R E S I L I E N C E & F O C U S I N V E S T O R S P R E S E N - - PowerPoint PPT Presentation

I N V E S T O R S P R E S E N T A T I O N M A R C H 2 0 1 9

R E S I L I E N C E & F O C U S

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 December 31, 2018, 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

4 7 9 N U T R I S A S T O R E S 15 P L A N T S M O R E T H A N 9 , 4 0 0 E M P L O Y E E S 23 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

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N E T S A L E S

CAGR 5 years 9.7% Preserves 7.3% Frozen 30.7% Exports 12.8% 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

CON SOLI DATED FI GURES IN MI LLI ON PESOS

15,953

12,197 13,139 14,431 15,953 16,455 1,166 2,139 2,592 2,882 2,985 955 1,079 1,158 1,230 1,531

2014 2015 2016 2017 2018 14,318 16,357 18,181 20,065 20,971

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

2,415 2,887 2,816 3,295 3,517

CAGR 5 years = 11.4% Preserves 10.0% Frozen 24.5% Exports 21.9%

9%

Frozen

86%

Preserves

5%

Exports

2,232 2,668 2,634 2,888 3,016 117 136 103 277 332 66 83 79 130 169

2014 2015 2016 2017 2018

16.9 17.7 15.5 16.4 16.8

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

CON SOLI 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% 3% 2% 2% 2% 2% 1% 1% 11%

Mayonnaise Frozen Pasta Tomato purée Home-style salsa Mole Tuna Vegetables Tea Jams Ketchup Fresh tuna Food packaging Juice 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 A T 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 A L 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

39% 10% 9% 5% 5% 4% 3% 3% 2% 20%

Mayonnaise Pasta Tomato purée Tuna Mole Vegetables Home-style salsa Jams Tea Others

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

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 A T E D F I G U R E S I N M I L L I O N P E S O S

11,558 12,197 13,139 14,431 15,953 16,455 2013 2014 2015 2016 2017 2018

NET SALES

16.2% 18.3% 20.3% 18.3% 18.1% 18.3%

EBITDA MARGIN

CAGR 5 YEARS Net sales: 7.3% EBITDA: 10.0%

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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% 72% 45% 27% We are #1 or #2 in categories that represent 72% of

• ur sales in Mexico

33%

TH I RD P A RTY I NFORMA TI ON CON SI DERI NG MODERN TRA DE A N D WH OLESA LERS

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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

44% 30% 14% 9% 2% 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

CON SOLI 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

CON SOLI DATED FI GURES IN MI LLI ON PESOS

783 1,166 2,139 2,592 2,882 2,985 2013 2014 2015 2016 2017 2018

NET SALES

14.2% 10.0% 6.3% 4.0% 9.6% 11.1%

EBITDA MARGIN

CAGR 5 YEARS Net sales: 30.7% EBITDA: 24.5% Acquistion of Nutrisa Acquisition of Nestlé

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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 E X S H A R E I N C R E A S E H O U S E H O LD P E N E T R A T IO N A C C E L E R A TE P E N E T R A T IO N

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

CON SOLI DATED FI GURES IN MI LLI ON PESOS

7,341 7,689 8,876 10,840 12,168 13,258 2013 2014 2015 2016 2017 2018

NET SALES

7.5% 13.7% 14.2% 16.3% 15.0% 18.3%

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 P A RTY I NFORMA TI ON CON SI DERI NG MODERN TRA DE

LEVERAGE ON THE ADOPTION OF GREEN SALSA AND STREET INSPIRED FOOD

34% 33% 9% 4% 4% 3% 2% 2%2%2% 5%

Guacamole Home-style salsa Tortillas Mole Taco sauce Peppers RFG meals FRZ meals Tortilla chips Enchilada Sauce 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% 37% 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

S U STA I NA BL E D E V E LO P M E N T G OA LS

ZERO HUNGER

Boost food health by reducing levels of malnutrition. Sustainably manage marine biodiversity. Prioritize the reduction

• f our carbon footprint,

seeking to neutralize the effects of climate change. Incorporate eco-design product technologies, favoring the circular economy approach. Promote the creation of

• pportunities and

quality employment. Manage the water resource efficiently, responsibly and sustainably, Promote gender equality and the empowerment of women.

CLIMATE ACTION RESPONSIBLE CONSUMPTION AND PRODUCTION DECENT WORK AND ECONOMIC GROWTH CLEAN WATER AND SANITATION GENDER EQUALITY LIF LIFE BELOW WATER

quality of life quality of life culture of lawfulness culture of lawfulness

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

CON SOLI DATED FI GURES IN MI LLI ON PESOS THE DEBT MIX CON SI 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 1.3 Net Debt / Shareholders Equity 0.25

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) = MA JORI TY NET I NCOME / A NNUA L AVERAGE MA JORI TY SH A REH OLDER ´S EQUI TY ROIC (RETURN ON I NVESTED CAPITAL) = EBIT / (CON SOLI D ATED SH A REH OLDER ´S EQUI TY + TOTAL DEBT) (A N N UA L AVERAGE FROM LAST TWO YEA RS)

12.9% 6.0% 10.2% 13.7% 14.2% 2014 2015 2016 2017 2018 11.0% 9.9% 10.9% 12.2% 12.3% 2014 2015 2016 2017 2018

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S H A R E H O L D E R S ´ STRUCTURE

43.1% 20.5% 10.7% 6.1% 6.1% 0.3% 19.3%

USA Mexico Europe Canada LATAM Other countries

SOURCE: BLOOMBERG A S OF MA RCH 20TH , 2019, EX CLUDES H ECHOS CON A MOR STA KE REP RESENTS 40% OF TOTA L F LOA T

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

Dividends paid

CON SOLI DATED FI GURES IN MILLION PESOS *EPS: ADJUSTED ANNUAL AVERAGE OUTSTANDI NG SHARES / MAJORI TY NET I NCOME

Outstanding shares 432 M Shares in treasury 14.5 M EPS* 2018 vs 2017 +11.6% Payout ratio 36.8% Dividend yield 2.4%

Dividend yield

367 367 384 389 387 426 2013 2014 2015 2016 2017 2018

1.8% 2.0% 2.4% 2.2% 2.4% 2.4%

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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*

*PROVISIONAL BOARD MEMBER TO BE RATIFIED AT THE ANNUAL SHAREHOLDERS’ MEETING

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

*PROVISIONAL BOARD MEMBER TO BE RATIFIED AT THE ANNUAL GENERAL SHAREHOLDERS’ MEETING

• 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.

Andrea Amozurrutia

• Tel. +52 (55) 5201.5636

aac@herdez.com Fernando Acevedo

• Tel. +52 (55) 5201.5655 ext. 1052

lfacevedom@herdez.com

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 Grecia Domínguez

• Tel. +52 (55) 5201.5602

gdominguez@herdez.com