corporate - alfa.com.mx · diversified portfolio of businesses with leading industry positions 8...

• General Internal Use

CORPORATEPRESENTATIONFirst Quarter 2020


Safe HarborThis 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. These uncertainties include, but are not limited to, risks

related to the impact of the COVID-19 global pandemic, such as the scope and duration of the

outbreak, government actions and restrictive measures implemented in response, availability of

workers and contractors due to illness and stay at home orders, supply chain disruptions and other

impacts to the business, or on the Company's ability to execute business continuity plans, as a result

there of. Accordingly, results are likely to vary from those set forth in this presentation. Copyright ©

2020 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.

2


Index

ALFA Overview

ALFA First Quarter Results

Appendix

Alpek – Petrochemicals

Sigma – Food Products

Nemak – Aluminum Autoparts

Axtel – IT & Telecom

Newpek – Oil & Gas

Other Information

3


Investment Highlights

1. Global company with operations in 29 countries; ~70% of revenues outside Mexico

2. Focus on Safety and Business Continuity amid Covid-19

3. Diversified portfolio of leading businesses providing essential goods/services

4. Solid balance sheet with investment grade rating; Cash U.S. $2.3 B

5. Strong corporate governance and experienced management team

6. Attractive value-enhancing initiatives and long-term prospects

4


ALFA has grown to become a global company

Manuf. Presence(Countries)

SalesOutside Mexico

Employees

2009 16 52% ~47,000

2019 29 67% ~83,000

5


Diversified portfolio of businesses with leading industry positions

8 out of 10Mexican Corporates use Axtel’s

IT and Telecom services

#1 in the production ofPTA, PET and EPSin the Americas

11 Sigma brandssell more than

US $100 Million a year each

1 out every 4 new carssold in the world contains

at least one Nemak product

733 production wellsoperated by Newpek

in U.S. and Mexico

Petrochemicals Food Products Aluminum Autoparts IT + Telecom Oil & Gas

6


Alpek, Sigma and Nemak are ALFA’s three largest businesses

Revenues 20191

US $17.5 BillionEBITDA 20191

US $2.3 Billion

35%

37%

23%

4%

37%

31%

27%

12%

1. Pie chart does not include Newpek and Others 7


Ownership

Petrochemicals

Food Products

Aluminum Autoparts

IT + Telecom

Oil & Gas

82%

100%

75%

53%

100%

Public company since 2012

Public company since 2015Ford Motor Co. owns 4.6%

Public company since 2005

8


ALFA Strategy (beyond COVID-19)

• Business Realignment

• Expansion

• Innovation in high growth segments

• Return Capital to Shareholders

• Net Debt <2.5x • ROIC >10%

9

Corporate Citizenship

Leading Industry Position

Financial Discipline

Strategic Principles

Strategic Priorities

Financial Parameters


Key initiatives (beyond COVID-19) aligned to Strategic Priorities

Business Key InitiativesInnovation in high growth segments

Business realignment

ExpansionReturn capital to

shareholders

Expand PET recycling capabilities

Lever product innovation platform

EV & structural component incursion

Evaluation of strategic alternatives

Divestment outside of Mexico

Dividends and share buybacks

10


Strong management team and solid corporate governance

• C - Suite average tenure of 29 years

• Average tenure of top 170+ Executives is 21 years

• Strong Corporate Governance with 83% Independent Directors

11


Experienced Management Team

Rolando ZubiránAxtel PresidentTenure 21 years

Rodrigo FernándezSigma PresidentTenure 21 years

Armando TamezNemak PresidentTenure 36 years

José de Jesús ValdezAlpek PresidentTenure 43 years

Paulino RodríguezVP Human CapitalTenure 16 years

Armando GarzaChairman of the BoardTenure 41 years

Álvaro FernándezPresidentTenure 29 years

Eduardo EscalanteCFOTenure 32 years

Carlos JiménezLegal CounselTenure 41 years

12


Board of Directors

• JOSE CALDERON ROJAS (2A)Chairman of the Board and Chief Executive Officerof Franca Industrias, S.A. de C.V. and Franca Servicios, S.A. de C.V.

• ENRIQUE CASTILLO SANCHEZ MEJORADA (1A)Managing Partner of Ventura Capital Privado, S.A. de C.V.

• FRANCISCO JAVIER FERNANDEZ CARBAJAL (1C)President of Servicios Administrativos Contry, S.A. de C.V.

• ALVARO FERNANDEZ GARZA (3C)President of ALFA, S.A.B. de C.V.

• ARMANDO GARZA SADA (3C)Chairman of the Board of ALFA, S.A.B. de C.V.

• CLAUDIO X. GONZALEZ LAPORTE (1B)Chairman of the Board of Kimberly-Clark de México, S.A.B. de C.V.

• DAVID MARTINEZ GUZMAN (1C)Chairman of the Board and Special Advisor of Fintech Advisory Inc.

• JOSE ANTONIO MEADE KURIBREÑA (1C)Board member since February 2019

• ALEJANDRO RAMIREZ MAGAÑA (1)President of Cinépolis, S.A. de C.V.

• ADRIAN SADA GONZALEZ (1B)Chairman of the Board of Vitro, S.A.B. de C.V.

• FEDERICO TOUSSAINT ELOSUA (1A)Chairman of the Board and Chief Executive Officer ofGrupo Lamosa, S.A.B. de C.V.

• GUILLERMO F. VOGEL HINOJOSA (1C)Chairman of the Board of Grupo Collado, S.A.B. de C.V., andof Exportaciones IM Promoción, S.A. de C.V.

Keys: (1) Independent Board Member / (A) Audit Committee (B) Corporate Practices Committee (C) Planning and Finance Committee 13


ALFA Sustainability Model is based on four pillars

INTERNAL WELL-BEING

COMMUNITY

ECONOMY

ENVIRONMENT

171 ALFA facilities run on clean and renewable energy sources such as wind and geothermal

US $35 Million invested in funding health, safety and employee development programs

10,845 students from 98 schools were benefited from ALFA´s support

More than 83,400 employees across 28 countries in America, Europe and Asia

In 2019, ALFA continued to deploy a broad program of actions in every aspect of its sustainability strategy

Collaborated with more than 190 institutions of social care

Nemak is the main consumer of recycled aluminum in Mexico, 80% of its aluminum usage comes from recycled sources

14


Financial Highlights

15,870 17,223

16,315 15,576

16,804

19,055

17,538

13 14 15 16 17 18 19

Revenues

1,915 2,040

2,420 2,322

2,018

2,858

2,298

13 14 15 16 17 18 19

EBITDA

1,556

1,422

1,632

1,492

1,148

1,570

920

13 14 15 16 17 18 19

Capex

A. Includes US $427 Million from extraordinary items

A

Revenues(US $ Million)

EBITDA(US $ Million)

Capex & Acquisitions(US $ Million)

15


Financial Highlights

5,123 4,785

5,844

6,300 6,543

6,276 6,323

14 15 16 17 18 19 1Q20

Net Debt

2.12.0

2.5

3.1

2.3

2.7 2.7

14 15 16 17 18 19 1Q20

Net Debt/EBITDA

7.27.7

6.6

4.6

5.8

5.2 5.3

14 15 16 17 18 19 1Q20

Interest CoverageNet Debt(US $ Million)

Net Debt/EBITDA(Times)

Interest Coverage(Times)

16


Cash dividends; +11% CAGR 2010 – 2020 (USD denominated)

70

97 104

118

154 154 170 169 168

202

100

10 11 12 13* 14* 15 16 17 18 19 20

* The 2014 dividend was paid early in 2013. The graph shows the approved amounts for each corresponding year.

Paid Dividends(US $ Million) 200

Subject to Board’s review

Paid in March

100

100

17


Index

ALFA Overview


Appendix






Other Information

18


Revenues reflect the effect of lower feedstock prices in Alpek, lower volume in Nemak, and Axtel’s recent divestments

Revenues(US $ Million)

1Q20 vs 1Q19(US $ Million)

1Q20 vs 4Q19(US $ Million)

4,479 4,473 4,319 4,267 4,167

1Q19 2Q19 3Q19 4Q19 1Q20

19


1Q20 EBITDA of US $563 million, including a US $91 million net gain from extraordinary items; Comparable EBITDA of US $473 million

519

595 548

636

563

1Q19 2Q19 3Q19 4Q19 1Q20

Reported EBITDA(US $ Million)

Extraordinary Items Comparable EBITDA(US $ Million)

EBITDA Margin

1Q20 vs 1Q19: 8%1Q20 vs 4Q19: -11%

1Q19 2Q19 3Q19 4Q19 1Q20

ALPEK (8) (28) (19) 184 (17)

SIGMA - - - - -

NEMAK - 8 - - -

AXTEL - 39 - (4) 107

NEWPEK (1) (1) (4) (58) -

TOTAL (8) 18 (23) 122 91

1Q20 vs 1Q19: -10%1Q20 vs 4Q19: -8%

528577 571

514473

11.8%

12.9% 13.2%

12.1%11.3%

1Q19 2Q19 3Q19 4Q19 1Q20

20


1Q20 Comparable EBITDA down 10% versus 1Q19 due lower volume in Nemak and lower polyester margins in Alpek

Comparable EBITDA 1Q20 vs 4Q19(US $ Million)

-8.0%

Comparable EBITDA 1Q20 vs 1Q19(US $ Million)

-10.0%

21


ALFA Net Debt down versus 1Q19 supported by non-core asset monetizations and solid operating cash generation

ALFA Net Debt(US $ Million)

Leverage Ratio (Net Debt/EBITDA)

7,194 7,122 7,032

6,276 6,323

1Q19 2Q19 3Q19 4Q19 1Q20

2.6 2.7 2.8 2.7 2.7

1Q19 2Q19 3Q19 4Q19 1Q20

Cash (US $ Million)

1,324 1,292 1,253 1,367

2,290

1Q19 2Q19 3Q19 4Q19 1Q20

22


ALFA focused on Safety and Business Continuity amid COVID-19

Business ContinuitySafety

• Top priority - safety of our employees, customers, suppliers and community

• Increased hygiene/sanitization protocols

• Reduction of on-site personnel

• Physical distancing

• Travel restrictions

• Closely monitoring health and government agency recommendations

• Preserve continuity and long-term sustainability

• Task forces coordinating immediate response

• Providing essential goods/services: food, packaging, IT

• Protecting our employees’ jobs

• Contributing to our communities

23


Key financial initiatives amid COVID-19

• Maximize liquidity

• Expand original plan to capture savings and cash flow benefits

• Reduce costs and expenses – including Executive salary reductions

• CAPEX deferral (e.g. Corpus Christi)

• Working capital optimization

• Board review of previously approved dividends at Nemak and Alpek

• Defer temporarily non-core asset divestments

24


Key underlying drivers by business amid COVID-19

Business Pros Cons

• Higher than expected reference margins (Asia) and demand

• FX benefit on MXN & BRL costs

• Temporary profitability impact due to oil and feedstock price decline (Brent: -19% vs. 4Q19)

• Volume growth in all regions

• Lower pork prices (Pork Ham US: -21% vs. 4Q19)

• Lower profitability (ex-USA) due to USD strength

• FX benefit on MXN costs

• Cost reduction and Operating efficiencies

• Lower volume due to OEM production rate reductions

• Incremental demand for services due to higher virtual collaboration

• Lower profitability due to MXN depreciation

25


Rising Asian reference polyester margins partially offset drop in oil/feedstock prices

1Q20 Highlights

• Providing essential materials for beverage/food packaging and medical supplies

• Cash US $570 million, up US $184 million vs 4Q19

• Net Debt/EBITDA of 1.7 times

• Extended Corpus Christi Polymers pre-construction period through the end of 2020

Paraxylene vs Brent Crude Oil Price (Base=100)

Margin: Asia PET to Px/MEG (US $ / Ton)

40

100

160

dec-18 jan-19 feb-19 mar-19 apr-19 may-19 jun-19 jul-19 ago-19 sept-19 oct-19 nov-19 dec-19 ene-20 feb-20 mar-20

Brent Px

240276 263 284

342

478

377333 323

370304

227275

1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20

26


0.0

0.2

0.4

0.6

0.8

1.0

1.2

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Resilient margins despite FX volatility amid downward trend in pork prices

13.915.0

10.0

5.5

13.3

15.8

9.1

4.4

Mexico USA LatAm Europe

EBITDA Margin By Region1Q20 Highlights

• Higher sales volume in all regions

• Cash US $718 million; up US $201 million vs 4Q19


• Foodservice distribution channel impacted hotel/restaurant closures amid COVID-19 (approx. 12% of Sigma sales)

1Q19

1Q20

6.5

Pork Ham Price

Jan. Mar. Jun. Sept. Dec.

U.S. ($/lb)

Europe (€/kg)

2018

2019

2020

27


1Q20 Sales and EBITDA reflect lower volume amid COVID-19

EBITDA per Equivalent Unit (USD/Equivalent Unit)

1Q20 Highlights Volume 1Q20 vs 1Q19(Million Equivalent Units)

• Temporarily ceased operations at certain plants due to shutdowns amid COVID-19

• Successfully restarted production in China (February)

• Intensified efforts to optimize costs and expenses, including Executive salary reductions



14.515.5

13.1 13.113.5

1Q 2Q 3Q 4Q

2019

2020

28


1Q20 EBITDA benefitted from the previously announced sale of three Data Centers

1Q20 Highlights

• Providing essential connectivity, cybersecurity and cloud services, among others



• Proceeds of US $175 million for the sale of 3 Data Centers

• Defer temporarily Infrastructure Unitsale process

56%44%

Service Infrastructure

Continuing EBITDA by Business Unit(Total 1Q20: US $48 million)

EBITDA (US $ Million)

56 57 57 6248

21

-4

39

-4

107

1Q19 2Q19 3Q19 4Q19 1Q20

Continuing

Discontinued

Extraordinary

29


Global Covid-19

30

Delivering Results & Aligning to Industry Trends

Non-essential MonetizationsValue Creation & Improved Capital Structure

Business SeparationCapture Opportunities and Maximize Value

Coronavirus Impact on SectorsOnly 13% of revenues from high-exposure sectors

61

294

175

Towers Mass Market Data Centers

Proceeds (US$ mm)

4.0 3.6 3.6 3.7

3.4 3.2

2.7 4Q17 4Q18

1Q20

2Q17

ND/EBITDA1 (x)

Services Infrastructure

Business Unit

• > 18,000 Customers

• Valued added Services

• Digital Transformation

• ~ 50 Customers

• Wholesale Connectivity & Passive Infrastructure

Business UnitHIGH

EXPOSURE

Impact Heatmap

Axtel 2019 Revenues(1)

~13%

~43% ~25%

ApparelAutomotive

Manufacturers

BeveragesChemicals

Manufacturing

Lodging / Leisure & TourismPassenger AirlinesRetail (non food)

Construction / MaterialsEquipment & Transportation

Potential Positive ImpactInternet service companies, Retail (online), Gold Mining

1. Without tower sale, merger-related expenses nor data center sale benefit.


Index

ALFA Overview


Appendix






Other Information

31

• General Internal Use3232


Leading Petrochemical company

Leading position across product portfolio:

• #1 PTA-PET producer in America

• #2 PET producer Worldwide

• #1 EPS producer in America

• Only PP producer in Mexico

2019

Revenues

US $6.2 Billion

EBITDA

US $0.9 Billion

33


Business Segments

Polyester chain

2019

Revenues US $4.7 Billion (77%)

EBITDA US $428 Million (50%)

Products

Purified Terephthalic Acid (PTA)

Polyethylene Terephthalate (PET)

Polyester fibers

Plastics & chemicals

2019

Revenues US $1.4 Billion (23%)

EBITDA US $218 Million (26%)

Products

Polypropylene (PP)

Expandable Polystyrene (EPS)

Caprolactam (CPL)

Fertilizers and other chemicals

2019 EBITDA includes a Cogeneration Sale Gain of US $188 M 34


Products are widely used for food packaging and consumer end-markets

Beverage

Food

Personal care

Sample end users by industry

Volume 2019 By Industry(4,384 Kta)

Construction4%Textiles

7%

ConsumerGoods

35%

Food and Beverages55%

Sales 2019 Geography(US $6,216 Million)

Asia & others0%

Europe3%

Mexico29%

U.S./CAN 44%

SA24%

Textiles

35


Installed capacity amounts to 7.0 Million tons

~6,000 employees

28 Production facilities

Source: Alpek estimate| Kta: Thousand tons per year | (1) Includes industrial and specialty chemicals and recycled PET capacities

Installed 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

U.S.

(2,385 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

(1,226 kta)

Guaratingueta 46

Ipojuca 640 450 90

Chile

(27 Kta)

Santiago 5

Puerto Montt 2

Concon 20

United Kingdom Wilton 350

Total Capacity: 7,386 Kta 2,890 2,814 115 400 640 325 85 117

36


Strategy

Foster

Circular

Economy

Strengthen Core

Business

Strategic

& Focused

Growth

Long-term strategy is based around 3 key pillars

37


Strategy

Each pillar includes set of concrete growth catalysts

• Global Cost Improvement

• Value-added Products

• FCF Generation

• Footprint Optimization

• Value Chain Integration

• Product Innovation

• Maximize CCP Value

• rPET Leadership

• Recycling Promotion

• Sustainable Product Portfolio

Growth Catalysts Details / Description

• Zero Based Budgeting & process innovation (Mainly Operations, Logistics & SG&A)

• Shift to products with higher margins & barriers to entry (Copolymers, Grey EPS)

• Reductions to CAPEX & NWC / Recover M&G Mexico debt

• Ensure global production is performed in optimal sites & logistic networks

• Grow capacity selectively & integrate into value chain (Px, Mexico EPS)

• New products & business lines (Biovento, Natural Gas Commercialization, CO2, PLA)

• Optimize project timing & minimize CAPEX

• Lead rPET supply in Americas through capital-effective investment

• Secure PET Bale & Flake supply / Equip vPET plants with single-pellet technology

• Active lobbying for circular economy via associations & The Recycling Partnership

• Develop sustainable alternatives for all our products (Biodegradable EPS & PP, etc.)

Strengthen

Core

Business

Strategic &

Focused

Growth

Foster

Circular

Economy

38


PET Fundamental Advantages

57

16

PET Other Plastics

37

182 187

GlassPET Aluminum ’00 ’15 ’19E’05 ’10

115

PET

Glass

Aluminum

27

90

#1 Recycling Collection Rate% Worldwide

Carbon Footprint Over Lifecycle1

(gr. CO2 Eq. / 355 mL Bottle)#1 Beverage Packaging MaterialBillion beverages (USA)

(1) Data from EPA and PET Resin Association considering bottle weight of containers. Includes emissions calculation for energy on processing and transportation, and non-energy related emissions; considers that material is recycled once.

39

• General Internal Use40


Multinational food company dedicated to bringing local favorite foods to communities everywhere

• +640,000 points of sale

• 11% of its sales came from innovation

2019

Revenues

US $6.5 Billion

EBITDA

US $703 Million

41


Highly recognized branded foods in Mexico, U.S., Central & South America and Europe

Region % Sales

LatAm8%

U.S.15%

Europe36%

Mexico41%

• 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

Cooked meats 60%

Dairy 19%

Dry meats 16%

Other categories 5%

Categories products

Mexico

United States

Dominican Rep.

El Salvador

Guatemala

Ecuador

Italy

Belgium

Germany

Netherlands

Spain

France

Peru

Honduras

Nicaragua

Costa Rica

Portugal

Romania

42


Diversified and strong brand portfolio in each market

PACKAGED MEATS DAIRY OTHER THIRD PARTY

MEXICO

EUROPE

U.S.

LATAM

43


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

70

Production

facilities

25 Europe

13 Latam

26 Mexico

6 USA210

Distribution

centers

18 Europe

39 Latam

139 Mexico

14 USA640,000

Points of sale

62,000 Europe

111,000 Latam

345,000 Mexico

105,000 USA

44


Consumer oriented innovation

Health & Nutrition

Origin & Tradition

Indulgence

Convenience

Sustainability & Trust

Innovation Platforms

• Based on “Design Thinking”

• Consumer research (260K contacts/year)

• 2 Research & Development Centers (+200 specialists)

• Innovations represent 11% of sales

• +270 new products launchedin 2019

45


Growth strategy

46

Explore the future

Defend current sources of profitability

High potential

opportunities

Protect Core

Margin expansion

Explore new categories

globallyNew business models

Strengthen organization

Enablers to accelerate organization

potential

Take advantage of global capabilities

as One Single Company

Strengthen competences to

face challenges in each

business unit

New sources of revenues


47


Leading provider of lightweighting solutions for the automotive industry

• Global footprint, cost competitiveness, R&D, skilled labor force

• One out of every four new vehicles sold worldwide has at least one Nemak component

• Sole supplier in ~90% of sales volume

2019

Revenues

US $4.0 Billion

EBITDA

US $621 Million

48


Focused on broad portfolio of highly-engineered solutions

Combustion Engine• Heads

• Blocks

• Transmissions

Electric Vehicles• Battery Housings

• E-Motor Housings

Vehicle Structures• Longitudinal Members

• Sub-Frames

• Pillars & others

49


Diversified customer base

• More than 50 customers worldwide

• Nemak supplies ~650 out of ~1,300 vehicle

nameplates platforms worldwide

50

http://www.opel.com/

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


Solid customer relationships; diversified revenue stream

28%

19%

14%

13%

6%

5%

4%4%

3% 4%

North

America

55%

Europe

36%

Others

9%

2019Volume distributionBy Customer

2019Revenue distributionBy Region

Otros

51


Global footprint with facilities close to customers

16Countries

Russia

Slovakia

Spain

38Manufacturing facilities• North America (18)

• Europe (14)

• South America (3)

• Asia (3)

52


Driving Nemak content per vehicle

Combustion Engine Hybrid Pure Electric

US $450 – 500 US $480 – 580 US $550 – 700

Heads, Blocks & Trans Heads & Blocks E-Motor Housings

Structural Components Structural Components Structural Components

Battery Housings Battery Housings

Hybrid Trans Other EV Components

Increased value added to sales

53


Sample awarded programs involving electric vehicles and structural components

Porsche TaycanVolvo Polestar

BMW X5 Hybrid Jeep Wrangler Hybrid

Ford Mustang Mach-E

54


Strong track record of agile cost structure adjustments and operating efficiencies to maximize profitability

$2,958 $2,955

$1,950

$2,880

$308 $309 $260

$365

$0

$100

$200

$300

$400

$500

$600

$700

$800

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

2007 2008 2009 2010

Revenues

EBITDA

Headcount rightsizing

Optimization of work shifts

Increase equipment output

Volume reallocation

Key InitiativesSales vs. EBITDA

Revenues 2009 vs 2008: -34%EBITDA 2009 vs 2008: -16%

EBITDA Margin 10.4% 10.5% 13.3% 12.7%

55


Differentiated approach by business segment

Maximize combustion engine business

• Operational efficiencies

• Cash flow generation

• Capacity utilization & consolidation

• Margin expansion through increased secondary processes (e.g. machining)

Capture growth in structural & EV components

• Greater margins & value added

• New competencies

• Assembly

• Design engineering

56

General Internal Use

57 57


IT and Telecom services for the enterprise and government segments

Main Services

Services:

• Managed networks

• System integration

• Collaboration

• Cloud solutions

• Cybersecurity

Infrastructure:

• Fiber to the Tower

• Fiber to the Data Center

• Spectrum

• Wholesale access

2019

Revenues

US $680 Million

EBITDA

US $265 Million

58


Sales and EBITDA Breakdown by Business Unit

81%Services

19%Infrastructure

1. Excludes Mass Market

EBITDASales 1

49%Services

51%Infrastructure

59


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

2018

2019

• Sale of mass-market FTTH

business to Televisa and

Megacable • Data Center Partnership

REALIGNMENT PROCESS

60


Strategy: Strong Positioning in IT & Telecom

Specialization and automation of strategic

services’ value chain (verticals)

Accelerate market penetration on digital

innovation services

Digitalization to improve efficiency

Main connectivity provider for mobile networks and data

centersMaximize

Value

Be theprincipal digital transformation

enabler of enterprise and

government segments

Be the leading neutral

fiber optic network operator in a high growth

market

ServiceUnit

Infrastructure UnitSeparation in 2

business units:

- Differentiation

- Maximize value & growth potential

Organic and inorganic growth of

cybersecurity and IT services

Long-term solid profitability vehicle

61


6262


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

• Involvement in the E&P industry began in 2006

• Operating mature fields in Mexico since 2013

2019

Revenues

US $76 Million

EBITDA

US $(91) Million1

1. 2019 EBITDA Includes US $63 M in non-cash provisions due to lower production outlook in the coming years 63


Current U.S. Operations – 616 wells

Technology

• Fracking for horizontal drilling

• Mature fields optimization

• World-class sub-surface analysis

capabilities

Net production(MBOED)

0.9 1.1 1.0

2.7

4.7

6.4

8.2 8.37.2

4.9 4.4

2.53.9

08 09 10 11 12 13 14 15 16 17 18 19 1Q20

Involvement in the E&P industry began

in 2006

• JV with Ensign Natural Resources (8.6%)

• Development of Eagle Ford Shale with 557 wells in production

64


Activities in Mexico – 117 wells

• Service contracts in San Andrés and Tierra Blanca fields with Pemex (CIEPs)

• Producing over 2.4 MBOED

• Optimization of existing wells

• Development of new wells in conventional formation

• 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

65


Strategy

• Evaluate strategic alternatives for its assets outside of

Mexico

66


Index

ALFA Overview


Appendix






Other Information

67


ALFA's heritage goes back to 1890

1979Nemak is founded

2008Sigma invest in

Perú

2018Alpek acquires

PQS (Brazil)

1993 1997

ALFA Invest US $3,200 Million in modernization and expansion

2000Nemak invests in Canada

2005Hylsamex is divested

2005Nemak acquiresRautenbach

2007Nemak acquires Teksid and Hydro assets

2001Alpek expands

to the U.S.

1996Alestra is founded

(Telecom)

2004Sigma expands in cheese

2007Alpek acquires Eastman PET Mexico & Argentina

2010Sigma

acquires Bas-S

2013Sigma

acquires Campofrio

2016Alestra/Axtel

merger

2011Alpek acquires

Eastman Columbia and

Wellman

1890Brewery is founded

1974Grupo Monterrey

Splits

1975First investment in

petrochem

1980ALFA invest

in food

1982Mexican crisis and

financial restructuring

2019Alpek acquires a PET facility (UK)

& rPET plant (USA)

2019Alpek sells its Cogeneration Power Plants

68


M&A is an important element of our strategy

2010Sigma

Bar-S

2011Alpek

Columbia siteEastman Chemical

2011Alpek

Wellman

2013Sigma

CampofrioFood Group

2016Alestra

Axtel merger

2018Alpek

Petroquímica Suapeand Citepe

2007Nemak

Teksid & HydroCasting assets

2005ALFA

DivestedHylsamex

2001Alpek

DAK Americas

2020Alpek

Lotte UK PET Plant

Wilton, UK

69


ROIC 2015 - 2019

13

9

6

12

6

2015 2016 2017 2018 2019

ROIC = NOPAT / Invested Capital | NOPAT = EBIT – Taxes | Invested Capital = Stockholder’s Equity + Debt 70


Breakdown by Region

Mexico

33%

U.S. & Canada

31%

Europe

22%

South & Central America

12%

Asia & Others

2%

Revenues 2019US $17.5 Billion

71


Outstanding bonds - ALFA

72

Val

ue

85

90

95

100

105

110

115

120

125

130

4/3

0/2

01

9

5/1

4/2

01

9

5/2

8/2

01

9

6/1

1/2

01

9

6/2

5/2

01

9

7/9

/20

19

7/2

3/2

01

9

8/6

/20

19

8/2

0/2

01

9

9/3

/20

19

9/1

7/2

01

9

10

/1/2

01

9

10

/15

/20

19

10

/29

/20

19

11

/12

/20

19

11

/26

/20

19

12

/10

/20

19

12

/24

/20

19

1/7

/20

20

1/2

1/2

02

0

2/4

/20

20

2/1

8/2

02

0

3/3

/20

20

3/1

7/2

02

0

3/3

1/2

02

0

4/1

4/2

02

0

4/2

8/2

02

0

2024

2044


Outstanding bonds – ALFA SubsidiariesV

alu

eV

alu

e

73

Sigma

Axtel

Alpek

Nemak

70

75

80

85

90

95

100

105

110

115

4/3

0/2

01

9

5/1

4/2

01

9

5/2

8/2

01

9

6/1

1/2

01

9

6/2

5/2

01

9

7/9

/20

19

7/2

3/2

01

9

8/6

/20

19

8/2

0/2

01

9

9/3

/20

19

9/1

7/2

01

9

10

/1/2

01

9

10

/15

/20

19

10

/29

/20

19

11

/12

/20

19

11

/26

/20

19

12

/10

/20

19

12

/24

/20

19

1/7

/20

20

1/2

1/2

02

0

2/4

/20

20

2/1

8/2

02

0

3/3

/20

20

3/1

7/2

02

0

3/3

1/2

02

0

4/1

4/2

02

0

4/2

8/2

02

0

2023

2022

2029

85

90

95

100

105

110

115

4/3

0/2

01

9

5/1

4/2

01

9

5/2

8/2

01

9

6/1

1/2

01

9

6/2

5/2

01

9

7/9

/20

19

7/2

3/2

01

9

8/6

/20

19

8/2

0/2

01

9

9/3

/20

19

9/1

7/2

01

9

10

/1/2

01

9

10

/15

/20

19

10

/29

/20

19

11

/12

/20

19

11

/26

/20

19

12

/10

/20

19

12

/24

/20

19

1/7

/20

20

1/2

1/2

02

0

2/4

/20

20

2/1

8/2

02

0

3/3

/20

20

3/1

7/2

02

0

3/3

1/2

02

0

4/1

4/2

02

0

4/2

8/2

02

0

2024

2028

2026

70

75

80

85

90

95

100

105

110

4/3

0/2

01

9

5/1

4/2

01

9

5/2

8/2

01

9

6/1

1/2

01

9

6/2

5/2

01

9

7/9

/20

19

7/2

3/2

01

9

8/6

/20

19

8/2

0/2

01

9

9/3

/20

19

9/1

7/2

01

9

10

/1/2

01

9

10

/15

/20

19

10

/29

/20

19

11

/12

/20

19

11

/26

/20

19

12

/10

/20

19

12

/24

/20

19

1/7

/20

20

1/2

1/2

02

0

2/4

/20

20

2/1

8/2

02

0

3/3

/20

20

3/1

7/2

02

0

3/3

1/2

02

0

4/1

4/2

02

0

4/2

8/2

02

0

2024

2025

70

75

80

85

90

95

100

105

110

4/3

0/2

01

9

5/1

4/2

01

9

5/2

8/2

01

9

6/1

1/2

01

9

6/2

5/2

01

9

7/9

/20

19

7/2

3/2

01

9

8/6

/20

19

8/2

0/2

01

9

9/3

/20

19

9/1

7/2

01

9

10

/1/2

01

9

10

/15

/20

19

10

/29

/20

19

11

/12

/20

19

11

/26

/20

19

12

/10

/20

19

12

/24

/20

19

1/7

/20

20

1/2

1/2

02

0

2/4

/20

20

2/1

8/2

02

0

3/3

/20

20

3/1

7/2

02

0

3/3

1/2

02

0

4/1

4/2

02

0

4/2

8/2

02

0

2024


ALFA & Subsidiaries Outstanding Bonds

CompanyAmount(M US)

RateYTM

(30/April/2020)Maturity

Ratings

S&P Fitch Moody’s

Alfa 500 5.250% 5.324% March 25, 2024 BBB- ; NO BBB- ; SO Baa3 ; SO

Alfa 500 6.875% 6.963% March 25, 2044 BBB- ; NO BBB- ; SO Baa3 ; SO

Alpek 650 4.500% 4.817% November 20, 2022 BBB- ; NO BBB- ; SO Baa3 ; SO

Alpek 300 5.375% 5.158% August 08, 2023 BBB- ; NO BBB- ; SO Baa3 ; SO

Alpek 500 4.250% 6.055% September 10, 2029 BBB- ; NO BBB- ; SO Baa3 ; SO

Sigma €600 2.625% 2.783% February 02, 2024 BBB ; NO BBB ; SO Baa3 ; SO

Sigma 1,000 4.125% 3.918% May 02, 2026 BBB ; NO BBB ; SO Baa3 ; SO

Sigma 500 4.875% 4.603% March 22, 2028 BBB ; NO BBB ; SO Baa3 ; SO

Nemak 500 4.750% 8.385% January 11, 2025 BB+ ; SO BBB- ; SO Ba1 ; -

Nemak €500 3.250% 8.036% February 28, 2024 BB+ ; SO BBB- ; SO Ba1 ; -

Axtel 500 6.375% 8.384% November 14, 2024 BB ; PO BB- ; SO Ba3 ; SO

74


Stock Highlights (BMV: ALFAA)

Daily Average Traded Shares & Value

Daily Stock Price (MXN)

3

12

00

8

2

10

64

15

6 9

F M AJ A M J J A S O N SD J F M A J JM

2019

20

10

15

30

JunDecJan Jun Jan Dec

(M Shares) (US$ M)

2018 2019

Valuation 2017 2018 2019 1Q20

Market Cap. (US$ B) 6,637 6,056 4,875 3,300

Net Debt (US$ M) 6,300 6,543 6,276 6,323

EBITDA LTM (US$ M) 2,018 2,858 2,298 2,342

Enterprise Value /

EBITDA7.0 4.8 5.4 4.6

Price / Earnings N/A 8.9 16.2 6.0

Price per Share

(MXN)24.7 23.0 18.6 12.8

Exchange Rate

(MXN/USD)18.9 19.2 19.3 19.9

2018

25

O N D

2020

2020

Jan

FJ M

75


Debt by Currency

US 58%

EUR35%

Other 7%

US99%

MXN 0%

US100%

US54%EUR

30%

MXN 13%

US 75%

MXN25%

US $1,148 Million US $1,992 Million US $2,734 Million

US $1,988 Million US $676 Million

*Includes currency hedging

Other 2%

76


Debt by Fixed and Variable Interest Rate

Fix100%

Var0%

Fix69%

Var31%

Fix82%

Var18%

Fix87%

Var 13%

US $1,148 Million US $1,992 Million

US $1,988 Million US $676 Million

*Includes currency hedging

Fix83%

Var17%

US $2,734 Million

77


Brent Crude Oil

120

100

80

60

40

20

US $/Bbl

Brent Crude Oil

99 $/bbl

53 $/bbl 44

$/bbl

54 $/bbl71

$/bbl 64 $/bbl

59 $/bbl

0

78

2014 2015 2016 2017 20192018 2020


PET Margin (Asia)

201

74 71 69 63 59 71 64 63 60 72 80 81104

133 135 118 110155 140 PTA

PET

2011

210

2012 3Q2015

258

2013 2014 1Q

260

4Q 1Q 2Q 3Q 4Q

478

4Q1Q2Q 3Q 1Q

394

270

2Q

230210

284

212240

276 263

342

377

324333

370

2Q

China

2016 2017 2018 2019

Margin: Asia PET to Px/MEG (US $/Ton)

250304

3Q 4Q

227

82

2020

1Q

275

78

79


Pork Ham Price in Europe and U.S.

€/kgPork Ham Price in Europe

US $/lbPork Ham Price in U.S.

Feb. Mar. Jun. Aug. Sept. Dec.

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2018

2019

2020

0.0

0.2

0.4

0.6

0.8

1.0

1.2

2018

2019

2020

Feb. Mar. Jun. Aug. Sept. Dec.

80


T. +52 (81) [email protected]

Contact

Hernán F. LozanoV.P. of Investor Relations

81

mailto:[email protected]

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