alfa, s.a.b. de c.v. fourth quarter 2016 financial report · fourth quarter 2016 financial report...

ALFA,S.A.B.deC.V.

FOURTHQUARTER2016FINANCIALREPORTALFAreports4Q16EBITDAofU.S.$540million

Monterrey, N.L.,Mexico, February 14, 2017.- ALFA, S.A.B. de C.V. (ALFA), aMexican company with global operations thatmanages a portfolio of businesses involved in refrigerated food, petrochemicals, aluminum auto components, IT andtelecommunicationsservicesandenergy,reportedtodayits4Q16unauditedfinancialresults.TotalrevenueswereU.S.$3,874million,down1%year-on-yearprimarilyduetothedepreciationoftheMexicanpesoandlowerpetrochemicalfeedstocksandaluminumprices. EBITDAwasU.S. $540million, down 17% vis-à-vis 4Q15, but only 3%down excluding extraordinary gainsrecorded in 4Q15. This reduction is mainly explained by lower margins for petrochemical products and adverse foreignexchangeeffects.Alvaro Fernandez, ALFA’s President, commented on the Company’s results: “Overall 4Q16 results were mixed, with goodperformancesatNemakandSigmaoffsetbyweakerperformancesatAlpekandAxtel.Supportedbystrongautomarkets inNorthAmericaandEurope,NemakperformedsolidlyinthequarterandpostedanotherrecordyearinEBITDA.Excludingone-time gains recorded a year ago, Sigmaposted positive results on a currency-neutral basis. In contrast, Alpek’s resultswerenegativelyaffectedbylowerpolypropylenemargins.Axtel’sresultswerealsoimpactedbytheweaknessoftheMexicanPesoagainsttheU.S.Dollarandthegovernment´sspendingcutswhichresulted inareducednumberofprojects”.Mr.Fernandezfurther commented, “The Alfa companies continue to make investments to both support future growth and enhanceefficiencies”.Consolidated capital expenditures and acquisitions amounted to U.S. $450 million during 4Q16, for a total of U.S. $1,491millionin2016.NetDebtatthequarterendofU.S.$5,844millionwas22%higherwhencomparedtotheU.S.$4,785millionin4Q15.ThisincreaseprimarilyreflectstheconsolidationofAxtel’sNetDebtpluscapitalexpendituresintheperiod.Attheendofthequarter,financialratioswere:NetDebttoEBITDA:2.5times;InterestCoverage:6.6times.MajorityNetLosswasU.S.$41millionin4Q16,comparedtoMajorityNetIncomeofU.S.$12millionin4Q15.Thisyear-on-yeardecrease ismainlytheresultof loweroperatingresultsandhigherComprehensiveFinancingExpenses(“CFE”)duetohigherforeignexchangelosses.

SELECTEDFINANCIALINFORMATION(U.S.$MILLIONS)

4Q16 3Q16 4Q15 CH.%VS.3Q16

CH.%VS.4Q15

YTD.´16

YTD`15

YTDChg.%

CONSOLIDATEDREVENUES 3,874 4,023 3,897 (4) (1) 15,756 16,315 (3)Sigma 1,438 1,461 1,482 (2) (3) 5,698 5,901 (3)Alpek 1,183 1,236 1,219 (4) (3) 4,838 5,284 (8)Nemak 996 1,063 1,048 (6) (5) 4,257 4,482 (5)Axtel 191 205 99 (7) 93 736 389 89Newpek 27 29 32 (4) (13) 107 138 (23)

CONSOLIDATEDEBITDA 540 560 647 (4) (17) 2,322 2,420 (4)Sigma 166 166 287 - (42) 663 869 (24)Alpek 133 157 143 (15) (7) 669 630 6Nemak 186 182 165 2 13 798 759 5Axtel 46 67 48 (32) (4) 225 166 36Newpek 12 1 37 917 (68) 9 67 (86)

MAJORITYNETINCOME (41) 13 12 (408) (451) 160 223 (28)CAPITALEXPENDITURES&ACQ. 450 376 454 20 (1) 1,491 1,606 (7)NETDEBT 5,844 5,943 4,785 (2) 22 5,844 4,785 22NetDebt/LTMEBITDA* 2.5 2.4 2.0 LTMInterestCoverage* 6.6 6.6 7.7

*Times.LTM=Last12months1EBITDA=OperatingIncome+depreciationandamortization+impairmentofassets.

CONTENTS:SummaryofGroups…2–ALFAFinancialTables…5–ALFAGroupsFinancialInformation…9Thisreleasemaycontainforward-lookinginformationbasedonnumerousvariablesandassumptionsthatareinherentlyuncertain.Theyinvolvejudgmentswithrespectto,amongotherthings,futureeconomic,competitiveandfinancialmarketconditionsandfuturebusinessdecisions,allofwhicharedifficultorimpossibletopredictaccurately.Accordingly,resultscouldvaryfromthoseforward-lookinstatementssetforthinthisrelease.Thereportpresentsunauditedfinancialinformation.Figuresarepresented inMexicanpesosorU.S.Dollars,as indicated.Whereapplicable,pesoamountsweretranslated intoU.S.Dollarsusing theaverageexchangerateof themonthsduringwhichtheoperationswererecorded.FinancialratiosarecalculatedinU.S.Dollars.Duetotheroundingupoffigures,smalldifferencesmayoccurwhencalculatingpercentchangesfromoneperiodtotheother.

ALFA,S.A.B.deC.V.–4Q16FinancialReport 2

Summaryofgroups´performanceduring4Q16During4Q16,Sigmacontinuedtoreportsolidresults,despiteachallengingenvironment.TotalrevenuesamountedtoU.S.$1,438million,down3%year-on-year,impactedbythe18%depreciationofthepesoduringtheperiod.Bycontrast, ona currencyneutral basis revenues rose5%.By region, sales inMexico increased10%y-o-y inpesosterms,reflectingpriceadjustmentstoabsorbtheeffectofahigherexchangerateonrawmaterialcosts.Europeansalescontinuedtoimprove.

Sigma reported4Q16EBITDAofU.S. $166million, down42%year-on-year. Excluding thenon-recurring gains ofU.S. $88 million from property damage and U.S. $38 million from business interruption insurance proceeds,reportedin4Q15relatedtotheBurgosplantfire,EBITDAincreased3%year-on-year.Onacurrencyneutralbasis,EBITDAwasup12%.Europeanoperationshavereportedbetteryear-on-yearresults throughouttheyeardespitethelackofthefacilitylostintheNovember,2014fire.

During 4Q16, Sigma invested U.S. $157 million in fixed assets. This amount includes U.S. $95 million for theconstructionofthenewplantinSpainwhichbeganlimitedoperationsinNovember2016.

Sigma´s consistent cash flowgenerationallowed the company to finance capital expenditures and tomaintain asolid financial condition. At the end of the period, Net Debt was U.S. $1,724 million, down U.S. $201 millioncomparedtotheU.S.$1,925millionin4Q15.4Q16NetDebttoEBITDAratiowas2.6times,whileInterestCoverageratiowas5.5times.

(Seeappendix“A”foramorecomprehensiveanalysisofSigma´s4Q16financialresults)

Alpek’s 4Q16 revenues totaled U.S. $1,183 million, down 3% year-on-year driven mainly by a 3% decline inaverageconsolidatedpricesreflectingloweroilandfeedstockprices.4Q16EBITDAwasU.S.$133million,down7%whencomparedto4Q15.Thisquarter’sConsolidatedEBITDAincludesaU.S.$16millionnon-cashinventorygain. Adjusting for the inventory gain, comparable Consolidated EBITDA was U.S. $117 million and U.S. $166million in 4Q16 and 4Q15, respectively. Comparable Consolidated EBITDA decreased 30% year-over-year asmarginnormalization continued in theP&C segment’s PP andEPSbusinesses, and forcemajeure stoppages atthreeU.S.plantsduetoHurricaneMatthewweighedonthePolyestersegment.

Alpek’s 4Q16 capital expenditures were U.S. $75 million. The majority of the funds were invested in M&G’sCorpus Christi PTA/PET facility, as well as in the Altamira cogeneration plant. Net Debt as of the end of thequarter was U.S. $1,042 million, up 44% year-on-year, driven by the aforementioned investment in strategicprojects.Atquarterend,financialratioswereasfollows:NetDebttoEBITDA,1.6times;InterestCoverage,10.5times.

(Seeappendix“B”forAlpek´s4Q16financialreport)

Nemak´s 4Q16 sales volumewas 11.8million equivalent units, 5% lower than 4Q15. Volume in North Americacontinued to be affected by Fiat Chrysler Automobiles (FCA) ’s decision to downscale production of itsmid-sizesedanlines,forwhichNemakwasasupplier.InEurope,salesvolumeremainedflat,whereasRestofWorldshowedstronggrowth.4Q16revenuesofU.S.$996millionwere5%loweryear-on-year.Apartfromlowersalesvolumes,loweraluminumpricesalsonegativelyimpactedrevenue.4Q16EBITDAtotaledU.S.$186million,up13%year-on-year.Despite the reduction in revenuesEBITDAgrewquarter-on-quarterdue to improvedproductmixandgoodperformanceinallregions,explainedbyplantefficienciesinNorthAmericaandEurope,andgrowthinAsia.EBITDAperunitwasU.S.$15.80in4Q16,upfromU.S.$13.30ayearago.

CapitalexpendituresinthequarteramountedtoU.S.$164million.FundswereutilizedtocontinuetheexpansionofmachiningcapacityandanewHPDCplant inMexico,aswellastheconstructionofanewfacility inSlovakiaandexpansion in Poland. Other capex included the updating of existing production equipment, and investments toimprove operational efficiency. Also, during the quarter the acquisition of Cevher Döküm was finalized, aferreceiving regulatory approvals. Net Debt at the end of 4Q16 totaled U.S. $1,262 million, up 4% from 4Q15,reflecting the capital expenditures during the period. Financial ratios in 4Q16were: Net Debt to EBITDA of 1.6times,andInterestCoverageof11.9times.


(Seeappendix“C”forNemak´s4Q16financialreport)

Axtel’s revenues in the fourth quarter totaled U.S. $191 million, up 93% year-on-year, largely reflecting theconsolidationofAxtel.However,governmentspendingcutswhichresultedinareducednumberofprojects,andadeclineinenterpriselongdistanceandinternationaltraffic,haveaffectedrevenuesthroughtheyear.

4Q16EBITDAwasU.S.$46million,down4%year-on-year,mostlyexplainedbythedepreciationof thepesoandlowercontributionfromthegovernmentsegment.Inpesoterms,EBITDAincreased13%.Expectedsynergiesfromthemergercontinuetobecapturedasplanned.

CapitalexpenditurestotaledU.S.$45millionin4Q16,includinginvestmentstoprovidelast-mileaccesstoconnectcustomers,todeployITinfrastructureandtofurtherincreasedatacentercapacityinQueretaro,Mexico.

Attheendof4Q16,NetDebtwasU.S.$972million,upU.S.$761millionyear-on-year,includingU.S.$721milliontoreflecttheconsolidationofAxtel’sNetDebtafterthemerger.Financialratiosattheendof4Q16were:NetDebttoEBITDAratioof4.3timesandInterestCoverageof6.3times.

(Seeappendix“D”forAxtel´s4Q16financialreport)

Newpek’s financial results improvedcomparedtothesameperiod in theprioryear, reflectingbetteroilandgasprices. WTI Oil price was up 17% from 4Q15, averaging U.S. $49 per barrel, and Henry Hub natural gas priceincreased44%toanaverageofU.S.$3permillionBTU.

Newpek´s sales volume in theU.S. averaged 5.9million barrels of oil equivalent per day (MBOED) during 4Q16,down37% from4Q15. InMexico,productionaveraged3.5MBOEDduring4Q16,down21% from4Q15.NonewwellsweredrilledintheU.S.andoperationsinMexicohavebeenscaleddown,inlinewithastrategicaldecisiontoreduceoperationalandcapitalexpensesduringthisperiodof lowoilandgasprices.The lowerproduction inthequarterisalsoareflectionofthenormaldepletionofwellsconnectedtosales.

4Q16revenuestotaledU.S.$27millionandEBITDAwasU.S.$12million.Thisrepresentedyear-on-yeardecreasesof13%and68%,respectively,explainedbylowerproductionlevelsandoilprices.CapitalexpendituresinthequarteramountedtoU.S.$5million.

(Seeappendix“E”formorecomprehensiveanalysisofNewpek´s4Q16financialresults)

Consolidatedfinancialresults4Q16ConsolidatedrevenueswereU.S.$3,874million,down1%fromtheU.S.$3,897millionreportedin4Q15.ThedecreasemainlyreflectslowerrawmaterialspricesforAlpek(oil-relatedfeedstocks)andlowervolumesforNemak.RevenueswerealsonegativelyimpactedbythestrongerU.S.Dollarexchangerate,whichreducedtheamountofrevenuestranslatedtodollarsofcompaniesexposedtotheMexicanPeso,particularlySigma(Mexicanoperations)andAxtel.Duringthequarter, foreignsalesrepresented65%of thetotal,comparedto66% in4Q15.CumulativerevenueswereU.S.$15,756millionin2016,down3%vs.2015,basicallyforthesamereasonsalreadymentioned.

4Q16 Consolidated Operating Income totaled U.S. $192 million, down 46% from 4Q15. However, 4Q15 resultsbenefittedfromextraordinarygainsofU.S.$88millionfrompropertydamage insuranceproceeds,relatedtotheBurgosplantfireinSigma.Excludingthisgain,OperatingIncomedecreased29%year-on-year,mostlyexplainedbySigmawhichdidnotbenefit frombusiness interruption insuranceproceeds it received in4Q15 in theamountofU.S.$38million,andbyAxtel,whichhasbeenimpactedbythedepreciationofthePeso,lowerperformancefromthegovernmentsegmentandchargesrelatedtothemerger.

4Q16 EBITDA was U.S. $540 million, down 17% year-on-year, reflecting the lower Operating Income explainedabove but only 3% lower excluding property damage proceeds cited above. Cumulative Operating Income andEBITDAwereU.S.$1,313millionandU.S.$2,322million,down13%and4%vis-à-vis2015,respectively.

ALFAreported4Q16ComprehensiveFinancingExpense(“CFE”)ofU.S.$183million,comparedtoU.S.$172millionin4Q15.Themainitemsaffecting4Q16CFEwereforeignexchangelossesonforeigndebt,duetothestrenghtening


oftheU.S.Dollarwhichappreciated18%year-on-yearversusthePeso.2016CFEwasU.S.$798million,15%lowerthanin2015.

MajorityNetLosswasU.S.$41millionin4Q16,comparedtoMajorityNetIncomeofU.S.$12millionin4Q15.Thedecreaseismostlyexplainedby loweroperating incomethanin4Q15.CummulativeMajorityNetIncometotaledU.S.$160million,28%lowerthanin2015.

Capitalexpendituresandacquisitions;NetDebtConsolidatedcapitalexpendituresandacquisitionstotaledU.S.$450million in4Q16, foracumulativeamountofU.S.$1,491millionin2016.Allsubsidiariescontinuedtomakeprogressontheir investmentplansasdiscussedintheinitialsectionofthisreport.Atquarter-end4Q16,ALFA’sNetDebtamountedtoU.S.$5,844million,U.S.$1,059millionhigherthan4Q15.HigherNetDebtreflectsmainlytheconsolidationofAxtel’sdebtofU.S.$721millionandcapitalexpendituresoftheperiod.Attheendofthequarter,financialratioswere:NetDebttoEBITDA,2.5times;InterestCoverage,6.6times.Theseratioscompareto2.0timesand7.7timesin4Q15.


ALFATABLE1|VOLUMEANDPRICECHANGES(%)

4Q16vs. YTD.´16vs.

3Q16 4Q15 YTD.´15TotalVolume (0.1) 13.0 11.1DomesticVolume 1.2 33.0 29.2ForeignVolume (1.4) (1.5) (1.5)Avg.Ps.Prices 2.0 4.0 2.4Avg.U.S.$Prices (3.6) (12.1) (13.1)

TABLE2|REVENUES (%)4Q16VS. 4Q16 3Q16 4Q15 3Q16 4Q15 YTD.´16 YTD.´15 Ch.%TOTALREVENUES Ps.Millions 76,713 75,323 65,232 2 18 293,782 258,300 14U.S.$Millions 3,874 4,023 3,897 (4) (1) 15,756 16,315 (3)

DOMESTICREVENUES Ps.Millions 27,213 26,552 22,115 2 23 103,290 87,749 18U.S.$Millions 1,373 1,418 1,321 (3) 4 5,539 5,545 -

FOREIGNREVENUES Ps.Millions 49,500 48,771 43,117 1 15 190,492 170,550 12U.S.$Millions 2,500 2,604 2,576 (4) (3) 10,217 10,770 (5)Foreign/Total(%) 65 65 66 65 66

TABLE3|OPERATINGINCOMEANDEBITDA (%)4Q16VS.

4Q16 3Q16 4Q15 3Q16 4Q15 YTD.´16 YTD.´15 Ch.%OPERATINGINCOME Ps.Millions 3,734 6,275 5,932 (40) (37) 24,214 24,057 1U.S.$Millions 192 334 357 (43) (46) 1,313 1,518 (13)EBITDA Ps.Millions 10,709 10,503 10,809 2 (1) 43,254 38,440 13U.S.$Millions 540 560 647 (4) (17) 2,322 2,420 (4)

TABLE4|COMPREHENSIVEFINANCING(EXPENSE)/INCOME(CFI)(U.S.$MILLIONS) (%)4Q16VS.

4Q16 3Q16 4Q15 3Q16 4Q15 YTD.´16 YTD.´15 Ch.%FinancialExpenses (70) (102) (87) 31 20 (384) (351) (9)FinancialIncome 9 6 10 50 (10) 31 36 (14)NetFinancialExpenses (61) (95) (77) 36 21 (352) (316) (11)FxGains(Losses) (127) (64) (46) (98) (176) (383) (348) (10)PREvaluation 0 (28) (53) 100 100 (69) (277) 75CapitalizedCFE 5 1 3 400 67 6 3 100CFE (183) (187) (172) 2 (6) (798) (937) 15Avg.CostofBorrowedFunds(%) 4.9 4.7 4.3 4.8 4.4


ALFATABLE5|MAJORITYNETINCOME(U.S.$MILLIONS) (%)4Q16VS.

4Q16 3Q16 4Q15 3Q16 4Q15 YTD.´16 YTD.´15 Ch.%ConsolidatedNetIncome(Loss) (35) 50 50 (170) (170) 295 351 (16)MinorityInterest 6 37 38 (84) (84) 134 128 5MajorityNetIncome(Loss) (41) 13 12 (415) (442) 160 223 (28)PerShare(U.S.Dollars) (0.01) 0.00 0.00 0.03 0.04 Avg.OutstandingShares(Millions) 5,121 5,121 5,121 5,121 5,129

TABLE6|CASHFLOW(U.S.$MILLIONS) (%)4Q16VS.

4Q16 3Q16 4Q15 3Q16 4Q15 YTD.´16 YTD.´15 Ch.%EBITDA 540 560 647 (4) (17) 2,322 2,420 (4)NetWorkingCapital&Others 232 65 170 257 36 (71) (243) 71CapitalExpenditures&Acquisitions (450) (376) (454) (20) 1 (1,491) (1,606) 7NetFinancialExpenses (60) (92) (81) 35 26 (369) (322) (15)Taxes (58) (47) (84) (23) 31 (290) (246) (18)Dividends(ALFA,S.A.B.) 0 0 0 - - (172) (156) (10)OtherSources/Uses (105) (20) (123) (425) 15 (987) 493 (300)Decrease(Increase)inNetDebt 99 89 75 11 32 (1,059) 339 (412)

TABLE7|SELECTEDBALANCESHEETINFORMATION&FINANCIALRATIOS(U.S.$MILLIONS)

4Q16 3Q16 4Q15 YTD.´16 YTD.´15Assets 16,886 16,809 15,500 16,886 15,500Liabilities 11,999 12,038 10,862 11,999 10,862Stockholders’Equity 4,887 4,771 4,639 4,887 4,639MajorityEquity 3,685 3,583 3,614 3,685 3,614NetDebt 5,844 5,943 4,785 5,844 4,785NetDebt/EBITDA* 2.5 2.4 2.0 2.5 2.0InterestCoverage* 6.6 6.6 7.7 6.6 7.7*Times:LTM=Last12months

AppendixAALFA,S.A.B.deC.V.andSubsidiariesBALANCESHEETInformationinmillionsofNominalMexicanPesos

Dec-16 Sep-16 Dec-15 Sep16 Dec15ASSETS

CURRENTASSETS:Cashandcashequivalents 24,633 22,655 24,852 9 (1)Tradeaccountsreceivable 28,850 30,070 23,946 (4) 20Otheraccountsandnotesreceivable 6,058 7,644 9,530 (21) (36)Inventories 40,923 39,466 34,128 4 20Othercurrentassets 11,305 11,832 4,874 (4) 132Totalcurrentassets 111,768 111,667 97,331 0 15

INVESTMENTSINASSOCIATESANDJOINTVENTURES 2,111 2,001 1,974 5 7PROPERTY,PLANTANDEQUIPMENT 149,503 138,070 106,376 8 41INTANGIBLEASSETS 63,171 54,934 44,615 15 42OTHERNON-CURRENTASSETS 22,384 21,110 16,409 6 36

Totalassets 348,938 327,783 266,705 6 31LIABILITIESANDSTOCKHOLDER'SEQUITY

CURRENTLIABILITIES:Currentportionoflong-termdebt 2,614 1,090 3,135 140 (17)Bankloansandnotespayable 6,193 6,187 2,443 0 154Suppliers 53,729 47,906 38,915 12 38Othercurrentliabilities 20,470 22,804 18,473 (10) 11Totalcurrentliabilities 83,006 77,988 62,966 6 32LONG-TERMLIABILITIES:Long-termdebt 136,323 131,038 101,631 4 34Deferredincometaxes 16,228 14,204 11,957 14 36Otherliabilities 7,890 7,217 6,802 9 16Estimatedliabilitiesforsenioritypremiumsandpensionplans 4,502 4,304 3,535 5 27

Totalliabilities 247,950 234,750 186,890 6 33STOCKHOLDERS'EQUITY:Controllinginterest:Capitalstock 213 213 205 - 4

Contributedcapital 213 213 205 - 4Earnedsurplus 75,938 69,657 61,986 9 23Totalcontrollinginterest 76,151 69,871 62,191 9 22TotalNon-controllinginterest 24,837 23,162 17,624 7 41

Totalstockholders'equity 100,988 93,033 79,815 9 27Totalliabilitiesandstockholders'equity 348,938 327,783 266,705 6 31Currentratio 1.35 1.43 1.55Debttoequity 2.46 2.52 2.34

(%)Dec16vs.

AppendixBALFA,S.A.B.DEC.V.andSubsidiariesSTATEMENTOFCOMPREHENSIVEINCOMEInformationinmillionsofNominalMexicanPesos

4Q16 3Q16 3Q15 YTD'16 YTD'15 3Q16 4Q15Netsales 76,713 75,323 65,232 293,782 258,300 2 18

Domestic 27,213 26,552 22,115 103,290 87,749 2 23Export 49,500 48,771 43,117 190,492 170,550 1 15

Costofsales (59,773) (58,838) (51,732) (226,422) (204,312) (2) (16)Grossprofit 16,940 16,485 13,500 67,360 53,988 3 25Operatingexpensesandothers (13,206) (10,210) (7,568) (43,146) (29,930) (29) (74)Operatingincome 3,734 6,275 5,932 24,214 24,058 (40) (37)Comprehensivefinancingexpense,net (3,711) (3,566) (2,918) (15,058) (14,490) (4) (27)Equityinincome(loss)ofassociates 77 27 7 115 (284) 188 966Incomebeforethefollowingprovision 100 2,736 3,021 9,271 9,284 (96) (97)Provisionsfor:Incometax (898) (1,815) (2,211) (4,161) (3,433) 51 59Consolidatednetincome (798) 920 810 5,110 5,851 (187) (198)Income(loss)correspondingtominorityinterest 92 686 648 2,410 2,073 (87) (86)Netincome(loss)correspondingtomajorityinterest (890) 234 162 2,700 3,778 (479) (649)EBITDA 10,709 10,503 10,809 43,254 38,440 2 (1)Interestcoverage* 6.6 6.6 7.7 6.6 7.7*LTM

4Q16vs.(%)


LUISOCHOA +52(81)8748.2521 [email protected]

JUANANDRÉSMARTÍN +52(81)8748.1676 [email protected]

MARCELAELIZONDO +52(81)8748.1223 [email protected]

SUSANBORINELLI +1(646)330.5907MBSVALUEPARTNERS [email protected]

Appendix: A SIGMA 10 B ALPEK 13 C NEMAK 25 D AXTEL 33 E NEWPEK 42


SIGMA

RefrigeratedFoodProducts|37%AND31%OFALFA´SREVENUESANDEBITDAIN4Q16

Sigmaisaleadingmultinationalrefrigeratedfoodcompanythatproduces,marketsanddistributesqualitybrandedfoods, includingpackagedmeats,cheese,yogurtandotherrefrigeratedandfrozenfoods.Sigmahasadiversifiedportfolioofleadingbrandsandoperates67plantsin17countriesacrossitsfourkeyregions:Mexico,Europe,theUnitedStates,andLatinAmerica.

IndustrycommentsDuring4Q16,theconsumermarketsweremixedacrossSigma’smainregionsofoperations.InMexico,theaverageconsumerconfidenceindexreportedbyINEGI(InstitutoNacionaldeEstadísticayGeografía–NationalInstituteforStatisticsandGeography)wasdown8%year-on-year.Asaresult,4Q16supermarketsame-storesalesreportedbytheNationalAssociationofSupermarketsandDepartmentStores(ANTAD)grewonly6%year-on-year innominalpesos.InEurope,theEuropeanCommissionreleasedtheaverageconsumerconfidenceindexfor4Q16,whichwas1%higherthan in4Q15. In theU.S., the index increasedto113.7 in4Q16asreportedbyTheConferenceBoard,reachinga15-yearhigh.FoodretailsalesreportedbytheU.S.CensusBureauincreased3%year-on-year,abovethe2%year-on-yeargrowthin4Q15.

Keyrawmaterialpricesweremixedduringthequarterandvariedbyregion.IntheAmericas,thepriceofsomeofSigma’skeyrawmaterialsremainedbelow4Q15levels.Specifically,turkeythighswere5%lower,whileporkhamswereatsimilarlevels.Bycontrast,freshandpowdermilkpriceswereup7%and11%,respectively,althoughtheywerestillbelowhighlevelsobservedin2013and2014.InEurope,porkpricesslightlyincreased,whencomparedtothesameyear-agoperiod.

However, inMexico the strengtheningof theU.S.Dollar vis-a-vis thePesohasoffsetmuchof thepotential costsavingsfromsuchfavorablecommoditypriceenvironment,asmostindustryparticipantsimportrawmaterials.

OperationsDuring4Q16,Sigmasoldapproximately426,000tonsoffoodproducts,up4%from4Q15.ThemainreasonbehindtheincreasewasbetterresultsinEuropeandMexico.Onacumulativebasis,Sigma’ssalesvolumewas1,679,000tons, up 1% from the sameperiod in 2015.With respect to pricingduring 4Q16, in dollar terms, averagepricesdeclined7%year-on-yearaveragemainlyduetothestrongerU.S.Dollarexchangerate.

Financialresults4Q16RevenuestotaledU.S.$1,438million,down3%year-on-year,affectedbythestrongerU.S.Dollarexchangerate,whichrose18%intheperiodagainsttheMexicanPeso.ExcludingtheFX impact,revenues increased5%. InMexico, sales in pesos were 10% higher year-on-year, reflecting higher sales volumes and price adjustments toabsorbhigherrawmaterialcosts.InEurope,salesinEuroswere3%above4Q15drivenbyhighersalesvolume.IntheU.S.,salesweredown7%duetolowervolumes.Onacumulativebasis,revenuesamountedU.S.$5,698million,down 3% when compared to the same year-ago period, mainly due to the stronger U.S. Dollar exchange ratealreadyexplained.

Sales inMexicoaccountedfor41%ofthequarter’stotal,whileEuroperepresented38%,theU.S.14%,andLatinAmerica7%.

OperatingIncomeandEBITDAwereU.S.$106millionandU.S.$166millionin4Q16,down55%and42%year-on-year,respectively.Excludingthenon-recurringgainsofU.S.$88millionfrompropertydamageandU.S.$38millionfrombusiness interruption insuranceproceeds, reported in4Q15, related to theBurgosplant fire, Sigma’s4Q16Operating IncomeandEBITDAweredown5%andup3%year-on-year, respectively.Thedecrease incomparableOperatingIncomeismainlyattributabletotheeffectofthedepreciationofthePeso.Onacurrency-neutralbasis,


EBITDAwouldhavebeenup12%year-on-year.Onacumulativebasis,OperatingIncomeandEBITDAamountedtoU.S.$458millionandU.S.$663million,down33%and24%than2015,respectively,forthesamereasons.

InEurope,operationscontinuedtoshowimprovementsdespitenotyetenjoyingtheflexibilityandcostadvantagesexpectedfromtherecentlycompletedplant,norhavingthebenefitofbusinessinterruptioninsurancecoverageasin 2015. In Mexico, EBITDA measured in U.S. dollars decreased 8% year-on-year attributed to the 18% pesodepreciationrecordedinthatperiod,butimproved9%onacurrency-neutralbasis.

Capitalexpendituresandacquisitions;NetDebtDuring4Q16,capitalexpenditurestotaledU.S.$157million.ThisincludesU.S.$95millionforthefinalizationofthenewplantinBurgos,Spain,whichbeganoperationsinNovember2016.Theremainderwasinvestedinotherfixedassetsandminorprojectsacrossthecompany.

Sigma´s consistent cash flow generation has allowed it to finance capital expenditures and to maintain a solidfinancial condition. At the end of 4Q16, Net Debt was U.S. $1,724million, down U.S. $201million from 4Q15.Financialratiosattheendof4Q16were:NetDebttoEBITDA,2.6times;InterestCoverage,5.5times.Theseratioscomparewiththosereportedin4Q15,of2.2timesand8.5times,respectively.

Subsequenttoyearend,onFebruary2nd,Sigmaissueda144ª,RegulationSbondintheEuropeanmarketfor600millionEuros.Thesecurityhasa2.625%couponandamaturityofsevenyears.Theproceedsfromthistransactionwillbeusedtorefinancedebt.


SIGMA

TABLE1|VOLUMEANDPRICECHANGES(%) 4Q16vs. YTD.´16vs.

3Q16 4Q15 YTD.´15TotalVolume 0.4 4.0 0.5Avg.Ps.Prices 3.9 10.5 13.1Avg.U.S.$Prices (1.9) (6.7) (4.0)TABLE2|REVENUES (%)4Q16VS. 4Q16 3Q16 4Q15 3Q16 4Q15 YTD.´16 YTD.´15 Ch.%TOTALREVENUES Ps.Millions 28,521 27,342 24,825 4 15 106,341 93,568 14U.S.$Millions 1,438 1,461 1,482 (2) (3) 5,698 5,901 (3)

DOMESTICREVENUES Ps.Millions 11,484 11,092 10,479 4 10 43,432 39,915 9U.S.$Millions 579 593 625 (2) (7) 2,329 2,520 (8)

FOREIGNREVENUES Ps.Millions 17,037 16,250 14,347 5 19 62,908 53,653 17U.S.$Millions 859 868 857 (1) - 3,369 3,381 -Foreign/Total(%) 60 59 58 59 57


4Q16 3Q16 4Q15 3Q16 4Q15 YTD.´16 YTD.´15 Ch.%OPERATINGINCOME Ps.Millions 2,095 2,138 3,960 (2) (47) 8,519 10,904 (22)U.S.$Millions 106 114 237 (7) (55) 458 680 (33)EBITDA Ps.Millions 3,295 3,106 4,792 6 (31) 12,374 13,892 (11)U.S.$Millions 166 166 287 - (42) 663 869 (24)TABLE4|SELECTEDBALANCESHEETINFORMATION&FINANCIALRATIOS(U.S.$MILLIONS)

4Q16 3Q16 4Q15 YTD.´16 YTD.´15Assets 4,876 4,935 4,858 4,876 4,858Liabilities 4,051 4,051 4,024 4,051 4,024Stockholders’Equity 825 885 834 825 834MajorityEquity 795 854 805 795 805NetDebt 1,724 1,843 1,925 1,724 1,925NetDebt/EBITDA* 2.6 2.4 2.2 2.6 2.2InterestCoverage* 5.5 7.0 8.5 5.5 8.5*Times:LTM=Last12months

Fourth Quarter 2016 (4Q16) |

This release contains 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. Accordingly, results could vary from those set forth in this release. The report presents unaudited financial information based on International Financial Reporting Standards (IFRS). Figures are stated in nominal Mexican pesos ($) and in current U.S. Dollars (U.S. $), as indicated. Where applicable, peso amounts were translated into U.S. Dollars using the average exchange rate of the months during which operations were recorded. Financial ratios are calculated in U.S. Dollars. Due to the rounding up of figures, small differences may occur when calculating percent changes from one period to the other.

Monterrey, Mexico. February 14, 2017 – Alpek, S.A.B. de C.V. (BMV: ALPEK)

Alpek reports 4Q16 EBITDA of U.S. $133 million

Selected Financial Information (U.S. $ Millions)

(1) Times: Last 12 months

Operating & Financial Highlights (4Q16)

Alpek

• 4Q16 Consolidated EBITDA of U.S. $133 million, including a U.S. $16 million non-cash

inventory gain

• 2016 Consolidated EBITDA of U.S. $669 million, including a U.S. $24 million non-cash

inventory gain and U.S. $8 million non-operating gains

• Solid balance sheet: 1.6x Net Debt / LTM EBITDA and 10.5x Interest Coverage

Polyester

• 4Q16 EBITDA of U.S. $82 million, including a U.S. $16 million non-cash inventory gain

• 2016 EBITDA of U.S. $349 million, including a U.S. $12 million non-cash inventory gain and a

U.S. $6 million insurance claim cash gain

• 4Q16 results negatively impacted by Hurricane Matthew force majeure and the integration of

Selenis Canada Inc.

Plastics &

Chemicals

(P&C)

• 4Q16 EBITDA of U.S. $52 million and U.S. $322 million in 2016. Full-year EBITDA includes a

U.S. $12 million non-cash inventory gain and a U.S. $2 million non-operating gain

• Polypropylene margins decreased as expected vs. 3Q16, and remain above historical levels

• Record 2016 EBITDA in polypropylene and expandable polystyrene businesses

4Q16 3Q16 4Q15 3Q16 4Q15 2016 2015 Ch.%

970 998 967 (3) - 3,938 3,937 -

Polyester 749 757 733 (1) 2 3,004 3,015 -

Plastics & Chemicals 221 241 235 (8) (6) 934 922 1

1,183 1,236 1,219 (4) (3) 4,838 5,284 (8)

Polyester 851 885 884 (4) (4) 3,444 3,840 (10)

Plastics & Chemicals 332 351 335 (5) (1) 1,394 1,444 (3)

133 157 143 (15) (7) 669 630 6

Polyester 82 83 70 (1) 17 349 344 2

Plastics & Chemicals 52 73 72 (28) (28) 322 284 14

28 50 29 (45) (4) 198 175 13

75 128 168 (41) (55) 345 317 9

1,042 915 722 14 44

1.6 1.3 1.1

10.5 10.8 10.7

Consolidated EBITDA

Total Volume (ktons)

Consolidated Revenues

(%) 4Q16 vs.

Net Debt/LTM EBITDA(1)

Interest Coverage(1)

Profit Attributable to Controlling Interest

CAPEX and Acquisitions

Net Debt


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www.alpek.com 2

Message from the CEO

Alpek’s 2016 Consolidated EBITDA was U.S. $669 million, up 6% versus 2015 driven by record Plastics &

Chemicals (P&C) segment performance. However, this was below our revised U.S. $700 million EBITDA guidance due

to lower-than-expected Polyester results amid a volatile oil price environment and extraordinary events such as

Hurricane Matthew in 4Q16.

Oil prices fluctuated between a minimum of U.S. $31/bbl in January and a maximum of U.S. $54/bbl in

December. Despite the recent rally driven by the OPEC agreement, the average price of Brent crude oil went down

from U.S. $53/bbl in 2015 to U.S. $44/bbl in 2016. Similarly, the U.S. paraxylene (Px) contract price posted its highest

2016 level in December, but its annual average was 12% lower year-over-year.

Feedstock price movements during 4Q16 resulted in a U.S. $16 million non-cash inventory gain for Polyester.

2016 Consolidated EBITDA includes a U.S. $24 million non-cash inventory gain, comprised of a U.S. $12 million gain

in Polyester and a U.S. $12 million gain in P&C.

Polyester segment EBITDA was U.S. $82 million in 4Q16 and U.S. $349 million in 2016. Adjusting for non-cash

inventory gains and the U.S. $6 million cash gain from the insurance claim reported in 3Q16, Comparable Polyester

EBITDA was U.S. $66 million in 4Q16 and U.S. $331 million in 2016, down 29% and 13% versus 2015 respectively. The

Polyester segment posted its lowest quarterly Comparable EBITDA in 4Q16 as supply chain disruptions caused by

Hurricane Matthew in North and South Carolina led Alpek to issue a force majeure on its U.S. PET resin products

between October 10th and November 1st. In addition, 4Q16 was the first quarter of turnaround work at Selenis Canada

Inc. which generated a Comparable EBITDA loss of U.S. $3 million.

Nevertheless, positive Polyester segment events during the year included final affirmative determinations in

the U.S. PET trade cases, the startup of the multiyear monoethylene glycol (MEG) supply agreement with Huntsman,

and the agreement signed with Petrobras to acquire its polyester operations in Brazil. Moreover, per industry experts,

2016 was the first year since 2010 in which PTA demand expansion exceeded capacity growth in China; a situation

that is supportive for gradual recovery in global polyester margins.

P&C segment EBITDA was U.S. $52 million in 4Q16 and a record U.S. $322 million in 2016. Adjusting for non-

cash inventory gains and the U.S. $2 million non-cash gain from acquired EPS assets reported in 1Q16, Comparable

P&C EBITDA was U.S. $52 million in 4Q16 and U.S. $308 million in 2016, down 28% and up 13% versus 2015

respectively. Both polypropylene (PP) and expandable polystyrene (EPS) posted their lowest quarterly Comparable

EBITDA in 4Q16 as margins decreased in line with expectations and PP volume was negatively impacted by a planned

maintenance shutdown together with a downward propylene price trend.

On the investment front, Capex was U.S. $75 million in 4Q16 and U.S. $345 million in 2016, making this the

third consecutive year in which Alpek has invested more than U.S. $300 million focused on strategic projects. This

year’s major investments included the final payment associated to the Corpus Christi PTA/PET facility and the 350

MW power cogeneration facility in Altamira, Mexico.

As of year-end 2016, Net Debt was U.S. $1.042 billion, U.S. $320 million more than 2015, following the

ongoing investment in strategic projects; most of which are scheduled to begin operating in 2017 and 2018. Financial

ratios remain at healthy levels of 1.6 times Net Debt to EBITDA and 10.5 times Interest Coverage.

We maintain a cautious view as we anticipate margin pressure in several of our products during 2017,

particularly PP. We also expect further volatility in global financial markets. In this context, financial discipline

becomes increasingly important, and Alpek finds a solid ground in: i) its long-term, fixed interest debt that protects

it against interest rate hikes; ii) dollar-denominated cash flows that mitigate risks from foreign exchange rate

fluctuations; and, iii) geographical diversification that reduces country-specific risk.


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www.alpek.com 3

Results by Business Segment

Polyester (Purified Terephthalic Acid (PTA), Polyethylene Terephthalate (PET), Polyester fibers – 71% of Alpek’s Net Sales)

Fourth quarter 2016 Polyester revenue was down 4% year-over-year and quarter-on-quarter, mainly as a

result of lower prices. Average 4Q16 Polyester prices decreased 6% and 3% when compared to 4Q15 and 3Q16

respectively. For the full year 2016, revenues were down 10% versus 2015, due to a 10% decrease in average price,

reflecting a 16% year-over-year drop in the average Brent oil price and a 12% decrease in the average U.S. Px contract

price.

4Q16 Polyester volume was up 2% when compared to 4Q15 and down 1% versus 3Q16. 2016 Polyester

volume was flat year-over-year. Weak U.S. polyester fiber demand was offset by modest volume growth in other

polyester products amid a volatile feedstock price environment.

Fourth quarter 2016 segment EBITDA was U.S. $82 million, including a U.S. $16 million non-cash inventory

gain. Adjusting for the inventory gain, Comparable 4Q16 Polyester EBITDA decreased 29% year-over-year and 22%

quarter-on-quarter. For the full year 2016, Polyester EBITDA was U.S. $349 million, including a U.S. $12 million non-

cash inventory gain plus a U.S. $6 million cash gain from the insurance claim reported in 3Q16. Comparable 2016

Polyester EBITDA decreased 13% versus 2015 mainly due to: i) a lower oil and feedstock price environment; ii) the

force majeure caused by Hurricane Matthew in 4Q16; and, iii) weak polyester fiber demand.

Plastics & Chemicals (P&C) (Polypropylene (PP), Expandable Polystyrene (EPS), Caprolactam (CPL), Other products – 29% of Alpek’s Net Sales)

4Q16 P&C revenue was down 1% year-over-year and 5% quarter-on-quarter, as higher average prices were

more than offset by lower volume. For the full year 2016, P&C revenues were down 3% versus 2015 as a result of a

5% decrease in average prices that was partially offset by a 1% volume increase.

Fourth quarter 2016 P&C volume was down 6% and 8% when compared to 4Q15 and 3Q16 respectively, as

PP volume was negatively impacted by a planned maintenance shutdown together with a weak propylene price

environment October thru December. 2016 P&C volume increased 1% year-over-year, posting growth in PP and EPS.

4Q16 P&C EBITDA totaled U.S. $52 million, down 28% year-over-year and quarter-on-quarter, mainly due to

lower PP and EPS margins. For the full year 2016, P&C EBITDA reached a record U.S. $322 million, including a U.S.

$12 million non-cash inventory gain and the U.S. $2 million non-cash gain from acquired EPS assets reported in 1Q16.

Comparable 2016 P&C EBITDA increased 13% driven by record annual PP and EPS EBITDA. Strong margins, supported

by lower feedstock costs and solid demand, contributed to this year’s better-than-expected PP and EPS performance.


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www.alpek.com 4

Consolidated Financial Results

Net Sales: Net Sales for the fourth quarter totaled U.S. $1.2 billion, down 3% year-over-year and 4% quarter-on-

quarter, mainly due to lower average consolidated prices. Average 4Q16 consolidated prices decreased 3% and 2%

when compared with 4Q15 and 3Q16 respectively, despite the year-end rally in oil prices. Accumulated net sales as

of December 31, 2016 were U.S. $4.8 billion, 8% below the same period in 2015 as a result of flat consolidated Volume

and an 8% decrease in average consolidated prices. Average 2016 prices were down 10% and 5% year-over-year at

the Polyester and P&C segments respectively, reflecting this year’s weak oil and feedstock price environment.

EBITDA: 4Q16 EBITDA was U.S. $133 million, down 7% when compared to 4Q15 and 15% lower than 3Q16. This

quarter’s Consolidated EBITDA includes a U.S. $16 million non-cash inventory gain. Adjusting for the inventory gain,

comparable Consolidated EBITDA was U.S. $117 million, U.S. $152 million and U.S. $166 million in 4Q16, 3Q16 and

4Q15, respectively. Comparable Consolidated EBITDA decreased 30% year-over-year and 23% quarter-on-quarter as

the Hurricane Matthew force majeure weighed on the Polyester segment and margin reduction continued in the P&C

segment’s PP and EPS businesses. Accumulated EBITDA as of December 31, 2016 was U.S. $669 million and

accumulated comparable Consolidated EBITDA totaled U.S. $637 million, up 6% and down 3% versus 2015

respectively. The P&C segment’s 13% year-over-year increase in comparable EBITDA was more than offset by the

13% decrease in Polyester.

Profit (Loss) Attributable to Controlling Interest: Profit Attributable to Controlling Interest for the

fourth quarter of 2016 was U.S. $28 million, compared to U.S. $29 million and U.S. $50 million in 4Q15 and 3Q16

respectively. 4Q16 Profit decreased versus 3Q16 due to a combination of lower Operating Income and higher

non-cash Fx Losses that were recognized due to the recent depreciation of the Mexican Peso. For the full year, Profit

Attributable to Controlling Interest totaled U.S. $198 million, up 13% when compared to 2015, driven mainly by

higher Operating Income.

Capital Expenditures and Acquisitions (Capex): 4Q16 Capex was U.S. $75 million, compared to

U.S. $168 million and U.S. $128 million in 4Q15 and 3Q16 respectively. Year-to-date Capex of U.S. $345 million is 9%

higher than 2015 as a result of the ongoing investment in strategic projects. The majority of these funds were invested

in the Corpus Christi PTA/PET facility, the 350 MW power cogeneration plant in Altamira and the MEG tolling

agreement with Huntsman. Other projects such as the EPS capacity expansion in Altamira and the construction of

two propylene spheres advanced as planned. 2016 Capex also included two acquisitions: the 20 thousand ton per

year EPS plant in Concon, Chile and the controlling stake in Selenis Canada Inc. which operates a 144 thousand ton

per year PET facility in Canada.

Net Debt: Consolidated Net Debt as of December 31, 2016 was U.S. $1.042 billion, up 44% year-over-year and

14% quarter-on-quarter. On an absolute basis, Net Debt increased U.S. $320 million during 2016 mainly driven by

the aforementioned investment in strategic projects. Gross Debt as of December 31, 2016 was U.S. $1.184 billion, up

7% and 3% when compared to 4Q15 and 3Q16 respectively. Year-end Cash and Cash equivalents balance was U.S.

$142 million. Financial ratios as of December 31, 2016 were: Net Debt to LTM EBITDA of 1.6 times and Interest

Coverage of 10.5 times.


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www.alpek.com 5

Appendix A - Tables

TABLE 1 | VOLUME (KTONS)

(%) 4Q16 vs.

4Q16 3Q16 4Q15 3Q16 4Q15 2016 2015 Ch.%

Total Volume 970 998 967 (3) - 3,938 3,937 -

Polyester 749 757 733 (1) 2 3,004 3,015 -

Plastics and Chemicals 221 241 235 (8) (6) 934 922 1

TABLE 2 | PRICE CHANGES (%)

(%) 4Q16 vs. 2016 vs.

3Q16 4Q15 2015

Polyester

Avg. Ps. Prices 3 11 6

Avg. U.S. $ Prices (3) (6) (10)

Plastics and Chemicals


Avg. U.S. $ Prices 3 5 (5)

Total


Avg. U.S. $ Prices (2) (3) (8)

TABLE 3 | INCOME STATEMENT (U.S. $ Millions)

(%) 4Q16 vs.

4Q16 3Q16 4Q15 3Q16 4Q15 2016 2015 Ch.%

Total Revenues 1,183 1,236 1,219 (4) (3) 4,838 5,284 (8)

Gross Profit 142 164 162 (14) (13) 714 666 7

Operating expenses and others (44) (42) (62) (4) 29 (182) (186) 2

Operating income 98 122 100 (20) (3) 532 481 11

Financial cost, net (36) (28) (37) (28) 3 (133) (116) (15)

Share of losses of associates - - - - - - (1) 88

Income Tax (29) (30) (20) 1 (45) (126) (130) 2

Consolidated net income 33 65 43 (49) (24) 272 233 17

Controlling Interest 28 50 29 (45) (4) 198 175 13


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TABLE 4 | REVENUES

(%) 4Q16 vs.

4Q16 3Q16 4Q15 3Q16 4Q15 2016 2015 Ch.%

Total Revenues

Ps. Millions 23,428 23,132 20,411 1 15 90,192 83,590 8

U.S. $ Millions 1,183 1,236 1,219 (4) (3) 4,838 5,284 (8)

Domestic Revenues

Ps. Millions 8,491 8,407 7,512 1 13 33,625 30,764 9

U.S. $ Millions 429 449 449 (4) (4) 1,806 1,946 (7)

Foreign Revenues

Ps. Millions 14,937 14,724 12,899 1 16 56,567 52,827 7

U.S. $ Millions 754 787 770 (4) (2) 3,032 3,338 (9)

Foreign / Total (%) 64 64 63 63 63

TABLE 5 | OPERATING INCOME AND EBITDA

(%) 4Q16 vs.

4Q16 3Q16 4Q15 3Q16 4Q15 2016 2015 Ch.%

Operating Income

Ps. Millions 1,944 2,292 1,681 (15) 16 9,863 7,590 30

U.S. $ Millions 98 122 100 (20) (3) 532 481 11

EBITDA

Ps. Millions 2,647 2,938 2,393 (10) 11 12,425 9,974 25

U.S. $ Millions 133 157 143 (15) (7) 669 630 6

TABLE 6 | COMPARABLE EBITDA

(%) 4Q16 vs.

4Q16 3Q16 4Q15 3Q16 4Q15 2016 2015 Ch.%

EBITDA

Ps. Millions 2,647 2,938 2,393 (10) 11 12,425 9,974 25

U.S. $ Millions 133 157 143 (15) (7) 669 630 6

Adjustments*

Ps. Millions (327) (89) 395 (268) (183) (622) 428 (245)

U.S. $ Millions (16) (4) 24 (261) (169) (32) 24 (235)

Comparable EBITDA

Ps. Millions 2,320 2,849 2,788 (19) (17) 11,803 10,402 13

U.S. $ Millions 117 152 166 (23) (30) 637 654 (3) *Adjustments: Inventory and non-operating, one-time (gains) losses


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www.alpek.com 7

TABLE 7 | FINANCIAL COST, NET (U.S. $ Millions)

(%) 4Q16 vs.

4Q16 3Q16 4Q15 3Q16 4Q15 2016 2015 Ch.%

Financial Expenses (17) (19) (19) 12 13 (76) (74) (2)

Financial Income 4 3 5 55 (12) 15 15 (2)

Net Financial Expenses (13) (16) (15) 23 14 (61) (59) (4)

Fx Gains (Losses) (23) (11) (22) (103) (4) (72) (57) (26)

Financial Cost, Net (36) (28) (37) (28) 3 (133) (116) (15)

TABLE 8 | NET INCOME (U.S $ Millions)

(%) 4Q16 vs.

4Q16 3Q16 4Q15 3Q16 4Q15 2016 2015 Ch.%

Consolidated Net Income 33 65 43 (49) (24) 272 233 17

Non-Controlling Interest 5 15 14 (65) (63) 75 58 28

Controlling Interest 28 50 29 (45) (4) 198 175 13

Earnings per Share (U.S. Dollars) 0.01 0.02 0.01 (45) (4) 0.09 0.08 13

Avg. Outstanding Shares (Millions)* 2,117 2,118 2,118 2,117 2,118 *For comparability are considered the same number of equivalent shares in the periods presented.

TABLE 9 | CASH FLOW (U.S. $ Millions)

(%) 4Q16 vs.

4Q16 3Q16 4Q15 3Q16 4Q15 2016 2015 Ch.%

EBITDA 133 157 143 (15) (7) 669 630 6

Net Working Capital & Others (84) 37 12 (328) (806) (183) 5 (3,931)

Capital Expenditures & Acq. (75) (128) (168) 41 55 (345) (317) (9)

Financial Expenses (16) (18) (17) 11 2 (58) (75) 23

Income tax (22) (23) (14) 2 (62) (164) (54) (201)

Dividends (20) - (10) (100) (102) (225) (160) (41)

Payment affiliated companies 8 (4) - 297 4,292 68 (2) 3,596

Other Sources / Uses (50) (25) (13) (104) (298) (83) (34) (141)

Decrease (Increase) in Net Debt (127) (4) (66) (2,767) (93) (320) (7) (4,380)


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TABLE 10 | STATEMENT OF FINANCIAL POSITION & FINANCIAL RATIOS (U.S. $ Millions)

(%) 4Q16 vs.

4Q16 3Q16 4Q15 3Q16 4Q15

Assets

Cash and cash equivalents 142 240 387 (41) (63)

Trade accounts receivable 542 555 476 (2) 14

Inventories 719 694 702 4 2

Other current assets 254 308 333 (18) (24)

Total current assets 1,656 1,796 1,898 (8) (13)

Investment in associates and others 28 44 23 (37) 21

Property, plant and equipment, net 1,970 1,872 1,820 5 8

Goodwill and intangible assets, net 575 590 512 (3) 12

Other non-current assets 200 128 99 56 102

Total assets 4,428 4,430 4,353 - 2

Liabilities & stockholders' equity

Current debt 135 97 39 39 242

Suppliers 636 624 553 2 15

Other current liabilities 168 206 275 (19) (39)

Total current liabilities 939 927 868 1 8

Long term debt 1,043 1,051 1,062 (1) (2)

Employees´ benefits 59 67 64 (11) (8)

Other long term liabilities 367 354 354 4 4

Total liabilities 2,409 2,400 2,348 - 3

Total stockholders' equity 2,019 2,031 2,005 (1) 1

Total liabilities & stockholders' equity 4,428 4,430 4,353 - 2

Net Debt 1,042 915 722 14 44

Net Debt/EBITDA* 1.6 1.3 1.1

Interest Coverage* 10.5 10.8 10.7

* Times: last 12 months.


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www.alpek.com 9

Polyester

TABLE 11 | REVENUES

(%) 4Q16 vs.

4Q16 3Q16 4Q15 3Q16 4Q15 2016 2015 Ch.%

Total Revenues

Ps. Millions 16,862 16,559 14,806 2 14 64,241 60,770 6

U.S. $ Millions 851 885 884 (4) (4) 3,444 3,840 (10)

Domestic Revenues

Ps. Millions 4,473 4,418 3,942 1 13 17,092 15,631 9

U.S. $ Millions 226 236 235 (4) (4) 917 986 (7)

Foreign Revenues

Ps. Millions 12,389 12,141 10,864 2 14 47,149 45,139 4

U.S. $ Millions 625 649 649 (4) (4) 2,528 2,853 (11)

Foreign / Total (%) 73 73 73 73 74


(%) 4Q16 vs.

4Q16 3Q16 4Q15 3Q16 4Q15 2016 2015 Ch.%

Operating Income

Ps. Millions 1,078 1,052 643 2 67 4,487 3,582 25

U.S. $ Millions 54 56 38 (4) 40 241 228 5

EBITDA

Ps. Millions 1,640 1,563 1,182 5 39 6,514 5,419 20

U.S. $ Millions 82 83 70 (1) 17 349 344 2


(%) 4Q16 vs.

4Q16 3Q16 4Q15 3Q16 4Q15 2016 2015 Ch.%

EBITDA

Ps. Millions 1,640 1,563 1,182 5 39 6,514 5,419 20

U.S. $ Millions 82 83 70 (1) 17 349 344 2

Adjustments*

Ps. Millions (327) 26 387 (1,374) (185) (370) 592 (162)

U.S. $ Millions (16) 2 23 (1,126) (170) (18) 35 (153)

Comparable EBITDA

Ps. Millions 1,313 1,589 1,568 (17) (16) 6,145 6,011 2

U.S. $ Millions 66 85 94 (22) (29) 331 378 (13) *Adjustments: Inventory and non-operating, one-time (gains) losses


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www.alpek.com 10

Plastics & Chemicals

TABLE 14 | REVENUES

(%) 4Q16 vs.

4Q16 3Q16 4Q15 3Q16 4Q15 2016 2015 Ch.%

Total Revenues

Ps. Millions 6,566 6,573 5,605 (0) 17 25,951 22,821 14

U.S. $ Millions 332 351 335 (5) (1) 1,394 1,444 (3)

Domestic Revenues

Ps. Millions 4,018 3,990 3,570 1 13 16,533 15,133 9

U.S. $ Millions 203 213 213 (5) (5) 890 960 (7)

Foreign Revenues

Ps. Millions 2,548 2,583 2,034 (1) 25 9,418 7,688 23

U.S. $ Millions 129 138 122 (7) 6 505 484 4

Foreign / Total (%) 39 39 36 36 34


(%) 4Q16 vs.

4Q16 3Q16 4Q15 3Q16 4Q15 2016 2015 Ch.%

Operating Income

Ps. Millions 898 1,234 1,040 (27) (14) 5,413 3,961 37

U.S. $ Millions 45 66 62 (31) (27) 293 249 18

EBITDA

Ps. Millions 1,039 1,369 1,214 (24) (14) 5,948 4,508 32

U.S. $ Millions 52 73 72 (28) (28) 322 284 14


(%) 4Q16 vs.

4Q16 3Q16 4Q15 3Q16 4Q15 2016 2015 Ch.%

EBITDA

Ps. Millions 1,039 1,369 1,214 (24) (14) 5,948 4,508 32

U.S. $ Millions 52 73 72 (28) (28) 322 284 14

Adjustments*

Ps. Millions - (114) 8 100 (95) (253) (164) (54)

U.S. $ Millions - (6) 1 100 (96) (14) (11) (25)

Comparable EBITDA

Ps. Millions 1,039 1,254 1,222 (17) (15) 5,695 4,344 31

U.S. $ Millions 52 67 73 (22) (28) 308 273 13 *Adjustments: Inventory and non-operating, one-time (gains) losses


[email protected]

www.alpek.com 11

Appendix B – Financial Statements

Dec 16 Sep 16 Dec 15 Sep 16 Dec 15

ASSETS

CURRENT ASSETS:

Cash and cash equivalents 2,935 4,674 6,650 (37) (56)

Trade accounts receivable 11,191 10,820 8,196 3 37

Other accounts and notes receivable 3,626 3,601 2,234 1 62

Inventories 14,853 13,536 12,086 10 23

Other current assets 1,616 2,400 3,498 (33) (54)

Total current assets 34,221 35,031 32,664 (2) 5

Investment in associates and others 575 855 397 (33) 45

Property, plant and equipment, net 40,699 36,511 31,322 11 30

Goodwill and intangible assets,net 11,875 11,497 8,812 3 35

Other non-current assets 4,130 2,501 1,699 65 143

Total assets 91,500 86,395 74,894 6 22

LIABILITIES AND STOCKHOLDER'S EQUITY

CURRENT LIABILITIES:

Debt 2,787 1,893 678 47 311

Suppliers 13,151 12,165 9,521 8 38

Other current liabilities 3,469 4,021 4,729 (14) (27)

Total current liabilities 19,407 18,079 14,928 7 30

NON-CURRENT LIABILITIES:

Debt (include debt issuance cost) 21,551 20,503 18,276 5 18

Deferred income taxes 5,883 5,327 4,707 10 25

Other liabilities 1,710 1,585 1,376 8 24

Employees´ benefits 1,227 1,303 1,108 (6) 11

Total liabilities 49,778 46,797 40,395 6 23

STOCKHOLDERS´ EQUITY:

Controlling interest:

Capital stock 6,048 6,050 6,052 (0) (0)

Share premium 9,071 9,071 9,071 - -

Contributed capital 15,119 15,121 15,123 (0) (0)

Earned surplus 21,954 19,843 14,831 11 48

Total controlling interest 37,073 34,964 29,954 6 24

Non-controlling interest 4,649 4,634 4,545 0 2

Total stockholders´equity 41,722 39,598 34,499 5 21

Total liabilities and stockholders´ equity 91,500 86,395 74,894 6 22

(%) Dec 16 vs.

STATEMENT OF FINANCIAL POSITION

Information in Millions of Mexican Pesos

ALPEK, S.A.B. DE C.V. and Subsidiaries


[email protected]

www.alpek.com 12

ALPEK, S.A.B. DE C.V. and Subsidiaries

Information in Millions of Mexican Pesos

2016 vs. (%)

4Q16 3Q16 4Q15 3Q16 4Q15 2016 2015 2015

Revenues 23,428 23,131 20,410 1 15 90,192 83,590 8

Domestic 8,491 8,408 7,512 1 13 33,625 30,764 9

Export 14,937 14,723 12,898 1 16 56,567 52,826 7

Cost of sales (20,615) (20,050) (17,693) (3) (17) (76,943) (73,029) (5)

Gross profit 2,813 3,081 2,717 (9) 4 13,249 10,561 25

Operating expenses and others (869) (790) (1,036) (10) 16 (3,386) (2,971) (14)

Operating income 1,944 2,291 1,681 (15) 16 9,863 7,590 30

Financial cost, net (719) (526) (625) (37) (15) (2,509) (1,862) (35)

Share of losses of associates 2 - (4) 956 157 (3) (23) 86

Profit (loss) before income tax 1,227 1,765 1,052 (30) 17 7,351 5,705 29

Income tax (582) (555) (337) (5) (73) (2,358) (2,040) (16)

Consolidated net income 645 1,210 715 (47) (10) 4,993 3,665 36

Profit attributable to Controlling interest 544 932 478 (42) 14 3,625 2,749 32

Profit attributable to Non-controlling interest 101 278 237 (64) (57) 1,368 916 49

STATEMENT OF INCOME

4Q16 vs.(%)

February 14, 2017 1

Nemak posts 13% EBITDA1 growth in 4Q16

Monterrey, Mexico. February 14, 2017. - Nemak, S.A.B. de C.V. (“Nemak”) (BMV: NEMAK), a leading provider of innovative lightweighting solutions for the global automotive industry, announced today its operational and financial results for the fourth quarter of 2016 ("4Q16").

For 4Q16 and full year EBITDA increased 12.7% and 5.1%, respectively. The quarterly result was mainly driven by an improved sales mix of higher value-added products and good operating performance in all regions.

Key Figures

Message from the CEO

We grew profitability in the quarter mainly on the back of a better product mix and improved operating performance. We benefited also from the ramp-up of new programs, particularly at our operations in Europe and Asia. Likewise, we expanded our in-house machining capacity across all regions, further supporting margins.

We took important steps to build upon our foundation for growth in the core powertrain business as well as the new structural and electric vehicle components businesses. During the quarter, we were awarded new contracts worth a total of US$225 million per year, more than 60% of which represented incremental revenues. Including these new contracts, we were awarded a total of US$875 million in new contracts in the year.

Moreover, we continued to execute strategic projects to further enhance our global manufacturing footprint. During the quarter, progress was made in the ramp-up of new production plants in Mexico, Poland, and Slovakia, along with capacity expansions in all our regions. And, we closed the acquisition of a supplier of complex aluminum automotive castings based in Izmir, Turkey. Capital expenditures excluding acquisitions amounted to US$164 million in the quarter and US$541 million for the year.

I am also pleased to share that, in the fourth quarter, Fitch, the rating agency, raised its outlook on Nemak to ‟Positive” from ‟Stable,” citing our solid global business position, credit profile, and operating performance, among other factors. With this latest revision, the three major rating agencies—Fitch, Moody’s, and Standard & Poor’s—all rate Nemak’s debt with a positive outlook, one notch below investment grade.

1 EBITDA = Operating Income + Depreciation, Amortization & other Non-Cash Charges

February 14, 2017 2

Automotive Industry

In the quarter, the seasonally adjusted annual rate ("SAAR") for vehicle sales in the U.S. and North America´s vehicle production increased 1.1% and 2.3%, respectively, from 4Q15. Although Nemak customers’ vehicle production remained flat, they continued benefiting from a favorable sales mix characterized by an increased share of pick-ups and SUVs.

In Europe, vehicle sales SAAR in 4Q16 was up 3.6% compared to 4Q15 as growth in Western Europe more than compensated for a decrease in Eastern Europe. Vehicle production and Nemak’s customer production in Europe increased 1.9% and 2.8% from 4Q15, respectively.

Recent Developments

On November 1st, Nemak announced that, after receiving customary regulatory approvals, it successfully consummated the acquisition of Cevher Döküm, a supplier of complex aluminum automotive castings based in Izmir, Turkey, that exports most of its production to the European market, generating revenues of US$70 million in 2015.

On December 6th, Nemak received two awards from the National Technology and Innovation Award (PNTi), which is overseen by Mexico’s Economy Ministry and National Council of Science and Technology. PNTi focuses on supporting the development of businesses and other organizations through the recognition, promotion, and facilitation of successful technology and innovation management processes.

February 14, 2017 3

Financial Results

What follows is an explanation of the results shown in the table above:

Total volumes decreased in 4Q16 mainly due to lower sales in North America which were partially offset with higher volumes in Rest of World (RoW). In Europe, year-on-year volumes remained flat. For the full year, the same quarterly trends were observed at the consolidated level; however, increased volumes in European operations contributed to making the decrease smaller.

Lower volumes combined with slightly lower aluminum prices resulted in a 5.0% year-on-year reduction in revenues. The North American market remained the largest, with revenues accounting for 58% of total, while Europe contributed with 33% and RoW with 9%. For the full year, revenues declined 5.0% for the same reasons.

4Q16 operating income increased 2.3% year-on-year, mainly as a result of an improved sales mix of higher value-added products and good operating performance in all regions. Operating margin was 9.0%, higher than the 8.4% in 4Q15. During the quarter, Nemak incurred an extraordinary non-cash charge in the amount of US$13 million related to the phase-out of a production line in its U.S. operations. Absent this effect, operating income would have increased 17%. For the full year, operating income was the same as in 2015. Operating margin for 2016 increased 60 basis points over 2015, reaching 11% on the back of increased sales of higher value-added products. Excluding the extraordinary charge already explained, 2016 operating income would have increased 2.8% over 2015.

The increase in operating income already explained enabled 4Q16 EBITDA to increase 12.7% year-on year. 4Q16 EBITDA margin was 18.7%, much higher than the 15.7% reported in 4Q15. For the full year, EBITDA was 5.1% higher than 2015. It represented 18.7% of total revenues, much better than the 16.9% of 2015.

4Q16 EBITDA per equivalent unit reached US$15.80, up from US$13.30 in 4Q15. For the whole year, EBITDA per equivalent unit reached US$15.90, up from US$15.00 in 2015.

4Q16 net income was slightly lower than 4Q15 due to higher comprehensive financial expenses related to the depreciation of the peso over the period and the extraordinary non-cash charge already explained, which more than offset the increase in operating income. For the full year, net income was slightly above 2015 due to higher operating income.

February 14, 2017 4

Capital expenditures totaled US$164 million during 4Q16, for a total of US$541 million in the year. Investments were made to expand capacity, update existing production equipment, and improve operational efficiency. These included activities associated with the construction of two new facilities in Mexico—a production plant and a machining center—as well as a new production plant in Slovakia and expansion in Poland.

As of December 31, 2016, Nemak reported Net Debt in the amount of US$1.3 billion, including Cash and Marketable Securities worth US$129 million. Financial ratios were: Debt, net of Cash, to EBITDA, 1.6 times; Interest Coverage, 11.9 times. These ratios are similar to those reported at the end of 2015.

Regional Results

North America

In 4Q16, revenues in North America decreased 10.3% compared to 4Q15 mainly due to lower volumes and lower aluminum prices. Despite the reduction in revenues, the Company was able to achieve a 5.3% EBITDA increase in the same period mainly due to operational performance improvement.

For the year as a whole, 2016 revenues decreased 10.0% compared to 2015 for the same reasons. However, EBITDA reached the same amount of 2015 due to operational improvements, favorable mix, the positive impact of metal lag during the first half of the year, and currency effects throughout 2016.

Europe

In 4Q16, revenues in Europe decreased 1.2% compared to 4Q15 mainly due to lower aluminum prices. In contrast, EBITDA increased 19.6% year-on-year mainly due to improved operational performance.

For the full year, revenues and EBITDA increased 3.1% and 12.9%, respectively, compared to 2015. The region achieved higher volumes and a better sales mix, which helped to more than offset lower aluminum prices and the devaluation of the euro compared to the U.S. dollar.

Rest of the World (RoW)

In 4Q16, revenues in RoW increased by 17% compared to 4Q15 mainly due to higher volumes and better product mix in Asia, which more than offset declines in South America. EBITDA in RoW increased US$5 million in 4Q16 compared to 4Q15 due to higher profitability in Asia.

In 2016, revenues in RoW increased 2.3% compared to 2015 mainly due to higher volumes and better product mix in Asia, which more than offset a weak performance in South America. EBITDA in RoW increased US$12 million in 2016 compared to 2015 mainly due to higher profitability in Asia.

February 14, 2017 5

Conference call information

Nemak’s Fourth Quarter 2016 Conference Call will be held on Wednesday, February 15th, 2017, 11:30 a.m. Eastern Time (10:30 a.m. Mexico City Time). To participate in the conference call, please dial: Domestic US: (877) 407-0784; International: (201) 689-8560; Mexico Toll Free 01-800-522-0034. The conference call will be webcast live through streaming audio. If you are unable to connect, the conference call audio and script will be available on our website. For more information, please visit www.nemak.com/investors

About Nemak

Nemak is a leading provider of innovative lightweighting solutions for the global automotive industry specializing in the development and manufacturing of aluminum components for powertrain and body structure applications. As of year-end 2016, the company employed more than 21,000 people at 36 facilities worldwide and generated revenues of US$4.3 billion. For more information about Nemak, visit http://www.nemak.com

Forward-looking statements

This report may contain certain forward-looking statements concerning Nemak’s future performance that should be considered as good faith estimates made by the Company. These forward-looking statements reflect management’s expectations and are based upon currently available data and analysis. Actual results are subject to future events and uncertainties, which could materially impact Nemak’s actual performance and results.

Methodology for presentation of results

The report presents unaudited financial information figures in Mexican pesos or US dollars, as indicated. For income statements, peso amounts were translated into US dollars using the average exchange rate of the months during which the operations were recorded. For balance sheets, peso amounts were translated into US dollars using the end of period exchange rate. Financial ratios were calculated in US dollars. Due to the rounding up of figures, small differences may occur when calculating percent changes from one period to another.

Three pages of tables to follow

http://www.nemak.com/investors

http://www.nemak.com/

February 14, 2017 6

February 14, 2017 7

February 14, 2017 8

Investor Relations:

Adrian de los Santos

[email protected]

+52(81) 8114-1128

4th 2016Quarter

Media Relations:

Julio Salinas

[email protected]

+52(81) 8114-1144

Nancy Llovera

[email protected]

+52(81) 8114-1128

San Pedro Garza Garcia, Mexico, February 14, 2017 - Axtel, S.A.B. de C.V. (“Axtel” or “the Company”), a

Mexican Information and Communications Technology company, announced today its unaudited fourth quarter

results ended December 31, 2016(1). Results presented on this report reflect figures consolidated under Alfa

S.A.B. de C.V. The complete unaudited fourth quarter results of Axtel have been filed with the Mexican Stock

Exchange and are also available at the Company’s website, axtelcorp.mx .

Note: Financial information presented throughout this report includes unaudited consolidated results for Alestra S. de

R.L. de C.V. and its subsidiaries (“Alestra”) up to February 14th, 2016, and for Axtel and its subsidiaries,

including Alestra, from February 15th, 2016, and thereafter.

Highlights:

Pro forma revenues declined 10% in 2016, as government segment revenues declined 37%.

This government segment decline results from the reduction of federal government spending in

2016 and also from non-recurrent equipment sales and projects’ revenues registered in 2015

and not replicated in 2016. However, Axtel’s quarterly recurrent enterprise and government

segment revenues have shown a positive trend in 2016, particularly from enterprise customers,

providing encouraging prospects for 2017.

During the fourth quarter, Axtel continued executing the post-merger integration plan with

positive results. At the end of the year, Axtel was able to achieve run-rate EBITDA synergies of

approximately Ps. 1,000 million.

Axtel is pleased to participate in ALTÁN Redes, the consortium granted with the exclusive

rights to exploit the 700 MHz band for the creation of a nationwide 4G wholesale network, also

known as Red Compartida. This project enhances Axtel’s mobility strategy and represents an

opportunity for the Company to become a strategic supplier to Red Compartida.

YTD

In millions 3Q16 4Q15 D%

Revenues (Ps.) (2) 3,783 3,836 1,660 -1% >100% 13,744 6,163 >100%

In USD 191 205 99 -7% 93% 736 389 89%

EBITDA (Ps.) (6) 910 1,265 804 -28% 13% 4,177 2,630 59%

In USD 46 67 48 -32% -4% 225 166 36%

Net (loss) Income (Ps.) -774 -451 337 -72% n.a. -2,003 622 n.a.

In USD -38 -23 20 -60% n.a. -103 39 n.a.

Capital Expenditures (Ps.) 885 942 551 -6% 61% 3,916 1,612 >100%

In USD 45 50 33 -11% 35% 210 101 >100%

Net Debt (In USD) 972 1,010 211 -4% >100%

Net Debt / EBITDA (7) 4.6x 4.2x 1.3x

YTD'16 YTD'154Q16 4Q153Q16(%) 4Q16 vs.

http://www.axtelcorp.mx/

80%

20%

Enterprise & Gov't

Mass Market

100%

Enterprise & Gov't

Mass Market

2

Sources of Revenues

Quarterly revenues totaled $124 million, compared to $84 million in the same period in

2015, a 46% increase. The year-over-year growth is explained by the consolidation of Axtel

revenues since February 15th, 2016. In the quarter, Telecom revenues increased 53% and IT

revenues increased only 4% due to extraordinary revenues in the fourth quarter of 2015 related

to equipment sales for system integration services. In peso terms, Enterprise revenues in the

fourth quarter of 2016 increased 73% compared to the same period in 2015.

Enterprise

Total revenues increased 93% in the fourth quarter of 2016 compared to the same period

in 2015, mostly explained by the consolidation of Axtel revenues since February 15th, 2016. In

peso terms, revenues increased 128%.

4Q15 4Q16

FTTx proportion within the revenue mix is 14% in 4Q16 and wireless is 7%; Enterprise decreased from

85% in 4Q15 to 65% in 4Q16 and Government remained in 15%.

YTD

In millions 3Q16 4Q15 D%

ENTERPRISE (Ps.) 2,451 2,431 1,416 1% 73% 9,079 5,471 66%

In USD 124 130 84 -5% 46% 486 346 41%

GOVERNMENT (Ps.) 558 628 244 -11% >100% 1,917 692 >100%

In USD 28 34 15 -17% 93% 102 43 >100%

MASS MARKET (Ps.) 775 778 - 0% n.a. 2,748 - n.a.

In USD 39 42 - -6% n.a. 147 - n.a.

TOTAL (Ps.) 3,783 3,836 1,660 -1% >100% 13,744 6,163 >100%

In USD 191 205 99 -7% 93% 736 389 89%

YTD'16 YTD'15(%) 4Q16 vs.

4Q16 3Q16 4Q15

YTD

In million USD 3Q16 4Q15 D%

TELECOM 111 118 73 -6% 53% 439 306 43%

Voice 32 37 18 -14% 75% 135 92 46%

Data and Internet 42 41 33 2% 26% 162 134 21%

Managed Networks 38 40 21 -6% 77% 142 81 76%

IT 12 12 12 5% 4% 48 39 21%

TOTAL ENTERPRISE 124 130 84 -5% 46% 486 346 41%

(%) 4Q16 vs.YTD'16 YTD'154Q16 3Q16 4Q15

3

Government revenues amounted to $28 million in the fourth quarter of 2016, compared to

$15 million in the same period in 2015, a 93% increase driven the benefit of consolidating Axtel

revenues since February 15th, 2016. Telecom revenues increased 366% and IT revenues

increased 31%. In peso terms, Government revenues in the fourth quarter of 2016 increased

128% compared to the fourth quarter of 2015.

Government

Mass Market (3)

In the fourth quarter of 2015, Alestra did not record revenues for the Mass Market segment.

FTTx. Revenues totaled $26 million in the fourth quarter of 2016 explained by the

consolidation of Axtel revenues since February 15th, 2016.

Legacy Technologies. Revenues from clients connected with WiMAX and other legacy

technologies totaled $13 million in the fourth quarter of 2016, also explained by the

consolidation of Axtel revenues since February 15th, 2016.

YTD


TELECOM 12 15 3 -17% >100% 45 11 >100%

Voice 2 2 0 7% >100% 7 2 >100%

Data and Internet 5 5 1 7% >100% 17 5 >100%

Managed Networks 6 9 1 -35% >100% 20 4 >100%

IT 15 19 12 -16% 31% 57 32 80%

TOTAL GOVERNMENT 28 34 15 -17% 93% 102 43 >100%

(%) 4Q16 vs.4Q16 3Q16 4Q15 YTD'16 YTD'15

YTD


FTTx 26 27 - -1% n.a. 93 - n.a.

Legacy Technologies 13 15 - -14% n.a. 54 - n.a.

TOTAL MASS MARKET 39 42 - -6% n.a. 147 - n.a.

(%) 4Q16 vs.YTD'16 YTD'154Q16 3Q16 4Q15

48

16

6

46

22

5

36

14

5

10

5

36

4

15

78

40

14

8

15 1516 16YTDQTR

4

Cost of Revenues(in Mdlls.)

Expenses(in Mdlls.)

EBITDA(in Mdlls.)

Cost of revenues, Operating and other expenses and EBITDA

Cost of revenues(4) (excludes depreciation and amortization

cost). For the three month period ended December 31, 2016, the cost of

revenues represented $40 million, an increase of 171% or $25 million,

explained by the increase in revenues related to the consolidation of Axtel

results since February 15th, 2016. In peso terms, Cost of Revenues

increased 216% year-over-year.

Operating and other expenses(5) (excludes depreciation and

amortization expense). In the fourth quarter of year 2016, expenses

totaled $105 million, 189% higher than the $36 million recorded in the

same period in year 2015. This increase is mostly explained by the

consolidation of Axtel results since February 15th, 2016, including the non-

recurring merger and integration process expenses. In peso terms,

expenses increased 244% year-over-year.

EBITDA(6). For the fourth quarter of 2016, EBITDA totaled $46

million, a 4% decrease compared to the same period in year 2015. In

peso terms, EBITDA increased 13% year-over-year, mostly explained by

the consolidation of Axtel results since February 15th, 2016. For the three

month period ended December 31, 2016, non-recurring expenses related

to the merger transaction totaled $14 million.

15 1516 16YTDQTR

15 1516 16YTDQTR

5

Interest Expense

At the end of the fourth quarter 2016, total debt increased $792 million in comparison

with fourth quarter 2015. The increase is explained by the consolidation of Axtel’s debt since

February 15th, 2016. The most relevant debt movements after the merger are the refinancing

of Axtel’s Senior Notes with a dual-currency Syndicated Credit Facility including the financing

of the $40 million redemption premium in February 2016 and the refinancing of Alestra’s $85

million short-term debt during the general syndication of the Credit Facility in April 2016.

Total Debt and Net Debt (8)

Net interest income reached $22 million in the fourth quarter of 2016, compared to an

expense of $1 million in 2015. The net interest income is explained by the cancellation of the

redemption premium of the Senior Notes registered during the first quarter of 2016 and the

consolidation of Axtel results on February 15th, 2016. In peso terms, net interest income

reached Ps. 438 million in the fourth quarter of 2016 compared to an expense of Ps. 10 million

in 2015.

Million dollars 4Q16 3Q16 4Q15

Syndicated Credit Facility 803 821 -

Long-term loan 187 188 190

Other loans 25 7 66

Other financing obligations 29 34 1

Accrued Interest 6 6 2

Total Debt 1,050 1,056 258

(-) Cash and cash equivalents (77) (46) (48)

Net Debt 972 1,010 211

In the fourth quarter of 2016, capital investments totaled $45 million, compared to $33

million in the year-earlier quarter, mainly explained by the consolidation of Axtel’s results since

February 15th, 2016.

Capital Investments

Appendix

Other important information

1) We are presenting financial information based on International Financial ReportingStandards (IFRS) in nominal pesos for the following periods:

– Consolidated income statement information for the three month periods endingon December 31, 2016 and 2015, and September 30, 2016; and twelve monthperiod ending on December 31, 2016 and 2015, and

– Balance sheet information as of December 31, 2016 and 2015; and September30, 2016.

2) 2015 and 2016 revenues:

3) Mass market operating data:

4) Costs of revenues include expenses related to the termination of our customers’cellular and long distance calls in other carriers’ networks, as well as expenses relatedto billing, payment processing, operator services and our leasing of private circuit links.

5) Operating expenses are those incurred in connection with general and administrativematters, such as personnel, land and tower leases, sales and marketing, maintenanceof our network and net other not recurrent expenses including merger and integrationexpenses.

6) EBITDA is defined as operating income (loss) plus depreciation and amortization, plusimpairment of assets.

* Revenue Generating Units, represent individual service subscriptions (line,

broadband, video) which generate recurring revenues for the Company.

In million USD Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

ENTERPRISE 88 88 85 84 107 126 130 124

Telecom 79 79 76 73 96 114 118 111

IT 9 9 9 12 11 12 12 12

GOVERNMENT 5 9 15 15 18 22 34 28

Telecom 3 2 3 3 9 9 15 12

IT 2 6 12 12 10 14 19 15

MASS MARKET - - - - 22 45 42 39

FTTH - - - - 13 27 27 26

Legacy Technologies - - - - 9 17 15 13

TOTAL 93 97 99 99 147 193 205 191

In thousands Q4 2016 Q3 2016 Q4 2015

FTTH

Customers 233 225 -

RGUs 639 614 -

Lines in service 281 266 -

Broadband subscribers 234 225 -

Video subscribers 124 123 -

LEGACY TECHNOLOGIES

Customers 207 241 -

RGUs 393 445 -

Lines in service 226 263 -

Broadband subscribers 167 182 -

6

7) Net Debt to EBITDA ratio: Net debt translated into U.S. Dollars using the exchange rateof the end of the period divided by the respective LTM pro forma EBITDA translatedinto U.S. Dollars using the average exchange rate for each month.

8) Total debt includes accrued interests for each period. Net debt is calculated subtractingcash and equivalents, including non-current restricted cash, from total debt.

9) Other long-term liabilities: During 2016 and as part of the post-merger integrationprocess, accounting policies were standardized including the provisioning of past-duereceivables. In this respect and according to the Merger Transaction Agreement, a Ps.984 million account payable in favor of ALFA was recorded in the fourth-quarter of2016, mainly from past-due account receivables from government customers,originated in periods previous to 2016. The payment of this amount could be reducedupon future collection results and is subject to Axtel’s financial conditions.

10) The number of outstanding paid Series B shares was 19,229,939,531 as of December31, 2016, equivalent to 2,747,134,219 CPOs. On July 21, 2016, all former Series Ashares were converted into Series B shares.

About AXTEL

Axtel is a Mexican Information and Communication Technology Company that serves the

enterprise, government and residential markets with a robust portfolio of solutions through its

brand Alestra (enterprise and government services) and its brand Axtel (residential and small

businesses services).

With a network infrastructure of over 40 thousand kilometers and more than 7 thousand square

meters of data center, Axtel enables organizations to be more productive and brings people

together to improve their quality of life.

As of February 15, 2016, Axtel is a subsidiary of Alfa, which owns 51% of its equity.

Axtel shares, represented by Ordinary Participation Certificates, or CPOs, trade on the Mexican

Stock Market under the symbol “AXTELCPO” since 2005.

Axtel’s Investor Relations Center: www.axtelcorp.mx

Enterprise and Government services website: www.alestra.mx

Mass Market services website: www.axtel.mx

7

http://www.axtelcorp.mx/

http://www.alestra.mx/

http://www.axtel.mx/

8

Axtel, S.A.B. de C.V. and SubsidiariesUnaudited Consolidated Balance Sheet

(in Thousand Mexican pesos)

(%) Dec-16 vs.Dec-16 Dec-15 Dec-15

ASSETSCURRENT ASSETSCash and equivalents 1,447,118 675,575 >100Accounts receivable 3,129,046 1,172,170 >100Related parties 20,949 25,773 (19)Refundable taxes and other accounts receivable 916,831 232,059 >100Advances to suppliers 517,457 251,416 >100Inventories 109,388 38,800 >100Financial Instruments (Zero Strike Call) 152,978 - n.a.Total current assets 6,293,766 2,395,793 >100

NON CURRENT ASSETSRestricted cash 153,040 148,291 3Property, plant and equipment, net 20,918,953 6,523,246 >100Long-term accounts receivable 8,642 - n.a.Intangible assets, net 6,446,945 1,121,870 >100Deferred income taxes 4,048,385 177,175 >100Investment in shares of associated co. & other 1,708 9,919 (83)Other assets 203,597 69,331 >100Total non current assets 31,781,268 8,049,832 >100

TOTAL ASSETS 38,075,035 10,445,625 >100

LIABILITIES & STOCKHOLDERS' EQUITYCURRENT LIABILITIESAccount payable & Accrued expenses 3,183,091 771,849 >100Accrued Interest 132,815 26,876 >100Short-term debt 400,000 624,029 (36)Current portion of long-term debt 495,773 574,348 (14)Taxes payable 17,357 37,862 (54)Deferred Revenue 1,022,982 39,450 >100Provisions 129,647 160,000 (19)Other accounts payable 2,198,215 841,702 >100Total current liabilities 7,579,880 3,076,116 >100

LONG-TERM LIABILITIESLong-term debt 20,485,861 3,210,041 >100Employee Benefits 467,036 226,827 >100Other LT liabilities 2,760,220 454,204 >100Total long-term debt 23,713,118 3,891,073 >100

TOTAL LIABILITIES 31,292,998 6,967,188 >100

STOCKHOLDERS EQUITYCapital stock 10,362,334 1,183,799 >100Additional paid-in capital 644,710 - n.a.Cumulative earnings (losses) (4,225,008) 2,294,638 n.a.

TOTAL STOCKHOLDERS' EQUITY 6,782,037 3,478,437 95

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 38,075,035 10,445,625 >100

(9)

9

Axtel, S.A.B. de C.V. and SubsidiariesUnaudited Consolidated Income Statement

(in Thousand Mexican pesos)

4Q16 3Q16 4Q15 3Q16 4Q15 YTD'16 YTD'15 D%

Total Revenues 3,783,302 3,836,227 1,660,151 (1) >100 13,743,672 6,162,901 >100

Operating cost and expenses

Cost of sales and services (790,408) (868,668) (250,505) (9) >100 (2,752,916) (1,240,109) >100

Selling, administrative and other expenses (2,082,775) (1,702,973) (605,642) 22 >100 (6,813,571) (2,293,232) >100

Asset impairment (81,136) 54,621 (3,014) n.a. >100 (29,779) (5,146) >100

Depreciation and amortization Cost (639,019) (829,668) (223,485) (23) >100 (2,807,424) (842,813) >100

Depreciation and amortization Expenses (811,819) (150,132) (45,960) >100 >100 (1,212,178) (166,554) >100

(4,405,158) (3,496,819) (1,128,606) 26 >100 (13,615,867) (4,547,854) >100

Operating income (loss) (621,856) 339,408 531,544 n.a. n.a. 127,805 1,615,048 (92)

Comprehensive financing result:

Interest expense 431,538 (275,222) (38,071) n.a. n.a. (619,786) (146,876) >100

Interest income 6,940 7,105 28,198 (2) (75) 23,092 40,582 (43)

Foreign exchange gain (loss), net (907,628) (482,535) (49,608) 88 >100 (2,206,658) (649,784) >100

Change in fair value of fin. instruments (40,852) (78,662) - (48) n.a. (192,122) - n.a.

Comprehensive financing result, net (510,003) (829,314) (59,482) (39) >100 (2,995,474) (756,078) >100

Equity in results of associated company (265) (4,924) (5) (95) >100 (5,189) (160) >100

Income (loss) before income taxes, (1,132,124) (494,829) 472,057 >100 n.a. (2,872,859) 858,809 n.a.

Income taxes:

Current 16,268 (15,677) (37,246) n.a. n.a. (79,097) (170,834) (54)

Deferred 341,522 59,663 (97,972) >100 n.a. 949,374 (66,433) n.a.

Total income taxes 357,790 43,986 (135,218) >100 n.a. 870,277 (237,267) n.a.

Net Income (Loss) (774,334) (450,843) 336,840 72 n.a. (2,002,581) 621,542 n.a.

(%) 4Q16 vs.


NEWPEK

Naturalgasandhydrocarbons|1%AND2%OFALFA´SREVENUESANDEBITDAIN4Q16

Newpekisanoil&gasexplorationandproductioncompanywithoperationsintheUnitedStatesandMexico.Thecompany owns mineral rights in several states within the U.S. where it extracts oil, natural gas and liquids. InMexico, its operations are concentrated in two mature oil fields under a service agreement with PetróleosMexicanos(PEMEX).

IndustrycommentsOilandgaspricesnotonly recoveredduring4Q16,butalsoappear tohavestabilized.WTIOilpricewasup17%from4Q15,averagingU.S.$49perbarrel,andHenryHubnaturalgaspriceincreased44%toanaverageofU.S.$3permillionBTU.Withtheuncertaintysurroundingthemid-to-longtermsustainableoilpricelevelunchanged,andglobaloildemandgrowingataslower-than-forecastrate,globaloilandgascompaniesremaincautiousregardingtheirexplorationplansfor2017andbeyond.

OperationsintheU.S.During4Q16,nonewwellswereconnectedtosalesattheEagleFordShaleplay(“EFS”)inSouthTexas.ThiskeptwellsinproductionatEFSat628bythequarter’send,3%abovethe610wellsinproductionattheendof4Q15.SalesvolumeintheU.S.averaged5.9MBOEDduring4Q16,down37%from4Q15.Liquidsandoilrepresented68%ofthetotalsalesvolumeforthequarter,upfrom62%ayearago.DrillingandcompletionactivitiesatEFSandtheprospectsinotherareaswithintheU.S.remainedonholdduringthequarter,butareexpectedtoresumein2017reflectingimprovedandmorestableoilandgasprices.

OperationsinMexicoInMexico,productionaveraged3.5MBOEDduring4Q16,down21%from4Q15.TheSanAndrésfieldrepresented70%of the total production for thequarter, essentially flat year-on-year. Therewere128wells in production inMexicobythequarter’send,a7%decreasefromthe138wellsinproductionattheendof4Q15.

Financialresults;capitalexpendituresandacquisitions;NetDebtRevenue in the quarter benefitted from higher oil and gas prices, which totaled U.S. $27 million in 4Q16.Nevertheless, revenuewas still down13%year-on-year due to lower production levels. 4Q16EBITDAdecreased68%year-on-year toU.S.$12million.CapitalexpendituresamountedtoU.S.$5million,whileNetDebtwasU.S.$25millionattheendofthequarter.


NEWPEKTABLE1|REVENUES (%)4Q16VS. 4Q16 3Q16 4Q15 3Q16 4Q15 YTD.´16 YTD.´15 Ch.%TOTALREVENUES Ps.Millions 544 536 527 1 3 1,991 2,180 (9)U.S.$Millions 27 29 32 (4) (13) 107 138 (23)

DOMESTICREVENUES Ps.Millions 246 269 208 (8) 18 920 771 19U.S.$Millions 12 14 12 (14) - 49 49 1

FOREIGNREVENUES Ps.Millions 298 267 319 11 (7) 1,071 1,409 (24)U.S.$Millions 15 14 19 5 (21) 57 89 (36)Foreign/Total(%) 55 50 60 54 65 VOLUME(U.S.Operations) ThousandsofBarrelsofOilEquivalentPerDay(MBOEPD) 5.9 6.7 9.4 7.2 9.3 Liquids&othersas%oftotalsalesvolume 68 65 62 64 64


4Q16 3Q16 4Q15 3Q16 4Q15 YTD.´16 YTD.´15 Ch.%OPERATINGINCOME Ps.Millions (1,275) (134) (1,100) (849) (16) (1,945) (2,168) 10U.S.$Millions (62) (7) (64) (768) 3 (99) (133) 26EBITDA Ps.Millions 240 22 619 997 (61) 199 1,075 (82)U.S.$Millions 12 1 37 917 (68) 9 67 (86)

TABLE3|SELECTEDBALANCESHEETINFORMATION&FINANCIALRATIOS(U.S.$MILLIONS)

4Q16 3Q16 4Q15 YTD.´16 YTD.´15Assets 343 445 482 343 482Liabilities 292 303 243 292 243Stockholders’Equity 51 142 239 51 239NetDebt 25 26 77 25 77NetDebt/EBITDA* 2.7 0.7 1.2 2.7 1.2InterestCoverage* 1.5 6.2 3.8 1.5 3.8*Times:LTM=Last12months

alfa, s.a.b. de c.v. fourth quarter 2016 financial report · fourth quarter 2016 financial report...

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