CORPORATE
PRESENTATION
1Q20
1
1Q20 CORPORATE PRESENTATION 1 DISCLAIMER This presentation has - - PowerPoint PPT Presentation
1Q20 CORPORATE PRESENTATION 1 DISCLAIMER This presentation has been prepared by Grupo KUO, S.A.B. de C..V. (Kuo or the Company) and has not been independently verified. You agree to keep the contents of this presentation strictly
CORPORATE
1
DISCLAIMER
This presentation has been prepared by Grupo KUO, S.A.B. de C..V. (“Kuo” or the “Company”) and has not been independently verified. You agree to keep the contents of this presentation strictly confidential. This presentation is highly confidential and contains proprietary and confidential information about KUO, its subsidiaries, its financial results and its operations. This presentation’s material is being presented solely for your information and may not be copied, reproduced or redistributed to any
its securities for offer or sale in the United States or elsewhere, or to conduct a public offering of securities in the United States or elsewhere. This presentation includes forward-looking statements. These statements relate to KUO's future prospects, developments and business strategies and are identified by the use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will,” “goals,” “target,” “strategy” and similar terms and phrases, and may include references to assumptions. Forward-looking statements are based on KUO's current expectations and assumptions regarding its business, the economy and other future
from those in the forward-looking statements include those mentioned in the 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 information presented or contained in this presentation. Neither the Company nor any of its affiliates, advisers or representatives accept any responsibility whatsoever for any loss or damage arising from any information presented or contained in this presentation. The information presented or contained in this presentation is current as of the date 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 make any 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 based on various factors. The use of registered trademarks, commercial trademarks and logos or photographic materials within this document are exclusively for illustrative purposes 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 of this presentation nor any information or statement contained herein shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. 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 the Offering Circular 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.
2
KUO AT A GLANCE LTM (MXN)
3
$43,421 Revenue $5,319 EBITDA 12.2% EBITDA Margin 2.87x Net Debt/ EBITDA 53% Exports 28 Manufacturing Plants 70 Countries +25,000 Employees
REVENUE
% of total
EBITDA
% of total
60%
CONSUMER
PORK MEAT BRANDED FOOD*
29% 33%
CHEMICAL
SYNTHETIC RUBBER* POLYMERS
20% 7%
AUTOMOTIVE
TRANSMISSIONS AFTERMARKET
51%
29% US & CANADA 10% EUROPE 47% MEX 12% ASIA 2% OTHER
*JV 50% / 50% Note: FY figures LTM 1Q20, expressed in millions of Mexican pesos in Combined Pro forma IFRS, considering the proportional consolidation method.
REVENUE DISTRIBUTION
RECENT DEVELOPMENTS
CONSUMER
4
IMPACTS: COVID & OTHERS
➢ Typified as a “essential activity” ➢ Estimated Export Sales growth (China & Japan) ➢ Expected Higher prices and volume vs 2019 ➢ Recent incident on new processing plant (30% installed capacity loss) ➢ Lower domestic prices
ACTIONS
➢ Focus on export channel ➢ Deployment of home delivery capabilities of Maxicarne venues ➢ Increase shifts in Merida’s processing plant to absorb production loss ➢ Use local third parties processing facilities ➢ Continue with insurance process
PORK MEAT
IMPACTS: COVID & OTHERS
➢ Typified as a “essential activity” ➢ Strong demand on main categories in domestic market, boosted by COVID outbreak ➢ Strong Sales trend in March & April ➢ Divestiture of Tuna business ➢ Impact in food service channel in Fresherized Foods (avocado business) ➢ Temporary shutdown of Don Miguel facility
ACTIONS
➢ Ensure supply chain/ logistics ➢ Focus on production within higher turnover products ➢ Home office of administrative staff ➢ Resume of operations in Don Miguel facility
HERDEZ DEL FUERTE
RECENT DEVELOPMENTS
CHEMICAL
5
IMPACTS: COVID & OTHERS
➢ Several applications typified as “essential activity” ➢ New value-added applications under development ➢ Drop in oil prices pressures raw material prices (butadiene -31%) ➢ Shutdown of one facility in Spain given halt of operations
ACTIONS
➢ Increased demand for labels (food & beverages) and belts (hygienic) ➢ New contract with sandal producer (Alpargatas) ➢ Technical shutdowns of some facilities due to contraction in tire segment ➢ Manage contraction in butadiene price
SYNTHETIC RUBBER
IMPACTS: COVID & OTHERS
➢ Several applications typified as “essential activities” ➢ Current COVID-19 contingency relieves pressure on campaign against single use products ➢ New value-added applications under development ➢ Shutdown of some US client's operations ➢ Drop in oil prices pressures raw material prices (styrene
ACTIONS
➢ Focus in development of new applications per COVID-19 ➢ Increased demand for single use applications in North America region ➢ Manage contraction in styrene price
POLYMERS
RECENT DEVELOPMENTS
AUTOMOTIVE
6
IMPACTS: COVID & OTHERS
➢ Shutdown of US facility for several weeks (March – May) ➢ Delay of OEMs sales per temporary operations shutdowns (March – May) ➢ GM has the commitment with customers to supply 2020 Corvette model ➢ Higher inventories
ACTIONS
➢ State of Michigan’s support on Wixom facility ➢ Resume operations on June, with expected gradual volume normalization starting in July ➢ Resume of GM, Ford & Fiat Chrysler operations
TRANSMISSIONS
IMPACTS: COVID & OTHERS
➢ Typified as “essential activity” ➢ Technical shutdowns during April & May
ACTIONS
➢ Enhance operations & inventories ➢ Resume operations in June, with expected volume normalization in following months
AFTERMARKET
RECENT DEVELOPMENTS
FINANCIAL ACTIONS
7
➢ Strict SG&A Control ➢ Canceled all salary increases and hiring freeze ➢ CAPEX to minimum maintenance level ➢ No dividend for 2020 ➢ Divestiture of Non-Strategic Assets (Tuna Business) ➢ US$80 MM withdrawal of committed credit facilities ➢ Available committed credit lines US$190 MM ➢ Increased cashflows/ dividends from JV’s ➢ Working Capital optimization ➢ No significant debt maturities until 2024 ➢ Obtained financial covenant waiver for credit facilities for 2020 (Gross leverage at 5.0x)
ANNEXES
FINANCIAL HIGHLIGHTS 1Q20
8
FINANCIAL HIGHLIGHTS 1Q20
(MILLION PESOS) 9
REVENUE EBITDA
10,016 11,209
1Q19 1Q20
11.9%
56.2% EXPORTS
7.4%
CONSUMER CHEMICAL AUTOMOTIVE 172 355 516
64 345 764 +48.2%
13.3% MGN 11.0% MGN 2.8% MGN 1Q20 1Q19 1Q20 1Q19 1Q20 1Q19 1,741 3,382 4,856
2,274 3,134 5,752 +18.4%
1Q20 1Q19
+30.6%
2019 2018 2019 2018
Note: Figures are expressed in millions of Mexican pesos in Combined Pro forma IFRS, considering the proportional consolidation method.
9.9%
1,029 1,105
10.3% 9.9%
6.00% 7.00% 8.00% 9.00% 10.00% 11.00% 12.00% 13.00% 500 600 700 800 900 1,000 1,100 1Q19 1Q20
CONSUMER 1Q20
(MILLION PESOS)
10
REVENUES
+18.4% +48.2%
9.9%
OPERATING MARGIN
13.3%
EBITDA MARGIN
Note: Figures are expressed in millions of Mexican pesos in Combined Pro forma IFRS, considering the proportional consolidation method.
4,856 5,752 1Q19 1Q20 516 764 1Q19 1Q20
EBITDA
50%
OF CONSOLIDATED SALES65%
OF CONSOLIDATED EBITDACONSUMER 1Q20
11
HIGHLIGHTS
PORK MEAT:
HERDEZ DEL FUERTE:
boosted by COVID-19 outbreak
Note: Figures are expressed in millions of Mexican pesos in Combined Pro forma IFRS, considering the proportional consolidation method.
355 345 1Q19 1Q20 3,382 3,134 1Q19 1Q20
CHEMICAL 1Q20
(MILLONES DE PESOS)
12
REVENUE EBITDA
7.3%
OPERATING MARGIN
11.0%
EBITDA MARGIN
Note: Figures are expressed in millions of Mexican pesos in Combined Pro forma IFRS, considering the proportional consolidation method.
31%
OF CONSOLIDATED SALES29%
OF CONSOLIDATED EBITDACHEMICAL 1Q20
13
Note: Figures are expressed in millions of Mexican pesos in Combined Pro forma IFRS, considering the proportional consolidation method.
HIGLIGHTS
SYNTHETIC RUBBER:
POLYMERS:
AUTOMOTIVE 1Q20
(MILLION PESOS)
14 172 64 1Q19 1Q20 1,741 2,274 1Q19 1Q20
REVENUE EBITDA
+30.6%
OPERATING MARGIN
2.8%
EBITDA MARGIN
Note: Figures are expressed in millions of Mexican pesos in Combined Pro forma IFRS, considering the proportional consolidation method.
19%
OF CONSOLIDATED SALES6%
OF CONSOLIDATED EBITDAAUTOMOTIVE 1Q20
15
Note: Figures are expressed in millions of Mexican pesos in Combined Pro forma IFRS, considering the proportional consolidation method.
HIGLIGHTS
TRANSMISSIONS:
AFTERMARKET:
CAPITAL STRUCTURE
16 RATIOS* 1Q20 1Q19 Net Debt / EBITDA 2.87x 2.81x Total Debt / EBITDA 3.40x 3.44x Interest Coverage 4.49x 5.12x
* Calculated on US dollars, in compliance with credit agreement obligations Note: Figures are expressed in millions of Mexican pesos in Combined Pro forma IFRS, considering the proportional consolidation method.
DEBT PROFILE
(USD) 13,940 14,372 15,431 13,236 17,082 2.81x 2.78x 2.97x 2.76x 2.87x 0.00x 1.00x 2.00x 3.00x 4.00x 5.00x 6.00x 7.00x 5,000 10,000 15,000 20,000
1Q19 2Q19 3Q19 4Q19 1Q20
Net Debt Net Debt / EBITDA
DEBT EVOLUTION
(MXN)
31 54 25 21 258 28
2020 2021 2022 2023 2024 2025 2026 2027
CURRENCY RATE TERM
81%
USD
13%
MXN
6% CNY 52% FIXED 48% VARIABLE 8% SHORT TERM 92% LONG TERM
17
INVESTOR RELATIONS
CONTACT
Antonia Gutiérrez
ir@kuo.com.mx antonia.gutierrez@kuo.com.mx +(52 55) 52.61.83.44 www.kuo.com.mx