I N V E S T O R S P R E S E N T A T I O N J U N E 2 0 1 9 F O R W - - PowerPoint PPT Presentation

I N V E S T O R S P R E S E N T A T I O N J U N E 2 0 1 9

The information contained herein (the “Information”) has been prepared by Grupo Herdez, S.A.B. de C.V., its subsidiaries and/or affiliated companies (“Grupo Herdez”), and may contain forward-looking statements that reflect Grupo Herdez’s current expectations and views, which may vary materially due to various factors, risks and uncertainties. Therefore, Grupo Herdez and/or its officers, employees or agents, assume no responsibility or liability for any such variations in the Information. In particular, and notwithstanding the foregoing, no guarantee is given as to possible future variations of the Information. The Information has been provided solely for informational

• purposes. The issuance of this Information shall not be taken as any form
• f commitment of Grupo Herdez to proceed with any transaction.

F O R W A R D - L O O K I N G S T A T E M E N T

All the information contained in this document is prepared in accordance with International Financial Reporting Standards (IFRS) as of March 31, 2019, unless otherwise stated.

I N V E S T M E N T C A S E

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+100

Y E A R S OF E X P E R I E N C E B R A N D E D F O O D L E A D E R D I V E R S I F I E D P O R T F O L I O

P R O F I T A B L E G R O W T H S T R A T E G Y

S O U N D F I N A N C I A L S T R U C T U R E S O L I D C O R P O R A T E G O V E R N A N C E C O M M I T T E D T O S U S T A I N A B I L I T Y

S T R A T E G Y

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M A I N T A I N A N D F O R M S O C I E T I E S T H R O U G H T H E D E V E L O P M E N T O F I N T E L L I G E N C E I M P L E M E N T T E C H N O L O G I E S T H A T A C C E L E R A T E P R O C E S S E S P R O M O T E S U S T A I N A B L E M A N A G E M E N T P R I O R I T I Z I N G W A T E R C A R E A N D E F F I C I E N T U S E O F E N E R G Y S U P P O R T A N D G E N E R A T E G R O W T H T H R O U G H T H E D E V E L O P M E N T O F T A L E N T A N D I N V E S T M E N T I N I N F R A S T R U C T U R E E X E R C I S E A R E S P O N S I B L E C O R P O R A T E C I T I Z E N S H I P

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C O R P O R A T E S T R U C T U R E

Grupo Herdez consolidates 100 percent of its Frozen division, Herdez Del Fuerte - Mexico, Barilla México and McCormick de México in its financial statements. The proportional stake of Herdez Del Fuerte in MegaMex is registered in “Equity Investment in Associated Companies“.

50%

McCormick de México since 1947

50%

Barilla México since 2002

50%

Herdez Del Fuerte since 2008

50%

MegaMex since 2009

100%

Frozen division Nutrisa 2013 Helados Nestlé 2015

L E A D I N G B R A N D S

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O U R B R A N D S I N M E X I C O O U R B R A N D S I N T H E U S D I S T R I B U T I O N AG R E E M E N T S I N M E X I C O

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I N F R A S T R U C T U R E

15 P L A N T S M O R E T H A N 9 , 8 0 0 E M P L O Y E E S 24 D I S T R I B U T I O N C E N T E R S 6 3 , 0 0 0 + H E L A D O S N E S T L É P O S 7 T U N A V E S S E L S 4 8 6 N U T R I S A S T O R E S

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N E T S A L E S

CAGR 5 years 8.4% Preserves 6.7% Frozen 21.1% Exports 10.1% P R E S E R V E S F R O Z E N E X P O R T S S E G M E N T M I X

CONSOLI DATED FI GURES IN MI LLI ON PESOS

15,953

13,139 14,431 15,953 16,455 16,903 2,139 2,592 2,882 2,985 3,031 1,079 1,158 1,230 1,531 1,547

2015 2016 2017 2018 12M1Q19 16,357 18,181 20,065 20,971 21,480

14%

Frozen

79%

Preserves

7%

Exports

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P R E S E R V E S F R O Z E N E X P O R T S E B I T D A M A R G I N

E B I T D A

S E G M E N T M I X

CON SOLI DATED FI GURES IN MI LLI ON PESOS

2,887 2,816 3,295 3,517 3,594

CAGR 5 years = 8.3% Preserves 6.6% Frozen 25.0% Exports 20.4%

10%

Frozen

85%

Preserves

5%

Exports

2,668 2,634 2,888 3,016 3,069 136 103 277 332 357 83 79 130 169 167

2015 2016 2017 2018 12M1Q19

17.7 15.5 16.4 16.8 16.7

C O M M E R C I A L L E A D E R S H I P

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C O N S O L I D A T E D S A L E S M I X B Y C H A N N E L C O N S O L I D A T E D S A L E S M I X B Y C A T E G O R Y

CONSOLI DATED FI GURES IN MI LLI ON PESOS

32% 31% 7% 7% 6% 5% 4% 4% 4%

Modern Wholesalers Exports Club stores Nutrisa stores Foodservice DSD traditional Others Convenience

33% 14% 8% 7% 5% 5% 4% 4% 2% 2% 2% 2% 2% 1% 11%

Mayonnaise Frozen Pasta Tomato purée Home-style salsa Mole Canned tuna Vegetables Jams Tea Ketchup Fresh tuna Food packaging Mustard Others trade

P R E S E R V E S S N A P S H O T

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H O U S E H O L D P E N E T R A T I O N & R E D U C T I O N O F D I S T R I B U T I O N G A P S C O N S U M E R I N S I G H T S ’ B A S E D I N N O V A T I O N

C O N S O L I D AT E D F I G U R E S I N M I L L I O N P E S O S , C O N S I D E R I N G S AL E S I N M E X I C O

P R E S E R V E S S A L E S M I X B Y C A T E G O R Y H O L I S T I C C O M M U N I C A T I O N P R E M I U M V E R S I O N S G R O W T H D R I V E R S

38% 9% 9% 6% 6% 5% 4% 2% 2% 19%

Mayonnaise Pasta Tomato purée Home-style salsa Mole Atún Vegetales Mermelada Té Otros

P R E S E R V E S P E R F O R M A N C E

C O N S O L I D AT E D F I G U R E S I N M I L L I O N P E S O S

12,197 13,139 14,431 15,953 16,455 16,903 2014 2015 2016 2017 2018 12M1Q19

NET SALES

18.3% 20.3% 18.3% 18.1% 18.3% 18.2%

EBITDA MARGIN

CAGR 5 YEARS Net sales: 6.7% EBITDA: 6.6%

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P R E S E R V E S M A R K E T L E A D E R S H I P

T E A M A Y O N N A I S E J A M S M O L E P A S T A T O M A T O P U R É E H O M E – S T Y L E S A L S A V E G E T A B L E S

73% 42% 83% 30% 73% 45% 27% We are #1 or #2 in categories that represent 69% of

• ur sales in Mexico

33%

THI RD PARTY I NFORMATI ON CONSI DERI NG MODERN TRADE AND WH OL ESAL ERS FI GURES AS OF FEB 28TH , 2019

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P R O D U C T I N N O V A T I O N & M A R K E T I N G C A M P A I G N S P R O D U C T CO-CREATION NEW CONSUMPTION OCCASIONS PREMIUM VERSIONS RESPONSIBLE CONSUMPTION HABITS

45% 30% 13% 9% 1% 1% 1%

Nutrisa stores DSD traditional Convenience Modern trade Wholesalers Club stores Foodservice

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F R O Z E N S N A P S H O T

F R O Z E N S A L E S M I X B Y C H A N N E L

CONSOLI DATED FI GURES IN MI LLI ON PESOS CONSI DERING SALES I N MEXI CO

PORTFOLIO SEGMENTATION BY CHANNEL INCREASE STORE TRAFFIC & FREEZER PRODUCTIVITY SG&A CONTROL S T R E N G T H E N I N G OF SALES C H A N N E L S G R O W T H D R I V E R S

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FROZEN PERFORMANCE

CONSOLI DATED FI GURES IN MI LLI ON PESOS

1,166 2,139 2,592 2,882 2,985 3,031 2014 2015 2016 2017 2018 12M1Q19

NET SALES

EBITDA MARGIN

CAGR 5 YEARS Net sales: 21.1% EBITDA: 25.0% Acquisition of Helados Nestlé

10.0% 6.3% 4.0% 9.6% 11.1% 11.8%

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N U T R I S A R E N O V A T I O N

A F T E R B E F O R E

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P R O D U C T I N N O V A T I O N LEVERAGING ON THE POWER BRANDS RENEWED IMAGE WITH CLEANER LABELS

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M E G A M E X S N A P S H O T

S A L S A S & S A U C E S D I S R U P T I O N A V O C A D O F O R A L L F O O D A W A Y F R O M H O M E

2020 Goals USD $1B Net sales 14-16% EBITDA margin

G R O W M E G A M EX S H A R E I N C R E A S E H O U S E HOLD PE N E T R A TION A C C E L ER ATE P E N E T R A TION

To bring the spirit of Mexico to every table

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M E G A M E X P E R F O R M A N C E

CONSOLI DATED FI GURES IN MI LLI ON PESOS

7,689 8,876 10,840 12,168 13,258 13,436 2014 2015 2016 2017 2018 12M1T19

NET SALES

13.7% 14.2% 16.3% 15.0% 18.3% 17.8%

EBITDA MARGIN

CAGR 5 YEARS Net sales: 12.5% EBITDA: 34.5%

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M E G A M E X P O R T F O L I O

*THI RD PARTY I NFORMATI ON CONSI DERI NG MODERN TRADE

LEVERAGE ON THE ADOPTION OF GREEN SALSA AND STREET INSPIRED FOOD

34% 27% 9% 7% 5% 4% 3% 2%2% 2% 5%

Home-style salsa Guacamole Tortillas Mexican food Taco sauce Mole Peppers Tortilla chips Enchilada sauce Cheese dip Others

M E G A M E X S A L E S M I X B Y C A T E G O R Y T O R T I L L A S M O L E H O M E - S T Y L E S A L S A G U A C A M O L E

73% 13% 39% 2%

INCREASE HOUSEHOLD PENETRATION 71% of U.S. households buy avocados MARKET SHARE*

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S U S T A I N A B I L I T Y M O D E L

17% of all the energy consumed by our operations comes from the cogeneration project. More tan 90% of our agricultural suppliers comply with the Agrochemicals Management Program, thus reducing our impact

• n the environment.

Through the Saber Nutrir program, we fight malnutrition and food insecurity with training and the installation of productive projects. We promote labor equality through the installation of nursing rooms, creating stronger bonds with our employees.

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TALENT DEVELOPMENT

N U R S I N G R O O M S V A R I A B L E C O M P E N S A T I O N B A S E D O N B U D G E T R E A C H FLEXIBLE WORKING TIME H E A L T H Y E A T I N G & P H Y S I C A L E X E R C I S E P R O G R A M S S T O C K P L A N F O R E X E C U T I V E S I N C L U S I O N O F P E O P L E W I T H D I S A B I L I T I E S

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D E B T S T R U C T U R E

CONSOLI DATED FI GURES IN MI LLI ON PESOS THE DEBT MIX CONSI DERS HEDGES

R A T E S M I X H E R D E Z 14 H E R D E Z 13 H E R D E Z 17 BANK LOAN H E R D E Z 18 H E R D E Z 17-2 Financial Debt 100% in MXN $6,630 Average Cost 8.6% Net Debt / EBITDA 1.5 Net Debt / Shareholders Equity 0.29

75% 25%

fixed floating

200 430 1,000 1,000 2,000 2,000

2019 2020 2021 2022 2023 2024 2025 2026 2027

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R E T U R N S

ROE ROIC

ROE (RETURN ON EQUI TY) = MAJORI TY NET I NCOME / ANNU AL AVERAGE MAJORI TY SH AREH OL DER ´S EQUI TY ROIC (RETURN ON I NVE STE D CAPI TAL) = EBIT / (CONSOL I D ATED SH AREH OL DER ´S EQUI TY + TOTAL DEBT) (ANNU AL AVERAGE FROM LAST TWO YEARS)

6.0% 10.2% 13.7% 14.2% 14.4% 2015 2016 2017 2018 12M1Q19 9.9% 10.9% 12.2% 12.3% 12.3% 2015 2016 2017 2018 12M1Q19

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S H A R E H O L D E R S ‘ STRUCTURE

37.4% 32.9% 9.3% 3.7% 3.7% 0.2% 16.6%

USA Mexico Europe Canada LATAM Other countries

SOU RCE: B L OOMB ERG AS OF MARCH 31, 2019. EXCL U DES H ECH OS CON AMOR STAKE

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D I V I D E N D H I S T O R Y

Dividends paid

CONSOLI DATED FI GURES IN MILLION PESOS *EPS: ADJUSTED ANNU AL AVERAGE OUTSTANDI NG SHARES / MAJORI TY NET I NCOME

Outstanding shares 432 M Shares in treasury 21.1 M EPS* 12M1Q19 vs 12M1Q18 +18.1% Payout ratio 40.6% Dividend yield 2.5%

Dividend yield

367 384 389 387 426 426 2014 2015 2016 2017 2018 12M1Q19

2.4% 2.4% 2.2% 2.4% 2.5% 2.0%

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HERDEZ* single series Robust governance structure 67% independent members Assignment of individual responsibilities on corporate governance, labor and environmental practices I N D E P E N D E N T 6 7 % Héctor Hernández-PonsTorres Chairman Enrique Hernández-PonsTorres Vicepresident Flora Hernández de Merino Board member Enrique Castillo Sánchez Mejorada José Roberto Danel Díaz Corporate Practices and Audit Committee Chairman Eduardo Ortiz Tirado Serrano Head of Labor Practices Luis Rebollar Corona Head of Environmental Practices

C O R P O R A T E G O V E R N A N C E

P R O P I E T A R Y José Manuel Rincón Gallardo Anasofía Sánchez Juárez Cardoze

A P P E N D I X

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We entered the apiculture business with the acquisition of miel Carlota 1987 We created Fundación Herdez to contribute and disseminate new food possibilities in Mexico With the acquisition of Mole Doña María, we became the first company to produce mole on an industrial scale

OUR L E G A C Y

1910 1940 1960 1914 Compañía Comercial Herdez is established 1947 We created McCormick de México, entering the mayonnaise category 1962 We created our own line of products under the Herdez brand in the preserves segment 1970 The slogan “Con toda confianza… es Herdez” is born 1980 1990 We started exporting products and changed our name to Herdez We acquired Grupo Búfalo and Pescados de Chiapas, entering the canned tuna category 1991 We made the IPO of Grupo Herdez in the Mexican Stock Exchange 1993 We entered the coffee category 2000 2008 Herdez Del Fuerte is created 2009 MegaMex, a subsidiary of Herdez Del Fuerte, begins operations in the US 2006 We signed the distribution agreement with Ocean Spray 2002 We created Barilla México and started producing and selling pasta in the Mexican market 2010 We created the Frozen segment with the acquisition of Nutrisa in 2013 and Helados Nestlé in 2015 2017 We started the distribution of Frank’s and French’s MegaMex strengthens its portfolio with the acquisition of Don Miguel and Fresherized Foods in 2010 and 2011, respectively 2011 We partnered with Aires de Campo, the leading company in

• rganic

food in Mexico 2010 We signed the distribution agreement with Reynold’s 1989 We signed a distribution agreement with Kikkoman

P R E S E N C E I N 2 1 C O U N T R I E S

Mexico, United States, Aruba, Canada, Costa Rica, Cuba, Czech Republic, Dominican Republic, Ecuador, Germany, Guatemala, Honduras, Jamaica, New Zealand, Nicaragua, Portugal, Russia, Salvador, South Korea, Spain and Switzerland.

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B R A N D P R E S E N C E

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HÉCTOR HERNÁNDEZ-PONS TORRES Propietary - Chairman ENRIQUE HERNÁNDEZ-PONS TORRES Propietary- Vicepresident FLORA HERNÁNDEZ DE MERINO Propietary - Board Member

• Has a law degree from Universidad Anahuac and

an MBA from the National University of San Diego

• Experience in the sector since 1978
• Named Chairman in 2004
• Has held several positions in industry groups

including BASC, CONCAMIN and CANAINCA

• Bachelor´s degree in Business Administration and a

post- graduate degree in Marketing and Business Management

• Experience in the sector since 1971
• Chairman of Megamex

ENRIQUE CASTILLO SÁNCHEZ MEJORADA Independent JOSÉ ROBERTO DANEL DIAZ Independent EDUARDO ORTIZ TIRADO SERRANO Independent

• Bachelor´s degree in Business Administration
• Former Chairman of Maxcom Telecomunicaciones, Non-

executive Chairman of Banco Nacional de México and Vice- Chairman and President of the Banking Association

• f

Mexico

• Board member of Grupo Alfa, Southern Copper Corporation

and Médica Sur

• Bachelor´s degree in Accounting and postgraduate degree

in Business Administration, Business Management and Corporate Governance

• Chairman of the Corporate Governance Best Practices

Committee, member

• f

the Latin American Corporate Governance Institute and board member of public and private companies

• Held the highest

positions in Finance in Grupo Vitro, Grupo Desc and Industria Peñoles

• Director in Aerobal and Gridimex
• Held positions as Corporate Vice-President

and General Manager in SC Johnson for Mexico and Central America

• Board

member

• f

ENACTUS, Un mañana para la comunidad and member of Fundación Xochitla

• Former board member in CONAR, CEMEFI and advisory

council for Great Place to Work Mexico

LUIS REBOLLAR CORONA Independent JOSÉ MANUEL RINCÓN GALLARDO Independent

• Bachelor´s degree in Chemical Engineer
• Board member in Grupo Gigante,

Grupo Sánchez and Corporación San Luis

• Held positions as

Chairman in Satélites Mexicanos and Sandvik de México

• Bachelor´s degree in Accounting
• Held positions as member of the international Board of KPMG,

Chairman for LATAM, member of the U.S. Board and managing partner in México

• Member
• f

the Corporate Governance Best Practices Committee and founding member of CINIF, independent Advisor

• f Cementos

Mexicanos, Banamex, Cinépolis, Citelis, Sonoco Operadora, Grupo Invekra, Peña Verde, Grupo CP , Fondo WAMEX and Grupo Proa

B O A R D O F D I R E C T O R S

ANASOFÍA SÁNCHEZ JUÁREZ CARDOZE Independent

• Bahelor´s degree in Marketing and a Master´s degree in

Communication, Advertising and New Media

• Held positions as Director of Business in Mexico and

Central America on Facebook, Brand Solutions Manager for Google and Commercial Leader for YouTube Mexico.

• She currently serves as the CEO of Waze Mexico, and as a

professor at the Higher Institute for Internet Development (ISDI) in the Internet Business Master.

W W W . G R U P O H E R D E Z . C O M . M X FOR MORE INFORM ATION

invrel@herdez.com