corporate presentation - alfa.com.mx · alfa participates in key areas of the economy 2017 results...
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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 © 2018 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 PRESENTATIONS E P T E M B E R , 2 0 1 8
CORPORATE PRESENTATION
ALFA participates in Key areas of the economy
2017 Results Guidance 2018
Revenues (US $ Billions) $16.8 $18.8
EBITDA (US $ Billions) $2.0 $2.4
Capex (US $ Millions) $1,101* $958
Net Debt/EBITDA 3.1 times 2.9 times
Interest Coverage 4.6 times 5.4 times
* Including acquisitions
SIGMA
Refrigerated Foods
ALPEK
Petrochemicals
NEMAK
Aluminum Auto Parts
AXTEL
IT + Telecom
NEWPEK
Hydrocarbons
2 ALFA
CORPORATE PRESENTATION
Breakdown by Business Group
Revenues 2017
US $16.8 Billion
EBITDA 2017
US $2.0 Billion
3 ALFA
Sigma
36%
Newpek
1%Axtel
5%
Nemak
27%
Alpek
31%
Sigma
33%
Axtel
14%
Nemak
35%
Alpek
18%
CORPORATE PRESENTATION
Ownership
100%
82%
75%
53%
100%
4
Public company since 2012.
Public company since 2015.
Ford Motor Co. owns 5.4%.
Public company since 2005.
ALFA
CORPORATE PRESENTATION
Global footprint
5
Production
Facilities in
28 countries
~65% of
sales outside
Mexico
More than
86,200
employees
CORPORATE PRESENTATION
Focused on long-term value creation
1.0 1.01.1
1.3
1.71.9 1.9
2.0
2.42.3
2.0
07 08 09 10 11 12 13 14 15 16 17
6
Revenues(US $ Billion)
EBITDA(US $ Billion)
ALFA
9.610.6
8.5
10.8
14.7 15.215.9
17.216.3 15.8
16.8
07 08 09 10 11 12 13 14 15 16 17
CORPORATE PRESENTATION
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
a majority of independent members who
question decisions.
7
CORPORATE PRESENTATION
Multinational food company dedicated to bringing local
favorite foods to communities everywhere
2017
Revenues
US $6.0billion
EBITDA
US $676million in 2017
9 SIGMA
CORPORATE PRESENTATION
Region % Sales
Highly recognized branded foods in Mexico, U.S., Central &
South America and Europe
• Broad geographic footprint: 70 production plants and presence in 18 countries
• Offers quality food at a wide range of price points and across diverse
categories
10
U.S.
16%
Mexico
41%Europe
36%
LATAM
7%
SIGMA
Meats
57%Dairy
18%
Dry Meats
20%
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
CORPORATE PRESENTATION
Diversified and strong brand portfolio in each market
PACKAGED MEATS DAIRY OTHER THIRD PARTY
MÉ
XIC
OE
UR
OP
AE
E.U
U.
LA
TA
M
11 SIGMA
CORPORATE PRESENTATION
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
12
70Production plants
26 Europe
13 Latam
25 Mexico
6 US
208Distribution centers
18 Europe
39 Latam
137 Mexico
14 US
+680,000Points of sale
64,000 Europe
146,000 Latam
410,000 Mexico
62,000 US
SIGMA
CORPORATE PRESENTATION
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
13 SIGMA
CORPORATE PRESENTATION
Growth strategy
14
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
CORPORATE PRESENTATION
One of the world’s largest integrated polyester groups
• 2017 Revenues of US $5.2 billion
• 2017 EBITDA of US $384 million
• Production facilities in key
geographic areas:
• North America: the
biggest market for
beverages
• Availability of low-cost
raw materials
• Logistics
16 ALPEK
CORPORATE PRESENTATION
Business Segments
Polyester chain
2017
Revenues US $3.7 billion (71%)
EBITDA US $147 million (38%)
Products
PTA
PET
Polyester fibers
Plastics & chemicals
2017
Revenues US $1.5 billion (29%)
EBITDA US $237 million (62%)
Products
PP
EPS
CPL
Fertilizers and other chemicals
17 ALPEK
CORPORATE PRESENTATION
Alpek´s products are widely used for food packaging and
consumer end-markets
Beverage Food Personal care Textiles
Sample end users by industry
18 ALPEK
Sales 2017
GeographyVolume 2017
By end market(4,012 KTA)
Asia & others
2%Europe
3%Latam
13%
Mexico
35%
USA &
Canada
47%
Construction
2%Textiles
7%
Consumer
Goods
25%
Food and
Beverages
66%
CORPORATE PRESENTATION
Alpek’s installed capacity amounts to 7.0 million tonsInstalled Capacity Breakdown (Kta)
SITE PTA PET rPET FIBERS PP EPS CPL OTHER
Mexico
(2,950
Kta)
Monterrey 160
Altamira 1,000 640 240
Salamanca 85
Ocotlán 10
Cosoleacaque 610 185
Lerma 100
USA
(2,343
Kta)
Cedar Creek 170 73
Cooper River 170 150
Columbia 640 725
Pearl River 430
Canadá Selenis 144
Argentina
(225
Kta)
Zárate 190
Pacheco 16
General Lagos 19
Brasil Guaratingueta 46
Ipojuca 640 450 90
Chile
(27
Kta)
Santiago 5
Puerto Montt 2
Concon 20
Capacidad Total: 7,010 Kta 2,890 2,464 89 400 640 325 85 117
Mexico
United Sates
Argentina
Chile
Brazil
More than
5,900employees
26 Production
facilities
Source: Alpek estimates Kta: Thousand tons per year
(1) Includes industrial and specialty chemicals and recycled PET capacities
19 ALPEK
CORPORATE PRESENTATION
Alpek is investing in attractive organic projects to boost
profitability
Project Overview estimated figures and dates
Project
Capex
(US $M)
EBITDA
(US$M) Start-up
1. Cosoleacaque Cogeneration (85 MW) 140 30 4Q14
2. MEG Tolling Agreement 65 20 2Q16
3. Propylene Spheres 23 10 2Q17
4. EPS Expansion Altamira 30 10 3Q17
5. Altamira Cogeneration (350 MW) 350 90 2018
6. PTA/PET Site (Corpus Christi) TBD TBD TBD
Total ~ $580 ~$160
US $537 million invested up to Mar-18
Source: Alpek estimates
20 ALPEK
CORPORATE PRESENTATION
Alpek’s strategy
• Enhance value creation across product portfolio through:
i. Selective vertical integration
ii. Operating efficiency
iii. Capacity / geographic expansion
• Solution-based focus on customer needs
21 ALPEK
CORPORATE PRESENTATION
The leading lightweighting solutions provider for the auto
industry
• 2017 Revenues of US $4.5 billion
• 2017 EBITDA of US $715 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
23 NEMAK
CORPORATE PRESENTATION
Focused on innovative lightweighting solutions for the
automotive industry
Powertrain
• Heads
• Blocks
• Transmission
EV Components
• E-Motor housings
• Battery housings
Structural Components
• Longitudinal members
• Shock towers
• Cross members
24 NEMAK
CORPORATE PRESENTATION
Diversified customer base
• More than 50 customers worldwide
• Nemak supplies ~650 out of 1,200 vehicle platforms worldwide
25 NEMAK
CORPORATE PRESENTATION
Solid customer relationships; diversified revenue stream
North
America
55%
Europe
35%
Others
10%
2017
Volume distributionBy Customer
2017
Revenue distributionBy Region
26 NEMAK
24%
13%
11%
6%4%
4%
4%
4%
3%
3%
3%
21%
North America
North America
Europe
Others
CORPORATE PRESENTATION
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)
27
Canada
United States
Mexico
Brazil
Argentina
Spain
Germany
Hungary
Russia
Slovakia
Poland
Austria
Czech Republic
India
China
Turkey
NEMAK
CORPORATE PRESENTATION
Aluminum components expected to grow due to stricter
environmental standards
NA and EU LV 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
28 NEMAK
CORPORATE PRESENTATION
Nemak’s strategy
29
• 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
CORPORATE PRESENTATION
IT and Communication services for the enterprise,
government and mass markets
Main Services
• Data centers
• Information security
• Managed networks
• Consultancy services
• Systems integration
• Cloud services
• Internet
• Pay-TV
31 AXTEL
CORPORATE PRESENTATION
Diversified revenue stream; focused on the enterprise
market
2017Revenues
U.S. $822million
EBITDA
U.S. $290Million in 2017
32 AXTEL
Sales
Breakdown(By type of service)
17%Government
19%Mass
market
64%Enterprise
By
Market Segment
5%Wireless
14%FTTH
14%IT
67%Telecomm
CORPORATE PRESENTATION
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
33 AXTEL
CORPORATE PRESENTATION
Infrastructure provides access to +90% of Mexican market
• 42,100 km of long-haul
fiber optics
• 23,100 km of long
distance
• 12,800 km of metro
rings
• 6,200 km of FTTH
network
• Six data centers
• 7,200 m2
• FTTH in major cities
34 AXTEL
CORPORATE PRESENTATION
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
• Maximize value from fiber-based (FTTx) services serving mass
market customers
35 AXTEL
CORPORATE PRESENTATION
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)
37 NEWPEK
CORPORATE PRESENTATION
Newpek fields
KS
TX
OK
CO
Eagle Ford
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 – 648 wells in
operation
•Mature fields optimization
•World-class sub-surface
analysis capabilities
38
Successful transition to
operations
• Experienced transition to
operations
• Mineral rights on leases
over 220,000 acres
3 14 7 830
6691
116
409 3
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 17
0.3 0.9 1.1 12.7
4.76.4
8.2 8.37.2
4.9
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 17
Net production
(mboed)EBITDA
(US $ million)
NEWPEK
CORPORATE PRESENTATION
Activities in Mexico
• Service contracts in San Andrés and Tierra Blanca fields
• Producing over 3.5 mboed on 128 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
39 NEWPEK
CORPORATE PRESENTATION
Newpek’s Strategy
40
• 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
CORPORATE PRESENTATION
Guidance ALFA 2018
(US $Millions) Revenues EBITDA Capex
2017 2018e 2017 2018e 2017 2018e
ALFA 16,804 18,825 2,018 2,365 1,101 958
Sigma 6,054 6,500 676 715 276 204
Alpek 5,231 6,825 384 750 236 167
Nemak 4,481 4,490 715 700 431 384
Axtel 822 816 290 277 121 174
Newpek 107 73 3 17 34 25
Assumptions:
• Mx GDP growth: 2.3%
• USA GDP growth: 2.4%
• Eurozone GDP Growth: 2.2%
• Avg. exchange rate Mx Peso to USD: $19.25
• Avg. exchange rate Euro to USD: $1.20
• Avg. oil price (Brent): US $57/barrel
41 Note: Guidance as of July 19, 2018