Investor Presentation. January, 2018

Transcription

1 Investor Presentation January, 2018

2 Forward-Looking Statements In addition to historical information, this presentation contains "forward-looking" statements that reflect management's expectations for the future. The words anticipate, believe, expect, hope, have the intention of, might, plan, should and similar expressions generally indicate comments on expectations. The final results may be materially different from current expectations due to several factors, which include, but are not limited to, global and local changes in politics, the economy, business, competition, market and regulatory factors, cyclical trends in relevant sectors; as well as other factors that are highlighted under the title Risk Factors on the annual report submitted by Mexichem to the Mexican National Banking and Securities Commission (CNBV). The forward-looking statements included herein represent Mexichem s views as of the date of this press release. Mexichem undertakes no obligation to revise or update publicly any forward-looking statement for any reason unless required by law. Mexichem has implemented a Code of Ethics that rules its relationships with its employees, clients, suppliers and general groups. Mexichem s Code of Ethics is available for consulting in the following link: Additionally, according to the terms contained in the Securities Exchange Act No 42, Mexichem Audit Committee established a mechanism of contact, which allows that any person that knows the un-fulfilment of operational and accounting records guidelines and lack of internal controls of the Code of Ethics, from the Company itself or from the subsidiaries that this controls, file a complaint which is anonymously guaranteed. The whistleblower program is facilitated by a third party. The telephone number in Mexico is The website is: and contact is: mexichem@ethic-line.com. Mexichem s Audit Committee will be notified of all complaints for immediate investigation. 2

3 Mexichem s Growth Strategy Mexichem at a Glance pg. 4 Adding Specialty Products and M&A pg. 9 Vertical Integration Acquisition for the Fluent Business Group Acquisition for the Vinyl Business Group Margin Growth vs Organic Volume Growth pg. 16 Backward Integration to Reduce Cost of Production pg. 20 Vinyl and Fluor Business Group Outlook pg. 23 Improving Outlook for PVC Fluor Business Group. NAFTA impact on Mexichem pg. 29 Lower Capex Cycle and Solid Balance Sheet pg. 32 Leveraging the Global Platform pg. 35 Mexichem s Growth Model Capital Allocation Strategy Model Mexichem of the Future pg. 39 Management Team pg. 43 3

4 4 Mexichem at a Glance

5 Business Snapshot Operations 37 countries Sales >100 countries >18,000 employees 120 production plants 15 R&D labs 2 fluorite mines >$5.4 bn Consolidated annual revenues 5

6 Mexichem Business Groups Global Leader in Plastics and Chemicals Fluor Value Chain Ethylene Value Chain Fluorspar Hydrofluoric acid Refrigerants Aluminum fluoride PVC & Specialty Resins Compounds & Plasticizers Derivatives Pipes and fittings Irrigation systems Datacom Geosynthetics JV with JV with LTM 3Q17 Revenues: $628 mm EBITDA: $246 mm EBITDA margin: 39.1% 23% of consolidated EBITDA Revenues: $2,248 mm EBITDA: $448 mm EBITDA margin: 19.9% 42% of consolidated EBITDA Revenues: $2,946 mm EBITDA: $403 mm EBITDA margin: 13.7% 38% of consolidated EBITDA Note: Revenues and adjusted EBITDA margin correspond to LTM 3Q17. All figures are before intercompany eliminations 6

7 Strong Track Record of disciplined acquisitions (26 acquisitions since 2003 and 82 companies) Specialty PVC resins Fluorita de Mexico 3 Camesa trade name becomes Mexichem 43% of Mexichem (Camesa subsidiary) Quimica Fluor Fluorita de Rio Verde , LTM3Q17 1.9x 2.5x 0.5x 0.7x 1.6x 1.2x 1.0x 1.3x 1.1x 0.7x 1.0x 2.2x 1.0x 1.7x 1.5x 7 Success at integrating new acquisitions has boosted sales and EBITDA and has made Mexichem a leader within the industries it operates Source: Company filings. 1) Adjusted EBITDA 2016 excludes the effect of Pajaritos incident in ) Figures for 2017 do not consider EBITDA from Netafim. 3) Completion of transaction is still pending. 4) Net debt in 2016 includes US$1.4mm and in 2015 US$21.4mm, corresponding to letters of credit and suppliers credits exceeding 180 days, which, only for the purposes of the covenants of the cebures and our revolving credit facility, are considered financial debt, although they are not recorded as debt in our balance sheet. EBITDA (US$mm) Net debt/ebitda 4

8 Mexichem s Markets and Product Categories Netafim s contribution BUSINESS UNITS MARKETS SERVED PRODUCT CATEGORIES EXAMPLES FLUENT Telecom Agricultural From 4% to 26% if we were to include Netafim Energy 12% Others 4% 9% 26% Infrastructure 16% 33% Housing Pipes & Fittings (PVC, Polyethylene, Polypropylene) Geosynthetics (woven & non-woven) Datacom & Infrastructure Irrigation systems Driplines, sprinklers and other irrigation products VINYL Wire & Cable Building & Construction Automotive 3% 21% 60% Industrial 5% Others 3% Medical 4% 4% Home, lawn & garden Base Chemicals Specialty Resins PVC Resins Compounds PA & Plasticizers Phosphates Other Chemicals FLUOR Refrigeration 43% 6% 10% 32% Source: Company fillings, Markets as % of pro forma 2016 revenues of combined entity Note: Netafim s agricultural contribution includes Landscape (c.1%) and Mining (c.1%) 9% Medicals Aluminium Building and Construction Chemicals Fluorspar Met Grade Fluorspar Acid Grade Hydrofluoric Acid Anhydrite Aluminum Fluoride Refrigerants Medical propellants 8

9 Adding Specialty Products M&A 9

10 Vertical Integration Ensuring Supply to Mitigate Volatility & Increase Cost Competitiveness Ethylene Chain Overview - One of the largest PVC resin and leading player in piping worldwide Salt Ethane Chlorine & Caustic Ethylene VCM PVC Resin Specialty Resin Compounds 44%* of consolidated EBITDA Fluent + Mexichem products Commodity companies trade at an average EV/EBITDA multiple of 5.8x to 8.0x On-going joint ventures VOLATILITY VERTICAL INTEGRATION THROUGHOUT THE VALUE CHAIN Specialty material companies trade at an average EV/EBITDA multiple of 9.0x to 13.8x 10 *YTD as of 3Q17

11 Acquisitions for Fluent Business Group Wavin and Dura-Line Wavin EBITDA Margin (1) (% of Total Revenue) 20.0% Dura-Line EBITDA Margin (1) (% of Total Revenue) 25.0% 22.4% 15.0% 10.0% 5.0% 4.3% 8.0% 10.3% 14.4% 12.0% 13.6% 9.7% 10.3% 20.0% 15.0% 10.0% 5.0% 9.7% 13.1% 14.0% 15.9% 13.3% 17.4% 14.3% 0.0% 1Q 2Q 3Q 4Q % 1Q 2Q 3Q 4Q Note:* Includes Wavin Africa, Overseas, China, Australia and Middle East (1) EBITDA figures exclude restructuring costs and a benefit of US$17MM in 4Q13 A global leader in the supply of plastic pipe systems and solutions for both, above, and below ground applications. Has close to $1.3 billion in annual revenue. Targeting opportunities in Europe, Asia Pacific and Middle East. Note:* Includes USA, Canada, Oman Mexico South Africa and Chezc Republic (1) The 4Q15 EBITDA figure includes the effect of discontinued operations A global leader in high-density polyethylene conduit duct and pressure pipe solutions. Allows for expansion in Telecom, Datacom and Energy Piping markets. Adds presence in India, South Africa and the Middle East. 11

12 Acquisition for Fluent Business Group Netafim to incorporate ~higher value-added products A global leader of technologically advanced irrigation solutions. 12 Transformational acquisition in specialty products and industrial solutions with specific expertise in water. Leader in advanced technology irrigation solutions. Consistent with the company s growth strategy into higher value-added products, increasing Fluent s portfolio of specialty products. Expands global footprint by strengthening presence in key markets such as U.S., India, and LatAm, and opens new regions such as Middle East, Africa and Australia. Revenues in 2016 were $855 million and EBITDA Margin of 13.5%. Brings strong R&D and technically advanced capabilities.

13 Acquisition for Vinyl Business Group Vestolit Vestolit EBITDA Margin (% of Total Revenue) 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 12.1% 8.4% 8.8% 10.8% 10.1% 14.4% 7.8% 13.8% 1Q 2Q 3Q 4Q Europe s 6th largest PVC manufacturer. Europe s only manufacturer of High Impact Suspension PVC (HIS-PVC) for weather-resistant windows and is Europe s second-largest producer of paste PVC for floors and wallpapers. Keeping with the strategy of becoming a global, vertically integrated company with a focus on high-end, specialized products. Expands European footprint by entering a new market segment and acquire new technology. 13

14 Acquisition for Vinyl Business Group Vinyl Compounds to incorporate ~40 m in sales to Compounds Business Unit U.K. leading supplier of PVC compounds Adds scale to Mexichem s U.K. operations with an EBITDA margin of 14.2% YTD as of 3Q17. Targeting opportunities in India and Southeast Asia. Expands the portfolio of specialty products. Enabled further vertical integration of Compound Business through stabilizer technologies and recycled PVC capabilities. Brings synergies to Vinyl Business group through Vinyl Compounds PVC resins and plasticizers. Key drivers for the demand are related to: o Building & Construction o Consumer Goods o Footwear 14

15 Improvement of Profitability Ratios ROE (%) ROIC (%) 8.3% 8.4% 4.5% 4.7% 1.2% 5.4% 6.4% 6.8% 0.5% 7.5% 4.5% 4.7% 7.1% 8.4% 5.4% 6.4% 6.3% 7.5% LTM 3Q17 ROE Assembly Policy LTM 3Q17 ROIC Assembly Policy ROE: Net Income / Equity average ROIC: NOPAT/Equity + Liabilities with cost Cash Net Income and NOPAT (EBIT-taxes) are trailing twelve months. 15

16 Margin Growth vs Organic Volume Growth 16

17 Driving Margin Growth Vs. Volume Growth Closer To Our End Consumers -Fluent Salt Ethane Chlorine & Caustic Ethylene VCM PVC Resin Compounds Specialty Fluent 17 17

18 Focus on Higher Margin Products In 2016 we discontinued operations of pressure pipes and shifted that capacity to Datacom pipes Datacom pipes have higher margins than pressure pipes 18

19 1 Cross selling of Products (Netafim, Fluorspar in Brazil, HIS-PVC in Latam) The company cross sells products with attractive margins in other regions, among others: 1) Fluorspar and refrigerant gases in Brazil, 2) HIS-PVC (high impact modified polyvinylchloride copolymer) a Vestolit product in LatAm, and, 3) Expects to sell PVC pipes to Netafim. 1 The broad high vale-added portfolio product is expected to expand with the acquisition of Netafim. 19 1) Completion of transaction is still pending, the company expects to cross-sell PVC pipes to Netafim

20 Backward Integration to Reduce Production Cost 20

21 Vertical Integration: Ethylene Ethylene is our Most Important Raw Material Ethylene Price Components December 2014 Ethane 27% Others 10% December 2016 Ethylene Margin 63% Polyethylene s Cost Structure PE Pipe Cost Structure Ethylene 81% PVC s Cost Structure PVC Pipe Cost Structure Ethylene 29% Others 19% Others 71% Ethane 32% Others 10% Ethylene Margin 45% PVC Resin Cost Structure Ethylene 39% Others 61% Ethylene Cracker (JV w/ OXY) = * 70% of the NA Vinyl Group s Ethylene Supply VCM Cost Structure Ethylene 49% Others 51% Source: Company fillings, *Once Ethylene cracker is fully operational. 21

22 Vertical Integration: Ethylene Estimated PVC Global Supply Cost Curve Before Source: Mexichem s Internal analysis. Each point of the curve represents a plant of global PVC production. 22

23 Vinyl and Fluor Business Group Outlook 23

24 000 MT Improving Outlook for PVC China s Share of Global Capacity is 40% 60,000 PVC Capacity 50,000 40,000 30,000 20,000 10, e Worldwide China Source: IHS 24

25 Million Metric Tons Improving Outlook for PVC There is limited additional global PVC capacity being built in the next 4 years 5.0 PVC Global Capacity Expansions Westlake, Shintech, China China, India India, China, Philippines, Egypt China, Egypt, Baltics North America Northeast Asia ROW Hypothetical NAM Hypothetical Europe 25 Source: IHS

26 Improving Outlook for PVC Global Supply, Demand and Operating Rate 60,000 50,000 40,000 30,000 20,000 10, e 2018e 2019e 2020e 2021e Total Supply ( 000 MT) Total Demand ( 000 MT) Operating rate (%) 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Source: IHS 26

27 Vertical Integration: Fluor Business Group Sulphuric Acid 40% Sold to Market 100% Sold to Market HF Refrigerant Gases Fluorspar 60% Sold to Market Aluminum Fluoride 100% Sold to Market Strategy: Downstream integration to higher value added products Source: Company filings + VOLATILITY VERTICAL INTEGRATION THROUGHOUT THE VALUE CHAIN Commodity/Chemical Companies trade at an average EV/EBITDA multiple of 9.0x to 11.0x 27

28 U.S. International Trade Commission decision and Price Behavior After a year-long investigation process by the U.S. Department of Commerce, on February 22, 2017 they announced that R-134a from China were being dumped in the U.S. market at prices below fair value and prescribed antidumping duties ranging from % to %. The American HFC Coalition believes the decision is fully supported by :1) The industry developed R-134a to succeed earlier-generation refrigerants without any negative impact on the ozone layer, 2) The industry invested substantial sums to manufacture R-134a in the U.S. for automotive air-conditioning, stationary airconditioning, and other applications. As a result of the dumped imports, the U.S. industry has suffered persistently low price levels and poor operating results. The imposition of antidumping duties is a positive step to restore conditions of fair trade in this market. As a consequence of the above mentioned R-134a refrigerant gas prices have increased more than 30% on average in the first nine months of

29 29 NAFTA Impact on Mexichem

30 U.S. Fluorspar Demand Supply Summary U.S. Fluorspar Demand E U.S. Fluorspar Supply E US Metspar Imports Metspar Acidspar % 10% Total Fluorspar Metspar: 100% used as a fluxer in the steel industry, particularly for stainless and specialty steels Acidspar: Aprox. 90% used for HF production (Honeywell, Chemours) and 10% for other applications The U.S. does not produce Metspar and has some small Acidspar mines (Hastie) that have not been producing in the last few years, but are still in development Source: Roskill, IM,USGS, Trademap Internal Analysis 80% Mexichem Mexico (others) Mongolia/Others Metspar: Mexichem supplies 80% of total US consumption Acidspar: Mexichem supplies approx. 54% of the US consumption. Other sources are from Mexico (Musquiz), Vietnam, China 30

31 Mexichem s imports/exports to the U.S. NAFTA tariffs and MFN tariffs from WTO (World Trade Organization) 9M17 Sales to the Exports (Mex-USA) U.S. in mm Name NAFTA MFN USA Acigrade Flurospar low arsenic Ex. 3.7% N.A. Acigrade Flurospar (ceramic, fine and standard) Ex. Ex Aluminum Fluoride Ex. 3.7% 13.0 Hydrofluric acid Ex. Ex. N.A. Anhydrous hydrofluoric acid Ex. Ex Metalurgic Fluorspar (lamas, big stone, standard) Ex. Ex Sulfuric Acid Ex. Ex. N.A. Total Sales to the U.S As % of 9M17 Total Consolidated Sales 3.1% 9M17 Purchases Imports (USA-Mex) to the U.S. in mm Name NAFTA MFN Mexico Vynil Choro Monomer (VCM) Ex. Ex Source: WTO and Company Filings.

32 Lower Capex Cycle and Solid Balance Sheet 32

33 Ending a Capital Cycle (in USD terms) Capex E 33

34 Manageable Debt Profile & Long-Term Maturity Profile Long-Term Debt Schedule US$MM, as of September 30, 2017 Investment Grade Fitch Ratings S&P Moody s BBB BBB- Baa3 Bank debt Most Debt at Hold Co Level Debt by Division (3Q17) Alignment of Debt to Revenue Currency Debt by Currency (Swapped, 3Q17) Conservative Leverage Ratios Holding Vinyl Fluor Fluent 5% 2% 1% US$ Euro Others 4% 35% 61% Total Debt / EBITDA Net Debt / EBITDA 2.7x 2.4x 2.5x 2.3x 2.0x 2.1x 1.9x 1.8x 1.4x 1.0x Source: Company filings 92% US$1.5B revolving credit facility (100% available)

35 35 Leveraging the Global Platform

36 Mexichem s Growth Model Our presence in 37 countries can be used as a platform for all our products. Driving revenue growth. Leveraging production facilities. Enabling technology and process transfer. Expanding our end markets and footprint with bolt-on acquisitions that create revenue & operating synergies. Dura-Line September 2014 Vestolit December 2014 Gravenhurst Plastics October 2016 Vinyl Compounds November 2016 Netafim August

37 Capital Allocation Strategy Model Selection of the project might depend on the balance of all these categories: Alignment Strategic rationale that fits to Mexichem & operations. Potential Sales growth. Replicate locally or globally. Profitability Based on EBITDA margins. Expansion in EBITDA margins after synergies. ROIC in 3 years. Capability Track record of operating or producing at high capacity. Market Dynamics Porter s Five Forces. Risks Country risk. Additional risks to Mexichem. 37

38 Mexichem s Growth Model Mexichem has over 30 avenues for growth worldwide Our presence in >30 countries (mainly through our Fluent Business Group) can be used as a growth platform for all our products. Given our existing presence and potential future growth opportunities, Mexichem has identified 5 countries and 3 regions where our growth strategy will be uniquely focused: Countries: -India -United States -Brazil -Turkey -Colombia Regions: -Southeast Asia -Africa -ME 38

39 39 Mexichem Of The Future

40 Investing in Innovation We have designed cutting edge products that adapt to our customers needs Reduce noise Wavin SiTech+ reduces noise levels more effectively than standard waste water discharge systems. Replace worn out pipes Wavin s Compact Pipe is optimal for replacing a worn out or defective pipe system without being too disruptive and/or expensive. We have installed over 1.5 million meters worldwide. 40

41 Investing in Innovation and Sustainability We have designed cutting edge products that are eco-friendly Solutions for rainwater management Infiltration and attenuation solutions give our clients maximum control over rainwater discharge. With these units they can create underground tanks quickly and easily. Heating and Cooling at lower costs Costumers can design heating and cooling systems as an integrated element of the concrete core of their building. This optimizes its thermal capacity. It s a highlysustainable approach, lowering the cost and use of energy. 41

42 Digital Strategy Four pillars aligned to Mexichem s business drivers Customer Engagement Operations Optimization Employee Empowerment Product & Service Transformation Growth and Profitability Drive existing growth and identify future regions of growth opportunities Vertical Integration Focused Leadership through collaboration and simplicity Increase Specialty Product Portfolio 42

43 43 Management Team

44 Executive Leadership Team (ELT) Paresh Chari President, Fluor Business Group Carlos Manrique Rocha President, Vinyl Business Group Andrés Múgica Jiménez de la Cuesta President, Fluor Business Group Sameer S. Bharadwaj President, Compounds Business Unit Antonio Carrillo Rule Chief Executive Officer (CEO) Rodrigo Guzmán Perera Chief Financial Officer (CFO) Alejandra Rodríguez Sáenz Corporate Vice-President, Human Capital Francisco Hernández General Counsel Pedro Martínez Puig Corporate Vice-President, IT Jorge Luis Guzmán Mejía Corporate Vice-President, Internal Audit 44

45 45 Thank You

46 46 APPENDIX

47 Summary of 3Q17 Results Income Statement mm US$ INCOME STATEMENT w/o one time item % 17/Adj. 16 Net sales 1,505 1,394 1,394 8% Cost of sales 1,137 1,073 1,073 6% Gross profit % Operating expenses 172 (64) 159 8% Operating income (loss) % Financial cost % Equity in income of associated entity (0) 0 0 N/A Income (loss) from continuing operations before income tax Third Quarter % Cash tax % Deferred taxes (6) N/A Income tax % Income (loss) from continuing operations % Discontinued operations 1 (8) (8) N/A Consolidated net income (loss) % Minority stockholders (0) N/A Net income (loss) % 47 EBITDA %

48 Summary of 3Q17 Results Balance Sheet mm US$ Balance sheet Sep 2017 Dec 2016 Total assets 8,788 8,354 Cash and temporary investments Receivables 1, Inventories Others current assets Long term assets 5,759 5,794 Total liabilities 4,942 4,772 Current portion of long-term debt Suppliers 1,426 1,270 Other current liabilities Long-term debt 2,248 2,241 Other long-term liabilities Consolidated shareholders'equity 3,846 3,582 Minority shareholders' equity Majority shareholders' equity 2,896 2, Total liabilities & shareholders' equity 8,788 8,354

49 Summary of 3Q17 Results Operating Cash Flow Highlights mm US$ Third Quarter January - September %Var % Var. EBITDA % % One time non-cash Items % % Adjusted EBITDA minus cash item* % % Cash Tax % % Net Interest % % Bank Commissions % % Exchange rate gains (losses) % % Change in Trade Working Capital % % Operating Cash Flow Before Capex % % CAPEX (Organic) % % CAPEX (Total JV) % % CAPEX JV (OXY SHARE) % % NET CAPEX JV % % Total CAPEX (organic & JV) % % Cash Flow % % Dividends % % 49 Free Cash Flow % N/A

50 Operating Results by Business Group VINYL Business Group (39% and 44% of Mexichem s sales before eliminations and EBITDA, respectively, in 2017) mm US$ Third Quarter January - September Vinyl %Var % Var. Volume (K Tons) % 1,920 1,894 1% Total Sales* % 1,752 1,535 14% Operating Income % % Adjusted Operating Income % % EBITDA % % Adjusted EBITDA % % *Intercompany sales were $37 million and $38 million in 3Q17 and 3Q16, respectively. And as of September 2017 and 2016 were $134 million and $111 million, respectively. 50

51 Operating Results by Business Group VINYL Business Group (39% and 44% of Mexichem s sales before eliminations and EBITDA, respectively, in 2017) mm US$ Third Quarter January - September Resins, Compounds & Derivatives %Var % Var. Volume (K Tons) % 1,709 1,653 3% Total Sales* % 1,703 1,495 14% Operating Income % % EBITDA % % *Intercompany sales were $46 million and $45 million in the 3Q17 and 3Q16, respectively, and as of September 2017 and 2016 were $156 million and $136 million, respectively. Of these amounts $9 million and $7 million were invoiced to PMV in 3Q17 and 3Q16, respectively and $22 million and $25 million accrued to September 2017 and mm US$ Third Quarter January - September PMV %Var % Var. Volume (K Tons) % % Total Sales* % % Operating Income N/A N/A Adjusted Operating Income -3 1 N/A % EBITDA % N/A 51 Adjusted EBITDA % % **Intercompany sales invoiced to Resins, Compounds and Derivatives were $2 million and $1 million in 3Q17 and 3Q16, respectively. And, as of September 2017 and 2016 were $4 million and $32 million, respectively.

52 Operating Results by Business Group FLUENT Business Group (50% and 37% of Mexichem s sales before eliminations and EBITDA, respectively, in 2017) mm US$ Third Quarter January - September Fluent %Var % Var. Sales % 2,257 2,203 2% Fluent LatAm % % Fluent Europe % 1, % Fluent US & Canada % % Fluent AMEA % % Intercompany Eliminations (5) (2) 104% (16) (6) 182% Operating Income % % EBITDA % % 3Q16 3Q17 3Q17 3Q17/3Q16 mm US$ Sales Sales FX Total % Var 283 Fluent LatAm % 327 Fluent Europe % 111 Fluent US/Canada % 31 Fluent AMEA % -2 Intercompany Eliminations % 750 Total % 52

53 Operating Results by Business Group FLUOR Business Group (11% and 23% of Mexichem s sales before eliminations and EBITDA, respectively, in 2017) mm US$ Third Quarter January - September Fluor %Var % Var. Sales % % Operating Income % % EBITDA % % 53

54 Fourth Quarter January Fourth - Quarter December thousands USD in thousands 2016 w/o 2016 w/o ENT 2016 Write off INCOME STATEMENT 2015 % 2016 Write off Write Off Write Off 2015 % 2016 Write off 1,260,152 Net 1,260,152 sales 1,204,526 5% 1,260,152 5,349,807 1,260,152 5,349,807 1,204,526 5,612,392-5% 5,349,807 5,349,807 5, 1,001,124 Cost 1,001,124 of sales 914,193 10% 1,001,124 4,143,473 1,001,124 4,143,473 4,369, ,193 10% -5% 4,143,473 4,143,473 4, 259,028 - Gross 259,028 profit 290,333-11% 1,206, ,028-1,206, ,028 1,243, ,333-11% -3% 1,206,334-1,206,334 1,2 ses 107,451 19,613 Operating 127,064 expenses 175,398-28% 107, ,095 (42,218) 19, , , , ,272-28% -11% 692,095 (42,218) 649,877 e 151,577 (19,613) Operating 131,964 income114,935 15% 151, ,239 (19,613) 42, , , , ,826 15% 8% 514,239 42, , ,513 Financial 27,513 cost 60,400-54% 162,931 27, ,931 27, ,215 60,400-54% -34% 162, ,931 of associated entity 611 Equity in 611 income of associated (2,207) entity N/A (2,873) 611 (2,873) 611 (2,207) (3,080) -7% N/A (2,873) (2,873) tinuing operations x Summary of 2016 Results Income Statement January - December 2016 w/o Write Off Income from continuing operations 123,453 (19,613) 103,840 56,742 83% 123, ,181 (19,613) 42, , , ,691 56,742 83% 45% 354,181 42, ,399 2 before income tax 61,578 Cash tax 61,578 12, % 189,295 61, ,295 61, ,883 12, % 34% 189, ,295 (20,037) (5,884) Deferred (25,921) taxes (4,607) 463% (20,037) (67,374) (5,884) (237) (25,921) (67,611) (52,468) (4,607) 463% 29% (67,374) (237) (67,611) 41,541 (5,884) Income 35,657 tax 8, % 121,921 41,541 (5,884) (237) 121,684 35,657 88,415 8, % 38% 121,921 (237) 121,684 tinuing operations 81,912 (13,729) Income 68,183 from continuing 48,729operations 40% 232,260 81,912 (13,729) 42, ,715 68, ,276 48,729 40% 48% 232,260 42, ,715 1 rations (5,389) Discontinued (5,389) operations (54,147) -90% (10,780) (5,389) (10,780) (5,389) (54,147) (54,165) -90% -80% (10,780) (10,780) income 76,523 (13,729) Consolidated 62,794 net income (5,418) N/A 221,480 76,523 (13,729) 42, ,935 62, ,111 (5,418) 101% N/A 221,480 42, ,935 1 ders 11,207 (6,053) Minority 5,154 stockholders(3,206) N/A (16,919) 11,207 18,718 (6,053) 5,154 1,799 (3,206) (4,059) N/A (16,919) 18,718 1,799 65,316 (7,676) Net income 57,640 (2,212) N/A 238,399 65,316 23,737 (7,676) 262,136 57, ,170 (2,212) 94% N/A 238,399 23, , ,856 (19,613) EBITDA 227, ,643 7% 246, ,754 (19,613) 42, , , , ,421 7% 2% 883,754 42, ,

55 Summary of 2016 Results Balance Sheet USD in thousands Balance Sheet Dec 2016 Dec 2015 Total assets 8,806,002 8,669,676 Cash and temporary investments 713, ,274 Receivables 802, ,779 Inventories 606, ,984 Others current assets 437, ,816 Long term assets 6,245,799 6,417,823 Total liabilities 4,908,448 4,990,895 Current portion of long-term debt 57,693 43,653 Suppliers 1,269,704 1,201,021 Other current liabilities 657, ,887 Long-term debt 2,241,370 2,291,422 Other long-term liabilities 682, ,912 Consolidated shareholders'equity 3,897,554 3,678,781 Minority shareholders'equity 918, ,419 Majority shareholders'equity 2,979,107 2,902, Total liabilities & shareholders' equit 8,806,002 8,669,676

56 56 Closer to Our End Customers Housing Catalogue in Brazil: Salt Ethane Chlorine & Caustic Ethylene VCM PVC Resin Specialty Compounds Fluent WATER FLOW SOLUTIONS WATER STORAGE SOLUTIONS ACCESORIES GAS SOLUTIONS ELECTRIC SOLUTIONS 56

57 57 Closer to Our End Customers Infrastructure Catalogue in Brazil: Salt Ethane Chlorine & Caustic Ethylene VCM PVC Resin Specialty Compounds Fluent SEWAGE SYSTEM SOLUTIONS HYDRAULIC SOLUTIONS 57

58 CAPACITY (Kmt) Building Mexichem s Specialty Products Portfolio Specialty PVC Resins Producers Worldwide (Kton) Vinnolit Mexichem Inovyn FCP LG Chem Tianjin Chem. Kem one Shenyang Blue Star Kaneka SCAC Source: IHS

59 Mexichem s Markets and Product Categories Salt Ethane Chlorine & Caustic Ethylene VCM PVC Resin Specialty Compounds Fluent Specific Markets: Sales by Distribution Channel Governmental Institutions 2% End Users 4% Retail 27% LatAm Other 4% Wholesalers 46% Governmental Institutions 2% End Users 0% Retail 4% Building Contractors 12% Europe Other 4% Wholesalers 78% Building Contractors 17% 59 Source: Company fillings, Information as of

60 Mexichem s EBITDA 2015 was highly affected by $202 million in comparison with 2011, due to FX and market conditions on Fluor (downstream), Brazil and Venezuela. $350 EBITDA 2011 vs 2015 ($m) $300 $250 $200 $150 $26 $70 - $202m Fluor Downstream Brazil $100 $196 $50 $- $3 $38 $ % from Mexichem EBITDA 35% 10% Venezuela 60 Source: EBITDA as reported 2011 and 2015 figures

61 Jan-2010 Mar-2010 May-2010 Jul-2010 Sep-2010 Nov-2010 Jan-2011 Mar-2011 May-2011 Jul-2011 Sep-2011 Nov-2011 Jan-2012 Mar-2012 May-2012 Jul-2012 Sep-2012 Nov-2012 Jan-2013 Mar-2013 May-2013 Jul-2013 Sep-2013 Nov-2013 Jan-2014 Mar-2014 May-2014 Jul-2014 Sep-2014 Nov-2014 Jan-2015 Mar-2015 May-2015 Jul-2015 Sep-2015 Nov-2015 Vertical Integration Tested in 4Q14 Prices of oil and ethylene falling rapidly USD/ ton 2,000 USD/ barrel 120 Salt Ethane Chlorine & Caustic Ethylene VCM PVC Resin Compounds Fluent Specialty 1, , Source: IHS (formerly CMAI) Ethylene-Spot USA (Left) PVC Export USA (Left) Crude Oil WTI (Right) Vinyl Business Group * EBITDA USD$MM 14% 10% 64 66% 5% ~30M USD Fluent Business Group * EBITDA USD$MM 59% 8% 66 4Q13 4Q14 4Q13 4Q14 * EBITDA without FX in 4Q14, and non recurrent effects of 4Q13 61

62 Jan-2010 Mar-2010 May-2010 Jul-2010 Sep-2010 Nov-2010 Jan-2011 Mar-2011 May-2011 Jul-2011 Sep-2011 Nov-2011 Jan-2012 Mar-2012 May-2012 Jul-2012 Sep-2012 Nov-2012 Jan-2013 Mar-2013 May-2013 Jul-2013 Sep-2013 Nov-2013 Jan-2014 Mar-2014 May-2014 Jul-2014 Sep-2014 Nov-2014 Jan-2015 Mar-2015 May-2015 Jul-2015 Sep-2015 Nov-2015 Margin Expansions in 4Q15 Prices of oil, ethylene and PVC resins USD/ ton 2,000 USD/ barrel 120 Salt Ethane Chlorine & Caustic Ethylene VCM PVC Resin Compounds Fluent Specialty 1, , Ethylene-Spot USA (Left) PVC Export USA (Left) Crude Oil WTI (Right) Vinyl Business Group Source: IHS (formerly CMAI) Positive performance on PMV + Resins, compounds & derivatives EBITDA USD$MM 244% 5% 15% Fluent Business Group Amid FX fluctuations, EBITDA margin expansions EBITDA USD$MM 12% 100 8% 66 26% Q14 4Q15 0 4Q14 4Q15 62

63 Improving Outlook for PVC PVC is the third most popular plastic in the world and the largest sourced material in the Building & Construction market, followed by PE & PP Building & Construction 19.7% Packaging Automotive Electrical & Electronic Others 39.9% 8.9% 5.8% 25.7% 63 Source: Plastics - The facts 2016 by PlasticsEurope