Corporate Presentation - Kuo › anexos › Presentacion_KUO_4Q16 220217.… · This presentation is only directed at relevant persons and any investment or investment activity to

February 2017

Corporate Presentation

Business Fundamentals

1) DIVERSIFICATION

Diversified portfolio with six strategicbusiness units (SBU’s)

Diversified industries: Consumer, Automotive, Chemical

2) STRONG MARKET POSITION

Largest producer of pork meat in Mexico

Leader in high performance transmissions

Leading Brands in Consumer Sector

Largest producer of syntethic rubber in Mexico

4) % EXPORTS3) FINANCIAL STRUCTURE

More tan 50% of revenues comes fromexports

USD Revenues cover USD liabilities

Strict Cost Control Policy

Strong Cash Flow from Operations

Low Leverage, strong ratios, longterm maturity profile

2

Business Portfolio/ Revenue BreakdownKUO

Consumer Chemical

Automotive

3

58%

42%

Pork Meat Herdez Del Fuerte JV

51%

49%

Synthetic Rubber JV Polystyrene

47%

32%

21%

Consumer Chemical Automotive

60%

40%

Transmissions Aftermarket

Manufacturing plants: 27

Employees: 18,000

Presence in: 70 countries

% Exports: 52%

Global Footprint

4

Financial Highlights 4Q16

5

REVENUE

EBITDA

+22.4%

+30.7%

+17.6%

+34.5% +36.0% -4.6%+13.0%

+38.5%+87.6%+58.4%

+120.8%

+310.8%

+54.5%

+104.8%

% Exports 95.6%100.0%45.0%31.4% 40.3% 12.2%51.2%

EBITDA Margin 22.6%7.8%15.4%13.9% 18.9% 11.2%10.7%

Note: Figures are expressed in million Mexican pesos in Combined Pro forma IFRS, considering the proportional consolidation method.

Financial Highlights 2016

Note: Figures are expressed in million Mexican pesos in Combined Pro forma IFRS, considering the proportional consolidation method.

6

REVENUE

EBITDA

+17.6%

+30.2%+15.7%

+5.4%+21.0%

+11.6%

+13.8%

+19.8%+77.6%+40.2%

+31.7%

+112.2%

+62.1%

+23.8%

% Exports 93.3%96.3%44.1%30.8% 44.0% 11.8%52.3%

EBITDA Margin 19.4%12.4%13.6%12.7% 10.4% 11.5%11.9%

26%

20%

15%12%

8%

19%

27%

20%

16%16%

8%

13%

Pork Meat (PM)

Herdez Del Fuerte JV (HDF)

Synthetic Rubber JV (SR)

Polystyrene (P)

Aftermarket (AM)

Transmissions (T)

Revenues MM MXN EBITDA & Margin MM MXN

Revenues & EBITDA LTM

Revenues EBITDA

PMT

AMPSR

HDF

PMT

AMPSR

HDF

7

$26,763 $28,599

$33,627

$12,396 $13,814

$17,597

2014 2015 2016

Revenues Exports

1) 2015 EBITDA does not include the non-recurring income from the sale of the 50% of Rubber un Emulsion business

$2,405 $2,860

$4,010

9.1% 10.0%11.9%

2014 2015 20161

Note: Figures are expressed in Mexican pesos in Combined Pro forma IFRS, considering the proportional consolidation method.

Debt (De-Risking)MM MXN

Balanced Capital Structure

*Calculated on US dollars, according to the compliance of credit agreements obligations

Debt Profile 4Q16MM USD

8

4,479

5,608

3,998 3,729

5,206 5,500

4,316

6,029 6,607

7,037 6,950 6,601 6,775

3.0 2.8

2.21.9 2.1 2.0 1.9

2.21.7 1.7 1.6 1.4 1.5

0.5

1.5

2.5

3.5

4.5

5.5

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 1Q16 2Q16 3Q16 4Q16

Net Debt Leverage Ratio

61 25

45 62

14

326

2017 2018 2019 2020 2021 2022

Ratios 2015* 2016*

Net Debt / EBITDA 1.7x 1.5x

Total Debt/ EBITDA 2.4x 2.5x

Interest Coverage Ratio 7.8x 7.1x


Weighted average cost of debt 6%

Average debt life 5 years

Debt in foreign currency 78%

Fixed Rate 69%

Rating S&P, Fitch BB

2016

25,000.00

30,000.00

35,000.00

40,000.00

45,000.00

50,000.00

55,000.00

10

15

20

25

30

35

Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17

Series B Shares IPC

1) As of February 17, 2017

KUO’s Share

2015 2016

Paid Dividends MXN $0.35 $0.45

9

Feb-17-2017

$34.50

*Figures are expressed in MXN

Market Cap $16,560 million

Outstanding Shares 456.366 million

Book Value $20.66

Price/ Book Value 1.81 x

EPS $3.40

P/E 11.0 x

Sales Per Share $0.07

Dividend Yield 1.4%

• Vertically integrated business includes farms, processing plants, feed plant and stores.

• Distribution channels: Exports, own stores, routes & wholesale

• Mexico’s largest pork producer

• Main exporter to Japan and South Korea

• 393 Maxicarne stores

Pork Meat SBU

Main Brands: Kekén, Kiniton, Maxicarne

Pork meat in different presentationsLive pork

Freemont Beef CO, Itochu México, Metafoods LLC,

Walmart, Soriana

Granjas Carroll de México, Gena Agropecuaria

Proteína Animal, Alimentos Kowi

Products:

Clients:

Competitors:

10

Key business facts

REVENUES EBITDA

$9,090 MM $1,153 MM

EXPORTS

EBITDAMargin

13%

(of total SBU sales)

OperatingMargin

10%

(of KUO consolidated sales) (of KUO consolidated EBITDA)


• Leading producer of tomato paste in Mexico, amongother products, and one of the leading producers ofHispanic food in the US

• Herdez Del Fuerte products are sold in domestic andinternational markets, exporting to six countries

• 50% - 50% JV with Grupo Herdez

Herdez Del Fuerte JV

11

Key business facts

Del Fuerte, Herdez, Búfalo, Doña María, Don Miguel,

Wholly Guacamole, Embasa, Aires de Campo

Walmart, Soriana, Chedraui, Comercial Mexicana

Costco, Kroger, Safeway, McLaneClients:

Competitors: ConAgra Foods, La Costeña, Gruma, General Mills

Products: Tomato puree, Sauces, Guacamole, Vegetebles

Main Brands:

REVENUES EBITDA

$6,646 MM$901 MM

EXPORTS

EBITDAMargin

14%


OperatingMargin

10%



Synthetic Rubber JV

• Main synthetic rubber producer in Mexico (70% marketshare) and eighth worldwide

• 50% - 50% JV with REPSOL

Main Brands: Solprene, Calprene, InsaMR, EmulsilMR, Paraclean

Products: Asphalt modifiers, products for tire industy

Clients: Cooper Tire & Rubber, Polichemi, Continental Tire

Competitors: Kraton, Khumo, Petrochemical, Lanxess, Synthos

12

Key business facts

$5,419 MM $672 MM

EBITDAMargin

12%


OperatingMargin

8%

REVENUES EBITDA EXPORTS



Key business facts

• Leading producer of polystyrene in Mexico (43%market share).

• Production and distribution of different types ofpolystyrene for the packaging and disposablepackaging industries.

Polystyrene SBU

13

REVENUES EBITDA

$5,231 MM $541 MM

EXPORTSEBITDAMargin

10%


OperatingMargin

9%



Main Brands: Resiprene, Resalloy

Products:

Clients:

Competitors:

Different types of polystyrene

Convermex, Pactiv, Republic Plastics

Americas Styrencis, Styrolutiona and Total PC

• Sole independent producer of rear-wheel manual transmissions in North America for high-performance segment.

• Produces and commercializes driveline & transmissions components for automotive industry (OM & aftermarket)

Transmissions SBU

14

Key business facts

Main Brands: Tremec, TDLM, TSP

Products: DCT, manual transmissions and components

Clients: GM, Ford, Volvo, FCA, Nissan, Kenworth, McLaren

Competitors: ZF, Getrag, Aisin US Gear, Graziano and Eaton

REVENUES EBITDA

$4,295 MM $831 MM

EXPORTS

EBITDAMargin

19%


OperatingMargin

14%



• Leader in engine components with proprietary and third-party products in Mexico

• Leader in spare parts in the Mexican market with presencein: USA and Latam

• Produces and commercializes automotive spare parts forengine, power train and brake systems

Aftermarket SBU

Main Brands: Moresa, TFVictor, Fritec, AutoparDrive

Products: Pistons, disc brakes, drum brakes, valves

Clients: Repair shops

Competitors: Federal Mogul, Mahle componentes, Fraco, Pevisa

15

Key business facts

REVENUES EBITDA

$2,862 MM $328 MM

EXPORTSEBITDAMargin

11%


OperatingMargin

9%



49%

16%

16%

4%

9%6%

Pork Meat (PM)

Herdez Del Fuerte JV(HDF)

Transmissions (T)

Aftermarket (AM)

Synthetic Rubber JV (SR)

Polystyrene (P)

Ongoing Growth Projects

Pork Meat SBU• Increase installed capacity to double output & increase distribution channels

Transmissions SBU• Development of the infrastructure to produce components lines• Investments in DCT product line

Herdez Del Fuerte JV• Investments for the Distribution Center expansion at Los Mochis, Sinaloa• Investments to improve capacity at MegaMex operations in USA

Capital Allocation

CAPEX CAPEX

16%84%

Maintenance Growth

PM

HDF

T

AM

SR

P

6

Antonia Gutié[email protected]@kuo.com.mx+(52 55) 52.61.83.44

José Eduardo [email protected]@kuo.com.mx+(52 55) 52.61.80.00 ext. 3057

Investor Relations Contacts

www.kuo.com.mx

17

This presentation has been prepared by Grupo KUO, S.A.B. de C.V. (“KUO” or the “Company”) solely for use at this presentation and has not been independentlyverified.

This presentation is being communicated only to persons who have professional experience in matters relating to investments and to persons to whom it may belawful to communicate it to (all such persons being referred to as relevant persons). This presentation is only directed at relevant persons and any investment orinvestment activity to which the presentation relates is only available to relevant persons or will be engaged in only with relevant persons. Solicitations resulting fromthis presentation will only be responded to if the person concerned is a relevant person. Other persons should not rely or act upon this presentation or any of itscontents.

You agree to keep the contents of this presentation strictly confidential. This presentation is highly confidential and contains proprietary and confidentialinformation about KUO, its subsidiaries, its financial results and its operations. This presentation material is being presented solely for your information and may notbe copied, reproduced or redistributed to any other person in any manner. At the request of KUO the recipient will promptly return all non-public material receivedfrom KUO (including this presentation) without retaining any copies thereof. No securities may be offered or sold in the United States absent registration or anexemption from registration under the U.S. Securities Act of 1933, as amended. KUO does not intend to register any of its securities for offer or sale in the UnitedStates or elsewhere, or to conduct a public offering of securities in the United States or elsewhere.

This presentation may contain “forward-looking statements” and actual results may vary from those expressed or implied. Such forward-looking statements can beidentified by the use of forward-looking terminology such as “anticipate,” “believe,” “considering,” “depends,” “estimate,” “expect,” “intend,” “plan,” “planning,”“planned,” “project,” “trend,” and similar expressions. All forward-looking statements are the Company's current expectation of future events and are subject to anumber of factors that could cause actual results to differ materially from those described in the forward-looking statements. Caution should be taken with respect tosuch statements and you should not place undue reliance on any such forward-looking statements. Factors that could affect these results include those mentioned inthe company’s filings with the Mexican Authorities and/or Regulators as well as the offering circular for the Company´s proposed offering of debt securities.

No representations or warranties, express or implied, are made as to, and no reliance should be placed on, the accuracy, fairness or completeness of the informationpresented or contained in this presentation. Neither the Company nor any of its affiliates, advisers or representatives accept any responsibility whatsoever for any lossor damage arising from any information presented or contained in this presentation. The information presented or contained in this presentation is current as of thedate hereof and is subject to change without notice and its accuracy is not guaranteed. Neither the Company nor any of its affiliates, advisers or representatives makeany undertaking to update any such information subsequent to the date hereof. This presentation should not be construed as legal, tax, investment or other advice.

Certain data in this presentation was obtained from various external data sources, and the Company has not verified such data with independent sources. Accordingly,the Company makes no representations as to the accuracy or completeness of that data, and such data involves risks and uncertainties and is subject to change basedon various factors. The use of registered trademarks, commercial trademarks and logos or photographic materials within this document are exclusively for illustrativepurposes and are not meant to violate the rights of the creators and/or applicable intellectual property laws.

This presentation does not constitute an offer or invitation to purchase or subscribe for any debt securities or other securities of the Company and neither any part ofthis presentation nor any information or statement contained herein shall form the basis of or be relied upon in connection with any contract or commitmentwhatsoever. Any decision to purchase securities in any offering of securities of the Company should be made solely on the basis of the information contained in theoffering document which may be published or distributed in due course in connection with any offering of securities of the Company, if any.

By participating in this presentation, you agree to be bound by the foregoing limitations.

Disclaimer

18

Documents

Corporate Presentation - Kuo › anexos › Presentacion_KUO_4Q16 220217.… · This presentation is only directed at relevant persons and any investment or investment activity to