Industrias Bachoco Announces Second Quarter 2021 Results

Rhea-AI Summary

Industrias Bachoco (NYSE: IBA) reported strong financial results for Q2 and H1 2021. Net sales surged by 27% to $20,860.9 million in Q2, driven by higher prices and sales volume. The company achieved a gross margin of 19% and an EBITDA margin of 11.7%, significantly improving from 2.7% in Q2 2020. Operating income reached $2,088.8 million, compared to $82.8 million last year. Net income was $1,443.2 million, marking a recovery from a loss of $28.2 million in Q2 2020. Total assets increased to $61,676.1 million, with a robust net cash position of $19,490.6 million.

Positive

• Net sales increased 27% in Q2 to $20,860.9 million.
• Gross profit rose to $3,959.8 million, up 113.2% year-over-year.
• EBITDA reached $2,437.4 million, with an EBITDA margin of 11.7%.
• Net income of $1,443.2 million compared to a loss of $28.2 million in Q2 2020.
• Total assets increased to $61,676.1 million with net cash of $19,490.6 million.

Negative

• Cost of sales rose by $2,326.6 million, up 16% compared to Q2 2020, due to higher raw material prices.

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 (“2Q21”) and first half (“1H21”) 2021 ended on June 30, 2021. 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- 2021 vs. 2020

• Net sales increased 27% in 2Q21 and increased 25% in 1H21
• EBITDA margin was 11.7% for 2Q21 and 13.3% for the 1H21
• SG&A as percentage of net sales was 8.3% and 8.4% for 2Q21 and 1H21 respectively.

CEO COMMENTS

Mr. Rodolfo Ramos Arvizu, Chief Executive Officer of Bachoco, stated, “During this quarter, we continued to observe a good balance between supply and demand. Even though costs were higher, our focus on efficiencies drove us to achieve good results in our second quarter of 2021.

We reached an increase in total sales of 27% for 2Q21 when compared to the same period of 2020. This led us to a gross margin of 19.0% for 2Q21 compared to the 11.3% of 2Q20.

Regarding our cost of sales, raw material prices continued to be high in USD terms. This meant an increase in our total cost of sales of 16% when compared to the same quarter of 2020. However, our efforts and focus towards efficiencies in our processes permitted us to offset part of this increase.

In terms of expenses, we kept our SG&A under control as a percentage of sales, we reported 8.3% for the quarter and 8.4% for the first half of 2021, which is lower compared to the 9.5% and 9.8% for the respective periods of 2020.

As a result, our operating profit for the quarter was $2,088.8 million, which is significantly higher than 2Q20 where we saw most of the negative impacts of COVID-19.

We reported an EBITDA of $2,437.4 million in 2Q21, which is higher than the $437.6 million reported in 2Q20. The EBITDA margins for each of those two periods were 11.7% and 2.7%, respectively. For the first half of the year, our EBITDA margin was 13.3%, compared to 4.3% EBITDA margin of the same period of 2020.

CAPEX for the quarter was $1,307.5 million compared to $992.4 million for the same period of 2020. This was achieved while ending with a net cash position of $19,490.6 million by the end of 2Q21.

To our commitment of continually adding value to our shareholders, in 2Q21 we reported earnings per share of $2.46 and for the first half of 2021 we reported earnings per share of $5.96.

We will remain focused on efficiencies across all of our processes which will allow us to supply our markets and customers as best as we can and as we have done through the years.”

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		2Q21	2Q20	Change
		$	$	$	%
Net Sales		20,860.9	16,431.9	4,429.0	27.0
Net sales in Mexico		15,937.6	11,339.9	4,597.6	40.5
Net sales in the U.S.		4,923.4	5,092.0	(168.6)	(3.3)

NET SALES BY SEGMENT
In millions of pesos		2Q21	2Q20	Change
		$	$	$	$
Net Sales		20,860.9	16,431.9	4,429.0	27.0
Poultry		18,170.5	14,796.3	3,374.1	22.8
Other		2,690.5	1,635.6	1,054.9	64.5

NET VOLUME SOLD BY SEGMENT
In tons				Change
		2Q21	2Q20	Volume	%
Total sales volume:		583,661	554,677	28,984.5	5.2
Poultry		441,486	433,484	8,002.1	1.8
Others		142,175	121,192	20,982.4	17.3

The Company’s 2Q21 net sales totaled $20,860.9 million; $4,429.0 million or 27.0% more than the $16,431.9 million reported in 2Q20. The increase was mainly a result of higher prices and higher volume sold in our main business lines.

In 2Q21, sales of our U.S. operations represented 23.6% of our total sales compared to a 31.0% in the same period of 2020. The decrease was mainly a result of a lower exchange rate in 2Q21 vs the same period of 2020.

GROSS PROFIT
In millions of pesos		2Q21	2Q20	Change
		$	$	$	%
Cost of sales		16,901.1	14,574.5	2,326.6	16.0
Gross profit		3,959.8	1,857.4	2,102.5	113.2
Gross margin		19.0%	11.3%	-	-

In 2Q21, cost of sales was $16,901.1 million; $2,326.6 million or 16.0% higher than the $14,574.5 million reported in 2Q20. 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 2Q21 was $3,959.8 million, higher than the gross profit of $1,857.4 million in 2Q20, with a gross margin of 19.0% for 2Q21 vs 11.3% in 2Q20. The result of this quarter compares to a difficult 2Q20, when mobility restrictions due to COVID-19 negatively affected some of the markets that we serve, which resulted in oversupply conditions throughout the industry.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (“SG&A”)
In millions of pesos		2Q21	2Q20	Change
		$	$	$	%
Total SG&A		1,729.2	1,567.0	162.2	10.4

Total SG&A expenses in 2Q21 were $1,729.2 million; $162.2 million higher than the $1,567.0 million reported in 2Q20. Total SG&A expenses as a percentage of net sales were 8.3% in 2Q21 and 9.5% in 2Q20.

OTHER INCOME (EXPENSE), NET
In millions of pesos		2Q21	2Q20	Change
		$	$	$	%
Other income (expense), net		(141.8)	(207.5)	65.7	(31.7)

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 2Q21, we recorded other expenses of $141.8 million, compared with other expenses of $207.5 million reported in 2Q20.

OPERATING INCOME
In millions of pesos		2Q21	2Q20	Change
		$	$	$	%
Operating income		2,088.8	82.8	2,005.9	2,421.5
Operating margin		10.0%	0.5%	-	-

Operating income in 2Q21 totaled $2,088.8 million; $2,005.9 million higher than the $82.8 million reported in 2Q20. This represents an operating margin of 10.0% for 2Q21, higher when compared to the same period of 2020. The increase in operating income is mainly attributed to efficiencies in our processes and better market conditions compared to 2Q20, which is allowing us to pass to our sales price the increases observed in raw materials costs.

NET FINANCIAL INCOME
In millions of pesos		2Q21	2Q20	Change
		$	$	$	%
Net Financial Income		(97.0)	(122.3)	25.3	(20.7)
Financial Income		2.1	(42.3)	44.4	(105.0)
Financial Expense		99.1	80.0	19.1	23.8

In 2Q21, the Company reported net financial expenses of $97.0 million, compared to the net financial expenses of $122.3 million reported in the same period of 2020.

TAXES FOR THE PERIOD
In millions of pesos		2Q21	2Q20	Change
		$	$	$	%
Total Taxes		548.7	(11.2)	559.9	(4,986.2)
Income tax		804.5	(407.6)	1,212.1	(297.4)
Deferred income tax		(255.9)	396.4	(652.3)	(164.5)

As a result of a higher operating income, Total taxes for the 2Q21 were $548.7 million compared with total taxes of $(11.2) million in the same period of 2020.

NET INCOME
In millions of pesos		2Q21	2Q20	Change
		$	$	$	%
Net income		1,443.2	(28.2)	1,471.4	(5,214.7)
Net margin		6.9%	(0.2)%	-	-
Basic and diluted earnings per share1		2.46	(0.06)	2.5	n/a
Basic and diluted earnings per ADR2		29.55	(0.70)	30.2	n/a
Weighted average Shares outstanding3		599,743	599,787	-	-
1 In pesos
2 in pesos, one ADR equals to twelve shares
3 In thousands of shares

For the 2Q21 we had Net income of $1,443.2 million, representing a basic and diluted income per share of $2.46 compared with a negative net income of $28.2 million, which compares with $(0.06) pesos of net income per share in 2Q20. This increase was attributed to higher operating results. Net margin in 2Q21 was a positive 6.9% compared to a negative 0.2% reported in 2Q20.

EBITDA
In millions of pesos		2Q21	2Q20	Change
		$	$	$	%
Net income		1,476.8	(34.8)	1,511.6	(4,343.0)
Income tax expense (benefit)		548.7	(11.2)	559.9	(4,986.2)
Result in associates		(33.6)	6.6	(40.2)	(610.2)
Net finance (income) expense		97.0	122.3	(25.3)	(20.7)
Depreciation and amortization		348.6	354.8	(6.2)	(1.7)
EBITDA		2,437.4	437.6	1,999.8	457.0
EBITDA Margin (%)		11.7%	2.7%	-	-
Net revenues		20,860.9	16,431.9	4,429.0	27.0

EBITDA in 2Q21 reached $2,437.4 million, representing an EBITDA margin of 11.7%, compared to an EBITDA of $437.6 million in 2Q20, with an EBITDA margin of 2.7%.

ACCUMULATED RESULTS

NET SALES BY GEOGRAPHY
In millions of pesos		1H21	1H20	Change
		$	$	$	%
Net Sales		40,218.6	32,170.3	8,048.2	25.0
Net sales in Mexico		30,566.9	22,407.5	8,159.4	36.4
Net sales in the U.S.		9,651.6	9,762.8	(111.2)	(1.1)

NET SALES BY SEGMENT
In millions of pesos		1H21	1H20	Change
		$	$	$	%
Net Sales		40,218.6	32,170.3	8,048.2	25.0
Poultry		35,154.3	28,959.1	6,195.2	21.4
Other		5,064.2	3,211.2	1,853.0	57.7

NET VOLUME SOLD BY SEGMENT
In metric tons				Change
		1H21	1H20	Volume	%
Total sales volume:		1,141,743	1,142,694	(951.2)	(0.1)
Poultry		858,464	890,651	(32,187.3)	(3.6)
Others		283,279	252,043	31,236.0	12.4

During the first half of 2021, net sales totaled $40,218.6 million; $8,048.2 million or 25.0% more than $32,170.3 million reported in the same period of 2020. The increase in sales is mainly attributable to higher prices of our main business lines when compared to the first half of 2020.

In 1H21, sales of our U.S. operations represented 24.0% of our total sales, compared with 30.3% in 1H20. The decrease was mainly a result of the appreciation of the Mexican peso in the first half of 2021.

OPERATING RESULTS
In millions of pesos		1H21	1H20	Change
		$	$	$	%
Cost of Sales		32,040.7	28,131.8	3,908.9	13.9
Gross Profit		8,177.9	4,038.5	4,139.4	102.5
Total SG&A		3,366.5	3,139.7	226.8	7.2
Other Income (expense)		(163.6)	(212.0)	48.4	(22.8)
Operating Income		4,647.7	686.8	3,960.9	576.7
Net Financial Income		222.6	2,304.2	(2,081.6)	(90.3)
Income Tax		1,352.6	849.1	503.5	59.3
Net Income		3,517.8	2,141.9	1,375.8	64.2

In 1H21, the cost of sales totaled $32,040.7 million; $3,908.9 million or 13.9% higher than the $28,131.8 million reported in 1H20.

As a result, we reached a gross profit of $8,177.9 million and a gross margin of 20.3% in 1H21, when compared to $4,038.5 million of gross profit and margin of 12.6% reached in the same period of 2020.

Total SG&A expenses in 1H21 were $3,366.5 million; $226.8 million or 7.2% more than the $3,139.7 million reported in 1H20. In 1H21 total SG&A expenses as a percentage of net sales represented 8.4% compared with 9.8% in 1H20.

In 1H21 we had other expenses of $163.6 million, compared with other expenses of $212 million reported in 1H20.

Operating income in 1H21 was $4,647.7 million, which represents an operating margin of 11.6%, an increase compared to the operating income of $686.8 million and the operating margin of 2.1% in 1H20.

Net financial income in 1H21 was $222.6 million, lower when compared to a net financial income of $2,304.2 million in 1H20, mainly as a result of the Mexican peso appreciation year over year.

Total taxes were $1,352.6 million as of June 30, 2021. These taxes include $1,329.3 million of income tax and $23.3 million of deferred income taxes. This figure compares to total taxes of $849.1 million in 1H20.

All the above resulted in a net income of $3,517.8 million or 8.7% of net margin in the 1H21, which represents $5.96 pesos of earnings per share; while in the 1H20 the net income totaled $2,141.9 million, 6.7% of net margin and $3.55 pesos of net income per share.

EBITDA
In millions of pesos		1H21	1H20	Change
		$	$	$	%
Net controlling interest profit		3,577.2	2,131.8	1,445.3	67.8
Income tax expense (benefit)		1,352.6	849.1	503.5	59.3
Result in associates		(59.4)	10.1	(69.5)	(686.9)
Net finance (income) expense		(222.6)	(2,304.2)	2,081.6	(90.3)
Depreciation and amortization		703.1	698.1	5.0	0.7
EBITDA		5,350.8	1,384.9	3,965.9	286.4
EBITDA Margin (%)		13.3%	4.3%	-	-
Net revenues		40,218.6	32,170.3	8,048.2	25.0

EBITDA in 1H21 reached $5,350.8 million, representing an EBITDA margin of 13.3%, compared to an EBITDA of $1,384.9 million in 1H20, with a margin of 4.3%.

BALANCE SHEET

BALANCE SHEET DATA
In millions of pesos		June 30, 2021	Dec. 31, 2020	Change
		$	$	$	%
TOTAL ASSETS		61,676.1	58,475.0	3,201.1	5.5
Cash and cash equivalents		21,461.0	19,242.4	2,218.5	11.5
Accounts receivable		4,249.9	4,366.7	(116.8)	(2.7)
TOTAL LIABILITIES		14,578.9	14,548.2	30.7	0.2
Accounts payable		5,593.5	5,834.0	(240.5)	(4.1)
Short-term debt		497.5	1,251.7	(754.2)	(60.3)
Long-term debt		1,472.8	1,460.4	12.4	0.8
TOTAL STOCKHOLDERS’ EQUITY		47,097.2	43,926.8	3,170.4	7.2
Capital stock		1,174.2	1,174.3	(0.1)	(0.0)

Cash and equivalents as of June 30, 2021 totaled $21,461.0 million vs $19,242.4 million as of December 31, 2020.

Total debt as of June 30, 2021 was $1,970.3 million, compared to $2,712.1 million reported as of December 31, 2020, mainly as a result of payments made in our short-term bank debt.

Net cash as of June 30, 2021 was $19,460.6 million, compared to net cash of $16,530.3 million as of December 31, 2020.

CAPITAL EXPENDITURES
In millions of pesos		1H21	1H20	Change
		$	$	$	%
Capital Expenditures		1,307.5	992.4	315.1	31.7

Total CAPEX for the 1H21 was $1,307.5 million and $992.4 million in 1H20, mainly allocated toward organic growth and productivity projects across all of our facilities.

STOCK INFORMATION

As of June 30, 2021
Total Shares	600,000,000
Total free float	26.75%
Market cap (millions of pesos)	$45,162

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	77.89	73.93	75.27		47.60	43.93	46.32
May	77.50	74.92	76.52		46.76	44.55	46.40
April	75.39	68.04	74.73		45.47	39.73	44.47
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
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	Hector Maya López	hmmaya@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 $19.95 per USD $1.0, which corresponds to the rate at the close of June 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 INCOME
Second Quarter Results, ended June 30th:
-Unaudited-
		U.S. Dollar
In millions pesos		2021				2021			2020
Net sales		$	1,045.7			20,860.9			16,431.9
Cost of sales			847.2			16,901.1			14,574.5
Gross profit			198.5			3,959.8			1,857.4
SG&A			86.7			1,729.2			1,567.0
Other income (expenses), net			(7.1	)		(141.8	)		(207.5	)
Operating income			104.7			2,088.8			82.8
Net finance income			(4.9	)		(97.0	)		(122.3	)
Income tax			27.5			548.7			(11.2	)
Net Income		$	72.3			1,443.2			(28.2	)
Non-controlling interest			(1.69	)		(33.6	)		6.6
Net controlling interest profit			74.02			1,476.8			(34.8	)
Basic and diluted earnings per share			0.12			2.46			(0.06	)
Basic and diluted earnings per ADR			1.48			29.55			(0.70	)
Weighted average Shares outstanding1			599,743			599,743			599,787
EBITDA Result		$	122.2			2,437.4			437.6
Gross margin			19.0	%		19.0	%		11.3	%
Operating margin			10.0	%		10.0	%		0.5	%
Net margin			7.1	%		6.9	%		-0.2	%
EBITDA margin			11.7	%		11.7	%		2.7	%
1 In thousands

CONSOLIDATED STATEMENT OF INCOME
Accumulated results, for the six months ended June 30.
-Unaudited-
		U.S. Dollar
In millions pesos		2021				2021			2020
Net sales		$	2,016.0			40,218.6			32,170.3
Cost of sales			1,606.0			32,040.7			28,131.8
Gross profit			409.9			8,177.9			4,038.5
Selling, general and administrative expenses			168.7			3,366.5			3,139.7
Other income (expenses), net			(8.2	)		(163.6	)		(212.0	)
Operating income			233.0			4,647.7			686.8
Net finance income			11.2			222.6			2,304.2
Income tax			67.8			1,352.6			849.1
Net income		$	176.3			3,517.8			2,141.9
Non-controlling interest			(2.98	)		(59.4	)		10.1
Net controlling interest profit			179.3			3,577.2			2,131.8
Basic and diluted earnings per share			0.30			5.96			3.55
Basic and diluted earnings per ADR			3.59			71.6			42.65
Weighted average Shares outstanding1			599,790			599,790			599,815
EBITDA Result		$	268.2			5,350.8			1,384.9
Gross margin			20.3	%		20.3	%		12.6	%
Operating margin			11.6	%		11.6	%		2.1	%
Net margin			8.9	%		8.7	%		6.7	%
EBITDA margin			13.3	%		13.3	%		4.3	%
1 In thousands

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
-Unaudited-
		In U.S. Dollar			June 30,		December 31,
In million pesos		2021			2021		2020*
TOTAL ASSETS		$	3,091.5		61,676.1		58,475.0
Total current assets			1,768.6		35,284.5		32,586.0
Cash and cash equivalents			1,075.7		21,461.0		19,242.4
Total accounts receivable			213.0		4,249.9		4,366.7
Inventories			399.9		7,977.9		7,701.0
Other current assets			80.0		1,595.8		1,275.9
Total non current assets			1,322.9		26,391.6		25,889.0
Net property, plant and equipment			1,018.3		20,314.8		19,733.8
Other non current Assets			304.6		6,076.8		6,155.2
TOTAL LIABILITIES		$	730.8		14,578.9		14,548.2
Total current liabilities			427.7		8,532.2		8,179.8
Notes payable to banks			24.9		497.5		1,251.7
Accounts payable			280.4		5,593.5		5,834.0
Other taxes payable and other accruals			122.4		2,441.2		1,094.1
Total long-term liabilities			303.1		6,046.7		6,368.4
Long-term debt			73.8		1,472.8		1,460.4
Other non current liabilities			48.2		962.0		1,033.0
Deferred income taxes			181.0		3,611.9		3,875.0
TOTAL STOCKHOLDERS' EQUITY		$	2,360.8		47,097.2		43,926.8
Capital stock			58.9		1,174.2		1,174.3
Commission in shares issued			20.7		413.3		413.4
Retained earnings			2,206.4		44,018.1		40,874.4
Others accounts			47.6		948.8		855.5
Non controlling interest			27.2		542.8		609.2
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	3,091.5		61,676.1		58,475.0
*Audited

CONSOLIDATED STATEMENT OF CASH FLOWS
In million of pesos
-Unaudited-
		U.S. Dollar				June 30,
		2021				2021			2020
NET MAJORITY INCOME BEFORE INCOME TAX		$	244.1			4,870.4			2,666.5
ITEMS RELATING TO INVESTING ACTIVITIES:			41.2			821.6			269.4
Depreciation and others			45.7			911.5			639.3
Income (loss) on sale of plant and equipment			2.2			43.3			(23.1	)
Other Items			(6.7	)		(133.2	)		(346.7	)
NET CASH GENERATED FROM NET INCOME BEFORE TAXES			285.3			5,691.9			2,935.9
CASH GENERATED OR USED IN THE OPERATION:			14.3			284.7			(1,977.9	)
Decrease (increase) in accounts receivable			(3.5	)		(70.5	)		(1,426.1	)
Decrease (increase) in inventories			(15.5	)		(310.0	)		395.7
Increase (decrease) in accounts payable			93.0			1,855.0			(1,961.8	)
Other Items			(59.6	)		(1,189.9	)		1,014.3
NET CASH FLOW FROM OPERATING ACTIVITIES			299.6			5,976.7			958.0
NET CASH FLOW FROM INVESTING ACTIVITIES			(44.2	)		(882.8	)		(188.6	)
Acquisition of property, plant and equipment			(65.5	)		(1,306.2	)		(824.6	)
Proceeds from sales of property plant and equipment			0.1			1.8			37.3
Other Items			21.1			421.6			598.7
CASH FLOW SURPLUS (REQUIREMENTS OF) TO BE USED IN FINANCING ACTIVITIES			255.3			5,093.9			769.4
Net cash provided by financing activities:			(144.1	)		(2,875.3	)		(706.5	)
Proceeds from loans			62.0			1,237.2			3,478.6
Principal payments on loans			(95.9	)		(1,912.3	)		(3,424.2	)
Dividends paid			(21.3	)		(425.8	)		(420.0	)
Other items			(88.9	)		(1,774.4	)		(340.9	)
Net increase (decrease) in cash and equivalents			111.2			2,218.5			62.9
Cash and investments at the beginning of year		$	964.5			19,242.4			19,164.8
CASH AND INVESTMENTS AT END OF PERIOD		$	1,075.7			21,461.0			19,227.7

DERIVATIVES POSITION REPORT

Second Quarter 2021
Thousands of Mexican Pesos, as of June 30, 2021
TYPE OF FINANCIAL INSTRUMENT	OBJECTIVE	NOTIONAL		VALUE OF THE RELATED COMMODITY								REASONABLE VALUE				AMOUNTS DUE BY YEAR	GUARANTIES REQUIRED
				2Q-2021				1Q-2021				2Q-2021		1Q-2021
Forward Vanilla, and KO Fwd	Hedge	$	248,431	$	19.95			$	20.42			$	-237,421	$	-231,713	96% in 2021; 4% 2022	The deals consider the possibility of margin calls but not another kind of guarantee
Futures for corn and soybean meal	Hedge	$	201,788	CORN				CORN				$	12,244	$	12,899	86% in 2021 and 14% in 2022
				In USD per Bushel				In USD per Bushel
				month		price		month		price
								May-21		$	5.643
				Jul-21		$	7.200	Jul-21		$	5.475
				Sep-21		$	5.993	Sep-21		$	4.960
				Dec-21		$	5.885	Dec-21		$	4.775
				SOYBEAN MEAL				SOYBEAN MEAL
				In USD per ton				In USD per ton
				month		price		month		price
				Aug-21		$	377.5
				Sep-21		$	379.0	May-21		$	423.2
				Oct-21		$	378.8	Jul-21		$	424.8
				Dec-21		$	381.7	Aug-21		$	419.6
				Jan-22		$	380.1	Sep-21		$	410.7
				Mar-22		$	374.1	Oct-21		$	399.6
				May-22		$	371.8	Dec-21		$	397.5
				Jul-22		$	373.7
				Aug-22		$	369.6
				Sep-22		$	369.6
Options of Corn	Hedge	$	594,632	CORN				CORN				$	88,823	$	33,523	99% in 2021 and 1% in 2022
				In USD per Bushel				In USD per Bushel
				month		price		month		price
				Jul-21		$	7.200	May-21		$	5.643
				Sep-21		$	5.993	Jul-21		$	5.475
				Dec-21		$	5.885	Sep-21		$	4.960
				Mar-22		$	5.955	Dec-21		$	4.775
								Mar-22		$	4.194
Options of soybean meal	Hedge	$	484,302	SOYBEAN MEAL				SOYBEAN MEAL				$	3,603	$	36,364	80% in 2021 and 20% in 2022
				In USD per ton				In USD per ton
				month		price		month		price
				Aug-21		$	377.5	May-21		$	423.2
				Sep-21		$	379.0	Jul-21		$	424.8
				Oct-21		$	378.8	Aug-21		$	419.6
				Dec-21		$	381.7	Sep-21		$	410.7
				Jan-22		$	380.1	Oct-21		$	399.6
				Mar-22		$	374.1	Dec-21		$	397.5
				May-22		$	371.8	Jan-22		$	394.2
								Mar-22		$	383.9
-The total financial instruments do not exceed 5% of total assets as of June 30, 2021.
-The notional value represents the net position as of June 30, 2021 at the exchange rate of Ps.19.95 per one dollar.
-A negative value means an unfavorable effect for the Company.

Second Quarter 2021
Thousands of Mexican Pesos, as of June 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	-$	237,421	$	19.45	$	20.45	$	20.94	Direct	-$	361,308	-$	113,534	-$	478
			-5%		5%		10%			-5%		5%		10%
Futures of Corn: (2)	$	12,244	$	6.840	$	7.560	$	7.920	The effect will materialize as the inventory is consumed	$	1,851	$	22,637	$	33,030
Futures of Soybean Meal: (2)			$	358.6	$	396.4	$	415.3
Options for Corn	$	88,823	$	6.840	$	7.560	$	7.920		$	68,536	$	109,110	$	129,397
Options of Soybean Meal	$	3,603	$	358.6	$	396.4	$	415.3		-$	20,613	$	27,818	$	52,033

(1)	The reference value is the exchange rate of Ps. $19.95 per USD as of June 30, 2021.
(2)	The reference values are; the future of corn for July 2021, $7.2000 USD/bushel and the future of soybean meal for August 2021, $377.50USD/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.

Second Quarter 2021
Thousands of Mexican Pesos, as of June 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	-$	237,421	$	9.97	$	14.96	$	24.93	$	29.92	Direct	-$	2,715,148	-$	1,476,285	$	787,856	$	1,789,187

CONFERENCE CALL INFORMATION

The Company will host its second quarter 2021 earnings call on Tuesday, July 27th, 2021. The earnings call will take place 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: http://web.meetme.net/r.aspx?p=12&a=UruYmiHQFTxayV

Confirmation Number: 50196779

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 Business Unit in the United States of America. 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210726005631/en/

FAQ

What were the key financial results for IBA in Q2 2021?

Industrias Bachoco (IBA) reported a 27% increase in net sales, amounting to $20,860.9 million, with a gross margin of 19% and an EBITDA margin of 11.7%.

How did IBA's net income change in Q2 2021 compared to Q2 2020?

In Q2 2021, IBA's net income was $1,443.2 million, a significant recovery from a loss of $28.2 million in Q2 2020.

What was the EBITDA for IBA in the first half of 2021?

The EBITDA for the first half of 2021 was $5,350.8 million, representing an EBITDA margin of 13.3%.

What is the net cash position of IBA as of June 30, 2021?

IBA reported a net cash position of $19,490.6 million at the end of Q2 2021.

How did operating income change for IBA in Q2 2021?

Operating income for IBA in Q2 2021 reached $2,088.8 million, a substantial increase from $82.8 million in Q2 2020.