2q18 - kuo...market cap $ 19,971 million outstanding shares 456.366 million book value $26.5 price/...

2Q18

CORPORATEPRESENTATION

This presentation has been prepared by Grupo KUO, S.A. de C..V. (“Kuo” or the “Company”) and has not been independently verified.

The securities referred to herein are only being offered to “qualified institutional buyers” under Rule 144A of the U.S. Securities Act of 1933, as amended (the

“Securities Act”), and non-U.S. persons in offshore transactions under Regulation S of the Securities Act. Other persons should not act upon this presentation or

any of its contents. The securities referred to herein are being offered solely pursuant to the Company’s confidential preliminary offering circular, dated June 20,

2017 (the “Offering Circular”), which should be read in its entirety. This presentation does not constitute an offer to sell or a solicitation of an offer to buy any

securities in any jurisdiction where such offer or sale is not permitted.

You agree to keep the contents of this presentation strictly confidential. This presentation is highly confidential and contains proprietary and confidential

information about KUO, its subsidiaries, its financial results and its operations. This presentation’s material is being presented solely for your information and may

not be copied, reproduced or redistributed to any other person in any manner. At the request of KUO the recipient will promptly return all non-public material

received from KUO (including this presentation) without retaining any copies thereof. No securities may be offered or sold in the United States absent registration

or an exemption from registration under the Securities Act. KUO does not intend to register any of its securities for offer or sale in the United States or elsewhere,

or to conduct a public offering of securities in the United States or elsewhere.

This presentation includes forward-looking statements. These statements relate to KUO's future prospects, developments and business strategies and are

identified by the use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will,” “goals,”

“target,” “strategy” and similar terms and phrases, and may include references to assumptions. Forward-looking statements are based on KUO's current

expectations and assumptions regarding its business, the economy and other future conditions. KUO's actual results may differ materially from those contemplated

by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include those

mentioned in the company’s filings with the Mexican Authorities and/or Regulators as well as the Offering Circular for the Company´s proposed offering of debt

securities.

No representations or warranties, express or implied, are made as to, and no reliance should be placed on, the accuracy, fairness or completeness of the

information presented or contained in this presentation. Neither the Company nor any of its affiliates, advisers or representatives accept any responsibility

whatsoever for any loss or damage arising from any information presented or contained in this presentation. The information presented or contained in this

presentation is current as of the date hereof and is subject to change without notice and its accuracy is not guaranteed. Neither the Company nor any of its

affiliates, advisers or representatives make any undertaking to update any such information subsequent to the date hereof. This presentation should not be

construed as legal, tax, investment or other advice.

Certain data in this presentation was obtained from various external data sources, and the Company has not verified such data with independent sources.

Accordingly, the Company makes no representations as to the accuracy or completeness of that data, and such data involves risks and uncertainties and is subject

to change based on various factors. The use of registered trademarks, commercial trademarks and logos or photographic materials within this document are

exclusively for illustrative purposes and are not meant to violate the rights of the creators and/or applicable intellectual property laws.

This presentation does not constitute an offer or invitation to purchase or subscribe for any debt securities or other securities of the Company and neither any part

of this presentation nor any information or statement contained herein shall form the basis of or be relied upon in connection with any contract or commitment

whatsoever. Any decision to purchase securities in any offering of securities of the Company should be made solely on the basis of the information contained in the

Offering Circular which may be published or distributed in due course in connection with any offering of securities of the Company, if any.

By participating in this presentation, you agree to be bound by the foregoing limitations.2

DISCLAIMER

Belgium

Spain

US

Mexico

China

KUO AT GLANCE (LTM FIGURES – JUNE 2018)

• $39,847 Revenue

• $5,642 EBITDA

• 14.2% EBITDA Margin

• 1.9x Net Debt / EBITDA

• 52% Exports

• 27 Manufacturing Plants

• 70 Countries coverage

• +21,000 Employees

Note: Figures are expressed in millions of Mexican pesos in Combined Pro forma IFRS, considering the proportional consolidation method.3

GLOBAL FOOTPRINT

29%

US &

CANADA

13%

EUROPE

47% MEX

8% ASIA

REVENUE DISTRIBUTION

PER REGION

3% OTHER

Consumer Chemical Automotive

BUSINESSPork MeatBranded Food

PolystyreneSynthetic Rubber

TransmissionsAftermarket

REVENUE 46% of total 36% of total 18% of total

EBITDA 48% of total 37% of total 15% of total

BUSINESS STRUCTURE

Peru

FINANCIAL HIGHLIGHTS 2Q18 (MILLION PESOS)

4Note: Figures are expressed in millions of Mexican pesos in Combined Pro forma IFRS, considering the proportional consolidation method.

REVENUES EBITDA

9,767

10,778

2Q17 2Q18

+10.4%

54% EXPORTS

1,307

1,527

13.4%14.2%

10.00%

11.00%

12.00%

13.00%

14.00%

15.00%

16.00%

800

900

1,000

1,100

1,200

1,300

1,400

1,500

1,600

2Q17 2Q18

+16.8%

+80 bp MARGIN

1,891

3,478

4,367

1,901

4,105

4,743CONSUMER

CHEMICAL

AUTOMOTIVE

+8.6%2Q18

2Q17

2Q18

2Q17

2Q18

2Q17

+18.0%

+0.5%273

415

601

228

599

709+18.0%

+44.3%

-16.5%

14.9% MGN

14.6% MGN

12.0% MGN

2Q18

2Q17

2Q18

2Q17

2Q18

2Q17

FINANCIAL HIGHLIGHTS 1H18 (MILLION PESOS)


REVENUES EBITDA

20,178

20,764

1H17 1H18

+2.9%

53% EXPORTS

2,576

2,893

12.8%

13.9%

10.00%

11.00%

12.00%

13.00%

14.00%

15.00%

16.00%

1,000

1,500

2,000

2,500

3,000

1H17 1H18

+12.3%

+110 bp MARGIN

3,726

7,459

8,923

3,675

7,788

9,215CONSUMER

CHEMICAL

AUTOMOTIVE

+3.3%1H18

1H17

1H18

1H17

1H18

1H17

+4.4%

-1.4%552

905

1,163

468

1,136

1,322+13.7%

+25.5%

-15.2%

14.3% MGN

14.6% MGN

12.7% MGN

1H18

1H17

1H18

1H17

1H18

1H17

4,367

4,743

CONSUMER 2Q18 (MILLION PESOS)


+8.6%2Q18

2Q17

2Q18

2Q17 601

709+18.0%

REVENUES EBITDA

44%OF CONSOLIDATED SALES

46%OF CONSOLIDATED EBITDA

12.2%OPERATING

MARGIN

14.9%EBITDA

MARGIN

HIGHLIGHTS

• Growth in Herdez del Fuerte driven by US operations (Megamex): guacamole, salsas and dipsMexico: tomato puree, mole, ketchup & salsas

• Higher dynamism in Pork Meat Business:

463 Maxicarne stores in operation

Exports growth to Japan

• Strong EBITDA growth in Herdez Del Fuerte & Pork Meat businesses:

Improved sales mix, better pricing

Operating efficiencies in Pork Meat business

Lower raw material prices: corn & avocado

• EBITDA Margin Expansion +110 bp to 14.9%

• Ongoing CAPEX investment to expand installed capacity in Pork Meat business

CONSUMER

7

3,478

4,105

CHEMICAL 2Q18 (MILLION PESOS)


+18.0%2Q18

2Q17

2Q18

2Q17 415

599+44.3%

REVENUES EBITDA



12.6%OPERATING

MARGIN

14.6%EBITDA

MARGIN

HIGHLIGHTS

• Higher volume and prices in Synthetic Rubber business: asphalt modifiers, industrial & construction segments

• Greater demand on value added products, Synthetic Rubber & Polystyrene businesses

• Strong EBITDA growth:

Improved product mix, better pricing

Differentiated products, pigments and plastic applications

Favorable raw material prices

Operating efficiencies

• EBITDA Margin Expansion +270 bp to 14.6%

CHEMICAL

9

1,891

1,901

AUTOMOTIVE 2Q18 (MILLION PESOS)


+0.5%2Q18

2Q17

2Q18

2Q17 273

228 -16.5%

REVENUES EBITDA



7.9%OPERATING

MARGIN

12.0%EBITDA

MARGIN

HIGHLIGHTS

• Revenues in line with 2Q17:

Higher components’ demand in Transmissions business

Higher demand of brake lines in Aftermarket business

Lower manual transmissions demand

• Lower EBITDA:

Costs related to new projects

Higher operating costs

Increase in raw materials’ costs: steel & aluminum

AUTOMOTIVE

11MM MXN

PORK MEAT (PM)

HERDEZ DEL FUERTE JV (HDF)

TRANSMISSIONS (T)

AFTERMARKET (AM)

SYNTHETIC RUBBER JV (SR)

POLYSTYRENE (P)

12

17%

MAINTENANCE

GROWTH

83%

45% PM

7% HDF

9% SR

4% AM

31% T

4% P

CAPEX 2Q18 (MILLION PESOS)

752 887 1,202 885 1,006

2Q17 3Q17 4Q17 1Q18 2Q18

Balanced Capital Structure through a Prudent Approach to Leverage

13

Calculated on US dollars, in compliance with credit agreement obligations

Ratios 2Q18 2Q17

Net Debt / EBITDA 1.9x 1.6x

Total Debt / EBITDA 2.3x 2.1x

Interest Coverage 7.3x 7.8x

BALANCED CAPITAL STRUCTURE

CURRENCY RATE TERM

83% USD

10% MMX

7% CNY

63% FIXED

37% VARIABLE

6% SHORT TERM

94% LONGTERM

DEBT PROFILE USD

7,004

8,3619,013

9,806

11,326

1.6x1.8x

1.6x1.8x 1.9x

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

4.0x

4.5x

5.0x

0

2,000

4,000

6,000

8,000

10,000

12,000

2Q17 3Q17 4Q17 1Q18 2Q18

NET DEBT EVOLUTIONMXN

3711 12

133

5 20 4 7 14

460

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

As of July 18, 201814

*Figures are expressed in MXN

$43.76+19.2%

L24M

Market Cap $ 19,971 million

Outstanding Shares 456.366 million

Book Value $26.5

Price/ Book Value 1.7x

EPS $3.0

P/E 14.7x

Dividend Yield 1.4%

KUO B

49,002+4.0%

L24M

Shares Series A Shares Series B

Buyback Program 2,561,878 15,131,589

2015 2016 2017

Paid Dividends MXN $0.35 $0.45 $0.61

07/2016 09/2016 11/2016 01/2017 03/2017 05/2017 07/2017 09/2017 11/2017 01/2018 03/2018 05/2018 07/2018

KUO B IPC

Institution Recommendation Price target Last Update

GBM Outperformer $ 61.80 17/07/2018

Actinver Buy $ 55.00 23/05/2018

NAU Securities Buy $ 51.00 11/06/2018

INVESTOR RELATIONS CONTACTS

Antonia Gutiérrez

[email protected]

[email protected]

+(52 55) 52.61.83.44

www.kuo.com.mx

2q18 - kuo...market cap $ 19,971 million outstanding shares 456.366 million book value $26.5 price/...

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