Grupo México, S.A.B. de C.V. (“Grupo México” “GMexico” 2018 Financial Report... · RESULTS FOR 1Q18 GRUPO MÉXICO 1T18 Página 14 Projects Our investment philosophy is not

RESULTS FOR 1Q18 GRUPO MÉXICO

1T18 www.gmexico.com Página 12

Mexico City, April 25, 2018

Grupo México, S.A.B. de C.V. (“Grupo México” “GMexico” - BMV: GMEXICOB).

Consolidated revenues in 1Q18 were 18% higher than in 1Q17, totaling US$2.66 billion. In the Mining Division, revenues

grew 15% given higher metal prices: copper +19%, zinc +23%, and molybdenum +56%. In the Transportation Division, carloads

increased by 39% and revenues 32% vs. 1T17. In Infrastructure, total sales decreased 4% due to a reduction in the number of

contracts with PEMEX.

In the Mining Division, we confirmed our first-place position as the Company with the lowest cash cost in the Industry, at

US$1.06/lb. of copper, and the largest copper reserves worldwide.

Copper production decreased 6% during 1Q18 vs. 1Q17, mainly because of lower production volumes at ASARCO, as a result

of a landslide on the slopes of the Mission mine and a decrease in production at the SX/EW plant at Buenavista, given a lower

than expected ore grade in the pregnant leaching solution (PLS) due to lower solubility index. The Company has developed a 12-

month corrective program to overcome this temporary decrease in production. As a result of these unexpected events, we are

adjusting our copper production guidance for the year, cutting it by 40,000 tons to 1,020,000 tons. We should note that, this

year, we are including 40,000 tons of copper from our new concentrator at Toquepala, which should start production during

3Q18. Thus, we still expect to achieve 1% growth in copper production compared to the 1,010,630 tons from last year.

EBITDA for 1Q18 was US$1.25 billion, 29% higher than in 1Q17. The Mining Division reached US$970 million, implying

26% growth vs. 1Q17. The Transportation Division reached US$224 million in EBITDA, 31% higher compared to the previous

year. The Infrastructure Division's EBITDA totaled US$60 million.

Consolidated net profit totaled US$362 million in 1Q18, representing a 14% decrease due to for a loss of US$148 million in our

equity investments.

Capital investments during 2017 reached US$3,600 million, including the acquisition of the Florida East Coast Railroad for

US$2,100 million in addition to the investment for organic growth. For 2018, our budget for organic capital investments is

US$2,467 million, which includes the mining projects of the Toquepala expansion and Tía María in Peru and in Mexico, the

Buenavista Zinc project and the Pilares copper mine. In the railway division, we will invest US$400 million and US$268 million

will be invested in infrastructure projects. During 1Q18, capital investments reached US $ 391 million.

Michiquillay acquisition.- On February 20, 2018, the Company won the public bidding process for the Michiquillay project in

Cajamarca, Peru. The Company’s tender included a purchase price of US$400 million.

COFECE resolution.- The Mexican antitrust agency (COFECE), issued a resolution on February 22, 2018, presented to

GMEXICO on March 7, 2018, concluding that there are not sufficient elements to support the definition of relevant markets

presented in the preliminary ruling, which stated that there were no effective competition conditions in the interconnection service

under the right-of-way modality to provide the public service of railroad cargo transportation. Thus, the COFECE voted

unanimously to void the preliminary ruling, and declared the case closed without any effects on GMXT.

On April 20, 2018, the Management Board declared the payment of a cash dividend of $0.60 pesos per share outstanding, to be

made in a single installment as of May 24, 2018.

All figures in US dollars (“US$”), currency of the United States of America, under U.S. GAAP, except where otherwise stated.

First Quarter 2018

RESULTS

Fist Quarter

(Thousand US Dollars) 2017 2018 US$000 %

Sales 2,263,399 2,667,740 404,341 17.9

Cost of Sales 1,206,230 1,352,531 146,301 12.1

Operating Income 769,000 967,750 198,749 25.8

EBITDA 976,707 1,259,386 282,679 28.9

EBITDA Margin (%) 43.2% 47.2%

Net Income 423,337 362,183 (61,154) (14.4)

Profit Margin (%) 18.7% 13.6%

Investments / Capex 299,196 390,623 91,427 30.6

Employees 29,917 30,822 905 3.0

Variance

http://www.gmexico.com/



Highlights

Mining Division

Michiquillay acquisition.- On February 20, 2018, the Company won the public bidding process for the Michiquillay project

in Cajamarca, Peru. The Company’s tender included a purchase price of US$400 million and annual royalties of 3% over

net revenues.

Michiquillay is a world-class mining project, with 1.15 billion tons of mineral resources and an average copper ore grade

of 0.63%. We expect it to produce 225,000 tons of copper per year (as well as molybdenum, gold, and silver byproducts),

with an initial lifespan of over 25 years for the mine, at a competitive cost of extraction. The estimated capital investment

is around US$2.50 billion. The Company is planning to begin production at Michiquillay in 2025, and this will become one

of the largest copper mines in Peru.

This asset offers both a unique and very attractive growth opportunity, and an excellent strategic and operating complement

that fits perfectly into our mining project portfolio in America, especially in investment grade countries.

San Martin mine, Zacatecas.- On February 28, in a calm and peaceful environment, the workers of the San Martin mine

at our Industrial Minera México subsidiary, held an election to vote on the Union that will hold the collective bargaining

agreement in San Martín. The National Federation of Independent Unions won the vote by a landslide. This Union holds

several collective bargaining agreements for our other subterranean operations and our smelting and refining plant at the La

Caridad mine. We see this important result as the first step to end the illegal strike that began in 2007, and resume operations

at the San Martin mine. Our initial estimates indicate that the San Martin mine will require a US$77.0 million investment

to resume operations by 1Q19, with an expected annual production of 20,000 tons of zinc, 7,500 tons of copper, and 2.8

million ounces of silver.

SX/EW corrective program, Buenavista del Cobre, Sonora.- We have obtained a lower copper grade in the pregnant

leaching solution (PLS) of the SX/EW plants, given the lower solubility index of the new leaching pads, due to the

characteristics of the ore that is being deposited in them. The company has developed a 12 months corrective program to

overcome this temporary decrease in production. This program includes the depositing the mineral in different leaching

pads, depending on the different characteristics of the ore. We have also implemented a more controlled blasting program

to reduce the generation of fine materials. Thus, we expect to produce 115,000 tons of copper at our SX/EW plants in

Buenavista, which will reduce our copper production guidance for the year by around 30,000 tons.

Mission, Arizona, USA.- On March 21, we suffered a landslide on the slopes of the Mission mine, with no damages to staff

or equipment. We have suspended work in that area and are awaiting the authority’s confirmation that we can resume

operations there, which we expect to take place during 2Q18. We have incurred in higher costs as, in order to continue

operations, we have had to mine in more distant areas. Thus, we estimate a loss of 13,000 tons of copper this year.




Projects

Our investment philosophy is not based on copper price outlooks, but on the quality of the assets that we operate and

develop. Throughout the years, our financial discipline has enabled us to continuously invest in our large asset portfolio.

Projects in Peru

We continue to work on various projects in Peru, with a total capital investment of US$2.90 billion, US$1.70 billion of

which has already been invested.

Toquepala Expansion Project, Tacna.- This US$1.25 billion project includes a new, state-of-the-art copper concentrator

that will expand annual copper production by 100,000 tons to total 245,000 tons of production in 2019, translating into a

69% increase. Up to March 31, 2018, we have invested US$968 million, achieving 90% progress and expecting it to begin

production by June 2018.

Tia Maria.- We have completed all the engineering and have complied with all environmental regulation, thus obtaining

approval of the Environmental Impact Assessment. We are working together with the government of Peru to obtain the

construction permit in 2018 for this growth project worth 120,000 annual tons of SX/EW metallic copper with an investment

of US$1.4 billion.

Projects in Mexico

Buenavista Zinc, Sonora.- This project is located within the Buenavista deposit in Sonora, and comprises the construction

of a concentrator with a production capacity of 80,000 tons of zinc and 20,000 additional tons of copper annually. To date,

the basic engineering has been completed, and the purchase of the main equipment has begun. The budget for this investment

is US$413 million, and it should be operational by 2020. Once the project is completed, the Mining Division’s zinc

production will double.

Pilares, Sonora.- This project is 6 km away from La Caridad and has an open pit mine with an annual production capacity

of 35,000 tons of copper concentrates. The high ore grade mineral will be transported by the same mine cars to feed the

main crushers of the La Caridad copper concentrator, thus improving the average ore grade (0.78% expected at Pilares vs.

0.34% at La Caridad). To date, the mine plan is being designed, and the new road layout has already been completed. The

investment budget is US$159 million, and it should begin operations in 2019.

Projects in the US

Asarco, Arizona.- The project to modernize the Hayden smelting facility in Arizona to comply 100% with the authorities’

new environmental regulation, with an investment of US$229 million, has nearly been completed. The smelting facility will

have state-of-the-art technology in converter furnaces and in the gas and dust collection and management. With this, it will

have a greater efficiency and will reach its new copper concentrate smelting design capacity of 630,000 tons per year.

Projects in Spain

Aznalcóllar, Andalucía.- This project is located only 35 km from the city of Seville in Spain. During 2017, we carried out

an ambitious exploration campaign. The results obtained confirm the project’s reserves and suggest a promising potential

to eventually increase the initial size of the ore bodies. We are working on the updated feasibility study to be completed by

the end of this year. The permitting process will continue, and the detailed engineering is expected to begin by late 2018,

with operations starting in 2021. The projects investment is estimated at US$290 million, and will increase our production

by an additional 102,000 tons of zinc equivalent per year.




Relevant Events

Transportation Division

Growth of the Energy Segment. – The Energy segment grew 18% in Tons-Km and 13% in carloads compared to 1Q17,

given the ongoing growth of cross-border imports of Diesel, Gasoline, and LP Gas, as well as new flows of coal. In the next

18 months, the new Hydrocarbons Terminals are expected to be opened in our network, which will contribute to the growth

of this business segment.

Growth in the Intermodal Segment. - During 1Q18, the Intermodal segment’s income grew 157% vs. 1Q17, mainly due

to the incorporation of volumes transported by FEC, and a 61% hike in the number of containers hauled on the Inter-pacific

service, thanks to the capacity increase, given our investments to be able to haul double-decker containers through the

tunnels in Tepic.

Automotive Segment. – During the quarter, this segment suffered a negative effect due to the service failures in American

Railways, which affected the flow of railway equipment available to transport the production of automotive assembly plants.

FEC Organizational Restructure.- An organizational restructure of FEC has been completed, which will reduce

administrative expenses by US$12 million annually, compared to 2017. FEC’s management has been strengthened through

internal reassignments and new engagements, which will enable us to achieve greater efficiency and more synergies.

New Terminal at Titusville, Florida.- FEC will begin operating a new terminal at Titusville, FLA, in May 2018. This will

enable us to have strategic presence to serve new, high-potential markets in Central Florida to which we had no access

previously.

Refinancing of Bridge Loan in pesos was completed.- During the quarter, the refinancing of the bridge loan obtained in

dolars last year for US$1.55 billion for the acquisition of FEC was completed.

On March 2, 2018, GMXT successfully issued bond Certificates totaling $5.0 billion pesos through a reopening. The

issuances were divided into one with a fixed rate worth P$4.52 billion pesos and a 9.6-year maturity, and a variable rate one

for P$475 million with a 4.6-year maturity. The appealing rates achieved are a reflection of the company’s sound balance

sheet, strong growth potential, and fundamentals.

This issuance is added to the successful transactions carried out last year (Issuance of bond Certificates for $10.0 billion

pesos and IPO of GMXT) to complete, together with a payment from our cash flow generation and a bilateral credit facility,

the refinancing of the bridge loan to thus obtain more appealing rates and a comfortable payment schedule.




Relevant Events

Infrastructure Division

New Record in Energy Generation- During 1Q18, 905,143 MWh were generated, translating into a 7% increase from

1Q17, with an average power of 389 MW. EBITDA grew 12% during the quarter, with a 40% margin.

New Record for the Salamanca-Leon Highway.- During 1Q18, the highway reported $182 million pesos in revenues and

a weighted average daily traffic (ADT) of 12,638 vehicles; the equivalent traffic translates into over 19,584 vehicles. The

increase in traffic equivalent between 1Q18 and 1Q17 was 16.4%.

México Compañía Constructora, progress on projects and new projects.- They are about to complete construction of

the access to Leon. Progress on the construction of the new Tailings Dam at Buenavista del Cobre stands at 61% vs. 52%

scheduled. Eighteen tunnels of the gauge expansion project on the Tepic-Guadalajara road have started operations. The first

stage of the Monterrey terminal for Ferromex in the Rio Escondido area has been completed.

Silao bypass.- On March 22, 2018, the deed of concession was signed to build, operate, exploit, preserve, and maintain the

Silao Bypass, for a period of 30 years. The bypass will be a high-spec highway spanning 17.4 kilometers in length, divided

into two tranches: Tranche I with 6.3 km, and Tranche II with 11.1 km.




Financing

Grupo Mexico maintains a solid balance sheet with a low leverage and a net debt to EBITDA ratio of 1.4x. 87% of the

debt contracts are in US dollars, and 14% are in pesos. 78% of the debt has a fixed rate. In addition, Grupo Mexico has a

comfortable debt payment schedule.

During the quarter, we finished refinancing the bridge loan obtained for the FEC transaction in the Transportation Division,

at very attractive rates and with a very comfortable payment schedule.

This proves that the company’s financial soundness enables it to be well positioned to continue with its aggressive expansion

program and analyze possible opportunities that may arise in the market.

Grupo Mexico Maturities Up to March 31, 2018

2017

Gross Gross Cash & Net

(US$000) Debt(1)

Debt(1)

Banks(2)

Debt

Grupo México - - 118,572 (118,572)

Americas Mining Corporation - - 96,436 (96,436)

Southern Copper Corporation 5,954,871 5,957,794 1,124,645 4,833,149

Asarco 60,539 36,323 26,446 9,877

GMéxico Transportes - 1,261,533 92,867 1,168,666

GFM - Ferromex 265,164 271,981 104,204 167,777

Ferrosur 24,397 15,310 29,738 (14,428)

México Proyectos y Desarrollos 1,044,454 963,342 82,452 880,890

Grupo Mexico (Consolidated) 7,349,426 8,506,283 1,675,360 6,830,923

(1) include Debt Fees

(2) include Short Term Investment

As of March 31, 2018

-

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.0

1,600.0

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045

División Minera División Trasnportes División Infraestructura




Mining Division

Americas Mining Corporation

Relevant Figures

Average Metal Prices

Copper.- Copper production in 1Q18 decreased 6% vs. 1Q17 to 231,656 tons as a result of lower ore grades and greater

rock hardness.

Molybdenum.- Molybdenum production in the quarter decreased 2% to 5,175 tons compared to the same period a year

earlier, given a lower production at Toquepala and Cuajone, due to lower ore grades.

Zinc.- Zinc production in the third quarter decreased 5% to 17,736 tons from 18,597 tons in 1Q17. This decrease is a result

of lower production at Santa Eulalia (-13%).

Silver.- In 1Q18, silver production increased 1% to 4.37 million ounces compared to 1Q17, mainly thanks to a greater

production in Buenavista and La Caridad.

Gold.- Gold production rose 21% during the quarter to 18,514 ounces, due to lower production at Buenavista (+34%),

Toquepala (+41%), and La Caridad (+8%).

Fist Quarter


Sales 1,808,007 2,086,686 278,679 15.4

Cost of Sales 1,013,606 1,085,769 72,164 7.1


EBITDA 768,908 969,991 201,083 26.2


Net Income 301,040 322,754 21,715 7.2


Investments / Capex 261,210 344,251 83,041 31.8

Variance

2Q 3Q 4Q

2017 2017 2017 2018 2017

Copper ($cts/Pound) 2.58 2.89 3.10 3.14 2.65

Molybdenum ($dlls/Pound) 8.08 8.13 8.79 12.24 7.83

Zinc ($cts/Pound) 1.18 1.34 1.47 1.55 1.26

Silver ($dlls/Ounce) 17.19 16.80 16.66 16.68 17.45

Gold ($dlls/Ounce) 1,256.96 1,277.84 1,274.35 1,329.28 1,219.36

Lead ($cts/Pound) 0.98 1.06 1.13 1.14 1.03

Sulfuric Acid ($dlls/Ton) 39.48 39.93 43.76 58.31 37.48

Fist Quarter

Source: Copper & Silver - COM EX; Zinc & Gold - LM E;

M olybdenum - M etals Week Dealer Oxide, Sulfuric Acid - AM C




Mining Production

Cash Cost

In the first quarter of 2018, operating cash cost per pound of copper (“cash cost”) was US$1.06 compared to US$1.07 (-

1%) a year earlier. This improvement was mainly due to operating efficiencies and higher byproduct prices.

Sales Distribution

The contribution of each metal to AMC’s accrued sales in 2018 is depicted below:

Mining Division Variance

2017 2018 %

Copper

Production (MT) 247,015 231,656 (15,360) (6.2)

Sales ($US MM) 1,506,682 1,716,207 209,525 13.9

Molybdenum

Production (MT) 5,276 5,175 (101) (1.9)

Sales ($US MM) 92,853 136,313 43,460 46.8

Zinc

Production (MT) 18,597 17,736 (861) (4.6)

Sales ($US MM) 78,964 94,908 15,944 20.2

Silver

Production ('000 Oz) 3,792 3,150 (642) (16.9)

Sales ($US MM) 73,960 70,925 (3,034) (4.1)

Gold

Production (Oz) 13,372 11,185 (2,187) (16.4)

Sales ($US MM) 17,028 16,992 (36) (0.2)

Sulfuric Acid

Production (MT) 684,227 685,464 1,237 0.2

Sales ($US MM) 17,960 28,944 10,983 61.2

Fist Quarter

Copper80.0%

Molybdenum7.4%

Silver3.9%

Sulfuric Acid1.5%

Zinc5.2%

Gold0.9%

Others0.2% Lead

0.9%




Transportation Division

Relevant Figures

The Transportation Division’s total revenues in 2018 reached US$543 million, 32% higher than in 1Q17. This was due to

the consolidation of Florida East Coast Rail Corp, as well as to better results in the Mexican operations.

Volumes transported throughout the year were 14% higher in tons-km and 39% more carloads in the quarter, compared

to the same period a year ago, driven mainly by the Energy, Minerals, and Intermodal segments.

Contribution per segment in revenues and tons-km, as well as revenue volume up to March 31, 2018:

Revenues per Segment Tons – Km.

EBITDA in the quarter rose 31% compared to the same period of 2017, from US$171 to US$224 million, respectively. The

figure was negatively affected by the currency appreciation. EBITDA margin reached 41.3% in 2018.

Fist Quarter


Load Volume (MillionTons/Km) 13,161 14,979 1,818 13.8

Moved Cars 343,643 478,501 134,858 39.2

Sales 410,350 542,813 132,463 32.3

Cost of Sales 244,866 320,437 75,571 30.9


EBITDA 170,698 224,227 53,529 31.4


Net Income 70,940 100,017 29,077 41.0


Investments / Capex 36,444 35,736 (708) (1.9)

Variance




Infrastructure Division

MPD

Relevant Figures

During 2018, the Infrastructure Division’s revenues reached US$144 million, 4% less than in the previous year.

EBITDA in the Division reached US$60 million during 1T18, translating into a 7% decrease from the previous year, mainly

due to a lower utilization of PEMSA’s equipment, given the suspension of some contracts, and PEMEX’s reduction in

platform rates.

Net profit was affected mainly by the peso appreciation, which caused a negative effect of US$3 million, and inflationary

effects, generating a negative impact worth US$2 million.

* * * * *

Fist Quarter


Sales 149,061 143,545 (5,516) (3.7)

Cost of Sales 76,250 74,586 (1,664) (2.2)

Operating Income 41,464 40,647 (817) (2.0)

EBITDA 64,040 59,568 (4,471) (7.0)


Income before Taxes 21,060 19,977 (1,083) (5.1)

Current Income Taxes 2,251 13,113 10,862 482.6

Deferred Income Taxes 26,853 8,624 (18,230) (67.9)

Net Income (8,041) (1,765) 6,276 (78.0)

EBITDA Margin (%) -5.4% -1.2%

Variance




Company Profile

Grupo Mexico “GMéxico” is a holding company whose main activities are: (i) mining, as it is one of the largest integrated

copper producers worldwide; (ii) the broadest railway system in Mexico; and (iii) engineering, procuring, construction, and

drilling services. These business lines are grouped under the following subsidiaries:

GMexico’s Mining Division is represented by its subsidiary Americas Mining Corporation (“AMC”), whose main

subsidiaries are Southern Copper Corporation (“SCC”) in Mexico and Peru, and Asarco In the USA. Both companies

together hold the largest copper reserves in the world. SCC trades on the New York and Lima stock exchanges. SCC’s

shareholders, directly or through subsidiaries, are: GMexico (88.9%) and other shareholders (11.1%). It has mines,

metallurgical plants and exploration projects in Peru, Mexico, the US, Spain, Chile, Argentina, and Ecuador. Asarco was

reincorporated into GMexico on December 9, 2009. It has 3 mines and 1 smelting plant in Arizona, and 1 refinery in Texas.

GMexico’s Transportation Division is represented by its subsidiary GMexico Transportes, S.A. de C.V. (GMXT). Its main

subsidiaries are Grupo Ferroviario Mexicano, S.A. de C.V. (“Ferromex”), Ferrosur, S. A. de C. V. (“Ferrosur”), Intermodal

México, S.A. de C.V., Texas Pacifico, LP, Inc., and Florida East Coast Railway Corp “FEC”. GMXT’s shareholders are

GMéxico (69.5%), Grupo Carso Sinca Inbursa (16.4%), and others (14.1%). Through its subsidiary, Ferrocarril Mexicano,

S.A. de C.V. (“Ferromex”), GFM is the largest railway company and has the largest coverage in Mexico. Its network spans

8,111 km. of railways covering roughly 71% of the Mexican territory. Ferromex’s lines connect at five border points with

the USA, as well as at four ports on the Pacific Coast, and two on the Gulf of Mexico. Ferromex’s shareholders are GMXT

(74%) and Union Pacific (26%). Ferrosur’s railway network spans 1,549 km. covering the center and southeast of the

country. It serves the states of Tlaxcala, Puebla, Veracruz, and Oaxaca, mainly, and has access to the Veracruz and

Coatzacoalcos ports in the Gulf of Mexico. Ferrosur is fully controlled by GMXT, which holds 100%. Headquartered in

Jacksonville, Florida, FEC offers railway services along the east coast of Florida, and is the supplier of railway services to

the ports in southern Florida: Miami, Everglades, and Palm Beach. FEC offers services along roughly 565 km of its own

railways, with conections to CSX and Norfolk Southern in Jacksonville, Florida. FEC is controlled by GMXT (100%).

GMexico’s Infrastructure Division is represented by its subsidiary México Proyectos y Desarrollos, S.A. de C.V.

(“MPD”). Its main subsidiaries are México Compañía Constructora, S.A. de C.V. (“MCC”), and Grupo México Servicios

de Ingeniería, S.A. de C.V. (“GMSI”), Controladora de Infraestructura Petrolera México, S.A. de C.V. (“PEMSA”),

Controladora de Infraestructura Energética México, S.A. de C.V. (“CIEM”), and Concesionaria de Infraestructura del Bajío,

S.A. de C.V. (“CIBSA”). MPD, PEMSA, MCC, GMSI, and CIEM are controlled 100% by GMéxico. MPD and MCC

participate in engineering, procuring, and construction activities for infrastructure works. GMSI’s business line is integrated

project engineering. PEMSA offers drilling services for oil and water exploration, and related added value services, such as

cementation engineering, and directional drilling. CIEM’s business line is energy generation through two combined cycle

plants and a wind farm. CIBSA operates and maintains a highway concession joining Salamanca and Leon.

________________________________________________________________________________________

This report includes certain estimates and future projections that are subject to risks and uncertainty of their real results, which could differ significantly

from the figures expressed. A lot of these risks and uncertainty are related to risk factors that GMexico cannot control or estimate precisely, such as

future market conditions, metal prices, the performance of other market participants, and the actions of government regulators, all of which are described

in detail in the Company’s annual report. GMexico is under no obligation to publish a revision of these future projections to reflect events or

circumstances that may take place following the release of this report.




Conference call to discuss the results of the first quarter 2018

Grupo Mexico, S.A.B. de C.V. (“Grupo México” -BMV: GMEXICOB) will hold its conference call to comment on the

results for the third quarter of 2017 with the financial community on February 08, 2018 at 1 pm (Mexico time). A Q&A

session for analysts and investors shall follow the call.

To participate, please dial in 10 minutes before the start of the conference call:

52 55 6722 5257 (Participants in Mexico)

(001) 866 779 0965 (Outside Mexico)

Confirmation code: 5326969

A repetition of the call shall be available 2 hours following the end of the call and until February 22, 2018. Afterwards, a

transcription of the call shall be made available via Grupo Mexico’s website.

(888) 843-7419 (participants from the US)

(630) 652-3042 (Participants outside the US)

Confirmation code: 5326969#




(Thousands of US Dollars)

STATEMENT OF EARNINGS 2018 2017 Variance

Net sales 2,667,740 2,263,399 404,341

Cost of sales 1,352,531 1,206,230 146,301

Exploration 6,445 5,154 1,291

Gross profit 1,308,764 1,052,015 256,749

Gross margin 49% 46%

Administrative expenses 63,216 46,055 17,161

Environmental remediation - (10,229) 10,229

EBITDA 1,259,386 976,707 282,679

Depreciation, amortization and depletion 277,799 247,189 30,610

Operating income 967,750 769,000 198,749

Operating margin 36% 34%

Interest expense 127,192 113,009 14,184

Interest income (6,926) (5,750) (1,176)

(Gain) loss in investments 132,475 (147,798) 280,273

Other (income) expense, net 18,417 54,139 (35,722)

Earnings before Tax 696,592 755,401 (58,808)

Taxes 244,962 252,909 (7,947)

Participation in subsidiary not consolidated and associated (4,604) (7,126) 2,522

Net Earnings 456,234 509,617 (53,383)

Net income attributable to the non-controlling interest 94,051 86,280 7,771

Net income attributable to GM 362,183 423,337 (61,154)

BALANCE SHEET

Cash and cash equivalents 1,675,360 1,377,046 298,315

Restricted cash 152,969 136,114 16,855

Notes and accounts receivable 1,309,061 991,467 317,594

Inventories 1,455,373 1,364,671 90,702

Prepaid and others current assets 498,347 580,626 (82,279)

Total Current Assets 5,091,111 4,449,924 641,187

Property, plant and equipment, Net 16,084,926 13,918,247 2,166,678

Leachable material, net 1,057,041 884,161 172,880

Other long term assets 3,491,373 3,446,627 44,746

Total Assets 25,724,451 22,698,960 3,025,491

Liabilities and Stockholders' Equity

Current - term debt 143,346 131,630 11,716

Accumulated liabilities 1,759,321 1,359,131 400,190

Current Liabilities 1,902,667 1,490,760 411,906

Long-term debt 8,362,937 7,217,796 1,145,141

Other non-current liabilities 1,661,293 1,549,857 111,436

Total Liabilities 11,926,897 10,258,414 1,668,483

Stockholders equity 2,003,496 2,003,496 -

Other equity accounts (2,273,008) (2,669,528) 396,520

Retaining earnings 12,030,402 11,433,207 597,195

Total Stockholders' equity 11,760,889 10,767,175 993,715

Non-controlling interest. 2,036,664 1,673,372 363,292

Total Liabilities and Equity 25,724,451 22,698,960 3,025,491 - - -

CASH FLOW

Net earnings 456,234 509,617 (53,383)


Deferred income taxes (43,432) 40,741 (84,173)


Other Net 167,194 (65,146) 232,340

Changes in assets and liabilities 55,714 (61,258) 116,972

Cash generated by operating activities 908,905 664,017 244,888

Capital expenditures (390,623) (299,196) (91,427)

Restricted cash (108,288) (90,665) (17,623)

Other - Net 71,573 39,337 32,236

Cash used in investing activities (427,338) (350,524) (76,814)

Debt incurred 451,877 - 451,877

Debt repaid (594,479) (26,510) (567,969)

Dividends paid (297,327) (153,678) (143,649)

Other - Net (1,706) (777) (929)

Cash used in financing activities (441,635) (180,965) (260,670)

Effect of exchance rate changes on cash and cash

equivalents (33,982) (4,084) (29,898)

Net increase (decrease) cash & cash equivalents 5,950 128,444 (122,495)

Cash and cash equivalents - Beginning of year 1,669,411 1,248,601 420,809

Cash and cash equivalents - End of year 1,675,360 1,377,046 298,315

GRUPO MEXICO, S.A.B. DE C.V. (GM)

CONSOLIDATED FINANCIAL STATEMENTS (US GAAP)

Accumulated






Net sales 2,086,686 1,808,007 278,679

Cost of sales 1,085,769 1,013,606 72,164

Exploration 6,445 5,154 1,291

Gross profit 994,472 789,247 205,225



Environmental remediation - (10,229) 10,229

EBITDA 969,991 768,908 201,084


Operating income 775,206 589,755 185,450


Interest expense 70,955 94,029 (23,074)

Interest income (2,725) (1,217) (1,508)

(Gain) loss in investments 125,169 (9,628) 134,797

Other (income) expense, net (1,225) (4,520) 3,295

Earnings before Tax 583,032 511,092 71,940

Taxes 211,061 180,585 30,476


Net Earnings 376,065 336,671 39,394


Net income attributable to AMC 322,754 301,040 21,715

BALANCE SHEET

Cash and cash equivalents 1,247,527 861,347 386,180

Restricted cash 3,024 3,796 (772)

Notes and accounts receivable 977,571 762,377 215,194

Inventories 1,340,716 1,267,111 73,605

Prepaid and others current assets 259,390 427,854 (168,464)

Total Current Assets 3,828,228 3,322,485 505,743

Property, plant and equipment, Net 10,715,213 10,315,010 400,204

Leachable material, net 1,057,041 884,161 172,880

Other long term assets 1,505,924 2,074,662 (568,738)

Total Assets 17,106,407 16,596,319 510,088


Long-term debt 24,332 24,332 -

Other non-current liabilities 1,354,932 1,472,035 (117,103)

Current Liabilities 1,379,264 1,496,368 (117,103)

Long term debt 5,969,785 5,991,079 (21,293)

Other long term liabilities 847,700 1,112,621 (264,921)

Total Liabilities 8,196,749 8,600,067 (403,318)

Stockholders equity 1,056,021 1,056,021 -

Other equity accounts (2,329,297) (2,473,468) 144,170

Retained earnings 9,431,670 8,695,085 736,584


Non-controlling interest. 751,264 718,612 32,651

Total Liabilities and Equity 17,106,407 16,596,319 510,088 - - -

CASH FLOW

Net earnings 376,065 336,671 39,394


Deferred income taxes (48,322) (13,317) (35,005)


Others Net 161,230 38,413 122,817

Changes in assets and liabilities (80,273) (102,956) 22,683



Restricted cash - 5,224 (5,224)

Other - Net (20,933) (9,166) (11,768)


Debt repaid (6,083) (6,083) -

Dividends paid (101,011) (6,859) (94,152)

Others Net (1,706) (777) (929)



equivalents (52,214) (28,943) (23,271)

Net increase (decrease) cash & cash equivalents 65,548 125,637 (60,089)

Cash and cash equivalents - Beginning of year 1,181,979 735,711 446,269

Cash and cash equivalents - End of year 1,247,527 861,347 386,180

AMERICAS MINNING CORPORATION (AMC)


Accumulated






Net sales 542,813 410,350 132,463

Cost of sales 320,437 244,866 75,571

Gross profit 222,376 165,484 56,892



EBITDA 224,227 170,698 53,529


Operating Income 132,408 113,989 18,419


Interest expense 41,166 5,310 35,856

Interest income (2,107) (3,041) 934

Other (income) expense - Net (24,322) 16,185 (40,507)

Earnings before Tax 117,671 95,535 22,136

Taxes (3,136) 6,863 (9,999)

Participation in subsidiary not consolidated and associated (510) (962) 452

Net Earnings 121,317 89,634 31,683


Net income attributable to ITM 100,017 70,940 29,077 - - -

BALANCE SHEET

Cash and cash equivalents 226,809 384,251 (157,442)

Notes and accounts receivable 288,974 161,990 126,984

Inventories 48,340 42,884 5,456

Prepaid and others current assets 100,768 87,180 13,588

Total Current Assets 664,891 676,305 (11,414)

Property, plant and equipment - Net 3,678,473 1,848,428 1,830,045

Other long term assets 959,270 244,124 715,146

Total Assets 5,302,634 2,768,857 2,533,777


Current portion of long-term debt 6,729 9,102 (2,373)

Accumulated liabilities 346,899 216,256 130,643

Current Liabilities 353,628 225,358 128,270

Long-term debt 1,542,095 280,459 1,261,636

Other non-current liabilities 468,999 104,865 364,134

Other liabilities 11,404 7,073 4,331

Total Liabilities 2,376,126 617,755 1,758,371

Stockholders equity 5 5 -

Other equity accounts (243,806) (702,104) 458,298

Retaining earnings 2,765,355 2,450,070 315,285


Non-controlling interest. 404,954 403,131 1,823

Total Liabilities and Equity 5,302,634 2,768,857 2,533,777

CASH FLOW

Net earnings 121,317 89,634 31,683


Deferred income taxes (16,970) (8,798) (8,172)

Participation in subsidiary not consolidated and associated (510) (962) 452

Other Net (22,835) 18,122 (40,957)

Changes in assets and liabilities (19,324) (14,784) (4,540)


Capital expenditures (35,736) (36,444) 708

Dividends received 207 - 207

Cash used in investing activities (35,529) (36,444) 915

Debt incurred 439,877 - 439,877

Debt repaid (569,114) (2,267) (566,847)

Dividends received (paid) - Net (85,130) (101,000) 15,870



equivalents 13,738 21,119 (7,381)

Net increase (decrease) cash & cash equivalents (109,733) 2,594 (112,327)

Cash and cash equivalents - Beginning of year 336,542 381,657 (45,115)

Cash and cash equivalents - End of year 226,809 384,251 (157,442)

GMÉXICO TRANSPORTES, S. A. DE C.V. (GMXT)


Accumulated






Net sales 143,545 149,061 (5,516)

Cost of sales 74,586 76,250 (1,664)

Gross profit 68,959 72,811 (3,852)


Administrative expenses 3,441 3,818 (377)

EBITDA 59,568 64,040 (4,471)

Depreciation, amortization and depletion 24,871 27,529 (2,658)

Operating income 40,647 41,464 (817)


Interest expense 16,630 16,561 70

Interest income (1,910) (1,110) (801)

Other (income) expense, net 5,949 4,953 997

Earnings before Tax 19,977 21,060 (1,083)

Taxes 21,737 29,104 (7,367)

Net Earnings (1,760) (8,044) 6,284

Net income attributable to the non-controlling interest 6 (3) 8

Net income attributable to MPD (1,765) (8,041) 6,276

BALANCE SHEET

Cash and cash equivalents 82,452 69,171 13,280

Restricted cash 149,945 132,318 17,627

Notes and accounts receivable 42,516 67,100 (24,585)

Inventories 66,316 54,674 11,641

Prepaid and others current assets 156,527 140,322 16,205

Total Current Assets 497,755 463,586 34,170

Property, plant and equipment, Net 1,651,909 1,712,141 (60,232)

Other long term assets 358,902 340,004 18,898

Total Assets 2,508,566 2,515,731 (7,164)


Current portion of long-term debt 112,285 98,196 14,089

Accumulated liabilities 246,633 193,592 53,042

Current Liabilities 358,918 291,787 67,131

Long-term debt 851,057 946,258 (95,201)

Other non-current liabilities 74,295 74,649 (354)

Total Liabilities 1,284,270 1,312,694 (28,425)

Stockholders equity 985,995 952,662 33,333

Other equity accounts (132,510) (92,124) (40,386)

Retaining earnings 370,282 341,983 28,299


Non-controlling interest. 530 515 15

Total Liabilities and Equity 2,508,566 2,515,731 (7,164) - - -

CASH FLOW

Net earnings (1,760) (8,044) 6,284

Depreciation, amortization and depletion 24,871 27,529 (2,658)

Deferred income taxes 8,624 26,853 (18,229)

Other Net 5,426 3,205 2,221

Changes in assets and liabilities 11,893 5,251 6,642

Cash generated by operating activities 49,054 54,794 (5,740)


Restricted cash (108,288) (95,890) (12,399)

Other - Net 52,724 41,711 11,013


Debt incurred 12,000 - 12,000

Debt repaid (19,282) (18,160) (1,122)

Other - Net 33,333 - 33,333

Cash used in financing activities 26,051 (18,160) 44,211

Net increase (decrease) cash & cash equivalents 8,904 (19,088) 27,993

Cash and cash equivalents - Beginning of year 73,548 88,258 (14,710)

Cash and cash equivalents - End of year 82,452 69,170 13,282

MÉXICO PROYECTOS Y DESARROLLOS, S.A. DE C.V. (MPD)


Accumulated


Documents

Grupo México, S.A.B. de C.V. (“Grupo México” “GMexico” 2018 Financial Report... · RESULTS FOR 1Q18 GRUPO MÉXICO 1T18 Página 14 Projects Our investment philosophy is not