ALFA CONFERENCE 2010

Transcription

1 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 2010 ALFA, S.A.B. de C.V. All rights reserved. Reproduction and distribution forbidden without the prior written consent of ALFA, S.A.B. de C.V. ALFA CONFERENCE 2010 Mexico City February 4th, 2010

2 REGISTRATION & WELCOME 2009 RESULTS ALFA S STRATEGIC EVOLUTION OUTLOOK FOR 2010

3 2009 RESULTS ALFA S STRATEGIC EVOLUTION OUTLOOK FOR 2010

4 Lower revenues in 2009 due to commodity prices and Nemak s volumes. However, record EBITDA thanks to strong petrochemical performance. ALFA Revenues (U.S. $ Billions) % 8.5 ALFA EBITDA (U.S. $ Millions) 964 9% 1, EBITDA margin (%)

5 EBITDA by group (U.S. $ Millions) Alpek % 428 Sigma % Nemak % 261 Alestra %

6 Lower capital expenditures were needed since Alpek s investment program was completed in ALFA Capital Expenditures (U.S. $ Million) Alestra & Others Sigma Alpek Nemak 75 ALPEK & NEMAK Mainly asset replacement. SIGMA & ALESTRA Capacity expansion, distribution, new products U.S. $ 288 million 6

7 Refinancing of Nemak s debt, plus Alestra, Petrotemex and Sigma s bond issues extended average life of consolidated debt ALFA Maturity Profile (U.S. $ Millions) Jun Dec Before Refinancing Dec. 09 Average Life (years)

8 which, coupled with better EBITDA, reinforced the financial condition. ALFA Financial Ratios Net Debt / EBITDA* (Times) Interest Coverage* (Times) * 4Q EBITDA times four 8

9 2009 RESULTS ALFA S STRATEGIC EVOLUTION OUTLOOK FOR 2010

10 ALFA obtained excellent results in Strategic strengths of businesses proved their value in a crisis year. ALFA s human capital talent was demonstrated dealing with a huge crisis. Confidence from financial community was key. Streamlined operations now provide even better cost competitiveness than before the crisis. No need for substantial capital expenditures in the short term. No meaningful financial commitments in 2010 after 2009 refinancing. 10

11 Economy in early stage of globalization; 3 crises in 16 years. Growth Real GDP, avg. (%) Inflation Annual Avg. Rate (%) Exchange Rate Pesos/U.S. $; avg. Highlights Salinas NAFTA - Privatizations, deregulation Zedillo Fox Calderón Tequila Effect - Fobaproa - Asian Crisis - 9/11 - US recession Global commodities crisis - World financial crisis Sources: PIB IMF, CPI IMF, TC Bloomberg 11

12 In 1993, ALFA and its environment were very different. ALFA Concentrated in Steel and Synthetic Fibers. Manufacturing operations, mainly. Focused in Mexico Incipient exports. Low capital expenditures during the 80 s. Recovering financial health. Environment Mexico was a closed economy highly volatile and risky. Beginnings of globalization NAFTA. Oil-based economy 12

13 ALFA in 1993 Portfolio* Size Footprint (U.S. $ Millions) 2,492 Mexico 271 Sales EBITDA * Breakdown based on revenues 13

14 New strategy was established in light of then current environment. ALFA strategy Complete modernization of commodity-product businesses; grow through brownfield investments. Aggressive growth in high-potential, high value-added businesses. Divestitures under adequate conditions. Move into new business areas with great appeal where ALFA could achieve sustainable competitive advantages, e.g.: cogeneration. 14

15 Investments to modernize and increase efficiency (global competitiveness). Modernization continues. Greater focus on products with added value (galvanized steel, painted and ultra-thin sheets, etc.). Incursion into Venezuela due to competitive advantages. Advancements in HYL direct-reduction technology. Overcome global steel industry crisis. Divestment. 15

16 Sale of Sidor stake Hylsamex sale 05 Industry Analysis, Strategy Review Hylsamex Partial Spin-off 04 EBITDA U.S. $759 M Debt Restructure Pipe Mill No. 6 Galvament Line II 02 Hylsa Bekaert sale Mining capacity growth Third Galvanized Line Aquila Mine New Furnace Puebla Plant Pickling Expansion 98 ISO 9002 Investment in Sidor Narrow Gauge Rod Sendzimir Cold Mill Galvanized and Painting Line 97 Metallic hood (Galvateja) Sponge Iron capacity Pickling Expansion Minimill Line 2 HYL New Plant First SAP in Mexico Self directed teams Insulated Panels (Galvamet) Acerex Minimill start up 95 50% Purchase Peña Colorada Mine Hylsamex IPO Painting Line II Investments for Plant Modernization 93 Continuous Reactor Sponge Iron Puebla 94 Investments Acquisitions and spin-offs Technology, Human Capital and Other Relevant Events EBITDA U.S. $89 M 16

17 Revenues (U.S. $ Million) 921 1, % CAGR 1,151 1,395 1,265 1,373 1,440 1,211 1,356 1,449 2, * 04* EBITDA (U.S. $ Million) 21% CAGR Commodities crisis * 04* EBITDA/Revenues Margins (%) Net Debt / EBITDA (Times) * 04* * Divested from ALFA 17

18 In summary, In 1994, Hylsamex had obsolete assets, limited capacity, threat from open market. Low economic value. Modernize or sell? Company was modernized, capacity expanded, value added products introduced. Substantial EBITDA increase. Worst steel industry crisis in modern history was successful faced. Company spun-off in the height of the cycle, for significantly more than would have been obtained prior to modernization (U.S. $ 2.4 billon). 18

19 Plants modernization with low specific investments. Entry into PP and EPS. Low cost producer. Modernization and growth in fibers. Strengthened position in polyester chain acquisition of PTA/PET assets in U.S.*, increase PET capacity. Profitable growth through scale and learning curve. Exit from non-profitable businesses Nylon, DMT. Growth in strategic businesses PTA, PET, PP, EPS. Energy optimization. Entry into natural gas business in Texas. * First major acquisition outside Mexico (2001) 19

20 First carbon bonds Increased PP market share in Mexico Focus on greater operational efficiency JV with Shaw to recycle PET 09 EBITDA U.S. $ 428 M Emission reduction project registered before UN Polioles electricity cogeneration PP Indelpro II Expansion 08 Petrocel (DMT) shut down Acq. Eastman PET Mexico and Argentina PTA Altamira second expansion DAK PET Cape Fear start up 07 Polioles Innovation Project Natural gas in Texas PTA Altamira debottlenecking 06 Sale of Nylon and Lycra to Koch (keeps Univex, Nyltek) Altamira EPS Expansion 05 Petrotemex Energy Efficiency Project 04 EPS capacity expansion DAK PET Cooper River start up Fibers Self Managed teams JV Akra Teijin in Polyester Fibers 02 Enertek spin-off (Iberdrola) PTA and PET acq. in U.S. (DAK) 01 Lycra Expansion Nylon 6,6 Expansion Splitter at Indelpro 99 Texturized Polyester new plant Enertek cogeneration start up ISO 9002 Nylon de México and Indelpro Stake acq. Pemex in PTA Stake acq. Akzo Nobel in Chemical fibers Polyester filament Expansion PTA Altamira start up 97 50% sale of Terza to Shaw ISO 9000 in Polioles Textile Nylon Expansion Acq. of polyurethane business from BASF Luxor Acquisition (Terza) PTA Cosoleacaque Expansion Colombin Bel Acquisition Acquisition of Nylon and Univex Investment Nylon 6,6 CPU Fibers start up 96 Polioles EPS start up Investments Acquisitions and spin-offs Technology, Human Capital and Other Relevant Events Temex capacity growth 93 EBITDA U.S. $ 126 M 20

21 Revenues (U.S. $ Million) 10% CAGR 2,738 3,204 3,410 4, ,4231,472 1,560 1,350 1,445 1,754 1,6631,8982,209 4,709 3, EBITDA (U.S. $ Million) % CAGR Commodities Crisis EBITDA/Revenues Margin (%) Net Debt / EBITDA (Times)

22 In summary, In 1994, Alpek focused on DMT and synthetic fibers. As the economy opened up, it was necessary to modernize and expand plants at the lowest possible investment cost. Synthetic fibers environment changed in the face of China joining the WTO and illegal trade. It was decided to reduce focus on fibers, strengthen PTA and PET, and expand EPS and PP. Divestment of non-profitable businesses. Incursion into natural gas in Texas. 22

23 Divesture of fresh meats business. Boost to refrigerated meats and distribution. Entry into dairy products and other refrigerated products. Product development & formulation. Investments in brand equity. Strengthen refrigerated distribution network. Reinforce position in regional cold cuts. Human talent development. Organic growth, distribution and acquisitions. Strengthen position in dairy products. Consolidate position in cold cuts. Growth of current business. Innovation system. International expansion. 23

24 Family Responsible Company Bel Distribution Cost and expenses reduction 100,000+ point of sale refrigerators 09 EBITDA U.S. $ 273 M ANTAD Award (3 rd time) Acquisition Longmont Cold cuts in U.S. Acquisition Braedt Cold cuts in Peru U.S. cold cuts plant 08 Sigma Innovation system Integrated Health SI program IASSA Cold cuts in Mexico Bernina Cold cuts in Mexico MCP Dairy products in U.S k retail clients Awards from Supermarkets Nayar Cold cuts in Mexico Automated distribution center Food Service Guten 06 Philadelphia distribution Young Talent program New Zealand Dairy Products in Mexico ANSPAC and SIGMA university 2,000+ vehicle network Chen Dairy products in Mexico Reinforced distribution network Distribution network in the U.S. Refrigerated Pizzas Refrigerated prepared foods Cold Coffee Galicia Cold cuts in Mexico Acquisitions Central America and the Caribbean Dairy desserts 03 Product formulation development continues Exports to U.S. First CADI Tepoztlán 02 Tangamanga Cold cuts in Mexico Cheese plant Yoghurt capacity expansion First SAP in food industry Acquisition of distributors San Antonio Cold Cuts in Mexico 97 Sigma IPO Product development Atitalaquia Plant Prepared frozen food Yoghurt plant 94 Exports to Central America Yoplait Franchise Launch of turkey line Oscar Mayer Distribution in Mexico ALFA acquires Sigma Divesture of Fresh Meat 80 Cheese manufacture EBITDA U.S. $ 18 M 46 Investments Acquisitions and spin-offs Technology, Human Capital and Other Relevant Events 24

25 International Footprint Market share (%) Cold Cuts 15 Next competitor Sigma Others Cheese 25 Sigma Next competitor Yogurt Others Plants Distribution Centers 20 Sigma Others First competitor 25

26 Revenues (U.S. $ Million) 12% CAGR 1, ,0081,051 1,604 1,7892,068 2,368 2,187 Revenue drop due to peso devaluation EBITDA (U.S. $ Million) Tequila Effect % CAGR EBITDA/Revenues Margin (%) Net Debt / EBITDA (Times)

27 In summary, At the beginning of the 90s, Sigma focused on red meats, had a limited product portfolio, no brands or self distribution. Strategy was changed. Cold cuts were boosted, dairy product offering broadened, distribution grew organically and through acquisitions. Investment in brand equity, entry into regional markets. Investment in R&D and innovation. Development of human talent. Leadership positions obtained in cold cuts and cheese. International expansion. 27

28 Competitive in quality and costs. Capacity expansion in Monterrey. Technologically dependant on Teksid. Start of exports to the U.S. Development of technology and technical skills. Incursion into engine blocks. Improvement in product launching. Scale and expansion in North America. Entry into Europe. Greater emphasis on skill development and R&D. Client portfolio diversification. Global expansion: acquisitions of Hydro, Teksid and Castech. Synergies and efficiencies. 28

29 Reduction in fixed costs Production relocation 09 EBITDA U.S. $ 261 M Acquisitions integration 12th prize in 13 years from GM as best powertrain supplier 08 Teksid, Hydro and Castech Plant VI 06 Exporter Award Rautenbach Germany 05 Entry into Europe with Czech plant millionth head produced 02 SAP Installation Talent Development (Nemak 2000) Acq. Of Ford Canada plants Plant V QS 9000 First aluminum engine block produced Monterrey Melting Center 98 PDC built in Monterrey Acq. Of Teksid stake (20%) Plant IV 97 Focus on product development Plant III 96 Leadership+ Program Acq. of Comalco for engine block technology Technology Development start up U.S. sales, Plant II 93 JV with Ford Nemak Founded GM and Chrysler added to customer portfolio First engine head for Ford EBITDA U.S. $ 14 M Investments Acquisitions and spin-offs Technology, Human Capital and Other Relevant Events 29

30 Nemak Global Footprint Canada U.S. Mexico Argentina Brazil Germany Austria Czech Republic Poland Slovakia Hungary China 30

31 Revenues (U.S. $ Million) ,243 1,336 2,897 3, EBITDA (U.S. $ Million) 22% CAGR 20% CAGR ,949 Global and auto crises EBITDA/Revenues Margin (%) Net Debt / EBITDA (Times)

32 In summary, In 1994, Nemak was technologically dependant on Teksid. It had limited exports to the U.S. Investments in R&D; technical skills and own technologies developed. Leadership in North America obtained. Diversification to engine blocks. Global presence and world leadership established through acquisitions. Best technological portfolio in the industry. 32

33 Opening of telecom market. Competing in several market segments. First: LD (voice). Consumer and enterprise markets. Unfavorable regulation. Focus on data and enterprise. AT&T Global Network (AGN). Bancomer stake bought back. Transformation to value added services. Strong presence and differentiation in enterprise segment. Integrated networks and convergent services. 33

34 U.S. $ 200 m bond Leadership in networks (e.g., SAT) 09 EBITDA U.S. $ 104 M ISO Information security New brand: Alestra Centro Experto convergence portfolio Innovation Program Buy back of Bancomer stake 06 Shareholder restructure due to AT&T takeover by SBC Boost to IP / Broadband services Financial Restructure U.S. $300 M bond AT&T Global Network Dot.Com crisis ISO 9002 Strategic repositioning Value Added Services (Data and Internet) 00 EBITDA U.S. $ 53 M U.S. $570 M bond issued EBITDA > Million client / 1 Bn Minutes First LD call 97 Merger with Unicom (Telecom Bancomer) JV with AT&T 95 5,000 Kms network built 96 Investments Acquisitions and spin-offs Technology, Human Capital and Other Relevant Events 34

35 Revenues (U.S. $ Million) % CAGR Revenue drop due to peso devaluation EBITDA (U.S. $ Million) % CAGR (59) (40) EBITDA/Revenues Margin (%) Net Debt / EBITDA (Times)

36 In summary, Alestra founded in 1994 to serve the Mexican telecom market. Unfavorable regulation. Change of focus to value added services and market niche approach. Strong presence and differentiation in enterprise segment. 36

37 Besides supporting it businesses, ALFA has developed other initiatives. R&D Talent Development Energy Innovation Social Responsibility ALFA Foundation 37

38 Modernization of businesses focused on commodities (steel, synthetic fibers) to reach international competitiveness. Expansion of Sigma & Nemak. Creation of Alestra. Reinforce competitive position. Increased value added to products. Development of new products. Establish international presence. Restructure portfolio with focus on companies with better growth, greater value added and differentiation, less cyclical. Consolidate global presence. Develop world-class competences. 38

39 Production relocation Fixed costs reduction Leadership in Network (e.g., SAT) 200 M dls bond First Carbon bonds Increased PP market share in Mexico Focus on operating efficiency Family Responsible Company Bel Distribution Cost and expenses optimization JV with Shaw to recycle PET 09 Emission reduction program registered before U.N. ANTAD Award PMI** and Synergies 12 th time in 13 years to receive best powertrain supplier award from GM Longmont Cold cuts Mexico Braedt Cold cuts Peru Cold Cuts U.S. plant Polioles electricity cogeneration Expansion PP Indelpro II 08 Sigma Innovation system Our brand: Alestra ISO Information security SI integral health program Petrocel shut down (DMT) Acq. Eastman PET Mexico and Argentina IASSA Cold cuts Mexico Teksid, Hydro and Castech Bernina Cold cuts Mexico MCP U.S. Dairy Expansion PTA Altamira to 1.0 Mt DAK PET Cape Fear start-up Experto Center 07 Innovation program ANTAD Award 300 k Retail clients HEB and Soriana Awards Nayar Cold cuts Mexico JV Newpek for nat. gas exploration in Texas Repurchase BBVA stake Debottlenecking PTA Altamira to 500 Kta Food Service Guten Planta VI Monterrey start-up 06 Stockholder restructure due to SBC takeover of AT&T Philadelphia Distribution Wal-Mart Award New Zealand Mexico Dairy Repurchase 100% polyester fibers Sale of Nylon and Lycra to Koch (keeps Univex, Nyltek) Rautenbach Sale of Sidor stake Hylsamex spin-off Expansion Altamira EPS to 165 Kt Boost to IP services/ Broad band Strengthening of distribution network Refrigerated pizzas 05 Export award Industry analysis, strategic review Partial Spin-off Hylsamex Chen Mexico Dairy Petrotemex emission reduction program Distribution network US Refrigerated prepared food 04 Debt restructure ~300 M bond Refrigerated coffee Galicia Cold cuts Mexico Acq. Central America and Caribbean Dairy desserts AT&T Global Network EPS capacity DAK PET Cooper River start up Czech Republic plant 03 Debt restructure Energy prize 100 millionth head Export to US ANTAD award Joint Venture Akra Teijin polyester fibers First CADI Tepoztlán Pipe mill No. 6 Panel Line II (Galvamet) 02 Enertek sale (Iberdrola) DAK acq. PTA and PET in US from DuPont 01 SAP Skill development (Nemak 2000) ISO 9002 Strategic repositioning 2 Ford plants in Canada Plant V Value Added Services M dls bond EBITDA > 0 Sale Hylsa Bekaert Tangamanga Expansion Nylon 6,6 to 27 Kta Splitter for PP at Indelpro Galvanized Line III Expansion Lycra Cheese plant Capacity Yoghurt 99 First monoblock Tangamanga Cold cuts Mexico Fusion Center Mty Texturized Polyester new plant Enertek start up Cheese plant Capacity Yoghurt New oven Puebla plant Expansion Decapado 98 QS 9000 Acq. Distributors ISO 9002 San Antonio Cold cuts Mexico 1 st LD call Acq. Sidor stake PDC* in Monterrey Acq. stake Pemex PTA Client 1 Million / 1 Bn. Minutes Acq. stake. Akzo Nobel Chemical fibers Plant IV ISO 9002 Nylon de México and Indelpro Fine wires 20% stake in Teksid Cold mill Sendzimir Galvanized and painting line Expansion Polyester filament PTA Altamira start up 97 Self-directed teams Merger with Unicom (Telecom Bancomer) Focus on product development Plant III 5,000 Kms network Expansion Nylon Textile Expansion PTA Cosoleacaque CPU fibers start up Metallic tiling (Galvateja) Sponge iron cap. Expansion Decapado Line 2 Minimill New plant HYL 96 Pemex PQ privatization study ISO 9000 at Polioles Leadership Program Acq. Sta. Rosa and Luxor (Terza) Acq. Univex Acq. Comalco for monoblock technology JV with AT&T Polioles EPS start up 95 Hylsamex IPO Sale 50% Terza to Shaw Sales to U.S. with Plant II Oscar Mayer distribution in Mexico Acq. Polyurethanes business from BASF Acq. Colombin Bel Investments in modernization of plants Focus on Talent and Technology Cheese manufacture Frozen prepared foods Temex capacity increase Acq. 50% Peña Colorada Portfolio Diversification Yoghurt 93 Painting Line III Sponge iron continuous reactor Puebla Invest. Nylon 6,6 94 Investments Acquisitions and spin-offs Technology, Human Capital and Other Relevant Events 39

40 2009 Portfolio* Size Footprint: 16 countries (U.S. $ Million) 8,536 1,055 Canada U.S. Mexico El Salvador Costa Rica Dominican Rep. Peru Argentina Brazil Germany Poland Hungary Slovakia Czech Rep. Austria China Revenues EBITDA * Based on revenues 40

41 ALFA Annual EBITDA (U.S. $ Million) 9% CAGR 1, % CAGR

42 ALFA Total Shareholder Return vs. Securities in U.S. and BMV ( ; CAGR in dollars) U.S. Small company ALFA ** DJI BMV Large company (S&P) Long Term Corporate Long Term Gov. Mid Term Gov. T-Bills Inflation Equities* Debt Risk free Source: Bloomberg * Adjusted for dividends ** Considering the distribution of Hylsamex s CPOs as if they were monetized in Aug

43 ALFA has evolved from a regional company with a commodity focused business portfolio, to a global company with operations in 16 countries, in three continents, in more profitable sectors, with a greater potential for growth, with products and services of increased added value and differentiation, and with strong leadership positions in its relevant markets.

44 2009 RESULTS ALFA s STRATEGIC EVOLUTION OUTLOOK for 2010

45 ALFA: Outlook for 2010 Sales growth explained by more volume, mainly. Revenues (U.S. $ Billion) EBITDA (U.S. $ Million) ,055 1,110 6% 5% e e 45

46 ALFA: Outlook for 2010 Capex (U.S. $ Million) Net Debt (U.S. $ Million) 2,361 2,408 2,292 36% -5% e e Net Debt to EBITDA* (times) * LTM 46

47 ALPEK: Outlook for 2010 Healthy demand supports revenue growth in Lower PET margins explain drop in EBITDA EBITDA: the third highest in history. Revenues (U.S. $ Million) EBITDA (U.S. $ Million) 4,709 3,971 4, % -13% e e 47

48 SIGMA: Outlook for 2010 Volume growth basically explains revenue growth. EBITDA and profitability trends are maintained. Revenues (U.S. $ Million) EBITDA (U.S. $ Million) 2,368 2,348 2, % 5% e e 48

49 ALESTRA: Outlook for 2010 Value added services growing 12% in 2010, offsetting decline in LD. Richer revenue mix leads to EBITDA growth. Revenues (U.S. $ Million) EBITDA (U.S. $ Million) % 8% e e 49

50 Nemak: Outlook for 2010 Gradual improvement in industry conditions. Sales volume up 13%. Nemak benefits from leaner cost structure after 2009 rightsizing. Revenues (U.S. $ Million) 3,026 1,949 2,196 EBITDA (U.S. $ Million) % 27% e e 50

51 2009 Results confirm robust strategic position of ALFA businesses: record EBITDA despite the crisis. The above was due to the profound transformation experienced by ALFA: leadership positions in its relevant markets, businesses with greater potential, human capital, state-of-the-art technology. Growth continues in Bases are set to keep on generating value.