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ALFA reports 4Q19 EBITDA of US $636 million

MONTERREY, Mexico, Feb. 12, 2020 /PRNewswire/ -- ALFA, S.A.B. de C.V. (BMV: ALFAA) (ALFA), a leading holding company that manages a diversified portfolio of subsidiaries with global operations announced today its unaudited results for the fourth quarter of 2019 ("4Q19"). All figures have been prepared in accordance with International Financial Reporting Standards ("IFRS").

4Q19 HIGHLIGHTS

    ALFA

  • 2019 adjusted EBITDA of US $2.4 billion, generally in line with Guidance
  • Net Debt down US $267 million y-o-y; down US $757 million when excluding IFRS16 impact

Alpek

  • Closed US $801 million sale of its two power cogeneration facilities to ContourGlobal
  • Agreement to acquire the only PET plant in the U.K.; installed capacity of 350 ktons per year

Sigma

  • EBITDA up 1% and 3% in 4Q19 and 2019 y-o-y, respectively
  • 2019 EBITDA margin of 10.9%; slightly higher y-o-y supported by efforts to mitigate ASF

Nemak

  • 2019 EBITDA in line with Guidance despite GM strike impact
  • Completed the construction of its first plant in NA 100% dedicated to assembly of EV components

Axtel

  • Better-than-expected performance in 2019
  • Functional separation process to operate under two specialized units advancing as planned

 

Message from ALFA's President

"2019 was a year of significant accomplishments for ALFA as we successfully executed on our strategic priorities. Alpek and Axtel monetized non-core assets that generated proceeds of close to US $1.3 billion between 4Q18 and 4Q19. Sigma and Nemak are both innovating in high growth segments in their respective industries as well as driving operating efficiencies, while Axtel realigned its business to better capture growth opportunities and maximize value.

The fourth quarter was pivotal in positioning ALFA for the future as Alpek closed the US $801 million sale of its two power cogeneration facilities and Axtel monetized three data centers as part of the US $175 million strategic agreement with Equinix.

ALFA's full year financial results were generally in line with our expectations supported by higher than anticipated consolidated EBITDA margin amid certain headwinds faced during the year. These included the African Swine Fever (ASF), which Sigma was able to mitigate through multiple targeted actions, a soft feedstock price environment at Alpek, and the strike at GM, which temporarily curtailed Nemak's production.

In line with its goal of promoting a circular economy, Alpek operates the largest recycling capacity among PET producers in the Americas. During 2019, the company acquired a PET recycling plant in the United States, which raised its recycled PET production capacity by 60%. Alpek also signed an agreement in 4Q19 with Lotte Chemical Corporation to purchase the only PET plant in the United Kingdom, which raised its production capacity by 14%. It is important to note that PET is 100% recyclable, the most recycled plastic in the world, and has significant economic and environmental advantages over other packaging materials, including an 80% lower carbon footprint versus glass and aluminum.

Innovation is a key driver at Sigma, supported by a team of more than 200 specialists, 2 research centers and 6 pilot plants. The company launched more than 270 products in 2019 and has more than 740 products under development. Revenues generated by products launched through Sigma's innovation platform over the last 36 months, accounted for 11% of sales, up from 7% three years ago. In addition to its in-house capabilities the company recently launched "Tastech by Sigma", a program to accelerate innovation through disruptive startups and emerging growth companies from around the world. Another highlight of the year was the creation of a new business unit "Global Snacking" to grow the protein-based snack category which currently generates sales of US $172 million per year.

Nemak continued to ramp up its capacity to meet demand for innovative lightweighting solutions through structural and electric vehicle (SC/EV) components. During 2019, the company supplied SC/EV components for 16 vehicles for 6 different customers worldwide. Moreover, Nemak recently completed the construction and is currently installing the necessary equipment to begin operations of its first plant in North America engaged 100% in assembly processes for electric vehicle components, expanding the range of solutions that it can provide its customers. Approximately 25% of Nemak's Capex investment in 2019 was dedicated to this new business line.

As part of Axtel's' realignment process, during 2019 the company completed the sale of its Mass Market business, monetized three data centers in a strategic agreement with Equinix, and began to operate under two new specialized business units: Infrastructure and Services. This new business structure is planned to optimize Axtel's operations and maximize the value of its infrastructure, which includes 40,600 kms of fiber optic network.

Newpek will continue to evaluate strategic alternatives for its assets outside of Mexico as we remain committed to exiting this business. During 2019, Newpek recognized US $63 million in expense provisions mainly associated with its lower production outlook in coming years.

Consolidated reported EBITDA for the year includes a US $108 million net gain from extraordinary items such as the US $188 million gain from the sale of Alpek's power cogeneration plants which was partially offset by provisions of US $63 million at Newpek. On an adjusted basis to make the figure comparable with our Guidance, 2019 EBITDA of US $2.4 billion was generally in line supported by solid underlying business performance amid external headwinds.

Net Debt decreased US $267 million year over year reflecting the successful monetization of non-core assets and strong cash flow generation. Excluding the impact from the adoption of a new accounting standard for leases (IFRS16) beginning in January, Net Debt was down US $757 million or 12% versus year-end 2018.

On the capital allocation front, it is important to note that ALFA paid out a record dividend of US $202 million in 2019. In addition, the Company cancelled US $165 million worth of shares and during the year repurchased US $37 million worth of shares, representing a total benefit to shareholders of US $404 million.

Looking ahead, ALFA will continue supporting the subsidiaries' investments in improving efficiencies, moving into high-growth businesses and further expanding geographic presence. More specifically, Alpek will be enhancing its recycling capabilities and focused on integrating its recent acquisitions. Sigma will continue to exploit its innovation capabilities to their fullest potential as well as executing operating efficiency initiatives to improve profitability, particularly in Europe.

Furthermore, Nemak has been successful in winning new contracts, capitalizing on the trend towards a more sustainable mobility. Whereas, Axtel will be operating under a new structure that is expected to strengthen its leadership position in key business segments and unlock its value potential".

Álvaro Fernández

SELECTED FINANCIAL INFORMATION (US $ MILLIONS)


4Q19

3Q19

4Q18

Ch. % vs.
3Q19

Ch. % vs.
4Q18

2019

2018

Ch. %

ALFA Revenues

4,267

4,319

4,692

(1)

(9)

17,538

19,055

(8)

Alpek

1,407

1,523

1,758

(8)

(20)

6,216

6,991

(11)

Sigma

1,706

1,632

1,596

5

7

6,463

6,336

2

Nemak

941

963

1,078

(2)

(13)

4,017

4,704

(15)

Axtel

176

165

208

6

(16)

680

809

(16)

Newpek

18

16

22

14

(19)

76

108

(29)

ALFA EBITDA1

636

548

887

16

(28)

2,298

2,858

(20)

Alpek

356

194

369

83

(4)

850

1,063

(20)

Sigma

176

182

174

(3)

1

703

684

3

Nemak

133

139

171

(4)

(22)

621

734

(15)

Axtel

53

57

206

(6)

(74)

265

422

(37)

Newpek

(65)

(11)

16

(479)

(519)

(91)

31

(395)

Majority Net Income

80

60

237

35

(66)

300

682

(56)

CAPEX & Acquisitions2

325

204

529

59

(39)

920

1,583

(42)

Net Debt

6,276

7,032

6,543

(11)

(4)

6,276

6,543

(4)

Net Debt/LTM EBITDA*

2.7

2.8

2.3






LTM Interest Coverage*3

5.2

5.8

5.8






* Times. LTM = Last 12 months

1 EBITDA = Operating Income + depreciation and amortization + impairment of assets.

2 Gross amount; does not include divestments

3 Interest Coverage = EBITDA/Net Financial Expenses

 

4Q19 EARNINGS CALL INFORMATION



Date:

Thursday, February 13, 2020

Time:

1:00 p.m. EST (NY) / 12:00 p.m. CST (CDMX)

By Phone:

United States:  +1-877-451-6152


International:  +1-201-389-0879


Mexico:  800-522-0034




Conference ID: 13698105



Webcast: 

http://public.viavid.com/index.php?id=137670



Replay:

https://www.alfa.com.mx/RI/conference.htm

 

About ALFA

ALFA is a holding company that manages a diversified portfolio of subsidiaries with global operations: Alpek, one of the world's largest producers of polyester (PTA, PET and fibers), and the leader in the Mexican market for polypropylene, expandable polystyrene (EPS) and caprolactam. Sigma, a leading multinational food company, focused on the production, marketing and distribution of quality foods through recognized brands in Mexico, Europe, United States and Latin America. Nemak, a leading provider of innovative lightweighting solutions for the global automotive industry, specializing in the development and manufacturing of aluminum components for powertrain, structural components and for electric vehicles. Axtel, a provider of Information Technology and Communication services for the enterprise and government segments in Mexico. Newpek, an oil and gas exploration and production company with operations in Mexico and the United States. In 2019, ALFA reported revenues of Ps. 337,750 million (US $17.5 billion), and EBITDA of Ps. 44,280 million (US $2.3 billion). ALFA's shares are quoted on the Mexican Stock Exchange and on Latibex, the market for Latin American shares of the Madrid Stock Exchange. For more information, please visit www.alfa.com.mx

Disclaimer

This release may contain 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 could vary from those set forth in this release. The report presents unaudited financial information. Figures are presented in Mexican Pesos or US Dollars, as indicated. Where applicable, Peso amounts were translated into US Dollars using the average exchange rate of the months during which the operations were recorded. Financial ratios are calculated in US Dollars. Due to the rounding up of figures, small differences may occur when calculating percent changes from one period to the other.

Cision

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SOURCE ALFA, S.A.B. de C.V.