Le Lézard
Classified in: Business, Covid-19 virus
Subjects: ERN, ESG

ALFA reports 4Q21 EBITDA of US $505 million; annual EBITDA of US $2.022 billion, second highest level in its history


MONTERREY, Mexico, Feb. 15, 2022 /PRNewswire/ -- ALFA, S.A.B. de C.V. (BMV: ALFAA) ("ALFA"), a company that has developed a diversified portfolio of leading businesses with global operations, announced today its unaudited results for the fourth quarter of 2021 ("4Q21"). All figures have been prepared in accordance with International Financial Reporting Standards ("IFRS").

4Q21 HIGHLIGHTS

ALFA

?

Record annual revenue of US $15.2 billion and second highest annual EBITDA of US $2.0 billion; both exceed revised 2021 Guidance

?

Consolidated net leverage ratio of 2.3 times; lowest since 2018

?

Consistent progress on 3 key directives of ALFA's Unlocking Value strategy

Alpek

?

Record annual revenue and EBITDA driven by high reference margins and strong volume

?

Net leverage ratio of 1.1 times; an improvement from 2.1 times in 4Q20

?

Regained investment-grade credit rating of BBB- from Standard & Poor's 

Sigma

?

Record annual revenue and EBITDA of US $6.8 billion and US $741 million, respectively

?

Net leverage ratio of 2.3 times; lowest level since 2012

?

Profitability enhancement initiatives in Europe moving forward; sold 2 plants in France and signed agreement to sell 6 plants in Belgium and the Netherlands

Axtel

?

Continued conversations with potential buyers; will maintain open dialogue while advancing with internal strategic agenda to capitalize on attractive market opportunities

?

2021 revenue and comparable EBITDA down 3% and 5%, respectively. Net debt down 5% supported by strong cash flow; fifth consecutive year of debt reduction

?

Gross acquisition of Enterprise segment projects up 21% versus 2020

Message from ALFA's President

"We hope you are all continuing to stay safe and healthy considering the recent surge of the Omicron variant of COVID-19. We are pleased to report that ALFA delivered another strong quarter and annual results exceeded Guidance, while maintaining consistent progress toward the Unlocking Value strategy and advancing ESG efforts.

Quarterly revenue and EBITDA were up 27% and 21% year over year, respectively. For the full year, ALFA achieved record revenue of US $15.2 billion and posted second best EBITDA of US $2.0 billion. Strong consolidated financial results underscore our businesses' capabilities to drive growth in a highly dynamic and fluid macro environment.

Alpek continued to beat expectations boosted by strong reference margins in Polyester and Plastics & Chemicals during 4Q21. Sigma also delivered stronger than expected performance, driven by double-digit 4Q21 EBITDA growth in Mexico and Europe. Alpek and Sigma reached all-time high annual revenue and EBITDA in 2021. By contrast, equipment delays caused by the global semi-conductor shortage, lower Government sales and a decrease in Enterprise voice revenue weighed on Axtel's quarterly and annual results.

Solid operating and financial performance reinforce ALFA's Unlocking Value strategy and enhances the Company's unique position to leverage real options and timing flexibility. We remain fully committed to eliminating ALFA's conglomerate discount through consistent progress focused on three key implementation directives:

i)

Reducing leverage: Ensuring that our consolidated and individual capital structures are appropriately balanced throughout the transformation process is fundamental to unlocking ALFA's full value potential. Better-than-expected EBITDA and financial discipline effectively translated into a 75 basis point improvement in consolidated leverage ratio during the year. ALFA's consolidated Net Debt to EBITDA ratio of 2.3 times at the close of 2021 marks the lowest level since 2018.




Alpek achieved an outstanding financial position supported by a low Net Debt to EBITDA ratio of 1.1 times and recovered its investment grade rating from S&P after a thorough review of its Business Risk profile. Moreover, Sigma's leverage ratio of 2.3 times in 4Q21, was down 29 basis points versus 4Q20, reaching its lowest level since 2012.




Organic deleverage may also be complemented through strategic initiatives such as the potential sale of Axtel. The Axtel team continued conversations with potential buyers during 4Q21. Axtel plans on maintaining an open dialogue with interested parties while moving ahead with its internal strategic agenda to capitalize on attractive market opportunities. 



ii)

Focusing on the core businesses: Growth and profit-enhancing initiatives at the Subsidiary level complement ALFA's strategy by boosting the value of core businesses while the transformation process is underway.




Sigma is on track towards achieving its goal of double-digit EBITDA margins in Europe by 2025, delivering a 93 basis points improvement during 2021. In addition to revenue enhancing actions, product innovation, and cost-saving initiatives, the Company advanced its footprint optimization efforts that will drive further margin improvement. To date, Sigma has announced the sale of 8 facilities out of the 25 it operated throughout Europe; 6 plants being sold in Belgium and the Netherlands, plus 2 plants sold in France.




Alpek recently announced a transformational agreement to acquire Octal, a major global producer of PET sheet with operations in Oman, U.S. and Saudi Arabia. The US $620 million investment will forward integrate Alpek into an adjacent, high-value business segment; accelerate the Company's progress towards its ESG goals; and enhance its ability to serve customers' growing PET resin needs. Importantly, Alpek has the financial strength to fund the acquisition and continue distributing cash to shareholders, supported by its extraordinary financial position, a favorable outlook for existing business lines, and the accretive nature of this transaction.




Axtel has accelerated its go-to-market approach in the Enterprise segment based on successful pilot testing during 2021. Axtel will implement a specialized commercial model for high-growth, digital transformation services: Cybersecurity, Cloud, Systems integration, Collaboration and Managed networks.



iii)

Enhancing business independence: Progress continued at the corporate level in assisting the Subsidiaries in achieving service-related independence from ALFA. A key aspect of this effort has been the transfer of personnel from centralized functions at ALFA to the business units. In turn, ALFA's Corporate headcount was reduced 18% during 2021, primarily driven by such transfers.

On the ESG front, ALFA and its businesses continued integrating best-practices into their long-term strategies during 2021, contributing towards a more sustainable future. For the second consecutive year, ALFA's rating increased in the S&P Global Corporate Sustainability Assessment and remains above the industry average for conglomerates. We are driven to improve continuously on Environmental, Social and Governance dimensions. Alpek set specific targets to reduce its scope 1 and 2 emissions and increase its PET bottle recycling capabilities. Sigma secured more than 60% of its power needs from cleaner and renewable energy sources as it navigates toward net-zero emissions. Moreover, "ALFA Fundación" continued to support social mobility through education, benefitting over 1,900 junior high, high school and university students in Mexico. Related to Governance, a periodic review of ESG topics was incorporated to ALFA's Audit Committee agenda, with results reported to ALFA's Board of Directors.

2021 was an exceptional year. My sincere appreciation to the entire ALFA team for their dedication and hard work, managing through a complex environment to serve our customers and deliver on our objectives. We look forward to another strong year in 2022."

Keep well/Stay safe,

Álvaro Fernández

SELECTED FINANCIAL INFORMATION (US $ Millions)


4Q21

3Q21

4Q20

Ch. %
vs.
3Q21

Ch. %
vs.
4Q20

2021

2020

Ch. %

ALFA & Subs with Nemak as Discontinued Operations

ALFA Revenues

4,086

3,976

3,218

3

27

15,181

12,325

23

    Alpek

2,152

2,082

1,392

3

55

7,697

5,326

45

    Sigma

1,768

1,729

1,662

2

6

6,817

6,347

7

    Axtel

136

138

150

(2)

(9)

562

578

(3)

ALFA EBITDA1

505

486

419

4

21

2,022

1,536

32

    Alpek

269

279

201

(4)

34

1,145

565

103

    Sigma

201

176

178

14

13

741

684

8

    Axtel

40

46

51

(13)

(22)

187

308

(39)

ALFA Comparable EBITDA2

534

440

364

21

47

1,837

1,408

30

    Alpek

300

234

151

28

99

962

601

60

    Sigma

199

176

178

13

12

739

684

8

    Axtel

40

46

51

(13)

(22)

187

197

(5)

Majority Net Income3

(166)

125

(63)

(234)

(166)

211

190

11

CAPEX & Acquisitions4

159

107

165

48

(4)

527

399

32

ALFA Net Debt5

4,677

4,875

4,699

(4)

-

4,677

4,699

-

    Alpek

1,225

1,323

1,185

(7)

3

1,225

1,185

3

    Sigma

1,691

1,692

1,756

-

(4)

1,691

1,756

(4)

    Axtel

574

613

602

(6)

(5)

574

602

(5)

ALFA Net Debt/LTM EBITDA6

2.3

2.5

3.1






ALFA LTM Interest Coverage7

5.4

5.2

4.4






1 EBITDA = Operating Income + depreciation and amortization + impairment of assets.

2 Excludes extraordinary items.

3 Majority Net Income includes Majority Net Income from Discontinued Operations (Nemak).

4 Gross amount; excludes divestments and Capex from Discontinued Operations (Nemak).

5 Net Debt adjusted for Discontinued Operations (excluding Nemak) at the close of 3Q20; previous periods unchanged.

6 Times. LTM = Last 12 months. Ratio calculated with Discontinued Operations for all periods.

7 Times. LTM = Last 12 months. Interest Coverage = EBITDA/Net Financial Expenses with Discontinued Operations.


















 

4Q21 EARNINGS CALL INFORMATION


Date:

Wednesday, February 16, 2022


Time:

1:00 p.m. EDT (NY) / 12:00 p.m. CDT (CDMX)



By Phone:

United States:

+1-877-451-6152


International:

+1-201-389-0879


Mexico:

800-522-0034


Conference ID: 13726713


Webcast:

https://viavid.webcasts.com/starthere.jsp?ei=1526654&tp_key=d376701c22


Replay:

https://www.alfa.com.mx/RI/conference.htm

Contact
Hernán F. Lozano
V.P. of Investor Relations
ALFA, S.A.B. de C.V.
T. +52 (81) 8748-2521
[email protected]

Carolina Alvear
Corporate Communication Director
ALFA, S.A.B. de C.V.
T. +52 (81) 8748-2521
[email protected]

About ALFA

ALFA manages a diversified portfolio of leading businesses with global operations: Sigma, a leading multinational food company, focused on the production, marketing and distribution of quality foods through recognized brands in Mexico, Europe, United States and Latin America. Alpek, one of the world's leading producers of polyester (PTA, PET, rPeT and fibers), and the leader in the Mexican market for polypropylene and expandable polystyrene (EPS). Axtel, a provider of Information Technology and Communication services for the enterprise and government segments in Mexico. In 2021, ALFA reported revenues of Ps. 308,060 million (US $15.2 billion), and EBITDA of Ps. 41,050 million (US $2.0 billion). ALFA's shares are quoted on the Mexican Stock Exchange and on Latibex, the market for Latin American shares of the Madrid Stock Exchange. For more information, please visit www.alfa.com.mx

Disclaimer

This release may contain forward-looking information based on numerous variables and assumptions that are inherently uncertain. They involve judgments with respect to, among other things, future economic, competitive and financial market conditions and future business decisions, all of which are difficult or impossible to predict accurately. These uncertainties include, but are not limited to, risks related to the impact of the COVID-19 global pandemic, such as the scope and duration of the outbreak, government actions and restrictive measures implemented in response, availability of workers and contractors due to illness and stay at home orders, supply chain disruptions and other impacts to the business, or on the Company's ability to execute business continuity plans, as a result thereof. Accordingly, results could vary from those set forth in this release. The report presents unaudited financial information. Figures are presented in Mexican Pesos or US dollars, as indicated. Where applicable, Peso amounts were translated into US dollars using the average exchange rate of the months during which the operations were recorded. Financial ratios are calculated in US dollars. Due to the rounding up of figures, small differences may occur when calculating percent changes from one period to the other.

SOURCE ALFA, S.A.B. de C.V.


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