.31

    93.62


    60.06

    56.87

    57.30

    November

    94.10

    88.07

    90.75


    59.15

    56.64

    58.02

    October

    102.00

    93.52

    94.15


    67.61

    58.70

    58.89

    September

    101.53

    94.02

    101.53


    67.29

    63.28

    66.50

    August

    95.14

    88.33

    94.89


    64.26

    59.42

    63.47

    July

    90.99

    85.13

    88.76


    61.95

    55.76

    59.81

    June

    86.79

    84.44

    86.74


    57.98

    54.75

    57.98

    May

    86.98

    83.69

    85.28


    56.43

    52.81

    55.00

    April

    86.30

    82.53

    84.02


    54.97

    52.06

    53.45

    March

    85.84

    80.23

    84.97


    54.55

    48.32

    54.24

    February

    83.53

    79.53

    80.08


    49.08

    46.20

    47.88

    January

    87.48

    80.47

    80.98


    49.02

    46.42

    46.43

    Source: yahoo finance

    ANALYST COVERAGE

    Institution

    Analyst name

    E-mail

    ACTINVER

    José Antonio Cebeira

    BBVA BANCOMER

    Miguel Ulloa

    GBM

    Miguel Angel Tortolero

    INTERACCIONES CASA DE BOLSA

    Martin Lara

    JPMORGAN

    Pedro Leduc

    APPENDICES

    For reference, some figures have been translated into millions of U.S. dollars ("USD") using an exchange rate of $19.66 per USD $1.00, which corresponds to the rate at the close of December 31st, 2017, according to Mexico's National Bank.

  • 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

    2017

    2017

    2016*





    TOTAL ASSETS

    2,623.7

    51,582.3

    45,090.5





    Total current assets

    1,487.9

    29,252.7

    26,930.4

    Cash and cash equivalents

    876.9

    17,240.1

    15,651.5

    Total accounts receivable

    185.1

    3,639.5

    3,778.0

    Inventories

    337.8

    6,641.4

    5,931.9

    Other current assets

    88.1

    1,731.7

    1,569.0





    Total non current assets

    1,135.8

    22,329.6

    18,160.1

    Net property, plant and equipment

    880.9

    17,319.3

    15,081.1

    Other non current Assets

    254.8

    5,010.2

    3,079.0





    TOTAL LIABILITIES

    $ 809.3

    15,910.7

    14,874.3





    Total current liabilities

    520.6

    10,234.6

    9,816.3

    Notes payable to banks

    188.5

    3,706.4

    4,597.5

    Accounts payable

    241.8

    4,754.7

    3,836.4

    Other taxes payable and other accruals

    90.2

    1,773.6

    1,382.4





    Total long-term liabilities

    288.7

    5,676.1

    5,058.0

    Long-term debt

    79.0

    1,554.0

    950.4

    Other non current liabilities

    13.9

    273.3

    195.0

    Deferred income taxes

    195.8

    3,848.9

    3,912.6





    TOTAL STOCKHOLDERS' EQUITY

    $ 1,814.4

    35,671.6

    31,716.2





    Capital stock

    67.0

    1,318.1

    1,174.4

    Commission in shares issued

    21.1

    414.4

    414.4

    Retained earnings

    1,663.2

    32,697.9

    28,694.6

    Others accounts

    60.1

    1,180.6

    1,378.9

    Non controlling interest

    3.1

    60.6

    53.9





    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

    $ 2,623.7

    51,582.3

    46,590.5





    *Audited








    CONSOLIDATED STATEMENT OF INCOME


    Fourth Quarter Results, ended December 31st:



    -Unaudited-





    U.S. Dollar



    In millions pesos

    2017

    2017

    2016*

    Net sales

    $ 765.0

    15,039.1

    14,206.6

    Cost of sales

    651.5

    12,808.8

    11,885.9

    Gross profit

    113.4

    2,230.4

    2,320.7

    SG & A

    76.8

    1,510.2

    1,321.9

    Other income (expenses), net

    2.3

    45.4

    18.4

    Operating income

    38.9

    765.6

    1,017.2

    Net finance income

    26.8

    527.3

    327.0

    Income tax

    - 9.3

    -182.6

    379.7

    Net Income

    $ 75.1

    1,475.5

    964.6





    Non-controlling interest

    0.11

    2.2

    -0.7

    Net controlling interest profit

    74.9

    1,473.3

    965.2

    Basic and diluted earnings per share

    0.12

    2.46

    1.61

    Basic and diluted earnings per ADR

    1.50

    29.47

    19.30

    Weighted average Shares outstanding1

    599,991

    599,991

    600,000





    EBITDA Result

    $ 54.6

    1,074.3

    1,293.4





    Gross margin

    14.8%

    14.8%

    16.3%

    Operating margin

    5.1%

    5.1%

    7.2%

    Net margin

    9.8%

    9.8%

    6.8%

    EBITDA margin

    7.1%

    7.1%

    9.1%





    1In thousands




    * Audited








    CONSOLIDATED STATEMENT OF INCOME


    Annual Results




    -Unaudited-





    U.S. Dollar



    In millions pesos

    2017

    2017

    2016*

    Net sales

    $ 2,953.0

    58,056.5

    52,020.3

    Cost of sales

    2,417.9

    47,536.5

    42,635.1

    Gross profit

    535.1

    10,520.0

    9,385.2

    Selling, general and administrative expenses

    275.5

    5,415.8

    4,847.9

    Other income (expenses), net

    4.2

    82.1

    260.2

    Operating income

    263.8

    5,186.3

    4,797.6

    Net finance income

    38.0

    747.5

    797.0

    Income tax

    55.2

    1,084.7

    1,643.4

    Net income

    $ 339.8

    4,849.1

    3,951.2





    Non-controlling interest

    0.3

    6.7

    4.5

    Net controlling interest profit

    247.0

    4,842.4

    3,946.6

    Basic and diluted earnings per share

    0.41

    8.07

    6.58

    Basic and diluted earnings per ADR

    4.93

    96.8

    78.9

    Weighted average Shares outstanding1

    599,998

    599,998

    599,980





    EBITDA Result

    $ 321.4

    6,319.0

    5,777.1





    Gross margin

    18.1%

    18.1%

    18.0%

    Operating margin

    8.9%

    8.9%

    9.2%

    Net margin

    8.4%

    8.4%

    7.6%

    EBITDA margin

    10.9%

    10.9%

    11.1%





    1In thousands




    * Audited












    CONSOLIDATED STATEMENT OF CASH FLOW



    In million of pesos




    -Unaudited-









    U.S. Dollar

    Diciembre 31,


    2017

    2017

    2016*





    NET MAJORITY INCOME BEFORE INCOME TAX

    $ 246.6

    5,933.8

    5,594.6





    ITEMS THAT DO NOT REQUIRE CASH:

    -

    -

    -





    ITEMS RELATING TO INVESTING ACTIVITIES:

    89.5

    516.6

    294.3

    Depreciation and others

    57.7

    1,075.8

    925.7

    Income (loss) on sale of plant and equipment

    2.3

    41.9

    (157.2)

    Other Items

    29.5

    (601.1)

    (474.2)





    ITEMS RELATING TO FINANCING ACTIVITIES:

    -

    -

    -





    NET CASH GENERATED FROM NET INCOME BEFORE TAXES

    336.1

    6,450.4

    5,888.9

    CASH GENERATED OR USED IN THE OPERATION:

    (33.2)

    (931.4)

    (2,968.6)

    Decrease (increase) in accounts receivable

    (10.7)

    159.4

    (1,145.2)

    Decrease (increase) in inventories

    (25.3)

    (437.0)

    (562.9)

    Decrease (increase) in accounts payable

    68.2

    108.1

    (48.2)

    Decrease (increase) in other liabilities

    (65.4)

    (761.9)

    (1,212.2)





    NET CASH FLOW FROM OPERATING ACTIVITIES

    302.9

    5,519.0

    2,920.3





    NET CASH FLOW FROM INVESTING ACTIVITIES

    (234.6)

    (3,718.5)

    (1,740.3)

    Acquisition of property, plant and equipment

    (177.0)

    (2,131.8)

    (2,792.3)

    Proceeds from sales of property plant and equipment

    1.5

    35.2

    278.3

    Other Items

    (59.2)

    (1,621.8)

    773.6





    CASH FLOW SURPLUS (REQUIREMENTS OF) TO BE USED IN FINANCING ACTIVITIES

    68.3

    1,800.6

    1,180.0





    Net cash provided by financing activities:

    12.5

    (212.0)

    (817.4)

    Proceeds from loans

    273.6

    5,378.9

    2,320.5

    Principal payments on loans

    (216.0)

    (4,246.1)

    (2,670.5)

    Dividends paid

    (39.7)

    (780.0)

    (780.0)

    Other items

    (5.4)

    (564.8)

    312.5

    Net increase (decrease) in cash and equivalents

    80.8

    1,588.6

    362.6





    Cash and investments at the beginning of year

    $ 796.1

    15,651.5

    15,288.9

    CASH AND INVESTMENTS AT END OF PERIOD

    $ 876.9

    17,240.1

    15,651.5









    *Audited




    DERIVATIVES POSITION REPORT

    Fourth Quarter 2017










    Thousands of Mexican Pesos, as of december 31, 2017








    TYPE OF FINANCIAL
    INSTRUMENT

    OBJECTIVE

    NOTIONAL

    VALUE OF THE RELATED COMMODITY

    REASONABLE VALUE

    AMOUNTS DUE BY YEAR

    GUARANTIES REQUIRED

    4Q-2017

    3Q-2017

    4Q-2017

    3Q-2017

    Forward Vanilla

    Hedge

    $ 231,548

    $ 19.66


    $ 18.18


    $ -8,030

    $ -63,253

    in 2018

    The deals consider the possibility of margin calls but not another kind of guarantee

    Futures for corn and soybean meal

    Hedge

    $ 84,151

    CORN

    CORN

    -$ 3,329

    $ 638

    in 2018

    In USD per Bushel

    In USD per Bushel

    month

    price

    month

    price



    Dec-17

    $ 3.553

    Mar-18

    $ 3.508

    Mar-18

    $ 3.763

    Sep-18

    $ 3.748



    SOYBEAN MEAL

    SOYBEAN MEAL

    In USD per ton

    In USD per ton

    month

    price

    month

    price



    Dec-17

    $ 315.8



    Jan-18

    $ 317.8

    Mar-18

    $ 316.8



    Options of Corn

    Hedge

    $ 16,410

    CORN

    CORN

    $ 172

    -$ 2,237

    in 2C018

    In USD per Bushel

    In USD per Bushel

    month

    price

    month

    price

    Mar-18

    $ 3.508



    May-18

    $ 3.590

    Dec-17

    $ 3.553

    Jul-18

    $ 3.678

    Jan-18

    $ 3.763

    Options of soybean meal

    Hedge

    $ 33,150

    SOYBEAN MEAL

    SOYBEAN MEAL

    $ 227

    $ 1,157

    in 2018

    In USD per ton

    In USD per ton

    month

    price

    month

    price

    Mar-18

    $ 316.8

    Dec-17

    $ 315.8

    May-18

    $ 323.1

    Jan-18

    $ 317.8

    Jul-18

    $ 325.3

    Mar-18

    $ 312.7
















    -The total financial instruments do not exceed 5% of total assets as of December 31, 2017.





    -The notional value represents the net position as of December 31, 2017 at the exchange rate of Ps. 19.66 per one dollar.



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







    NOTES

    -The total financial instruments do not exceed 5% of total assets as of December 31st, 2017.

    -The notional value represents the net position as of December 31st, 2017 at the exchange rate of Ps. 19.66 per dollar.

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

    PROBABLE SCENARIO

    Fourth Quarter 2017









    Thousands of Mexican Pesos, as of december 31, 2017






    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

    -2.5%

    2.5%

    5.0%

    -2.5%

    2.5%

    5.0%

    Forwards Vanilla

    -$ 8,030

    $19.17

    $ 20.15

    $ 20.64

    Direct

    -$ 13,837

    -$ 2,223

    $ 3,584



    -5%

    5%

    10%


    -5%

    5%

    10%

    Futures of Corn: (2)

    -$ 3,329

    $ 3.332

    $ 3.683

    $ 3.858

    The effect will materialize as the inventory is consumed

    -$ 7,537

    $ 879

    $ 5,087

    Futures of Soybean Meal: (2)

    $ 301.0

    $ 332.6

    $ 348.5

    Options for Corn

    $ 172

    $ 3.332

    $ 3.683

    $ 3.858

    -$ 63

    $ 545

    $ 1,072

    Options of Soybean Meal

    $ 227

    $ 301.0

    $ 332.6

    $ 348.5

    -$ 1,431

    $ 1,885

    $ 3,542










    (1)The reference value is the exchange rate of Ps. $19.66 per USD as of December 31, 2017.




    (2)The reference values are; the future of corn for March 2017, $3.5075 USD/bushel and the future of soybeanmeal for March 2018, $316.80 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 2017











    Thousands of Mexican Pesos, as of december 31, 2017








    STRESS SCENARIO

    TYPE OF FINANCIAL INSTRUMENT

    REASONABLE VALUE

    VALUE OF THE RELATED COMMODITY

    EFFECT ON THE INCOME STATEMENT

    EFFECT ON THE CASH FLOW

    Reference Value

    -50%

    -25%

    25%

    50%

    -50%

    -25%

    25%

    50%

    Forward Vanilla

    -$ 8,030

    $9.83

    $14.74

    $24.57

    $29.49

    Direct

    -$124,170

    -$66,100

    $50,040

    $108,110

    CONFERENCE CALL INFORMATION

    The Company will host its fourth quarter 2017 earnings call, Thursday, February 1st, 2018 at 9:00 am Central Time (10:00 am ET).

    To participate in the earnings call, please dial:
    Toll free in the U.S.: 1 (888) 771-4371
    Toll free in Mexico: 001 866 779 0965
    Toll Local Mexico: 52 55 6722 5257
    Toll in the Brazil: 0800 761 0710
    A current list of available local and international free phone telephone numbers:

    Confirmation Number: 46283414

    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 25,000 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.

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    SOURCE Industrias Bachoco, S.A.B. de C.V.

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