CORPORATE PRESENTATION - ALFA · CORPORATE PRESENTATION ALFA participates in Key areas of the...

CORPORATE PRESENTATION

This presentation contains forward-looking information based on numerous variables and assumptions that are

inherently uncertain. They involve judgments with respect to, among other things, future economic, competitive and

financial market conditions and future business decisions, all of which are difficult or impossible to predict accurately.

Accordingly, results are likely to vary from those set forth in this presentation. Copyright © 2019 ALFA, S.A.B. de

C.V. All rights reserved. Reproduction and distribution is forbidden without the prior written consent of ALFA, S.A.B.

de C.V.

CORPORATE PRESENTATIONM A R C H , 2 0 1 9


ALFA participates in Key areas of the economy

2018 Results Guidance 2019

Revenues (US $ Billions) $19.1 $19.1

EBITDA1 (US $ Billions) $2.9 $2.4

Capex (US $ Millions) $1,2962 $979

SIGMA

Refrigerated Foods

ALPEK

Petrochemicals

NEMAK

Aluminum Auto Parts

AXTEL

IT + Telecom

NEWPEK

Hydrocarbons

2 ALFA

1. Includes extraordinary items for US $427 million in 2018 and US $200 million in 2019

2. Includes acquisitions and divestitures


Breakdown by Business Group

Revenues 2018

US $19.1 Billion

EBITDA 2018

US $2.9 Billion

3 ALFA

Alpek

37%

Newpek

1%Axtel

4%

Nemak

25%

Sigma

33%

Alpek

35%

Axtel

15%

Nemak

25%

Sigma

24%

Newpek

1%


Ownership

100%

82%

75%

53%

100%

4

Public company since 2012.


Ford Motor Co. owns 5.4%.


ALFA


Global footprint

5

Production

Facilities in

28 countries

~70% of

sales outside

Mexico

More than

86,000

employees


1.11.3

1.71.9 1.9 2.0

2.4 2.32.0

2.9*

2.4*

09 10 11 12 13 14 15 16 17 18 19E

Focused on long-term value creation

6

Revenues(US $ Billion)

EBITDA(US $ Billion)

ALFA

10.6

8.5

10.8

14.7 15.2 15.917.2

16.3 15.8

19.1 19.1

09 10 11 12 13 14 15 16 17 18 19E

*Includes extraordinary items for US $427 million in 2018 and

US $200 million in 2019


Corporate Strategy

• Strategy is bottom up.

• Strategy is formed at the subsidiary

level where the differentiated knowledge

is located.

• Our focus is on improving and

strengthening the existing businesses in

our portfolio to drive higher shareholder

returns.

• We provide the policies and guidelines.

Corporate governance practices.

Major project-approval and leverage

limits.

• Involvement and support in M&A activity.

• We have a strong board of directors with

most independent members who

question decisions.

7


Petrochemicals

8


One of the world’s largest integrated polyester groups

• 2018 Revenues of US $7.0 billion

• 2018 EBITDA of US $1.0 billion

• Production facilities in key

geographic areas:

• North America: the

biggest market for

beverages

• Availability of low-cost

raw materials

• Logistics

9 ALPEK


Business Segments

Polyester chain

2018

Revenues US $5.2 billion (74%)

EBITDA US $788 million (74%)

Products

Purified Terephthalic Acid (PTA)

Polyethylene Terephthalate (PET)

Polyester fibers

Plastics & chemicals

2018

Revenues US $1.7 billion (26%)

EBITDA US $276 million (26%)

Products

Polypropylene (PP)

Expandable Polystyrene (EPS)

Caprolactam (CPL)

Fertilizers and other chemicals

10 ALPEK


Alpek’s products are widely used for food packaging and

consumer end-markets

Beverage Food Personal care Textiles

Sample end users by industry

11 ALPEK

Sales 2018

Geography(US $6,991 Million)

Volume 2018

By Industry(4,402 Kta)

Asia & others

1%

Europe

3%Latam

18%

Mexico

30%

US

45%

Construction

4%Textiles

7%

Consumer

Goods

22%

Food and

Beverages

67%

Canada

3%


Alpek’s installed capacity amounts to 7.0 million tonsInstalled Capacity Breakdown (Kta)

SITE PTA PET rPET FIBERS PP EPS CPL OTHER

Mexico

(3,030

Kta)

Monterrey 160

Altamira 1,000 640 240

Salamanca 85

Ocotlán 10

Cosoleacaque 610 185

Lerma 100

USA

(2,358

Kta)

Cedar Creek 170 55

Cooper River 170 150

Columbia 640 725

Pearl River 430

Richmond 45

Canada Selenis 144

Argentina

(225

Kta)

Zárate 190

Pacheco 15

General Lagos 19

Brazil Guaratingueta 46

Ipojuca 640 450 90

Chile

(27

Kta)

Santiago 5

Puerto Montt 2

Concon 20

Capacidad Total: 7,036 Kta 2,890 2,464 115 400 640 325 85 117

Mexico

United Sates

Argentina

Chile

Brazil

More than

5,800employees

26 Production

facilities

Source: Alpek estimates. Kta: Thousand tons per year.

Includes industrial and specialty chemicals and recycled PET

capacities12 ALPEK


Alpek’s strategy

13 ALPEK

Strengthen

Core Business

Growth

PET

Sustainability

Strengthen

Core

Business

• Ensure profitability throughout industry cycles

• Enhance position in the Americas

• Secure competitive feedstock/power supply

Growth

• Deliver returns on recent investments (U.S. $1 B)

• Vertical integration

• Strategic and opportunistic M&A

PET

Sustainability

• Expand PET recycling capacity

• Enhance recycled content offering

• Support customer initiatives


Refrigerated Foods

14


Multinational food company dedicated to bringing local

favorite foods to communities everywhere

2018

Revenues

US $6.3billion

EBITDA

US $684million

15 SIGMA


Region % Sales

Highly recognized branded foods in Mexico, U.S., Central &

South America and Europe

• Broad geographic footprint: 70 manufacturing facilities and operations in 18

countries

• Offers quality food at a wide range of price points and across diverse

categories

16

U.S.

15%

Mexico

41%Europe

36%

LATAM

8%

SIGMA

Cooked meats

59%Dairy

18%

Dry Meats

18%

Other Categories

5%

Mexico

United States

Dominican Rep.

El Salvador

Guatemala

Ecuador

Peru

Honduras

Nicaragua

Costa Rica

Portugal

Italy

Belgium

Germany

Netherlands

Spain

France

Romania


Diversified and strong brand portfolio in each market

PACKAGED MEATS DAIRY OTHER THIRD PARTY

ME

XIC

OE

UR

OP

EU

SA

LA

TA

M

17 SIGMA


Broad supply chain network

Reach, service, efficiency and knowledge

• Global processes

• Benchmarks

• Best practice implementation

• Production sharing capabilities

Safety & quality throughout the supply chain

• Sourcing development programs and

certifications

• In-store quality checks

• Customer development programs

• Certified facilities

18

70Production facilities

26 Europe

13 Latam

25 Mexico

6 US

208Distribution centers

18 Europe

39 Latam

137 Mexico

14 US

+642,000Points of sale

65,000 Europe

116,000 Latam

378,000 Mexico

83,000 US

SIGMA


Product & Process Innovation

Consumer-driven innovation

• Extensive consumer research

• Proprietary mathematical models

• Sigma Innovation System

State-of-the-Art Research & Development

center

• With +160 specialists

• Leadership in food process technology

R&D Alliances

• Research agreements with educational

and governmental institutions

• Open technology

19 SIGMA


Growth strategy

20

Continue consolidating recent acquisitions while implementing best practices

Reinforce brand equity through innovation and differentiated marketing

Increase distribution to improve market share

Capture greater market share in the foodservice market

Fully leverage assets through distribution of third-party leading brands

Achieve fair-share in relevant markets / categories

M&A in packaged meats and dairy

Grow exports of heritage products

Explore new categories

Enter new geographies

Complement innovation capabilities through open innovation / venture capital

Continue developing world class talent

Invest in the

Future

Expand the

Core

Strengthen Core

Business


Aluminum Autoparts

21


The leading lightweighting solutions provider for the auto

industry

• 2018 Revenues of US $4.7 billion

• 2018 EBITDA of US $734 million

• Global footprint, cost

competitiveness, R&D, skilled

labor force

• One out of every four new vehicles

sold worldwide has a Nemak

component

• Sole supplier in ~90% of sales

volume

22 NEMAK


Focused on innovative lightweighting solutions for the

automotive industry

Powertrain

• Heads

• Blocks

• Transmissions

EV Components

• E-Motor Housings

• Battery Housings

Structural Components

• Longitudinal Members

• Shock Towers

• Cross Members

23 NEMAK


Diversified customer base

• More than 50 customers worldwide

• Nemak supplies ~650 out of 1,200 vehicle platforms worldwide

24 NEMAK

http://www.opel.com/

http://www.opel.com/

http://img3.wikia.nocookie.net/__cb20100630205529/logopedia/images/b/b8/Maserati_logo.png

http://img3.wikia.nocookie.net/__cb20100630205529/logopedia/images/b/b8/Maserati_logo.png


Solid customer relationships; diversified revenue stream

North

America

56%

Europe

35%

Others

9%

2018

Volume distributionBy Customer

2018

Revenue distributionBy Region

25 NEMAK

28%

16%

11%

6%

8%

4%

3%

3%

21%

Others


Global footprint with modern facilities near key customers

• Global footprint serving all major markets

• 38 manufacturing facilities strategically located close to customer sites

• North America (18), Europe (14), South America (3), Asia (3)

26

Canada

United States

Mexico

Brazil

Argentina

Spain

Germany

Hungary

Russia

Slovakia

Poland

Austria

Czech Republic

India

China

Turkey

NEMAK


Aluminum components expected to grow due to stricter

environmental standards

North America and Europe Light Vehicle Aluminum Content(Pounds per vehicle)

2012

324

2015e

350

301

2009

24

2018e

426

2021e

475

2025e

380

Structural

Components

Others

Heat Transfers

Wheels & brakes

Transmissions

Engine Blocks

Cylinder Heads

Source: Ducker, Nemak

109

27 NEMAK


Nemak’s strategy

28

• Maximize powertrain business

Capture growth – aluminum penetration in blocks

Focus on high complexity products

Continue to increase efficiencies

Increase machining – additional value added, margin expansion

• Invest in development of structural components and parts for EVs

High-growth segment

Lightweighting key for EV performance

Complex products

Attractive profitability


IT +Telecom

29


IT and Telecom services for the enterprise and government

segments

Main Services

• Data centers

• Information security

• Managed networks

• Consultancy services

• Systems integration

• Cloud services

• Internet

30 AXTEL


Diversified revenue stream; focused on the enterprise

market

2018Revenues

U.S. $809million

EBITDA

U.S. $422million

31 AXTEL

Sales

Breakdown(By type of service)

19%Mass Market

81%Enterprise

By

Market Segment

9%Wireless

18%Mass Market

66%Telecom

17%IT

15%FTTH*

*FTTH: Fiber to the home

17%Government


Strategic evolution

• Start up local mass market «Fixed Wireless»

• Avantel acquisition (´06)

• Broad band mass market

• Vertical markets

• Cloud services

• App management

• Data center

• Enterprise strategy

• Value added services – Data IP

• Start up LD services

ALESTRA CONVERGENCE

• Unified communications

• Managed networks

• Security

• Large Scale Solutions

• Systems integration

• Data center

• IPTV (´13)

• Cloud services & managed IT

1997

1999

2000

2008

2011

2008

2011

• Value added services mass market– Wimax

• Enterprise integration Telco / IT

• FTH

2015 2015

TELECOMM MARKET OPENED

IP PROTOCOL, INTERNET BUBBLE

VOICE AND DATA NET CONVERGENCE LAN/WAN

TELECOM / IT CONVERGENCE

DATA CENTER CONVERGENCE

MEGER 2016

32 AXTEL


Infrastructure provides access to +90% of Mexican market

• 38,100 km of long-haul

fiber optics

• Six data centers

• 7,200 m2

33 AXTEL


Axtel’s strategy

• Focused on providing IT and Telecommunications (ICT) managed solutions to

increase the productivity of core Enterprise and Government segments

• Further increase the penetration of IT solutions to consolidate leading position in core

Enterprise and Government segments

• Enhanced integrated ICT offers with cloud-based solutions from global technology

partners

• Deploy a multi-platform mobility solution to complement portfolio of services to

Enterprise and Government customers, as well as enable third-party mobile offers for

other customers

34 AXTEL


Hydrocarbons

35


Exploration & Production (E&P) operations in the U.S. and

Mexico

Involvement in the E&P industry

began in 2006

• JV with Pioneer (8.6%)

• Development of Eagle Ford Shale

Operating mature fields in Mexico

since 2013

• Service contracts with Pemex

(CIEPs)

36 NEWPEK


Newpek fields

KS

TX

OK

CO

Eagle Ford

0.9 1.1 1.0

2.7

4.7

6.4

8.2 8.37.2

4.9 4.4

08 09 10 11 12 13 14 15 16 17 18

Current U.S. Operations

Talent

• Team of experience

people in the US.

• World-class partners (e.g.

Pioneer Natural

Resources)

Technology

• Fracking for horizontal

drilling in Eagle Ford – 555

wells in operation

• Mature fields optimization

• World-class sub-surface

analysis capabilities

37

Successful transition to operations

• Experienced transition to

operations

• Mineral rights on leases over

220,000 acres

Net production

(MBOED)EBITDA

(US $ million)

NEWPEK

14 7 8

30

66

91

116

40

9 3

31

08 09 10 11 12 13 14 15 16 17 18

MBOED= Thousand of barrels of oil equivalent pre day.


Activities in Mexico

• Service contracts in San Andrés and Tierra Blanca fields

• Producing over 3.4 mboed on 131 wells

• Optimization of existing wells

• Development of new wells in conventional formation

• In a JV with Verdad Exploration, won contracts to operate two wet gas fields in Tamaulipas, Mexico

• Area of 363 Km2

• Minimum required investment of US $4 million

38 NEWPEK


Newpek’s Strategy

39

• Divest assets outside of Mexico

• Continue to assess opportunities in Mexico

Find unique opportunities in current market

Migrations and farm-ins

• Leverage partnerships

• Evaluate infrastructure investments


ALFA Guidance 20191

(US $ Millions) Revenues EBITDA CAPEX

2018 2019e 2018 2019e 20182 2019e

ALFA 19,055 19,107 2,8583 2,4294 1,296 979

Alpek 6,991 7,248 1,063 918 826 310

Sigma 6,336 6,679 684 735 180 194

Nemak 4,704 4,377 734 620 403 320

Axtel 809 641 422 217 85 122

Newpek 108 54 31 (3) 26 29

Assumptions:

•Mexico GDP growth: 1.7%

•USA GDP growth: 2.3%

•Eurozone GDP Growth: 1.8%

•Avg. exchange rate Mx Peso to USD: $20.60

•Avg. exchange rate Euro to USD: $1.18

•Avg. oil price (Brent): US $68/barrel

40

1. Guidance as of February 14, 2019

2. CAPEX for 2018 includes divestitures and acquisitions

3. Includes US $427 million from extraordinary items

4. Includes US $200 million from sale of Cogen plants

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