Industrias Bachoco Announces Third Quarter 2021 Results

Industrias Bachoco, S.A.B. de C.V., “Bachoco” or “the Company”, (NYSE: IBA; BMV: Bachoco) announced today its unaudited results for the third quarter (“3Q21”) and first nine months of 2021 (“9M21”) ended on September 30th, 2021. All figures have been prepared in accordance with International Financial Reporting Standard (“IFRS”) and are presented in nominal million Mexican Pesos (“$”).

HIGHLIGHTS 2021

  • Net sales increased 10.6% in 3Q21 and 19.8% in 9M21.
  • SG&A expenses as a percentage of net sales were 8.9% in 3Q21 and 8.5% in 9M21.
  • EBITDA margin was 5.6% for 3Q21 and 10.7% for the 9M21
  • Earnings per basic and diluted share were $1.41 for 3Q21 and $7.37 for 9M21.

CEO COMMENTS

Mr. Rodolfo Ramos Arvizu, Chief Executive Officer of Bachoco, stated: “This was a typical third quarter for the Company, in terms of seasonality, with chicken prices at their weakest as compared to the first half of the year.

In México, we observed lower demand which negatively affected our prices. Unlike the U.S., where main commodity prices remained strong for most of the quarter.

In terms of cost of sales, prices of corn and soybean meal remained high when compared to previous years, fully impacting our cost in México and the U.S. As a result, our cost of sales was 16.6% higher than reported in 3Q20.

The behavior in pricing and the increase in cost led us to an EBITDA of $1,127.4 million and a margin of 5.6% for the 3Q21 compared to the $1,828.2 million and margin of 10.0% of the same period of 2020. On the other hand, for the nine months of the year 2021, the EBITDA margin was 10.7%, higher when compared to 6.4% EBITDA margin of the same period of 2020.

Despite the challenging conditions of this quarter, the Company remained in a healthy financial condition as we reached a net cash level of $18,269.7 million, which will allow us to continue to support 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 2020.

QUARTERLY RESULTS

NET SALES BY GEOGRAPHY

In millions of pesos

3Q21

3Q20

Change

$

$

$

%

Net Sales

20,229.0

18,292.4

1,936.6

10.6

Net sales in Mexico

14,963.8

13,114.4

1,849.4

14.1

Net sales in the U.S.

5,265.2

5,178.0

87.2

1.7

NET SALES BY SEGMENT

In millions of pesos

3Q21

3Q20

Change

$

$

$

%

Net Sales

20,229.0

18,292.4

1,936.6

10.6

Poultry

17,765.7

16,226.6

1,539.1

9.5

Other

2,463.3

2,065.7

397.6

19.2

NET VOLUME SOLD BY SEGMENT

In tons

Change

3Q21

3Q20

Volume

%

Total sales volume:

570,381

568,470

1,911.2

0.3

Poultry

442,665

434,272

8,392.9

1.9

Others

127,716

134,198

(6,481.7)

(4.8)

The Company’s 3Q21 net sales totaled $20,229.0 million; $1,936.6 million or 10.6% higher than the $18,292.4 million reported in 3Q20. The increase is a result of better prices in all our business lines.

In 3Q21, sales of our U.S. operations represented 26.0% and compared to 28.3% in the 3Q20.

GROSS PROFIT

In millions of pesos

3Q21

3Q20

Change

$

$

$

%

Cost of sales

17,619.0

15,107.6

2,511.4

16.6

Gross profit

2,610.0

3,184.7

(574.8)

(18.0)

Gross margin

12.9%

17.4%

-

-

In 3Q21, cost of sales was $17,619.0 million; $2,511.4 million or 16.6% higher than the $15,107.6 million reported in 3Q20. This increase was mainly attributed to higher unit cost in our main business lines mainly as a result of higher raw material costs in peso terms.

The Company´s gross profit in 3Q21 was $2,610.0 million, lower than the gross profit of $3,184.7 million in 3Q20, with a gross margin of 12.9% for 3Q21 vs 17.4% in 3Q20.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (“SG&A”)

In millions of pesos

3Q21

3Q20

Change

$

$

$

%

Total SG&A

1,790.9

1,600.8

190.1

11.9

Total SG&A expenses in 3Q21 were $1,790.9 million; $190.1 million higher than the $1,600.8 million reported in 3Q20. Total SG&A expenses as a percentage of net sales represented 8.9%, slightly higher than the 8.8% in 3Q20.

OTHER INCOME (EXPENSE), NET

In millions of pesos

3Q21

3Q20

Change

$

$

$

%

Other income (expense), net

(80.7)

(99.2)

18.5

(18.7)

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.

In 3Q21, we recorded other expenses of $80.7 million, compared with other expenses of $99.2 million reported in 3Q20.

OPERATING INCOME

In millions of pesos

3Q21

3Q20

Change

$

$

$

%

Operating income

738.4

1,484.8

(746.4)

(50.3)

Operating margin

3.7%

8.1%

-

-

Operating income in 3Q21 totaled $738.4 million; $746.4 million lower than the Operating income of $1,484.8 million reported in 3Q20. This represents an Operating margin of 3.7% for 3Q21, versus an Operating margin of 8.1% in the same period of 2020. The decrease in Operating income is mainly attributed to higher cost of sales as a result of higher raw material costs both in USD and peso terms.

NET FINANCIAL INCOME

In millions of pesos

3Q21

3Q20

Change

$

$

$

%

Net Financial Income

459.6

(267.5)

727.1

(271.8)

Financial Income

527.5

(212.9)

740.4

(347.8)

Financial Expense

67.9

54.6

13.4

24.5

In 3Q21, the Company reported net financial income of $459.6 million, compared to a net financial expense of $267.5 million reported in the same period of 2020. The increase is mainly attributed to higher exchange rate gains.

TAXES FOR THE PERIOD

In millions of pesos

3Q21

3Q20

Change

$

$

$

%

Total Taxes

380.6

359.2

21.5

6.0

Income tax

(275.3)

114.5

(389.7)

(340.5)

Deferred income tax

655.9

244.7

411.2

168.0

Total taxes for the 3Q21 were $380.6 million, which is higher when compared with total taxes of the same period of 2020.

NET CONTROLLING INTEREST INCOME

In millions of pesos

3Q21

3Q20

Change

$

$

$

%

Net income

817.4

858.1

(40.8)

(4.7)

Net margin

4.0%

4.7%

-

-

Non-Controlling Interest income

(26.4)

30.1

(56.5)

n/a

Net controlling interest income

843.8

828.0

15.8

1.9

Basic and diluted income per share1

1.41

1.38

0.03

n/a

Basic and diluted income per ADR2

16.88

16.56

0.3

n/a

Weighted average Shares outstanding3

599,734

599,823

-

-

1 In pesos

2 in pesos, one ADR equals to twelve shares

3 In thousands of shares

Net controlling interest income for 3Q21 was $843.8 million, representing a basic and diluted income per share of $1.41 pesos, compared with a net controlling interest income of $828.0 million, which represented a $1.38 pesos of income per share in 3Q20.

EBITDA

In millions of pesos

3Q21

3Q20

Change

$

$

$

%

Net controlling interest income

843.8

828.0

15.8

1.9

Income tax expense (benefit)

380.6

359.2

21.5

6.0

Result in associates

(26.4)

30.1

(56.5)

(187.7)

Net finance (income) expense

(459.6)

267.5

(727.1)

(271.8)

Depreciation and amortization

389.0

343.4

45.5

13.3

EBITDA

1,127.4

1,828.2

(700.8)

(38.3)

EBITDA Margin (%)

5.6%

10.0%

-

-

Net revenues

20,229.0

18,292.4

1,936.6

10.6

EBITDA in 3Q21 reached $1,127.4 million representing an EBITDA margin of 5.6%, compared to an EBITDA of $1,828.2 million in 3Q20, with an EBITDA margin of 10.0%.

ACCUMULATED RESULTS

NET SALES BY GEOGRAPHY

In millions of pesos

9M21

9M20

Change

$

$

$

%

Net Sales

60,447.5

50,462.7

9,984.9

19.8

Net sales in Mexico

45,530.7

35,521.9

10,008.8

28.2

Net sales in the U.S.

14,916.8

14,940.8

(23.9)

(0.2)

NET SALES BY SEGMENT

In millions of pesos

9M21

9M20

Change

$

$

$

%

Net Sales

60,447.5

50,462.7

9,984.9

19.8

Poultry

52,920.0

45,185.7

7,734.3

17.1

Other

7,527.5

5,277.0

2,250.6

42.6

NET VOLUME SOLD BY SEGMENT

In metric tons

Change

9M21

9M20

Volume

%

Total sales volume:

1,712,125

1,711,165

960.0

0.1

Poultry

1,301,129

1,324,924

(23,794.4)

(1.8)

Others

410,995

386,241

24,754.3

6.4

During the 9M21, net sales totaled $60,447.5 million; $9,984.9 million or 19.8% more than the $50,462.7 million reported in the same period of 2020.

In 9M21, sales of our U.S. operations represented 24.7% of our total sales, compared with 29.6% in 9M20.

OPERATING RESULTS

 

9M21

9M20

Change

$

$

$

%

Cost of Sales

49,659.7

43,239.4

6,420.3

14.8

Gross Profit

10,787.9

7,223.3

3,564.6

49.3

Total SG&A

5,157.4

4,740.5

416.9

8.8

Other Income (expense)

(244.3)

(311.2)

66.9

(21.5)

Operating Income

5,386.1

2,171.5

3,214.6

148.0

Net Financial Income

682.2

2,036.8

(1,354.5)

(66.5)

Income Tax

1,733.3

1,208.3

525.0

43.4

Net Income

4,335.1

3,000.0

1,335.1

44.5

Non-controlling interest

(85.8)

40.2

(126.0)

(313.2)

Net controlling interest Income

4,420.9

2,959.8

1,461.1

49.4

In the 9M21, the cost of sales totaled $49,659.7 million; $6,420.3 million or 14.8% higher than $43,239.4 million reported in the 9M20.

As a result, we reached a gross profit of $10,787.9 million and a gross margin of 17.8% in 9M21, when compared to $7,223.3 million of gross profit and a gross margin of 14.3% reached in the same period of 2020.

Total SG&A expenses in 9M21 were $5,157.4 million; $416.9 million or 8.8% more than the $4,740.5 million reported in 9M20. In 9M21 total SG&A expenses as a percentage of net sales represented 8.5% lower when compared to the 9.4% on 9M20.

In 9M21 we had other expenses of $244.3 million, compared with other expenses of $311.2 million reported in 9M20.

The operating income in 9M21 was $5,386.1 million, which represents an operating margin of 8.9%, an increase from an operating income of $2,171.5 million and an operating margin of 4.3% in 9M20.

The net financial income in 9M21 was $682.2 million lower when compared to the net financial income of $2,036.8 million in 9M20.

Total taxes were $1,733.3 million as of September 30th, 2021. These taxes include $1,054.0 million of income tax and $679.2 million of deferred income taxes. This figure compares to total taxes of $1,208.3 million in 9M20; the increase was mainly attributed to a higher income before taxes.

All the above resulted in a net controlling interest income of $4,420.9 million in the 9M21, which represents $7.37 pesos of earnings per share; while in the 9M20 the net controlling interest income totaled $2,959.8 million, and $4.93 pesos of earnings per share.

EBITDA

In millions of pesos

9M21

9M20

Change

$

$

$

%

Net controlling interest profit

4,420.9

2,959.8

1,461.1

49.4

Income tax expense (benefit)

1,733.3

1,208.3

525.0

43.4

Result in associates

(85.8)

40.2

(126.0)

(313.2)

Net finance (income) expense

(682.2)

(2,036.8)

1,354.5

(66.5)

Depreciation and amortization

1,092.1

1,041.6

50.5

4.8

EBITDA

6,478.2

3,213.1

3,265.1

101.6

EBITDA Margin (%)

10.7%

6.4%

-

-

Net revenues

60,447.5

50,462.7

9,984.9

19.8

EBITDA in 9M21 reached $6,478.2 million, representing an EBITDA margin of 10.7%, compared to EBITDA of $3,213.1 million in 9M20, with an EBITDA margin of 6.4%.

BALANCE SHEET

BALANCE SHEET DATA

In millions of pesos

Sep 30, 2021

Dec. 31st, 2020

Change

$

$

$

%

TOTAL ASSETS

63,262.3

58,475.0

4,787.3

8.2

Cash and cash equivalents

20,088.0

19,242.4

845.6

4.4

Accounts receivable

4,743.4

4,366.7

376.7

8.6

TOTAL LIABILITIES

15,601.5

14,548.2

1,053.3

7.2

Accounts payable

6,503.2

5,834.0

669.3

11.5

Short-term debt

1,818.3

1,251.7

566.6

45.3

Long-term debt

-

1,460.4

(1,460.4)

(100.0)

TOTAL STOCKHOLDERS’ EQUITY

47,660.8

43,926.8

3,734.0

8.5

Capital stock

1,174.2

1,174.3

(0.1)

(0.0)

Cash and equivalents as of September 30th, 2021 totaled $20,088.0 million vs $19,242.4 million as of December 31, 2020.

Total debt as of September 30th, 2021 was $1,818.3 million, compared to $2,712.1 million reported as of December 31, 2020.

Net cash as of September 30th, 2021 was $18,269.7 million, compared to net cash of $16,530.3 million as of December 31, 2020.

CAPITAL EXPENDITURES

In millions of pesos

9M21

9M20

Change

$

$

$

%

Capital Expenditures

2,251.1

1,570.1

681.0

43.4

Total CAPEX for the 9M21 was $2,251.1 million vs $1,570.1 million in 9M20, mainly allocated toward organic growth and productivity projects across all of our facilities.

STOCK INFORMATION

As of September 30, 2021

Total Shares

600,000,000

Total free float

26.75%

Market cap (millions of pesos)

$45,588

Source: Yahoo Finances

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

Sep-21

77.07

73.02

75.98

47.11

43.82

44.20

Aug-21

73.90

70.47

73.45

44.24

42.17

43.75

Jul-21

78.00

72.86

72.86

47.00

43.89

43.89

Jun-21

77.89

73.93

75.27

47.60

43.93

46.32

May-21

77.50

74.92

76.52

46.76

44.55

46.40

Apr-21

75.39

68.04

74.73

45.47

39.73

44.47

Mar-21

69.42

67.16

68.04

40.45

38.30

39.95

Feb-21

71.99

68.02

69.42

43.19

39.67

39.67

Jan-21

73.60

69.22

69.28

44.66

41.14

41.14

ANALYST COVERAGE

 

Institution

Analyst name

E-mail

ACTINVER

Enrique Mendoza Farias

emendoza@actinver.com.mx

BBVA BANCOMER

Pablo Abraham Peregrina

pablo.abraham@bbva.com

GBM

Luis Rodrigo Willard Alonso

lrwillard@gbm.com

INTERCAM

Richard Horbach Martinez

rhorbach@intercam.com.mx

JP MORGAN

Ulises Argote

ulises.argote@jpmorgan.com

SANTANDER

Alanis Peña Alan

aalanis@santander.com.mx

BANK OF AMERICA

Fernando Olvera

folvera@bofa.com

APPENDICES

For reference, some figures have been translated into millions of U.S. dollars (“USD”) using an exchange rate of $20.64 per USD $1.0, which corresponds to the rate at the close of September 30, 2021, 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

September 30,

December 31,

In million pesos

2021

2021

2020*

 
TOTAL ASSETS

$

3,065.0

63,262.3

58,475.0

 
Total current assets

1,750.8

36,137.1

32,586.0

Cash and cash equivalents

973.3

20,088.0

19,242.4

Total accounts receivable

229.8

4,743.4

4,366.7

Inventories

427.1

8,814.6

7,701.0

Other current assets

120.7

2,491.1

1,275.9

 
Total non current assets

1,314.2

27,125.2

25,889.0

Net property, plant and equipment

1,015.3

20,956.4

19,733.8

Other non current Assets

298.9

6,168.8

6,155.2

 
TOTAL LIABILITIES

$

755.9

15,601.5

14,548.2

 
Total current liabilities

503.3

10,388.9

8,179.8

Notes payable to banks

88.1

1,818.3

1,251.7

Accounts payable

315.1

6,503.2

5,834.0

Other taxes payable and other accruals

100.2

2,067.4

1,094.1

 
Total long-term liabilities

252.5

5,212.6

6,368.4

Long-term debt

-

-

1,460.4

Other non current liabilities

44.7

922.6

1,033.0

Deferred income taxes

207.8

4,290.0

3,875.0

 
TOTAL STOCKHOLDERS' EQUITY

$

2,309.1

47,660.8

43,926.8

 
Capital stock

56.9

1,174.2

1,174.3

Commission in shares issued

20.0

413.3

413.4

Retained earnings

2,148.5

44,345.6

40,874.4

Others accounts

58.7

1,211.4

855.5

Non controlling interest

25.0

516.4

609.2

 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

3,065.0

63,262.3

58,475.0

 
*Audited
CONSOLIDATED STATEMENT OF INCOME
Third Quarter Results, ended September 30th:
-Unaudited-

U.S. Dollar

In millions pesos

2021

2021

2020

Net sales

$

980.1

20,229.0

18,292.4

Cost of sales

853.6

17,619.0

15,107.6

Gross profit

126.5

2,610.0

3,184.7

SG&A

86.8

1,790.9

1,600.8

Other income (expenses), net

(3.9

)

(80.7

)

(99.2

)

Operating income

35.8

738.4

1,484.8

Net finance income

22.3

459.6

(267.5

)

Income tax

18.4

380.6

359.2

Net Income

$

39.6

817.4

858.1

 
Non-controlling interest

(1.28

)

(26.4

)

30.1

Net controlling interest profit

40.88

843.8

828.0

Basic and diluted earnings per share

0.07

1.41

1.38

Basic and diluted earnings per ADR

0.82

16.88

16.56

Weighted average Shares outstanding1

599,734

599,734

599,823

 
EBITDA Result

$

54.6

1,127.4

1,828.2

 
Gross margin

12.9

%

12.9

%

17.4

%

Operating margin

3.7

%

3.7

%

8.1

%

Net margin

4.2

%

4.0

%

4.7

%

EBITDA margin

5.6

%

5.6

%

10.0

%

 
1 In thousands
CONSOLIDATED STATEMENT OF INCOME
Accumulated results, for the nine months ended September 30.
-Unaudited-

U.S. Dollar

In millions pesos

2021

2021

2020

Net sales

$

2,928.7

60,447.5

50,462.7

Cost of sales

2,406.0

49,659.7

43,239.4

Gross profit

522.7

10,787.9

7,223.3

Selling, general and administrative expenses

249.9

5,157.4

4,740.5

Other income (expenses), net

(11.8

)

(244.3

)

(311.2

)

Operating income

261.0

5,386.1

2,171.5

Net finance income

33.1

682.2

2,036.8

Income tax

84.0

1,733.3

1,208.3

Net income

$

210.0

4,335.1

3,000.0

 
Non-controlling interest

(4.16

)

(85.8

)

40.2

Net controlling interest profit

214.2

4,420.9

2,959.8

Basic and diluted earnings per share

0.36

7.37

4.93

Basic and diluted earnings per ADR

4.29

88.5

59.21

Weighted average Shares outstanding1

599,766

599,766

599,818

 
EBITDA Result

$

313.9

6,478.2

3,213.1

 
Gross margin

17.8

%

17.8

%

14.3

%

Operating margin

8.9

%

8.9

%

4.3

%

Net margin

7.3

%

7.2

%

5.9

%

EBITDA margin

10.7

%

10.7

%

6.4

%

 
1 In thousands
CONSOLIDATED STATEMENT OF CASH FLOWS
In million of pesos
-Unaudited-
 
U.S. Dollar

September 30,

2021

2021

2020

 
NET MAJORITY INCOME BEFORE INCOME TAX

$

294.0

6,068.4

4,208.3

 
ITEMS RELATING TO INVESTING ACTIVITIES:

59.4

1,226.7

975.5

Depreciation and others

65.8

1,358.3

1,312.0

Income (loss) on sale of plant and equipment

3.1

63.3

25.8

Other Items

(9.4

)

(194.9

)

(362.4

)

 
NET CASH GENERATED FROM NET INCOME BEFORE TAXES

353.4

7,295.1

5,183.9

CASH GENERATED OR USED IN THE OPERATION:

(56.5

)

(1,166.0

)

(1,779.4

)

Decrease (increase) in accounts receivable

(11.6

)

(239.0

)

(829.4

)

Decrease (increase) in inventories

(72.0

)

(1,487.0

)

(1,300.9

)

Increase (decrease) in accounts payable

86.8

1,791.9

1,036.1

Other Items

(59.7

)

(1,231.9

)

(685.2

)

 
NET CASH FLOW FROM OPERATING ACTIVITIES

297.0

6,129.1

3,404.4

 
NET CASH FLOW FROM INVESTING ACTIVITIES

(78.9

)

(1,629.1

)

(1,270.8

)

Acquisition of property, plant and equipment

(109.1

)

(2,251.1

)

(1,570.1

)

Proceeds from sales of property plant and equipment

0.8

17.1

118.7

Other Items

29.3

604.9

180.6

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

218.0

4,500.0

2,133.6

 
Net cash provided by financing activities:

(177.1

)

(3,654.4

)

(3,098.0

)

Proceeds from loans

59.9

1,237.2

3,313.9

Principal payments on loans

(92.2

)

(1,903.8

)

(6,033.9

)

Dividends paid

(41.3

)

(851.6

)

(791.7

)

Other items

(103.5

)

(2,136.1

)

413.8

Net increase (decrease) in cash and equivalents

41.0

845.6

(964.4

)

 
Cash and investments at the beginning of year

$

932.3

19,242.4

19,164.8

CASH AND INVESTMENTS AT END OF PERIOD

$

973.3

20,088.0

18,200.4

 
 

DERIVATIVES POSITION REPORT

 
Third Quarter 2021
Thousands of Mexican Pesos, as of September 30, 2021
TYPE OF FINANCIAL INSTRUMENTOBJECTIVENOTIONALVALUE OF THE RELATED COMMODITYREASONABLE VALUEAMOUNTS DUE BY YEARGUARANTIES REQUIRED
3Q-20212Q-20213Q-20212Q-2021

Forward Vanilla,

and KO Fwd

Hedge

$130,725

$

20.64

$

19.95

$63,580

$-237,421

91% in 2021;

9% 2022

The deals

consider the

possibility of

margin calls but

not another kind

of guarantee

Futures for corn and

soybean meal

Hedge

$63,826

CORNCORN

-$ 3,890

$12,244

44% in 2021

and 56% in

2022

In USD per BushelIn USD per Bushel
monthpricemonthprice
Dec-21

$

5.368

Jul-21

$

7.200

Mar-22

$

5.445

Sep-21

$

5.993

Dec-21

$

5.885

SOYBEAN MEALSOYBEAN MEAL
In USD per tonIn USD per ton
monthpricemonthprice
Dec-21

$

328.7

Aug-21

$

377.5

Jan-22

$

331.0

Sep-21

$

379.0

Mar-22

$

333.4

Oct-21

$

378.8

May-22

$

337.1

Dec-21

$

381.7

Jul-22

$

340.5

Jan-22

$

380.1

Aug-22

$

341.4

Mar-22

$

374.1

Sep-22

$

341.3

May-22

$

371.8

Oct-22

$

339.1

Jul-22

$

373.7

Dec-22

$

340.3

Aug-22

$

369.6

Sep-22

$

369.6

Options of Corn

Hedge

$152,988

CORNCORN

$23,350

$88,823

95% in 2021

and 5% in 2022

In USD per BushelIn USD per Bushel
monthpricemonthprice
Jul-21

$

7.200

Sep-21

$

5.993

Dec-21

$

5.885

Dec-21

$

5.368

Mar-22

$

5.955

Mar-22

$

5.445

Options of soybean

meal

Hedge

$210,800

SOYBEAN MEALSOYBEAN MEAL

-$ 21,390

$3,603

59% in 2021

and 41% in

2022

In USD per tonIn USD per ton
monthpricemonthprice
Aug-21

$

377.5

Sep-21

$

379.0

Oct-21

$

343.1

Oct-21

$

378.8

Dec-21

$

328.7

Dec-21

$

381.7

Jan-22

$

331.0

Jan-22

$

380.1

Mar-22

$

333.4

Mar-22

$

374.1

May-22

$

337.1

May-22

$

371.8

 
 
-The total financial instruments do not exceed 5% of total assets as of September 30, 2021.
-The notional value represents the net position as of September 30, 2021 at the exchange rate of Ps.20.64 per one dollar.
-A negative value means an unfavorable effect for the Company.
Third Quarter 2021
Thousands of Mexican Pesos, as of September 30, 2021

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 (1)

-2.5%

2.5%

5.0%

-2.5%

2.5%

5.0%

Forward Vanilla, and KO Fwd

$

63,580

$

20.12

$

21.16

$

21.67

Direct

-$

6,254

$

122,273

$

189,766

-5%

5%

10%

-5%

5%

10%

Futures of Corn: (2)

-$

3,890

$

5.099

$

5.636

$

5.904

The effect will

materialize as the

inventory is consumed

-$

7,081

-$

699

$

2,493

Futures of Soybean Meal: (2)

$

325.9

$

360.3

$

377.4

Options for Corn

$

23,350

$

5.099

$

5.636

$

5.904

$

15,700

$

30,999

$

38,648

Options of Soybean Meal

-$

21,390

$

325.9

$

360.3

$

377.4

-$

33,681

-$

9,434

$

2,522

(1) The reference value is the exchange rate of Ps. $20.64 per USD as of September 30, 2021.
(2) The reference values are; the future of corn for September 2021, $5.3675 USD/bushel and the future of soybeanmeal for October 2021, $343.10USD/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.
Third Quarter 2021
Thousands of Mexican Pesos, as of September 30, 2021

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 and KO Fwd

$

63,580

$

10.32

$

15.48

$

25.80

$

30.96

Direct-$1,333,173-$634,798

$

602,090

$

1,171,086

CONFERENCE CALL INFORMATION

The Company will host its third quarter 2021 earnings call, on Monday, October 25th, 2021. The earnings call will take place at 3:00 pm Central Time (4:00 pm ET).

Toll free in the U.S.: 1 (888) 771-4371
Toll free in Mexico: 001 866 779 0965

A current list of available local and international free phone telephone numbers:
http://web.meetme.net/r.aspx?p=12&a=UanmoXYcFjkTlS

Confirmation Number: 50236531

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 80 distribution centers in Mexico, and a production complex in the United States. Currently the Company employs more than 29,000 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.

Contacts:

Maria Guadalupe Jaquez
maria.jaquez@bachoco.net
Andrea Guerrero
andrea.guerrero@bachoco.net
T. +52(461)618 3555

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