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 J A N U A R Y 2 0 1 9

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

The information herein contained (“Information”) has been prepared by Grupo Herdez, S.A.B. de C.V., its associates, subsidiaries and/or affiliated companies (“Grupo Herdez”) and may contain forward-looking statements that reflect Grupo Herdez current expectations and views which could differ materially due to different factors, risks and uncertainties. Therefore, Grupo Herdez and/or its respective officers, employees or agents, assume no responsibility or liability for any discrepancy in the

• Information. In

particular, but without prejudice to the generality of the foregoing, no warranty is given as to the accuracy of the statements or the future variation of the Information or any other written or oral Information issued by Grupo Herdez. The Information has been delivered for informative purposes only. The issuance of this information shall not be taken as any form of commitment on the part 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 September 31, 2018, unless otherwise stated.

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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 H I S T O R Y

1910 1940 1960 1914 Compañía Comercial Herdez is established 1947 We created McCormik 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 USA 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 and 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 partner 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

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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% of the Frozen divi- sion, Herdez Del Fuerte, Barilla México y McCormick de México. The proportional part of Herdez Del Fuerte in Mega- Mex is registered in “Equity Investment in Associates“.

50%

McCormick 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

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

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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 , 3 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 5 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

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 U N I T E D S T A T E 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

P R E S E N C E I N 2 5 C O U N T R I E S

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

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

S E G M E N T S

1 0 F R OZ E N

O F N E T S A L E S

14%

C A T E G O R I E S Soft drinks Healthy snacks Frozen yogurt Popsicles Food supplements

E X P O R T S

O F N E T S A L E S

7%

C A T E G O R I E S Mexican food Mayonnaise Tea MegaMex is registered in “Equity Investment in Associates” and includes categories like guacamole, salsas and vegetables.

P R E S E R V E S

O F N E T S A L E S

79%

C A T E G O R I E S Canned tuna Mayonnaise Mole Tomato purée Pasta Vegetables

35% 16% 8% 8% 8% 4% 4% 4% 3% 2% 2% 2%1% 1% 1%

Mayonnaise Frozen Pasta Tomato purée Others Mole Canned tuna Vegetables Salsa Marmalade Ketchup Thea Food packaging Juice Mushrooms

35% 35% 8% 7% 6% 5% 4%

Retail Wholesalers Club stores Nutrisa stores Foodservice DSD traditional Convenience

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

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S A L E S M I X B Y C H A N N E L Presence in ALL the sales channels in Mexico 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 CONSI DERING SALES I N MEXI CO

Presence in the major food categories in Mexico

Tea

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M A R K E T S H A R E I N M E X I C O

C A N N E D T U N 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 S A L S A V E G E T A B L E S

8 % 73% 41% 84% 29% 72% 44% 27% We are #1 or #2 in categories that represents 79% of

• ur sales

FI GURES A S OF A UG UST

P R E S E R V E S G R O W T H D R I V E R S

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

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P R O D U C T I N N O V A T I O N P R O D U C T CO-CREATION BROADER CONSUMPTION OCCASIONS PREMIUM VERSIONS RESPONSIBLE CONSUMPTION HABITS

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P O I N T O F S A L E I N I T I A T I V E S

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F R O Z E N G R O W T H D R I V E R S

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 THIGHT SG&A CONTROL 46% 30% 13% 8% 2% 1%

Nutrisa stores DSD traditional Convenience Retail Others Club stores

S T R E N G T H E N I N G OF SALES C H A N N E L S

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

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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

19

M E G A M E X G R O W T H D R I V E R S

I N C R E A S E SALES BY I N N O V A T I O N A C C E L E R A T E B R A N D G R O W T H E X P A N S I O N O F S A L E S C H A N N E L S

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

R E D U C E G E N E R A L E X P E N S E S AS A P R O P O R T I O N OF NET SALES I M P R O V E G R O S S M A R G I N T H R O U G H E F F I C EN T P O R T A F O LI O M A N A G E M E N T R E D U C E P R O D U C T ION C O S T S

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MEGAMEX SALES MIX

CON SOLI DATED FI GURES IN MI LLI ON PESOS

LEVERAGE ON THE ADOPTION OF GREEN SALSA AND STREET INSPIRED FOOD INCREASE HOUSEHOLD PENETRATION 71% of U.S. households buy avocados

34% 33% 9% 4% 4% 4% 2% 2% 2%2% 4%

Guacamole Salsa Tortillas Mole Peppers Taco sauce RFG meals FRZ meals Tortilla chips Enchilada sauce Others

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MEGAMEX PERFORMANCE

CON SOLI DATED FI GURES IN MI LLI ON PESOS

7,689 8,876 10,840 12,168 12,168 2014 2015 2016 2017 12M3Q18

NET SALES

14.5% 14.2% 10.7% 15.0% 15.0%

EBITDA MARGIN

CAGR 5 YEARS Net sales: 13.9% EBITDA: 24.3%

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N E T S A L E S

CAGR 5years = 9.6% Preserves 7.4% Frozen 26.4% Exports 11.6% 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 16,238 1,166 2,139 2,592 2,882 2,972 955 1,079 1,158 1,230 1,478

2014 2015 2016 2017 12M3Q18 14,318 16,357 18,181 20,065 20,688

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 2,232 2,668 2,634 2,888 2,910 117 136 103 277 333 66 83 79 130 156

2014 2015 2016 2017 12M3Q18

16.9 17.7 15.5 16.4 16.4

2,415 2,887 2,816 3,295 3,399

CAGR 5years = 8.9% Preserves 6.9% Frozen 29.9% Exports 24.0%

10%

Frozen

85%

Preserves

5%

Exports

73% 27%

fixed floating

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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 HEDGE DERIVATES

M I X R A T E S 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

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

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Financial Debt 100% in MXN $6,830 Average Cost 8.5% Net Debt / EBITDA 1.3 Net Debt / Shareholders Equity 0.26

Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17

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COMPANY Vs. STOCK PERFORMANCE

CON SOLI DATED FI GURES IN MI LLI ON PESOS

CAGR 6 YEARS Net sales: 9.4% EBITDA: 10.7% Share price: -1.5%

$12,042 $1,843 $39.7 $20,688 $3,399 $36.22

12M3Q18

Net sales Share price EBITDA

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R E T U R N S

ROE ROIC

ROE (RETURN OVER EQUI TY) = MA JORI TY NET I NCOME / A NNUA L AVERAGE MA JORI TY SH A REH OLDER ´S EQUI TY ROIC (RETURN OVER 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% 15.6% 2014 2015 2016 2017 12M3Q18 11.0% 9.9% 10.9% 12.2% 12.4% 2014 2015 2016 2017 12M3Q18

Δ %Herdez Δ %IPC Δ %Consumo Frecuente P A R T O F T H E I N D E X E S Comercial Consumo Frecuente IMC30 IPC CompMX IPC SmallCap IPC Sustentable Transforma

S T O C K P E R F O R M A N C E

EPS 432 MILLION

49% FLOAT EPS MXN 2.77 OCT 2018 432 MILLION OUTSTANDING SHARES

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Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18

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S H A R E H O L D E R S

Hechos con amor 51.0% Commonwealth Bank 3.5% GBM 3.1% Franklin Resources 2.5% Dimensional Fund 1.4% Blackrock 1.4% Vanguard Group 1.4% BMO Financial 0.8% Royal Bank 0.8% Janus Henderson 0.6% IXE Fondos 0.5% Others 33.0%

HERDEZ* single series 432 million shares

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

Dividend per share EPS

CON SOLI DATED FI GURES IN PESOS

0.9 0.9 0.9 0.9 1.0 1.8 0.9 1.7 2.4 2.8 2014 2015 2016 2017 12M3Q18

Ooustanding Shares 432 M Shares in Treasury 6.9 M EPS 3Q18 vs 2017 +14.5% Payout Ratio 36.1% Dividend Yield 2.4%

2.4% 2.0% 2.4% 2.0% 2.4%

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HERDEZ* single series Robust governance structure from subisidiaries 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 Rebolla 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

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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

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

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

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