alpek 1q20 corporate presentation · in u.s. and mexico petrochemicals food products aluminum auto...
TRANSCRIPT
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Corporate Presentation
1st Quarter 2020
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This presentation contains, or may be deemed to contain, “forward-looking statements”. By their
nature, forward looking statements involve risks and uncertainties because they relate to events
and depend on circumstances that may or may not occur in the future. The future results of Alpek,
S.A.B. de C.V. and its subsidiaries may differ from the results expressed in, or implied by the
forward-looking statements set out herein, possibly to a material degree.
Disclaimer
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Alpek at a Glance
Key Investment Highlights
The Case for PET
Financials
Relevant Events
Appendix
Index
3
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Alpek is the largest component of ALFA’s portfolio Alfa posted US$17.5B in Revenues & US$2.3B in EBITDA1
4
8 out of 10
Mexican Corporates use
Axtel’s IT and Telecom
services
11 Sigma brands
sell more than
US$100M a year each
1 out every 4 new cars
sold in the world contains
at least one Nemak
product
728 production wells
operated by Newpek
in U.S. and Mexico
Petrochemicals Food Products Aluminum Auto Parts IT + Telecom Oil & Gas
82%
18%
100%
75%
25% 53%
28%
19%
100%
Alfa Publicly traded
EBITDA1
(% Alfa)31% 27% 12% -37%
#1 in the production of
PTA, PET and EPS
in the Americas
Petrochemicals
82%
18%
Other Privately Held
(1) Figures as of December 31, 2019
Source: Alpek
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Alpek is one of the largest PetChems in The AmericasStrong portfolio of products across two main segments
5
Polyester (76% Sales)2 Plastics & Chemicals (23% Sales)2
Revenues1:Comparable
EBITDA1:
Net Debt /
Adjusted EBITDA1:US$6.2B US$722M 1.6x
PTA, PET
& rPET
Polyester
Fibers
Polypropylene
(PP)
Expandible
Polystyrene (EPS)
Caprolactam
(CPL)
Specialty Chemicals
& Fertilizers
(1) Figures for the year ended December 31, 2019;
(2) Sales revenue for the year ended December 31, 2019; additional 1% represented by other small business
Source: Alpek
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Our footprint spans 28 plants across 7 countries Over 7 million tons and more than 6,000 employees worldwide
6
Installed capacity breakdown (kta)
Site PTA PET rPET Fibers PP EPS CPL Other
Mexico
(3,030 Kta)
A Monterrey 160
B Altamira 1,000 640 240
C Salamanca 85
D Ocotlán 10
E Cosoleacaque 610 185
F Lerma 100
USA
(2,385 Kta)
G Fayetteville, NC 170 55
H Charleston, SC 170 150
I Columbia, SC 640 725
J Bay St. Louis, MI 430
K Richmond, IN 45
Canada
(144 Kta)L Montreal 144
Argentina
(225 Kta)
M Zárate 190
N Pacheco 15
O General Lagos 19
Brazil
(1,226 Kta)
P Guaratingueta 46
Q Ipojuca 640 450 90
Chile
(27 Kta)
R Santiago 5
S Puerto Montt 2
T Concon 20
United Kingdom
(350 Kta)U Wilton 350
Total Capacity: 7,386 Kta 2,890 2,814 115 400 640 325 85 117
Polyester
P&C
6Kta: Thousand tons per year
Source: Alpek estimates
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Alpek at a Glance
Key Investment Highlights
The Case for PET
Financials
Relevant Events
Appendix
Index
7
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Investment Highlights
State-of-the-art technology resulting in low-cost position
Portfolio uniquely placed to lead growth of circular economy
Market leadership across all our products in the Americas
Consumer-oriented product portfolio limiting demand volatility
Proven track record of growth across all parts of the cycle
Clear strategy & catalysts executed by experienced management team
1
2
6
3
5
4
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Alpek holds leading industry positions for all its products
9
Polyester Industry Positon1 by Product
(1) Industry position is based on installed capacity and reflects market position as of December 31, 2019. (2) Polyester Staple Fiber (excluding filaments)
Source: PCI and Alpek estimates
PP
EPS
CPL
1
1
1
Mexico
The Americas
Mexico
PTA
rPET
PET
PSF2
1
1
1
2
The Americas
The Americas
The Americas
The Americas
2 Worldwide
P&C Industry Positon1 by Product
1. Market Leadership1
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Alpek is the largest PTA-PET producer in AmericasMarket has consolidated & become increasingly organized over time
10Kta: Thousands tons per year
Source: Wood Mackenzie
Kta
The Americas PTA Capacity Share (%) The Americas PET Capacity Share (%)
Kta
1. Market Leadership1
(1) Includes CC Polymers
Source: Alpek & Wood Mackenzie
36%
24%
7,240
2015
27%
2025E1
23%
14%
49%
24%
2020
46%
25%
19%
9%6,190
Indorama
BP
Others
5,940
6%
5,681
27%
16%
34%
5,494
32%
24%
43%
2015
10%
33%
8%
2020
42%
11%
8%
7%
2025E1
Indorama
FENC
M&G
6,781
Others
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Food & Beverage 55%
Construction 4%
Consumer Goods 35%
Textiles 7% EUR 3%
SA 24%
USA/CAN 44%
MEX 29%
ME 0%Asia 0%
Resilient end-markets account for 89% of volume97% of Alpek’s sales are dollar-based
11
Beverage Food Personal Care Textiles
Volume 2019
4,384 Kta
Sales 2019
US$6,216 M
89%
Volume by Industry 20191 Sales Geography 20191
Sample End Users by Industry
71%
1. Consumer Oriented Portfolio2
(1) Volume and sales breakdown for data for the year ended December 31, 2019.
Kta: Thousand tons per year
Source: Alpek
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Alpek has grown at 8.8% CAGR since 1986Constant growth at different points of the industry cycle
12
´86 ´93 ´98 ´03 ´08 ´13 ´18 ´19 ´25
Acquisition
of first PTA
plant
PP plant
start-up (JV)
CPL plant
acquisition
First U.S.
polyester
plant
acquisition
EPS
capacity
expansion
(JV)
First
recycling
plant (JV)
First power
cogeneration
plant
IPO (BMV)U.S. PTA/
PET plant
acquisitions
Polyester
acquisition
in Brazil
DMT
Expansion
rPET
Acquisition
in USA
Corpus Christi
Polymers (JV)
Sales volume 1986-2018 (Index: 1986 = 100)PET
acquisition
in UK
1. Proven Growth3
Source: Alpek
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Oxidation
Post-Oxidation
CTA Storage
Filtration and
Drying
Feed prep
Hydrogenation
Crystallization Crystallization
PTA Storage
Polymerization
Precursor
Storage
Esterification
Pre-Poly
Annealing
Crystallization
PET Resin
Pelletization
Precursor
Preheating
Filtration and
Drying
State-of-the-art tech, strategically located assets & low-cost logistics
yield low cost position in industry
13
Steps eliminated with
IntegRex ®
Marg
in
Cost
80% of Market
Participants
Continuous investment in own technology has
improved Alpek’s cost position (i.e. IntegRex)
World scale production facilities make Alpek the
low-cost producer in The Americas (i.e. PP)
Solid State
Polymerization
1. Low Cost Position4
Source: Alpek, Philip Townsend
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Long-term strategy is based around 3 key pillars
Foster
Circular
Economy
Strengthen Core
Business
Strategic
& Focused
Growth
14
1. Strategy & Mgmt. Team5
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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
15
1. Strategy & Mgmt. Team5
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Mgmt. with 30+ years average experience in PetChemClear strategy & culture of empowerment ensure efficient operations
16
Plastics & Chemicals
José Carlos PonsCFO (24)
José de Jesús ValdezCEO (44)
Felipe GarzaCo-President
Alpek Polyester (43)
Jorge YoungCo-President
Alpek Polyester (30)
Gustavo TalancónPresident
Polyester Filament (31)
Alejandro LloveraPresident
Polypropylene (35)
José Luis ZepedaPresident
EPS & Chemicals (34)
Gustavo TalancónPresident CPL &
Ammonium Sulfate (31)
Polyester
#) Years with Alfa/Alpek
Source: Alpek
1. Strategy & Mgmt. Team5
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Alpek at a Glance
Key Investment Highlights
The Case for PET
Financials
Relevant Events
Appendix
Index
17
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The Case for PET
Everything you should know
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Plastics have been in the news a lot lately…
19
Indexed Google Searches (2009-2020)
100
367
111009 1712 14 1513 16 18 19
PlasticWaste
20
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…But not all plastics are the samePET is 100% recyclable, recycled at high rates & can be remade back to its original use
20
Polyethylene
Terephthalate
High Density
PolyethylenePolyvinyl Chloride
Low Density
PolyethylenePolypropylene Polystyrene
Others
(PC, et al.)Plastic
100%Recyclable &
Recycled?
Back to Original
Purpose?
PET HDPE PVC LDPE PP PS
FullyOnly
Non-Dyed
Non-
ApplicableEmerging Emerging
Non-
Applicable
✓ ✓ ✓ ✓
Emerging
✓
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Polyethylene terephthalate (pol·y·eth·yl·ene·ter·eph·thal·ate)
Commonly known as PET or PETE and identified by
Mainly used to bottle water & carbonated beverages worldwide
Extremely versatile and used for many other consumer goods too
Safe for consumption. Always.
Making the world better since 1973
Hey there, I’m PET, I think we’ve met…
BPA
FREE
PHTHALATE
FREE
21
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PET isnumber .
for a reason
22
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PET is the best option because of its traits…
23
11g.1.0x
283g.25.7x
15g.1.4x
1.5¢1.0x
6.5¢4.3x
3.1¢2.1x
Shatter
Resistant
Note: All figures per 355ml bottle
Source: International Monetary Fund, CCFGroup, Bloomberg, SBAcci
Convenient &
Resealable
Costs +50%
Less
Uses 25%
Less Material
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…making it the most widely usedbeverage packaging material
2424
04 1606 0705 11 1708 181203 1301 14 1500 1009 1902
98
Aluminum-0.2%
Glass+0.4%
37
34
PET+6.3%
116
37
94
USA Beverage Packaging Industry Units by Substrate (B Units)
Source: SBAcci
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PET’s carbon footprintis 60-80% lower than
glass or aluminum
Source: Franklin Associates
Carbon Footprint Over Lifecycle(lbs. CO2 Eq. / 100k oz.)
4.3x2.5x
1,125
2,766
4,848
GlassPET Aluminum
1.0x
Photo: Aluminum making process Photo: Glass making process
1,200oF 2,800oF
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27
We havea plastic
waste problem
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28Source: Reuters, USA Today
“Coca-Cola chooses plastic bottle collection over aluminum cans to cut carbon footprint”Alexis Akwagyiram
Coca-Cola is committed to collecting and recycling plastic bottles rather than switching to aluminum cans as the world’s largest soft drinks maker seeks to reduce its carbon footprint, said James Quincy, its chief executive officer to Reuters.
“Coke, Dr Pepper, Pepsi execs: We are committed to reducing plastic waste”Jim Dinkins, Derek Hopkins and Kirk Tanner
Recently, we launched an industrywide effort with the country’s leading advocates for conservation and recycling to reduce our need for new plastic by working to collect, recycle and remake plastic bottles from the plastic bottles we already produce.
Our bottles are already designed to be 100% recyclableso they can be remade into new bottles. The plastic we use in our bottles is used to make a variety of consumer products and is in high demand across many industries. All of us are eager to get the plastic back through improved recycling. When recycled appropriately, our bottles can be made into new bottles.
Industry leaders agree the solution lies with further increasing PET recycling rates, not imposing bans
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PET already highly recycled on a worldwide basisUSA with largest potential in NA to increase recycling rates
29
PET Recycling
Rate (%)…
58
16
69
46
30
65
98
PET
Worldwide
PET
USA
Other Plastics Aluminum
USA
Glass
USA
PET
Mexico
PET
Germany
Very different from
other plastics…
On par with other beverage
package alternatives…
…and with potential to continue
growing under right incentives
Source: Wood Mackenzie, Ball Corporation, Aluminum.org
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Everyone must play a part in order to incentivize recycling and ensure a circular PET usage loop
30
Waste Mgmt.
Producers Consumers
Bottlers
• Consume responsibly
• Recycle everything
• Separate trash properly
• Increase rPET production
• Meet bottlers’ needs
• Improve rPET technology
• Grow gathering network
• Improve PET separation
• Improve bale quality
• Use higher rPET (%) content
• Design for higher recyclability
• Willingness to source rPET
Government• Promote recycling
• Promote use of
lower CO2 products
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Alpek is leading the way towards fosteringa fully circular PET economy
31
Alpek already recycling
5 Billionbottles each year
Active member of to
strengthen USA recycling efforts
55
70
115
2010 2014 2019KTon
Among largest rPET
producers in The Americas
Fayetteville, NC
USA
Gral. Pacheco, BA,
Argentina
Richmond, IN,
USA
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32
So, what else canwe do personally?
Share this information
Reduce, reuse & recycle
Separate waste properly
3R
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1. PET is an unrivaled product for CPG packaging
▪ 100% recyclable and already 58% recycled worldwide
▪ Only plastic that can be 100% recycled to its same use
▪ 50% cheaper & 25% lighter than glass & aluminum
▪ Resealable, hygienic & shatter-resistant packaging option
2. PET is the best option for the environment
▪ 60-80% lower carbon footprint than glass & aluminum
3. Focus on promoting a truly circular economy for PET
▪ Promote increase rPET content instead of generalized bans
▪ Grow recycling infrastructure to increase PET bale availability
▪ Focus on improving recycling scale, cost-efficiency & education
Need to get the word out to gain momentum, ensure alignment, and make sure decisions are made using the full set of facts
The Case for PET (in short)
33
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Alpek at a Glance
Key Investment Highlights
The Case for PET
Financials
Relevant Events
Appendix
Index
34
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669
843662
517
220
188
20182016 2017 2019 2020 YTD 2020G
384
1,063
850
111
547
Results & Guidance
35
Sales Volume (K Ton) Revenues (US$ M)
Reported EBITDA (US$ M) CAPEX (US$ M)
4,6524,402
2020G2016 2017
Polyester
2020 YTD2018 2019
P&C
3,938 4,0124,384
1,184
5,677
2016 2017
P&C
2020 YTD20192018 2020G
Polyester
4,8385,231
6,991
6,216
1,433
270
15
277
2017
826
2016
345
2018 2019 2020 YTD 2020G
236
Suape/
Citepe &
CCP
Business
Combination
Cogen.
Sale
% Sales 13.8% 13.7%7.3% 15.2% 9.6%7.7%
Comparable
Business
Combination
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EBITDA BreakdownBoth Polyester and P&C exceeded Comparable 1Q EBITDA Guidance1 (exc. RMCF)
36(1) Not applicable for the rest of the year
(2) Raw Material Carry-Forward
40
20
10
50
20
50
17
49
1
P&C
94
RMCF2
74
1Q20 Comparable Inventory
Adjustment
58
1Q20 Reported
116
1Q20G
P&C
Polyester 74
147
Polyester
127
111
1Q20 Comparable
(w. RMCF)1
Others
Others
+26%
Alpek 1Q20 EBITDA vs. Guidance1 (US$M)
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LeverageAlpek maintains low leverage despite payment of dividend from Cogen sale
37
Net Debt (US$M) LTM EBITDA (US$M) Net Debt/EBITDA (Times)
1,022
944
864 850821
1Q202Q191Q19 3Q19 4Q19
2.22.2
2.4
1.6
1.7
1Q19 1Q202Q19 3Q19 4Q19
2,2002,084
2,036
1,3301,436
1Q201Q19 4Q192Q19 3Q19
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Balance Sheet Accounts
38
Net Working Capital1 (US$ M) Property, Plant and Equipment (US$ M)
Net Debt2 (US$ M) Stockholders’ Equity (US$ M)
694
497
951
774
634
2016 2017 20202018 2019
534353 44NWC Days
1,9552,105
2,390
1,968 1,876
2019 20202016 2017 2018
1,042
1,262
1,832
20192016 2017 20202018
1,3301,436
2,019
1,604
2,1932,391
1,847
202020192016 2017 2018
IFRS
(1) Net Working Capital = Accounts receivable + Other accounts receivable + Inventories - Suppliers - Other accounts payable and accrued expenses
(2) Net Debt = Bank loans and notes payable + Current portion of long-term debt + Long term debt – Cash
Source: Alpek estimates
51
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Debt Profile99% of Debt denominated in USD1,2 / Debt average life @ 4.3 years
39
Consolidated Debt Profile2 (Mar. 2020)
570
173 169
300
500
650
0
100
200
300
400
500
600
700
800
900
2023 20252024Cash
US$M
20222020 2021 2026 2027 2028 2029
675
Cash
Bonds
Bank Debt
Net Debt: Gross Debt:Available Comm.
Credit LinesUS$1,436M US$2.006B US$590M
(1) A small portion of debt is denominated in MXN, EUR and ARS
(2) Excludes leases, documents and accrued interests
Coupon
4.250%
Coupon
4.500%
Coupon
5.375%
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Dividends to Shareholders
40
(1) Paid in January 2020
100114
95111
143 143 1432.1
3.03.4 3.4
5.95.95.6
50
0 -1
100
150
3
0
1
2
4
5
6
201620152013 20141 2017
4.72
2018 2019
(US
$ M
)
Dividend Yield (%)
(1) Paid in December 2013
(2) Showing US$143M Dividend in 2018 (Paid in 2020)
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239274
369
140161
194
356
111
4Q2Q 3Q 1Q
Business
Comb.
Results by Quarter
41
Sales Volume (K Ton) Revenues (US$ M)
Reported EBITDA (US$ M) Majority Net Income (US$ M)
1,151 1,1741,061 1,0871,121 1,118
1,0591,184
1Q2Q 3Q 4Q
1,7591,941
1,7581,6421,643
1,5231,407 1,433
4Q2Q 3Q 1Q
142
80
393
2756 50
209
-19
2Q 3Q 1Q4Q
2019 2020
Business
Comb.
M&G Recovery
220
136
2018 Comparable
220 188Cogen
Sale
Source: Alpek
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Comparable EBITDA
42
(1) EBITDA includes profits (US $5 M) from other activities such as natural gas sales
Reported EBITDA2015 2016 2017 2018 2019 1Q20 1Q19
(US$ M)
Polyester 344 349 147 788 428 58 80
Plastics & Chemicals 284 322 237 276 218 49 54
Cogeneration Plant’s Sale - - - - 188
TOTAL 630 669 384 1,063 850 111 140
Adjustments*2015 2016 2017 2018 2019 1Q20 1Q19
(US$ M)
Polyester (35) 18 (87) 258 (47) (16) (4)
Plastics & Chemicals 11 14 8 1 (13) (1) (4)
Cogeneration Plant’s Sale - - - - 188 0
TOTAL (24) 32 (79) 259 128 (17) (8)
*Adjustments: Inventory and non-operating, one-time (gains) losses
Comparable EBITDA2015 2016 2017 2018 2019 1Q20 1Q19
(US$ M)
Polyester 378 331 234 529 474 74 84
Plastics & Chemicals 273 308 229 275 231 50 58
TOTAL 654 637 462 804 722 127 148
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43
2020 2019 Delta
US$M 1Q 1Q 4Q 1Q 4Q
Reported EBITDA 111 140 167 (29) (57)
Inventory Adjustment (17) (19) (6) 2 (11)
Others - 11 1 (11) (1)
Comparable EBITDA 127 148 172 (20) (45)
Raw Material Carry-Forward (20) (19) (2) (1) (18)
Comparable EBITDA +
Raw Material Carry-Forward147 167 173 (20) (26)
Raw Material Carry Forward Effect (RMCF1) BreakdownSmaller YoY & QoQ difference in EBITDA when excluding extraordinary effects
(1) Raw Material Carry-Forward: Effect on margin generated from price change to raw materials between purchase vs. actual consumption. Positive or negative depending on price change
(2) Excludes Cogeneration sale
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Alpek at a Glance
Key Investment Highlights
The Case for PET
Financials
Relevant Events
Appendix
Index
44
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Relevant Events & Updates
Corpus Christi Polymers (CCP) integrated PTA/PET facility
• Pre-construction period extended through end of 2020
COVID-19
• Alpek products are considered essential as they serve Food / Beverage / CPG packaging & medical supplies
• Operations not affected as Alpek continues serving customer demand
• Guidance withdrawn due to volatility and until reliable estimate can be provided
M&G Mexico PET plant restructuring process
• Normalized M&G Mexico operations continue (supported by Alpek)
• Ruling on “Concurso Mercantil” with pre-arranged restructuring plan expected in 2Q20
Dividend payments
• Paid U.S. $143 million dividend related to Cogeneration sale in January
• U.S. $82 million dividend approved in our Annual Shareholders Meeting
• Subject to review by Board of Directors given COVID-19 environment
45
1
2
3
4
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Corpus Christi Polymers extended its pre-construction period
46
Source: Alpek
Highlights CCP capacity share by partner
PTA
1.3 M tons
PET
1.1 M tons
• PET (Int.): 367 Kta
• PTA: 125 Kta
• PET (Int.): 367 Kta
• PTA: 125 Kta
• PET (Int.): 367 Kta
• PTA: 125 KtaPx
MEG
Px
MEG
Px
MEG
Overview
Current
Status
• JV between Alpek, Indorama & Far Eastern (FENC)
• Acquired Corpus Christi PTA/PET assets on Dec. 28,
2018 for US$1.2B (Alpek US$266M in cash and
US$133M non-cash contrib.)
• JV will operate as toll-based manufacturer for Alpek,
Indorama and Far Eastern
• CCP operated by independent management team
• Each partner to procure own RM & sell own PTA/PET
• CCP extended its pre-construction period through the
end of 2020 and reduced CAPEX needs by US$45M
• Alpek still has US$67M in cash credit for additional
CAPEX needs
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COVID-19Alpek posted better-than-expected 1Q results amid volatile environment
47
Industry Impact 1Q20 Effects on Alpek Company Reaction
• Lower crude oil demand in Asia
resulted in decreases to Crude Oil
& Paraxylene (Px) prices
• Polyester margins strengthened
vs. 4Q19 as lower PTA/PET output
from Asia reduced supply in 1Q20
• Mexican Peso & Brazilian Real
depreciated during 1Q20
• No adverse effect to Alpek’s
business continuity from COVID-19
• Alpek’s businesses deemed
essential (food & beverage
packaging, CPG, medical supplies &
general chemicals)
• Polyester results favored by
improved volumes and margins
• US$36M non-cash Inventory Loss
and negative Raw Material Carry-
Forward effect
• Temporary effect with potential to
be reverted
• Increased hygiene measures &
home office to protect employees’
health
• Guaranteed PET production for
customers given high demand
• Focus on financial stability as FCF
US$181M better than
expectations
• Cash balance improved by
U$240M by drawing committed
long / short-term credit lines
> >
Volatility surrounding COVID-19 makes it difficult to predict feedstock prices, demand and margins /
2020 Guidance has been withdrawn until Alpek can provide reliable estimates
=
=
+
–
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Other Relevant Events
48
• Alpek sold its two Cogeneration plants for US$801M
• Sale finalized on November 25th
• Proceeds used to pay down debt and pay a US$143M dividend
• Alpek companies to keep attractive cost-plus Power & Steam contracts
• First Alpek acquisition outside of the Americas
• Only PET producer in UK, mainly serving domestic demand
• Increasing PET production capacity by 15%
• Improved PTA/PET capacity net balance and reduction to PTA spot sales
• Took over operations as of January 1st, 2020
• Capacity: 45 KTA rPET
• Location: Richmond, Indiana
• Part of Alpek’s strategy to increase presence in rPET segment
• Increased Alpek’s overall PET recycling capacity to 115KTA
UK PET (2020)
CoGen Plants Sale (2019)
Richmond PET (2019)
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Alpek at a Glance
Key Investment Highlights
The Case for PET
Financials
Relevant Events
Appendix
Index
49
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Polyester Value Chain
50
Ethylene
Crude Oil Refinery Naphtha Reformer/BTX
PX
Ethylene OxideCracker
0.80 ton Ethylene
per ton EO
0.66 ton PX
per ton PTA
MEG
0.72 ton EO
per ton MEG
0.84 ton PTA
per ton PET
0.34 ton MEG
per ton PET
PTA
Fibers &
Filaments
PET rPET
Ethane(From Natural Gas)
Source: Alpek, Nexant
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Polypropylene (PP) Value Chain
51
Ethane /
Propane
Source: Alpek, Nexant
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Expandable Polystyrene (EPS) Value Chain
52
Ethylene
Crude Oil Refinery Naphtha Reformer
Benzene
StyreneEthane(From Natural Gas)
Cracker
Pentane
EPS
0.29 ton Ethylene
per ton Styrene
0.79 ton Benzene
per ton Styrene
0.94 ton Styrene
per ton EPS
0.06 ton Pentane
per ton EPS
Source: Alpek, Nexant
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Caprolactam (CPL) Value Chain
53
Natural Gas
Crude Oil Refinery
Cyclohexane
Naphtha Reformer
Benzene
Ammonia
Caprolactam
Ammonium SulfateSyngas
0.94 ton Bz per
ton Cyclohexane
0.99 ton CX
per ton CPL
Fertilizers
Nylon
Source: Alpek, Nexant
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Latest Quarter Results
54(1) Times: Last 12 months
Source: Alpek
Alpek: Selected Financial Information
(%) 1Q20 vs.
1Q20 4Q19 1Q19 4Q19 1Q19
Total Volume (ktons) 1,184 1,059 1,087 12 9
Polyester 967 851 857 14 13
Plastics & Chemicals 217 208 230 4 (6)
Consolidated Revenues 1,433 1,407 1,642 2 (13)
Polyester 1,094 1,075 1,239 2 (12)
Plastics & Chemicals 300 311 376 (4) (20)
Consolidated EBITDA 111 356 140 (69) (21)
Polyester 58 122 80 (52) (27)
Plastics & Chemicals 49 42 54 15 (10)
Cogeneration Plants’ Sale - 188 - (100) -
Profit Attributable to Controlling Interest (19) 209 27 (109) (172)
CAPEX and Acquisitions 15 115 69 (87) (79)
Net Debt 1,436 1,330 2,200 8 (35)
Net Debt / EBITDA(1) 1.7 1.6 2.2
Interest Coverage(1) 7.3 7.2 8.8
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Latest Quarter Results
55
Source: Alpek
Alpek: Cash Flow(%) 1Q20 vs.
1Q20 4Q19 1Q19 4Q19 1Q19
EBITDA 111 356 140 (69) (21)
Net Working Capital & Others 100 (67) (24) 249 520
Capital Expenditures & Acq. (15) (115) (69) 87 79
Financial Expenses (26) (39) (31) 32 16
Income tax (64) (29) (30) (120) (111)
Dividends (163) (25) (179) (553) 9
Other Sources / Uses (49) 625 (176) (108) 72
Decrease (Increase) in Net Debt (106) 706 (369) (115) 71
(%) 1Q20 vs.
1Q20 4Q19 1Q19 4Q19 1Q19
Consolidated Net Income (16) 218 40 (107) (141)
Non-Controlling Interest 3 8 13 (63) (76)
Controlling Interest (19) 209 27 (109) (172)
Earnings per Share (U.S. Dollars) (0.01) 0.10 0.01 (109) (172)
Avg. Outstanding Shares (Millions)* 2,115 2,116 2,118
Alpek: Net Income
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Relevant References: Crude OilPrice reduction from demand reduction & no agreement to reduce output in 1Q20
56
Brent Crude Oil Price
53
44
54
71
64
20
40
60
80
100
120
US$/Bbl
Avg.99
2014 2015 2016 2017 20192018 2020
Source: Bloomberg
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Relevant References: ParaxylenePx prices also fell in 1Q20 following their correlation with Crude Oil
57
1,7081,635 1,641
1,382
992876
989924 924
9771,056 1,100
1,258 1,2821,165
1,077955 937
876
0
500
1,000
1,500
2,000
1Q 3Q2013
US$/Ton
201620122011 2014 2015 2Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2017 2018 2019
NA Px Contract Price
US$165/ton
decrease from
Dec.’19 to Mar.’20
2020
Source: IHS
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Relevant References: Integrated PET MarginsMargins have already risen above Guidance levels in low-demand quarter
58
200
74 69 69 62 64 60 72 80 81 104133 135 117 110
155 14082 78
193
174 186 208165 159 180
204 184 202
238
346
242
215 214
214
164
145196
0
100
200
300
400
500
600
277
2012
227
2Q
US$/Ton
PET
20142011 2Q1Q2013 2015 2016
393
3Q
263
4Q 1Q
333
3Q 3Q4Q
304276
1Q 2Q 4Q 1Q
370
PTA
342
248 255227 223
240
284
478
275
377
324
China
2017 2018 2019
Asian Margins (Px / MEG to PET)
2020
Guidance
255
Source: ICIS, PCI, CCFGroup
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59
NA Propylene Contract Price (PGP) NA Polypropylene Margin (PP to PGP)
12 1213
15
24
27
19
22 22 2221
20
15
0
2
4
6
8
10
12
14
16
18
20
22
24
26
28
1Q171411
cpp
161512 13 18 1Q2Q 3Q 4Q
76
60
6971
39
34
45
54
38 37 3835
31
0
10
20
30
40
50
60
70
80
1413
cpp
11 1512 16 17 18 1Q 2Q 3Q 4Q 1Q
2019 2020 2019 2020
Relevant References: Propylene & PolypropyleneDecrease in both PGP contract prices & industry PP margins in 1Q20
Alpek able to
maintain
margins in 1Q
Source: IHS
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Relevant References: Caprolactam
60
2,100
1,240
1,069
840 862
727
1,216
839934
1,141 1,1371,231 1,272 1,281
1,075976
692 644549
0
300
600
900
1,200
1,500
1,800
2,100
2,400
2015
US$/Ton
20122011 2016 1Q2013 2014 1Q 2Q 2Q3Q 4Q 1Q 3Q 4Q 1Q 2Q 3Q 4Q
2017 2018 2019
Asian Caprolactam to NA Benzene Spread (Contract)
2020
Source: IHS Markit
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Stock Highlights (BMV: ALPEK)
61
Daily Average Traded Shares & Value (M Shares)
Daily Stock Price (MXN)
5
2
3
4
2
0
6
0
4
1
F S NJA FJ M A M J JJ O MN D A M JJ A S O D F M
2019
10
0
40
20
30
MayMay JanJan Sep Sep Jan
(M Shares) (US$ M)
2018 2019
Valuation 2017 2018 2019 1Q20
Market Cap. (US$ B) 2,951 2,916 2,307 1,657
Net Debt (US$ M) 1,262 1,832 1,330 1,436
EBITDA LTM (US$ M) 384 1,063 850 821
Enterprise Value /
EBITDA11.6 4.7 4.6 4.1
Price / Earnings N/A 3.8 5.9 5.0
Price per Share (MXN) 26.50 27.30 21.00 15.56
Exchange Rate
(MXN/USD)19.00 19.83 19.26 19.86
2018 2020
2020
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Alpek’s Investor Relations Team
62
8 Years at Alfa/Alpek
Previously held roles in Talent and Culture at Alfa and Axtel
BA in International Relations from ITESM
Alejandra
Bustamante
IR Manager
24 Years at Alfa/Alpek
Prior to being Alpek CFO, held roles as VP of Business Development and Director of South America
Business at Nemak
BS in Mechanical Engineering from ITESM, MBA from ITESM & Executive Management Program from
IPADE
José Carlos
Pons
CFO
9 Years at Alfa/Alpek
Previously held roles as Director of Logistics & Procurement at Indelpro, Director of Energy Markets at Alfa,
and Project Leader at The Boston Consulting Group
BS in Industrial Engineering from Cornell University and MBA from Stanford Graduate School of Business
Alejandro
Elizondo
IRO
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alpek.com