ALFA reports 2Q21 EBITDA of US $496 million; record US $1.0 billion EBITDA in the first half of the year

MONTERREY, Mexico, July 21, 2021 /PRNewswire/ -- ALFA, S.A.B. de C.V. (BMV: ALFAA) (ALFA), manages a diversified portfolio of subsidiaries with global operations announced today its unaudited results for the second quarter of 2021 ("2Q21"). All figures have been prepared in accordance with International Financial Reporting Standards ("IFRS").

2Q21 HIGHLIGHTS

ALFA	Successfully obtained all regulatory approvals and completed required amendments to expand the maximum threshold of foreign investment participation via the Nafinsa Trust to 75% 2021 EBITDA Guidance revised up 8% to US $1.767 billion driven by Alpek Steady progress on Unlocking Value strategy; consolidated leverage ratio (Net Debt to EBITDA) of 2.6x, down from 3.2x in 2Q20 and 2.9x in 1Q21
Sigma	Record second quarter Sales and EBITDA in 2Q21 Stronger-than-expected recovery in Foodservice channel; EBITDA up 11% versus pre-pandemic levels (2Q19) Acceleration program "Tastech by Sigma" received more than 360 applications and Sigma selected 12 startups to complete joint pilot tests in its four regions
Alpek	2Q21 Comparable EBITDA of US $225 million (+51% y-o-y) driven by record 2Q volume and better-than-expected margins 2021 EBITDA Guidance revised up 17% to US $880 million, reflecting 2Q21 results and a stronger margin outlook Completed acquisition of state-of-the-art integrated rPET facility in Pennsylvania, U.S.
Axtel	2Q21 EBITDA of US $57 million (+17% y-o-y excluding extraordinary gains in 2Q20) driven by 32% growth in Infrastructure unit Ongoing engagement with potential buyers of its Infrastructure business unit On track with full-year guidance

Message from ALFA's President

"We wish everyone is safe and well. 2Q21 marks the first full year since the biggest impact from the pandemic on our consolidated results. I am extremely proud of our Team's accomplishments over the last twelve months as ALFA has delivered on its operational, financial and strategic goals.

Second quarter results highlight the quick recovery of our core businesses amid the continued rebound in global economic activity. Double-digit sales growth versus 2Q20 in Sigma, Alpek and Axtel, boosted ALFA Sales and EBITDA 34% and 89%, respectively. 2Q21 Consolidated EBITDA was the second highest quarterly figure since 2019, and accumulated EBITDA of US $1.0 billion set a new record for any first half of the year.

Sigma and Axtel remain on track with their full-year targets as Alpek again delivered outstanding results. Sigma's record second quarter sales and EBITDA were supported by a better-than-expected recovery in its Foodservice channel, as well as favorable foreign exchange rate trends. Axtel benefitted from robust performance in its Infrastructure business unit plus a strong Mexican Peso. 

Alpek exceeded its revised guidance as it continued to capitalize on strong demand and higher reference polyester and polypropylene margins amid a favorable rise in oil and feedstock prices. As a result, Alpek increased its 2021 EBITDA guidance to US $880 million from US $750 million announced last quarter. To reflect this upside, ALFA's full-year 2021 EBITDA Guidance has also been revised upwards to US $1.767 billion from the previous revision of US $1.637 billion.

We continued to advance on key corporate priorities: implementing our Unlocking Value strategy and expanding the "Nafinsa Trust" to allow for higher foreign ownership of ALFA shares. I am happy to inform you that ALFA successfully obtained all regulatory approvals and completed required amendments to expand the maximum Nafinsa Trust threshold to 75% of ALFA's shares outstanding. The approved threshold of 75% provides ample room for foreign investors to continue investing in ALFA. Based on figures from Nacional Financiera, S.N.C., foreign investors held 50.26% of outstanding ALFA shares on June 30, 2021.

We are making steady progress in our unlocking value transformation plan, aligned to three key implementation directives: i) Reducing leverage, ii) Focusing on core businesses and iii) Enhancing business independence.

i) Reducing leverage: Consolidated leverage (Net Debt to EBITDA) continued trending down towards our 2.5x target driven by better-than-expected EBITDA and disciplined capital allocation reflected in lower Net Debt. This was the second consecutive quarter that ALFA's consolidated net leverage was below three times since 2Q20. We are also committed to accelerating deleverage through strategic initiatives such as the potential sale of Axtel. The Axtel team remains actively engaged with potential buyers of its Infrastructure business unit.

ii) Focusing on core businesses: We are driven to boost the underlying value of our core businesses to complement the potential from ALFA's transformational process. "Developing new sources of revenue" is one of three strategic pillars that Sigma is focused on to enhance growth. Sigma made significant progress during 2Q21 to begin the roll-out of Plant-based products in different regions under a new global brand. In addition, "Tastech by Sigma" – the acceleration program to collaborate with high-impact startups and scale-ups, carried out its Selection Day after receiving more than 360 applications from participants in 23 countries. Twelve cutting-edge startups were chosen to complete pilot tests together with Sigma across its four regions.

Another recent development related to Sigma was the publication of its 2020 Sustainability Report, which outlines the Company's sustainability strategy and progress on its Sustainability Goals for 2025. This reflects ALFA's commitment towards ESG as all its core businesses have released individual sustainability reports. We invite you to learn more on how each of our Companies incorporates sustainability principles and contributes to making this world a better place.

Moreover, Alpek completed the US $96 million acquisition of a state-of-the-art PET recycling and pelletization facility in Pennsylvania, U.S.; aligned with its long-term strategic pillar to "Foster a Circular Economy". This transaction reaffirms Alpek's position as the largest PET recycler in the Americas and will allow the Company to achieve its target of supplying selected customers with 25% recycled PET content ahead of schedule. Alpek expects to begin production at this site in 3Q21.

iii) Enhancing business independence: We celebrate that Nemak and Controladora Nemak are seeking the required shareholder approvals to merge the two entities into one. This is a positive development to unlock value at Nemak by simplifying its shareholder structure; which is relevant for ALFA shareholders who received Controladora Nemak shares as part of our Unlocking Value strategy.

Our focus remains on individual businesses to achieve service-related independence from ALFA through a gradual and orderly process. Certain transfers of personnel between ALFA and its subsidiaries began during 2Q21 based on initial results from the joint analysis to determine the most appropriate allocation of corporate capabilities.

On a separate note, we will host an Extraordinary Shareholders' Meeting on July 29, 2021 to propose the merger between "ALFA Corporativo" – our corporate services company, and "ALFA S.A.B." – the listed entity that controls the subsidiaries to which corporate services are provided. The proposed merger as well as an amendment to article 2 of ALFA's bylaws are required under the new outsourcing law in Mexico. It is important to note that this matter is not related to ALFA's Unlocking Value strategy. We invite all our shareholders to make sure their shares are represented as a 75% registration is necessary to install the meeting.

Record EBITDA in the first half of 2021 highlights the resilience of our businesses and reaffirms our positive view of the ongoing recovery. We are entering this new era in a strong position to continue building upon the positive momentum and delivering on our goals."

Keep well/Stay safe,

Álvaro Fernández

 

SELECTED FINANCIAL INFORMATION (US $ MILLIONS)
	2Q21			1Q21		2Q20		Ch. % vs. 1Q21		Ch. % vs. 2Q20		YTD `21		YTD `20		Ch. %
ALFA & Subs with Nemak as Discontinued Operations
ALFA Revenues	3,731			3,388		2,789		10		34		7,119		6,050		18
Alpek	1,849			1,614		1,175		15		57		3,463		2,608		33
Sigma	1,707			1,613		1,470		6		16		3,320		3,107		7
Axtel	149			140		132		7		13		288		289		-
ALFA EBITDA1	496			535		263		(7)		89		1,031		679		52
Alpek	273			324		74		(16)		268		597		185		223
Sigma	182			181		159		-		15		363		327		11
Axtel	57			45		53		26		8		102		208		(51)
ALFA Comparable EBITDA2	449			414		334		8		34		863		678		27
Alpek	225			203		149		11		51		429		296		45
Sigma	182			181		159		-		15		363		327		11
Axtel	57			45		49		26		17		102		97		5
Majority Net Income3	99			154		(88)		(35)		213		253		82		210
CAPEX & Acquisitions4	183			79		85		132		115		262		167		57
Net Debt5	4,811			4,864		6,640		(1)		(28)		4,811		6,640		(28)
Net Debt/LTM EBITDA6	2.6			2.9		3.3
LTM Interest Coverage7	5.0			4.3		4.2
1 EBITDA = Operating Income + depreciation and amortization + impairment of assets. 2 Excludes extraordinary items 3 Majority Net Income includes Majority Net Income from Discontinued Operations (Nemak). 4 Gross amount; excludes divestments and Capex from Discontinued Operations (Nemak). 5 Net Debt adjusted for Discontinued Operations (excluding Nemak) at the close of 3Q20; previous periods unchanged. As reference, 2Q20 Net Debt includes US $1.515 billion from Nemak. 6 Times. LTM = Last 12 months. Ratio calculated with Discontinued Operations for all periods. 7 Times. LTM = Last 12 months. Interest Coverage = EBITDA/Net Financial Expenses with Discontinued Operations.

 

2Q21 EARNINGS CALL INFORMATION
Date:	Thursday, July 22, 2021
Time:	1:00 p.m. EDT (NY) / 12:00 p.m. CDT (CDMX)
By Phone:	United States:     +1-877-451-6152
	International:       +1-201-389-0879
	Mexico:                800-522-0034
Conference ID:	13720839
Webcast:	http://public.viavid.com/index.php?id=145401
Replay:	https://www.alfa.com.mx/RI/conference.htm

 

Contact
Hernán F. Lozano 
V.P. of Investor Relations
ALFA, S.A.B. de C.V.
T. +52 (81) 8748-2521
iralfa@alfa.com.mx 

Carolina Alvear
Corporate Communication Director
ALFA, S.A.B. de C.V.
T. +52 (81) 8748-2521
comunicacion@alfa.com.mx

About ALFA

ALFA a company that has developed a diversified portfolio of leading businesses with global operations: 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. 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. 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. In 2020, ALFA reported revenues of Ps. 263,867 million (US $12.3 billion), and EBITDA of Ps. 32,597 million (US $1.5 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. 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 thereof. 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.

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