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Industrias Bachoco Announces Second Quarter 2022 Results

Industrias Bachoco, S.A.B. de C.V., “Bachoco” or “the Company”, (NYSE: IBA; BMV: Bachoco) announced today its unaudited results for the second quarter (“2Q22”) and first half (“1H22”) 2022 ended on June 30, 2022. All figures have been prepared in accordance with International Financial Reporting Standard (“IFRS”) and are presented in nominal million Mexican Pesos (“$”), except earnings per share.

HIGHLIGHTS- 2022 vs. 2021

  • Net sales increased 26.7% in 2Q22 and increased 26.3% in 1H22
  • EBITDA margin was 15.9% for 2Q22 and 15.2% for the 1H22
  • SG&A as percentage of net sales was 8.0% and 8.1% for 2Q22 and 1H22 respectively.

CEO COMMENTS

Mr. Rodolfo Ramos Arvizu, Chief Executive Officer of Bachoco, stated, “Seasonally, the second quarter is one of the strongest of the year and this 2Q22 performed that way. Even when we kept observing important increases in raw material costs like corn and soybean meal, the good balance between supply and demand and our participation in all main channels, in poultry, allowed us to capture better prices and offset the negative impacts due to higher costs.

We reached an increase in total sales of 26.7% for 2Q22 when compared to the same period of 2021. Part of that increase was related to an 8.3% higher volume sold in our Others segment as we integrated sales from RYC Alimentos in this business line.

Our cost of sales in 2Q22 increased 21.4% vs 2Q21. Most of that increase was related to higher raw material costs, as aforementioned, which had a negative impact both in our Mexican and U.S. operations.

In terms of expenses, we kept our SG&A under control as a percentage of sales, we reported 8.0% for the quarter which compares to the 8.3% of 2Q21.

As a result, our operating income for 2Q22 was $3,831.0 million which represents a 14.5% margin; this compares to the $2,088.8 million and 10.0% margin achieved in 2Q21.

We reported an EBITDA of $4,212.5 million in 2Q22 and 15.9% margin, which compares to the $2,437.4 million and 11.7% obtained in the same period of 2021.

CAPEX for the first half of 2022 was $1,908.5 million compared to $1,307.5 million for the same period of 2021. This was achieved while ending with a net cash position of $17,904.5 million by the end of 2Q22.”

Executive Summary

The following financial information is expressed in millions of nominal pesos, except for amounts per share and per ADR, with comparative figures for the same periods of 2021.

QUARTERLY RESULTS

 

NET SALES BY GEOGRAPHY

 

 

 

 

In millions of pesos

 

2Q22

2Q21

Change

 

 

$

$

$

%

Net Sales

 

26,432.1

20,860.9

5,571.1

26.7

Net sales in Mexico

 

19,839.8

15,937.6

3,902.2

24.5

Net sales in the U.S.

 

6,592.3

4,923.4

1,668.9

33.9

NET SALES BY SEGMENT

 

 

 

 

In millions of pesos

 

2Q22

2Q21

Change

 

 

$

$

$

$

Net Sales

 

26,432.1

20,860.9

5,571.1

26.7

Poultry

 

22,605.9

18,170.5

4,435.5

24.4

Other

 

3,826.1

2,690.5

1,135.7

42.2

NET VOLUME SOLD BY SEGMENT

In tons

 

Change

 

2Q22

2Q21

Volume

%

Total sales volume:

591,738

583,661

8,077.2

1.4

Poultry

437,723

441,486

(3,763.4)

(0.9)

Others

154,015

142,175

11,840.6

8.3

The Company’s 2Q22 net sales totaled $26,432.1 million; $5,571.1 million or 26.7% more than the $20,860.9 million reported in 2Q21. The increase was mainly a result of higher volume sold in Others and higher price across our main business lines.

In 2Q22, sales of our U.S. operations represented 24.9% of our total sales compared to a 23.6% in the same period of 2021.

GROSS PROFIT

 

 

 

 

In millions of pesos

 

2Q22

2Q21

Change

 

 

$

$

$

%

Cost of sales

 

20,518.5

16,901.1

3,617.4

21.4

Gross profit

 

5,913.6

3,959.8

1,953.8

49.3

Gross margin

 

22.4%

19.0%

-

-

In 2Q22, cost of sales was $20,518.5 million; $3,617.4 million or 21.4% higher than the $16,901.1 million reported in 2Q21. This increase was due to higher unit cost in our main business lines as a result of higher raw material prices in USD terms.

The Company´s gross profit in 2Q22 was $5,913.6 million, higher than the gross profit of $3,959.8 million in 2Q21, with a gross margin of 22.4% for 2Q22 vs 19.0% in 2Q21.

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

In millions of pesos

 

2Q22

2Q21

Change

 

 

$

$

$

%

Total SG&A

 

2,123.3

1,729.2

394.1

22.8

Total SG&A expenses in 2Q22 were $2,123.3 million; $394.1 million higher than the $1,729.2 million reported in 2Q21. Total SG&A expenses as a percentage of net sales were 8.0% in 2Q22 and 8.3% in 2Q21.

OTHER INCOME (EXPENSE), NET

In millions of pesos

 

2Q22

2Q21

Change

 

 

$

$

$

%

Other income (expense), net

 

40.7

(141.8)

182.5

(128.7)

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 2Q22, we recorded other income of $40.7 million, compared with other expenses of $141.8 million reported in 2Q21.

OPERATING INCOME

 

 

 

 

In millions of pesos

 

2Q22

2Q21

Change

 

 

$

$

$

%

Operating income

 

3,831.0

2,088.8

1,742.2

83.4

Operating margin

 

14.5%

10.0%

-

-

Operating income in 2Q22 totaled $3,831.0 million; $1,742.2 million higher than the $2,088.8 million reported in 2Q21. This represents an operating margin of 14.5% for 2Q22, higher when compared to the same period of 2021.

NET FINANCIAL INCOME

 

 

 

 

In millions of pesos

 

2Q22

2Q21

Change

 

 

$

$

$

%

Net Financial Income

 

157.9

(97.0)

254.8

(262.8)

Financial Income

 

333.6

2.1

331.5

15,578.6

Financial Expense

 

175.8

99.1

76.7

77.4

In 2Q22, the Company reported net financial income of $157.9 million, compared to the net financial expenses of $97.0 million reported in the same period of 2021.

TAXES FOR THE PERIOD

 

 

 

 

In millions of pesos

 

2Q22

2Q21

Change

 

 

$

$

$

%

Total Taxes

 

1,054.1

548.7

505.5

92.1

Income tax

 

394.7

804.5

(409.8)

(50.9)

Deferred income tax

 

659.4

(255.9)

915.3

(357.7)

As a result of a higher operating income, Total taxes for the 2Q22 were $1,054.1 million compared with total taxes of $548.7 million in the same period of 2021.

NET controlling interest INCOME

 

 

 

 

In millions of pesos

 

2Q22

2Q21

Change

 

 

$

$

$

%

Net income

 

2,934.7

1,443.2

1,491.6

103.4

Net margin

 

11.1%

6.9%

-

-

Non-Controlling Interest income

 

(9.3)

(33.6)

24.3

n/a

Net controlling interest income

 

2,944.1

1,476.8

1,467.3

n/a

Basic and diluted income per share1

 

4.91

2.46

2.4

n/a

Basic and diluted income per ADR2

 

58.94

29.55

29.4

n/a

Weighted average Shares outstanding3

 

599,380

599,743

-

-

1 In pesos

2 in pesos, one ADR equals to twelve shares
3 In thousands of shares

For the 2Q22 we had Net controlling interest income of $2,944.1 million, representing a basic and diluted income per share of $4.91 compared with a Net controlling interest income of $1,476.8 million, and $2.46 pesos of income per share in 2Q21. This increase was attributed to higher operating results.

EBITDA

In millions of pesos

 

2Q22

2Q21

Change

 

 

$

$

$

%

Net controlling interest income

 

2,944.1

1,476.8

1,467.3

99.4

Income tax expense (benefit)

 

1,054.1

548.7

505.5

92.1

Result in associates

 

(9.3)

(33.6)

24.3

(72.2)

Net finance (income) expense

 

(157.9)

97.0

(254.8)

(262.8)

Depreciation and amortization

 

381.5

348.6

32.9

9.4

EBITDA

 

4,212.5

2,437.4

1,775.1

72.8

EBITDA Margin (%)

 

15.9%

11.7%

-

-

Net revenues

 

26,432.1

20,860.9

5,571.1

26.7

EBITDA in 2Q22 reached $4,212.5 million, representing an EBITDA margin of 15.9%, compared to an EBITDA of $2,437.4 million in 2Q21, with an EBITDA margin of 11.7%.

ACCUMULATED RESULTS

 

NET SALES BY GEOGRAPHY

 

 

 

 

In millions of pesos

 

1H22

1H21

Change

 

 

$

$

$

%

Net Sales

 

50,799.1

40,218.6

10,580.5

26.3

Net sales in Mexico

 

37,936.2

30,566.9

7,369.3

24.1

Net sales in the U.S.

 

12,862.9

9,651.6

3,211.3

33.3

NET SALES BY SEGMENT

 

 

 

 

In millions of pesos

 

1H22

1H21

Change

 

 

$

$

$

%

Net Sales

 

50,799.1

40,218.6

10,580.5

26.3

Poultry

 

43,482.1

35,154.3

8,327.8

23.7

Other

 

7,316.9

5,064.2

2,252.7

44.5

NET VOLUME SOLD BY SEGMENT

In metric tons

Change

 

1H22

1H21

Volume

%

Total sales volume:

1,175,400

1,141,743

33,656.4

2.9

Poultry

879,210

858,464

20,745.4

2.4

Others

296,190

283,279

12,911.1

4.6

During the first half of 2022, net sales totaled $50,799.1 million; $10,580.5 million or 26.3% more than $40,218.6 million reported in the same period of 2021. The increase in sales is mainly attributable to higher prices of our main business lines when compared to the first half of 2021.

In 1H22, sales of our U.S. operations represented 25.3% of our total sales, compared with 24.0% in 1H21.

OPERATING RESULTS

 

 

 

 

In millions of pesos

 

1H22

1H21

Change

 

 

$

$

$

%

Cost of Sales

 

39,759.0

32,040.7

7,718.3

24.1

Gross Profit

 

11,040.1

8,177.9

2,862.2

35.0

Total SG&A

 

4,122.4

3,366.5

755.9

22.5

Other Income (expense)

 

55.5

(163.6)

219.1

(133.9)

Operating Income

 

6,973.2

4,647.7

2,325.4

50.0

Net Financial Income

 

(77.9)

222.6

(300.5)

(135.0)

Income Tax

 

1,832.6

1,352.6

480.0

35.5

Net controlling interest income

 

5,100.7

3,577.2

1,523.5

42.6

In 1H22, the cost of sales totaled $39,759.0 million; $7,718.3 million or 24.1% higher than the $32,040.7 million reported in 1H21.

As a result, we reached a gross profit of $11,040.0 million and a gross margin of 21.7% in 1H22, when compared to $8,177.9 million of gross profit and margin of 20.3% reached in the same period of 2021.

Total SG&A expenses in 1H22 were $4,122.4 million; $755.9 million or 22.5% more than the $3,366.5 million reported in 1H21. In 1H22 total SG&A expenses as a percentage of net sales represented 8.1% compared with 8.4% in 1H21.

In 1H22 we had other income of $55.5 million, compared with other expenses of $163.6 million reported in 1H21.

Operating income in 1H22 was $6,973.2 million, which represents an operating margin of 13.7%, an increase compared to the operating income of $4,647.7 million and the operating margin of 11.6% in 1H21.

Net financial expenses in 1H22 was $77.9 million, compared to a net financial income of $222.6 million in 1H21.

Total taxes were $ 1,832.6 million as of June 30, 2022. These taxes include $999.3 million of income tax and $833.3 million of deferred income taxes. These figures compare to total taxes of $1,352.6 million in 1H21.

All the above resulted in a Net controlling interest income of $5,100.7 million or 10.0% of margin in the 1H22, which represents $8.51 pesos of earnings per share; while in the 1H21 the Net controlling interest income totaled $ 3,577.2 million, 8.9% of margin and $5.96 pesos of earnings per share.

EBITDA

 

 

 

 

In millions of pesos

 

1H22

1H21

Change

 

 

$

$

$

%

Net controlling interest profit

 

5,100.7

3,577.2

1,523.5

42.6

Income tax expense (benefit)

 

1,832.6

1,352.6

480.0

35.5

Result in associates

 

(37.9)

(59.4)

21.4

(36.1)

Net finance (income) expense

 

77.9

(222.6)

300.5

(135.0)

Depreciation and amortization

 

756.3

703.1

53.2

7.6

EBITDA

 

7,729.5

5,350.8

2,378.7

44.5

EBITDA Margin (%)

 

15.2%

13.3%

-

-

Net revenues

 

50,799.1

40,218.6

10,580.5

26.3

EBITDA in 1H22 reached $7,729.5 million, representing an EBITDA margin of 15.2%, compared to an EBITDA of $5,350.8 million in 1H21, with a margin of 13.3%.

BALANCE SHEET

 

BALANCE SHEET DATA

 

 

 

 

In millions of pesos

 

June 30, 2022

Dec. 31st, 2021

Change

 

 

$

$

$

%

TOTAL ASSETS

 

70,429.6

65,988.8

4,440.8

6.7

Cash and cash equivalents

 

20,479.8

20,777.0

(297.1)

(1.4)

Accounts receivable

 

5,048.4

5,108.5

(60.0)

(1.2)

TOTAL LIABILITIES

 

18,193.6

17,704.7

488.9

2.8

Accounts payable

 

6,460.3

10,200.7

(3,740.3)

(36.7)

Short-term debt

 

2,575.3

1,993.9

581.4

29.2

Long-term debt

 

-

-

-

-

TOTAL STOCKHOLDERS’ EQUITY

 

52,236.0

48,284.1

3,951.9

8.2

Capital stock

 

1,173.9

1,174.4

(0.5)

(0.0)

Cash and equivalents as of June 30, 2022 totaled $20,479.8 million vs $20,777.0 million as of December 31, 2021.

Total debt as of June 30, 2022 was $2,575.3 million, compared to $ 1,993.9 million reported as of December 31, 2021.

Net cash as of June 30, 2022 was $ 17,904.5 million, compared to net cash of $ 18,783.1 million as of December 31, 2021.

CAPITAL EXPENDITURES

In millions of pesos

 

1H22

1H21

Change

 

 

$

$

$

%

Capital Expenditures

 

1,908.8

1,307.5

601.3

46.0

Total CAPEX for the 1H22 was $1,908.8 million and $1,307.5 million in 1H21, mainly allocated toward organic growth and productivity projects across all of our facilities.

STOCK INFORMATION

As of June 30, 2022

Total Shares

600,000,000

Total free float

26.75%

Market cap (millions of pesos)

$43,458

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

June

76.90

68.56

72.43

 

47.25

39.70

43.35

May

78.17

76.03

76.27

 

47.09

44.75

46.86

April

77.83

74.96

77.83

 

46.64

44.42

45.78

March

69.42

67.16

68.04

 

40.45

38.30

39.95

February

71.99

68.02

69.42

 

43.19

39.67

39.67

January

73.60

69.22

69.28

 

44.66

41.14

41.14

Source: Yahoo Finances

ANALYST COVERAGE

 

Institution

Analyst name

E-mail

BANK OF AMERICA

Fernando Olvera

folvera@bofa.com

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

Alan Alanis Peña

aalanis@santander.com.mx

APPENDICES

For reference, some figures have been translated into millions of U.S. dollars (“USD”) using an exchange rate of $20.14 per USD $1.0, which corresponds to the rate at the close of June 30, 2022, 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

 

June 30,

 

December 31,

In million pesos

2022

 

2022

 

2021*

 
TOTAL ASSETS

$

3,497.0

70,429.6

65,988.8

 
Total current assets

 

2,001.3

40,305.4

37,845.6

Cash and cash equivalents

 

1,016.9

20,479.8

20,777.0

Total accounts receivable

 

250.7

5,048.4

5,108.5

Inventories

 

653.3

13,156.5

9,145.6

Other current assets

 

80.5

1,620.6

2,814.6

 
Total non current assets

 

1,495.7

30,124.2

28,143.2

Net property, plant and equipment

 

1,132.9

22,816.9

21,763.4

Other non current Assets

 

362.8

7,307.3

6,379.8

TOTAL LIABILITIES

$

903.4

18,193.6

17,704.7

 
Total current liabilities

 

593.3

11,948.6

12,835.3

Notes payable to banks

 

127.9

2,575.3

1,993.9

Accounts payable

 

320.8

6,460.3

10,200.7

Other taxes payable and other accruals

 

144.6

2,912.9

640.7

 
Total long-term liabilities

 

310.1

6,245.0

4,869.4

Long-term debt

 

-

-

-

Other non current liabilities

 

56.4

1,135.1

1,027.9

Deferred income taxes

 

253.7

5,109.9

3,841.5

 
TOTAL STOCKHOLDERS' EQUITY

$

2,593.6

52,236.0

48,284.1

 
Capital stock

 

58.3

1,173.9

1,174.4

Commission in shares issued

 

20.6

414.1

414.1

Retained earnings

 

2,443.3

49,207.3

45,038.6

Others accounts

 

49.7

1,000.9

1,179.2

Non controlling interest

 

21.8

439.8

477.7

 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

3,497.0

70,429.6

65,988.8

 
*Audited
CONSOLIDATED STATEMENT OF INCOME
Second Quarter Results, ended June 30th:
-Unaudited-

U.S. Dollar

 

 

 

 

In millions pesos

2022

 

2022

 

2021

Net sales

$

1,312.4

 

26,432.1

 

20,860.9

 

Cost of sales

 

1,018.8

 

20,518.5

 

16,901.1

 

Gross profit

 

293.6

 

5,913.6

 

3,959.8

 

SG&A

 

105.4

 

2,123.3

 

1,729.2

 

Other income (expenses), net

 

2.0

 

40.7

 

(141.8

)

Operating income

 

190.2

 

3,831.0

 

2,088.8

 

Net finance income

 

7.8

 

157.9

 

(97.0

)

Income tax

 

52.3

 

1,054.1

 

548.7

 

Net Income

$

145.7

 

2,934.7

 

1,443.2

 

 
Non-controlling interest

 

(0.46

)

(9.3

)

(33.6

)

Net controlling interest profit

 

146.18

 

2,944.1

 

1,476.8

 

Basic and diluted earnings per share

 

0.24

 

4.91

 

2.46

 

Basic and diluted earnings per ADR

 

2.93

 

58.94

 

29.55

 

Weighted average Shares outstanding1

 

599,380

 

599,380

 

599,743

 

 
EBITDA Result

$

209.2

 

4,212.5

 

2,437.4

 

 
Gross margin

 

22.4

%

22.4

%

19.0

%

Operating margin

 

14.5

%

14.5

%

10.0

%

Net margin

 

11.1

%

11.1

%

6.9

%

EBITDA margin

 

15.9

%

15.9

%

11.7

%

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

U.S. Dollar

 

 

 

 

In millions pesos

2022

 

2022

 

2021

Net sales

$

2,522.3

 

50,799.1

 

40,218.6

 

Cost of sales

 

1,974.1

 

39,759.0

 

32,040.7

 

Gross profit

 

548.2

 

11,040.1

 

8,177.9

 

Selling, general and administrative expenses

 

204.7

 

4,122.4

 

3,366.5

 

Other income (expenses), net

 

2.8

 

55.5

 

(163.6

)

Operating income

 

346.2

 

6,973.2

 

4,647.7

 

Net finance income

 

(3.87

)

(77.9

)

222.64

 

Income tax

 

91.0

 

1,832.6

 

1,352.6

 

Net income

$

251.4

 

5,062.7

 

3,517.8

 

 
Non-controlling interest

 

(1.88

)

(37.9

)

(59.4

)

Net controlling interest profit

 

253.3

 

5,100.7

 

3,577.2

 

Basic and diluted earnings per share

 

0.42

 

8.51

 

5.96

 

Basic and diluted earnings per ADR

 

5.07

 

102.1

 

71.57

 

Weighted average Shares outstanding1

 

599,380

 

599,380

 

599,790

 

 
EBITDA Result

$

383.8

 

7,729.5

 

5,350.8

 

 
Gross margin

 

21.7

%

21.7

%

20.3

%

Operating margin

 

13.7

%

13.7

%

11.6

%

Net margin

 

10.0

%

10.0

%

8.7

%

EBITDA margin

 

15.2

%

15.2

%

13.3

%

 
1 In thousands
CONSOLIDATED STATEMENT OF CASH FLOWS
In million of pesos
-Unaudited-
 

U.S. Dollar

 

June 30,

2022

 

2022

 

2021

 
NET MAJORITY INCOME BEFORE INCOME TAX

$

342.4

 

6,895.3

 

4,870.4

 

 
ITEMS RELATING TO INVESTING ACTIVITIES:

 

45.7

 

919.6

 

821.6

 

Depreciation and others

 

50.5

 

1,016.7

 

911.5

 

Income (loss) on sale of plant and equipment

 

1.2

 

23.2

 

43.3

 

Other Items

 

(6.0

)

(120.3

)

(133.2

)

 
NET CASH GENERATED FROM NET INCOME BEFORE TAXES

 

388.0

 

7,814.9

 

5,691.9

 

CASH GENERATED OR USED IN THE OPERATION:

 

(195.2

)

(3,932.2

)

284.7

 

Decrease (increase) in accounts receivable

 

(12.5

)

(251.1

)

(70.5

)

Decrease (increase) in inventories

 

(206.8

)

(4,165.5

)

(310.0

)

Increase (decrease) in accounts payable

 

(99.0

)

(1,993.0

)

1,855.0

 

Other Items

 

123.0

 

2,477.5

 

(1,189.9

)

 
NET CASH FLOW FROM OPERATING ACTIVITIES

 

192.8

 

3,882.7

 

5,976.7

 

 
NET CASH FLOW FROM INVESTING ACTIVITIES

 

(124.5

)

(2,508.4

)

(882.8

)

Acquisition of property, plant and equipment

 

(94.8

)

(1,908.9

)

(1,306.2

)

Proceeds from sales of property plant and equipment

 

2.7

 

53.5

 

1.8

 

Other Items

 

(32.4

)

(653.1

)

421.6

 

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

 

68.2

 

1,374.2

 

5,093.9

 

 
Net cash provided by financing activities:

 

(79.5

)

(1,601.5

)

(2,875.3

)

Proceeds from loans

 

28.3

 

570.0

 

1,237.2

 

Principal payments on loans

 

0.6

 

11.4

 

(1,912.3

)

Dividends paid

 

(21.1

)

(425.8

)

(425.8

)

Other items

 

(87.2

)

(1,757.1

)

(1,774.4

)

Net increase (decrease) in cash and equivalents

 

(11.3

)

(227.3

)

2,218.5

 

 
Cash and investments at the beginning of year

$

1,028.2

 

20,707.1

 

19,242.4

 

CASH AND INVESTMENTS AT END OF PERIOD

$

1,016.9

 

20,479.8

 

21,461.0

 

 

DERIVATIVES POSITION REPORT

Second Quarter 2022
Thousands of Mexican Pesos, as of June 30, 2022
 
TYPE OF FINANCIAL INSTRUMENT OBJECTIVE NOTIONAL VALUE OF THE RELATED COMMODITY REASONABLE VALUE AMOUNTS DUE BY YEAR GUARANTIES REQUIRED
2Q-2022 1Q-2022 2Q-2022 1Q-2022

Forward Vanilla y KO Fwd

Hedge

$

224,433

$

20.14

$

19.89

$

-80,565

$

-157,022

90% in 2022 and 10% in 2023

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

Futures for corn, soybean meal and soybean oil

Hedge

$

566,793

CORN CORN

$

24,903

$

66,687

100% in 2022

In USD per Bushel In USD per Bushel
month price month price
May-22

$

7.488

Jul-22

$

7.330

Sep-22

$

6.288

Sep-22

$

6.963

Dec-22

$

6.198

Dec-22

$

6.838

SOYBEAN MEAL SOYBEAN MEAL
In USD per ton In USD per ton
month price month price
May-22

$

467.5

Jul-22

$

459.4

Aug-22

$

435.5

Aug-22

$

447.9

Sep-22

$

416.1

Sep-22

$

432.2

Oct-22

$

405.7

Oct-22

$

414.5

Dec-22

$

406.7

Dec-22

$

411.5

SOYBEAN OIL SOYBEAN OIL
In US cents per pound In US cents per pound
month price month price
Aug-22

$

67.01

May-22

$

69.94

Sep-22

$

65.68

Options of Corn

Hedge

$

620,897

CORN CORN

$

27,649

$

138,102

92% in 2022 and 8% in 2023

In USD per Bushel In USD per Bushel
month price month price
May-22

$

7.488

Jul-22

$

7.330

Sep-22

$

6.288

Sep-22

$

6.963

Dec-22

$

6.198

Dec-22

$

6.838

Mar-23

$

6.263

Mar-23

$

6.845

Options of soybean meal

Hedge

$

878,302

SOYBEAN MEAL SOYBEAN MEAL

$

34,539

$

66,894

78% in 2022 and 22% in 2023

In USD per ton In USD per ton
month price month price
May-22

$

467.5

Aug-22

$

435.5

Jul-22

$

459.4

Sep-22

$

416.1

Aug-22

$

447.9

Oct-22

$

405.7

Sep-22

$

432.2

Dec-22

$

406.7

Oct-22

$

414.5

Jan-23

$

405.9

Dec-22

$

411.5

Mar-23

$

401.3

Jan-23

$

406.1

May-23

$

398.3

Mar-23

$

394.8

Options of Soybean oil

Hedge

$

63,655

SOYBEAN OIL SOYBEAN OIL

-$ 973

$

521

100% in 2022

In US cents per pound In US cents per pound
month price month price
Aug-22

$

67.01

Sep-22

$

65.68

May-22

$

69.94

 
-The total financial instruments do not exceed 5% of total assets as of June 30, 2022.
-The notional value represents the net position as of June 30, 2022 at the exchange rate of Ps.20.14 per one dollar.
-A negative value means an unfavorable effect for the Company.
Second Quarter 2022
Thousands of Mexican Pesos, as of June 30, 2022

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 y KO Fwd

-$ 80,565

$

19.64

$

20.64

$

21.15

Direct

-$193,539

$

32,409

$ 94,048

 

 

 

-5%

 

5%

 

10%

 

-5%

 

5%

10%

Futures of Corn: (2)

$ 24,903

$

5.974

$

6.602

$

6.917

The effect will materialize as the inventory is consumed

-$ 3,437

$

53,243

$ 81,582

Futures of Soybean Meal: (2)

$

413.7

$

457.3

$

479.1

Futures for Soy Oil (2)

$

63.7

$

70.4

$

73.7

Options for Corn

$ 27,649

$

5.974

$

6.602

$

6.917

-$ 3,396

$

58,694

$ 89,738

Options of Soybean Meal

$ 34,539

$

413.7

$

457.3

$

479.1

-$ 3,718

$

74,727

$ 114,914

Options of soybean Oil

-$ 973

$

63.66

$

70.36

$

73.71

-$ 1,374

-$ 573

-$ 172

 
(1) The reference value is the exchange rate of Ps. $20.14 per USD as of June 30, 2022.
(2) The reference values are: future of corn Sep 2022, $6.2880 USD/bushel, the future of soybeanmeal Aug 2022, $435.50 USD/ton and the future of soybean oil Aug 2022, $67.01 usd cts / pound
'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.
Second Quarter 2022
Thousands of Mexican Pesos, as of June 30, 2022 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 y KO Fwd -$80,565

$10.07

$15.11

$25.18

$30.21

Direct -$2,340,042 -$1,210,303

$737,767

$1,579,072

CONFERENCE CALL INFORMATION

The Company will host its second quarter 2022 earnings call on Thursday, July 28th, 2022. The earnings call will take place at 10:00 am Central Time (11:00 am ET).

To participate in the earnings call, please dial:

Toll free in the U.S.: 866 374 5140

Toll free in Mexico: 1 866 779 1760

Toll Local Mexico: 52 55 6722 5258

Toll in the Brazil: 800 761 0711

To access the event online:

https://onlinexperiences.com/Launch/QReg/ShowUUID=A1D63B38-F85B-4377-8636-68C0716DB2D4&LangLocaleID=1033

Confirmation Number: 68053969#

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 32,000 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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