alpek corporate presentation 4q19 eng...general internal use alpek is the largest component of...

General Internal Use 1

Corporate Presentation

4th Quarter 2019

General Internal Use

This presentation contains, or may be deemed to contain, “forward-looking statements”. By their

nature, forward looking statements involve risks and uncertainties because they relate to events

and depend on circumstances that may or may not occur in the future. The future results of Alpek,

S.A.B. de C.V. and its subsidiaries may differ from the results expressed in, or implied by the

forward-looking statements set out herein, possibly to a material degree.

Disclaimer


Index

3

Alpek at a Glance

Key Investment Highlights

The Case for PET

Financials

Guidance

Relevant Events

Appendix


Alpek is the largest component of ALFA’s portfolio Alfa posted US$17.5B in Revenues & US$2.3B in EBITDA1

8 out of 10

Mexican Corporates use

Axtel’s IT and Telecom

services

11 Sigma brands

sell more than

US$100M a year each

1 out every 4 new cars

sold in the world contains

at least one Nemak

product

728 production wells

operated by Newpek

in U.S. and Mexico

Petrochemicals Food Products Aluminum Auto Parts IT + Telecom Oil & Gas

82%

18%

100%

75%

25% 53%

28%

19%

100%

Alfa Publicly traded

EBITDA1

(% Alfa)31% 27% 12% -37%

#1 in the production of

PTA, PET and EPS

in the Americas

Petrochemicals

82%

18%

Other Privately Held

4

(1) Figures as of December 31, 2019

Source: Alpek


Alpek is one of the largest PetChems in The AmericasStrong portfolio of products across two main segments

5

Polyester (76% Sales)2 Plastics & Chemicals (23% Sales)2

Revenues1: Adjusted EBITDA1:Net Debt /

Adjusted EBITDA1:US$6.2B US$850M 1.6x

(1) Figures for the year ended December 31, 2019;

(2) Sales revenue for the year ended December 31, 2019; additional 1% represented by other small business

Source: Alpek

PTA, PET

& rPET

Polyester

Fibers

Polypropylene

(PP)

Expandible

Polystyrene (EPS)

Caprolactam

(CPL)

Specialty Chemicals

& Fertilizers


Our footprint spans 28 plants across 7 countries Over 7 million tons and more than 6,000 employees worldwide

6

Installed capacity breakdown (kta)

Site PTA PET rPET Fibers PP EPS CPL Other

Mexico

(3,030 Kta)

A Monterrey 160

B Altamira 1,000 640 240

C Salamanca 85

D Ocotlán 10

E Cosoleacaque 610 185

F Lerma 100

USA

(2,385 Kta)

G Fayetteville, NC 170 55

H Charleston, SC 170 150

I Columbia, SC 640 725

J Bay St. Louis, MI 430

K Richmond, IN 45

Canada

(144 Kta)L Montreal 144

Argentina

(225 Kta)

M Zárate 190

N Pacheco 15

O General Lagos 19

Brazil

(1,226 Kta)

P Guaratingueta 46

Q Ipojuca 640 450 90

Chile

(27 Kta)

R Santiago 5

S Puerto Montt 2

T Concon 20

United Kingdom

(350 Kta)U Wilton 350

Total Capacity: 7,386 Kta 2,890 2,814 115 400 640 325 85 117

Polyester

P&C

Kta: Thousand tons per year

Source: Alpek estimates


Long-term strategy is based around 3 key pillars

Strengthen

Core Business

Strategic &

Focused

Growth

Foster Circular

Economy

1

2

3

• Global cost improvements (focused on Operations, Logistics, SG&A)

• Incorporate higher value-added products (i.e. Copolymers)

• Focus on maximizing FCF (Optimize CAPEX, M&G Mexico Debt, NWC)

• Increase footprint through vertical integration (PDH) & debottlenecking (EPS)

• Capitalize products from new R&D (Fertilizers) & business lines (NatGas)

• Incorporate & maximize value from Corpus Christi Polymers JV

• Maintain leadership of rPET capacity in The Americas

• Focus on supporting growth of recycling rates in our markets

7


Index

8

Alpek at a Glance


The Case for PET

Financials

Guidance

Relevant Events

Appendix


Investment Highlights

State-of-the-art technology resulting in low-cost position

Portfolio uniquely placed to lead growth of circular economy

Market leadership across all our products in the Americas

Consumer-oriented product portfolio limiting demand volatility

Proven track record of growth across all parts of the cycle

Experienced management team with clear strategy

1

2

6

3

5

4


Alpek holds #1 or #2 industry positions for all products within its portfolio

1

2

1

12

Industry Position1 Comments

Industry Position 48% est. installed capacity share in the Americas

Industry Position 44% est. installed capacity share in the Americas

Industry Position Recent acquisition of 45KTA Richmond, Indiana site

Industry Position Attractive growth potential & JV with LyondellBasell

#1 in the AmericasLargest plant in the Americas

47% est. installed capacity share in the Americas

Only producer in Mexico Among top 3 lowest cost producers worldwide

Only producer in Mexico

#1 in the Americas

#1 in the Americas

#1 in the Americas

#2 Worldwide

PTA

rPET

PP

PET

EPS

CPL

Po

lye

ste

rP

las

tic

s &

Ch

em

ica

ls

10

Note: on Plastics and Chemicals PP refers to polypropylene, EPS to expandable polystyrene, and CPL to caprolactam

Note: PTA = Purified Terephthalic Acid, PET = Polyethylene Terephthalate, PP = Polypropylene, EPS = Expandable Polystyrene, CPL = Caprolactam

(1) Industry position is based on installed capacity and reflects market position as of December 31, 2018

(2) Polyester Staple Fiber (excluding filaments)

Source: PCI and Alpek estimates

Leading supplier of filament for car seatbelts

31% est. installed capacity share (excl. filament)#2 in the Americas2Fibers

1

1. Market Leadership1


Alpek is the largest PTA-PET producer in AmericasMarket has consolidated & become increasingly organized over time

5,3825,738

6,953

36%44%

43%

24%

32%

32%6%

10%

27%

10%

8%

13%8%

7%

2014 2018 2023E

6,260 6,192

7,375

36%48%

47%

26%

25%

25%23%

23%

19%15%

9%

2014 2018 2023E

Kta

The Americas PTA Capacity Share (%) The Americas PET Capacity Share (%)

11

Indorama

BP

OthersKta

Indorama

FENC

M&G

Others

Source: WoodMackenzie

Kta: Thousands tons per year

Source: Wood Mackenzie

1. Market Leadership1


Food & Beverage 55%Consumer Goods 35%

Textiles 7%Construction 4%

MEX 29%

USA/CAN 44%

SA 24%

ME 0%EUR 3%

Asia 0%

Resilient end-markets account for 89% of volume97% of Alpek’s sales are dollar-based

Beverage Food Personal Care Textiles

Volume 2019

4,384 Kta

Sales 2019

US$6,216 M

89%

Volume by Industry 20191 Sales Geography 20191

Sample End Users by Industry

12

(1) Volume and sales breakdown for data for the year ended December 31, 2019.

Kta: Thousand tons per year

Source: Alpek

71%

1. Consumer Oriented Portfolio2


Alpek has grown at 8.8% CAGR since 1986Constant growth at different points of the industry cycle

´86 ´93 ´98 ´03 ´08 ´13 ´18´19e´22

Acquisition

of first PTA

plant

PP plant

start-up (JV)

CPL plant

acquisition

First U.S.

polyester

plant

acquisition

EPS

capacity

expansion

(JV)

First

recycling

plant (JV)

First power

cogeneration

plant

IPO (BMV)U.S. PTA/

PET plant

acquisitions

Polyester

acquisition

in Brazil

DMT

Expansion

rPET

Acquisition

in USA

Corpus Christi

Polymers (JV)

Sales volume 1986-2018 (Index: 1986 = 100)

13Source: Alpek

PET

acquisition

in UK

1. Proven Growth3

https://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&ved=2ahUKEwjMuuDM7aHkAhURtlkKHcPyBlgQjRx6BAgBEAQ&url=https://shawinc.com/&psig=AOvVaw1bYzSPlq1W_McKfVIAB_vS&ust=1566954208029195


Oxidation

Post-Oxidation

CTA Storage

Filtration and

Drying

Feed prep

Hydrogenation

Crystallization Crystallization

PTA Storage

Polymerization

Precursor

Storage

Esterification

Pre-Poly

Annealing

Crystallization

PET Resin

Pelletization

Precursor

Preheating

Filtration and

Drying

State-of-the-art tech, strategically located assets &

low-cost logistics yield low cost position in industry

Steps eliminated with

IntegRex ®

Marg

in

Cost

80% of Market

Participants

Continuous investment in own technology has

improved Alpek’s cost position (i.e. IntegRex)

World scale production facilities make Alpek the

low-cost producer in The Americas (i.e. PP)

14Source: Alpek, Philip Townsend

Solid State

Polymerization

1. Low Cost Position4


Mgmt. with 30+ years average experience in PetChemClear strategy & culture of empowerment ensure efficient operations

Plastics & Chemicals

José Carlos PonsCFO (23)

José de Jesús ValdezCEO (43)

Felipe GarzaCo-President

Alpek Polyester (42)

Jorge YoungCo-President

Alpek Polyester (29)

Gustavo TalancónPresident

Polyester Filament (30)

Alejandro LloveraPresident

Polypropylene (34)

José Luis ZepedaPresident

EPS & Chemicals (33)

Gustavo TalancónPresident CPL &

Ammonium Sulfate (30)

15

Polyester

(#) Years with Alfa/Alpek

Source: Alpek

1. Management5


Index

16

Alpek at a Glance


The Case for PET

Financials

Guidance

Relevant Events

Appendix


The Case for PET

Everything you should know


Plastics have been in the news a lot lately…

18

Indexed Google Searches (2009-2020)

100

367

111009 1712 14 1513 16 18 19

PlasticWaste

20


…But not all plastics are the samePET is 100% recyclable, recycled at high rates & can be remade back to its original use

19

Polyethylene

Terephthalate

High Density

PolyethylenePolyvinyl Chloride

Low Density

PolyethylenePolypropylene Polystyrene

Others

(PC, et al.)Plastic

100%Recyclable &

Recycled?

Back to Original

Purpose?

PET HDPE PVC LDPE PP PS

FullyOnly

Non-Dyed

Non-

ApplicableEmerging Emerging

Non-

Applicable

Non-

Applicable

✓ ✓ ✓ ✓

https://www.gettyimages.com.mx/detail/foto/shampoo-imagen-libre-de-derechos/93248129


Polyethylene terephthalate (pol·y·eth·yl·ene·ter·eph·thal·ate)

Commonly known as PET or PETE and identified by

Mainly used to bottle water & carbonated beverages worldwide

Safe for consumption. Always.

Making the world better since 1973

Hey there, I’m PET, I think we’ve met…

BPA

FREE

PHTHALATE

FREE

20


PET isnumber .

for a reason

21


PET is the best option because of its traits…

22

11g.1.0x

283g.25.7x

15g.1.4x

1.5¢1.0x

6.5¢4.3x

3.1¢2.1x

Shatter

Resistant

Note: All figures per 355ml bottle

Source: International Monetary Fund, CCFGroup, Bloomberg, SBAcci

Convenient &

Resealable

Costs +50%

Less

Uses 25%

Less Material


…making it the most widely usedbeverage packaging material

2323

37

2734

98

90

00 05

Aluminium-0.4%

10 15

PET+6.2%

115

19E

Glass-1.2%

USA Beverage Packaging Industry Units by Substrate (B Units)

Source: SBAcci


PET’s carbon footprintis 80% lower thanglass or aluminum

Source: EPA

Carbon Footprint Over Lifecycle(gr. CO2 Eq. / 355 mL Bottle)

5.1x4.9x 9.0x3.1x

37

182 187

10 31

90

PET Aluminum Glass

Vir

gin

Rec

ycle

d

1.0x

Aluminum

1,200oF

Glass

2,800oF


We havea plastic

waste problem


Industry leaders agree the solution lies with further increasing PET recycling rates, not imposing bans

27Source: Reuters, USA Today

“Coca-Cola chooses plastic bottle collection

over aluminum cans to cut carbon

footprint”Alexis Akwagyiram, Reuters

Coca-Cola is committed to collecting and recycling

plastic bottles rather than switching to aluminum

cans as the world’s largest soft drinks maker seeks to

reduce its carbon footprint its chief executive officer

told Reuters.

“Coke, Dr Pepper, Pepsi execs: We are

committed to reducing plastic waste”Jim Dinkins, Derek Hopkins and Kirk Tanner, USA Today

Recently, we launched an industrywide effort with the

country’s leading advocates for conservation and

recycling to reduce our need for new plastic by

working to collect, recycle and remake plastic

bottles from the plastic bottles we already produce.

Our bottles are already designed to be 100%

recyclable so they can be remade into new bottles.

The plastic we use in our bottles is used to make a

variety of consumer products and is in high demand

across many industries. All of us are eager to get the

plastic back through improved recycling. When

recycled appropriately, our bottles can be made into

new bottles.


PET already highly recycled on a worldwide basisUSA with largest potential in NA to increase recycling rates

28

PET Recycling

Rate (%)…

58

16

69

46

30

65

98

PET

Worldwide

PET

USA

Other Plastics Aluminum

USA

Glass

USA

PET

Mexico

PET

Germany

Very different from

other plastics…

On par with other beverage

package alternatives…

…and with potential to continue

growing under right incentives

Source: Woodmakenzie, Ball Corporation, Aluminum.org


Everyone must play a part in orderto ensure a circular PET recycling loop

29

Waste Mgmt.

Producers Consumers

Bottlers

• Consume responsibly

• Recycle everything

• Separate trash properly

• Increase rPET production

• Meet bottlers’ needs

• Improve rPET technology

• Grow gathering network

• Improve PET separation

• Improve bale quality

• Use higher rPET (%) content

• Design for higher recyclability

• Willingness to source rPET

Government• Incentivize recycling

• Promote use of

lower CO2 products


Alpek is leading the way towards fosteringa fully circular PET economy

30

Alpek already recycling

5 Billionbottles each year

Active member of to

strengthen USA recycling efforts

55

70

115

2010 2014 2019KTon

Among largest rPET

producers in The Americas

RICHMOND


So, what else canwe do personally?

Share this information

Reduce, reuse & refuse

Recycle everything

Separate waste properly

3R


1. PET is an unrivaled product for beverage packaging

▪ 100% recyclable and already 58% recycled worldwide

▪ Only plastic that can be 100% recycled to its same use

▪ 50% cheaper & 25% lighter than glass & aluminum

▪ Resealable & shatter-resistant packaging option

2. PET is the best option for the environment

▪ 80% lower carbon footprint than glass & aluminum

3. Focus on promoting a truly circular economy for PET

▪ Promote increase rPET content instead of generalized bans

▪ Grow recycling infrastructure to increase PET bale availability

▪ Focus on improving recycling scale, cost-efficiency & education

Need to get the word out to gain momentum, ensure alignment, and make sure decisions are made using the full set of facts

The Case for PET (in short)

32


Index

33

Alpek at a Glance


The Case for PET

Financials

Guidance

Relevant Events

Appendix


630 669

843662

517

220

188

2017 20182015 2016 2019 2020G

384

1,063

850

547

Results & Guidance

34

Sales Volume (K Ton) Revenues (US$ M)

Reported EBITDA (US$ M) CAPEX (US$ M)

4,652

2015 2017 2018 2020G2016

4,402

2019

P&C

Polyester

3,937 3,938 4,0124,384

5,677

P&C

2015 2019

4,838

2016 2017 2018 2020G

5,231

Polyester

5,284

6,991

6,216

270 277

2020G20182015 2016 2017 2019

317 345

236

826

Suape/

Citepe &

CCP

Business

Combination

Cogen.

Sale

% Sales 11.9% 15.2%13.8% 7.3% 9.6%13.7%

Comparable

Business

Combination


EBITDA BreakdownAlpek exceeded 2019 EBITDA Guidance figures

35

52

11

46 46 42

167

4Q19

Comparable

6

122

RMCF1

123

6

Inventories 4Q19

Reported

Others

Polyester

P&CPolyester4Q19G

188

135

173 172

4Q19

Comparable

(w. RMCF)1

Others

12 2

P&C

125

Others

Others

EBITDA

4Q19 vs.

4Q19G(US$M)

EBITDA

2019 vs.

2019G(US$M)

(1) Raw Material Carry Forward

190

41

231

67

231

68

218

Polyester512

2019

Comparable

(w. RMCF)1

P&C

9

29

Polyester

541

RMCF1

474

P&C

789

428

2019

Reported

Others

11

Inventories2019G Others 2019

Comparable

718 722

662


LeverageNet debt reduced by U.S. $706 million resulting in 1.6x leverage

36

Net Debt (US$M) LTM EBITDA (US$M) Net Debt/EBITDA (Times)

407

564

834

1,0631,022

944

864 850

1Q18 2Q194Q182Q18 1Q193Q18 3Q19 4Q19

3.1

2.9

1.9

1.7

2.2 2.22.4

1.6

3Q182Q181Q18 4Q18 2Q191Q19 3Q19 4Q19

1,270

1,637 1,603

1,832

2,2002,084

2,036

1,330

3Q181Q18 2Q18 3Q194Q18 1Q19 4Q192Q19


Balance Sheet Accounts

37

Net Working Capital1 (US$ M) Property, Plant and Equipment (US$ M)

Net Debt3 (US$ M) Stockholders’ Equity (US$ M)

694

497

955

856

2016 20182017 20192

544153 44NWC Days

1,9552,105

2,390

1,968

2018 201922016 2017

1,042

1,262

1,832

1,330

201922016 2017 2018

2,019

1,604

2,1932,391

2016 201922017 2018

IFRS

(1) Net Working Capital = Accounts receivable + Other accounts receivable + Inventories - Suppliers - Other accounts payable and accrued expenses

(2) December ‘19

(3) Net Debt = Bank loans and notes payable + Current portion of long-term debt + Long term debt – Cash

Source: Alpek estimates


Debt ProfileDebt maturity improved to 5.3 years after income from Cogen sale

38

(1) A small portion of debt is denominated in ARS

(2) Excludes leases, documents and accrued interests

Consolidated Debt Profile2 (Dec. 2019)

• Net Debt: U.S. $1,330 million / Gross Debt: U.S. $1,716 million

• Available Committed Credit Lines: U.S. $740 million (Total: U.S. $740 million)

• 99% of our debt is denominated in US dollars1,2

386

20 19

300

500

650

0

100

200

300

400

500

600

700

800

900

2020 2021

US$M

Cash 20252022 20242023 2026 2027 2028 2029

675

Cash

Bonds

Bank Debt


Dividends to Shareholders

39

100114

95111

143 143 1432.1

3.03.4 3.4

5.95.9

0

5

-1

100

6

50

150

1

0

2

4

3

2013 20141 2015 2016 2017

4.71

2018

5.11

2019

(US

$ M

)

Dividend Yield (%)

(1) Paid in January 2020


181

239274

369

140161

194

356

1Q 2Q 3Q 4Q

Business

Comb.

Results by Quarter

40

Sales Volume (K Ton) Revenues (US$ M)

Reported EBITDA (US$ M) Majority Net Income (US$ M)

1,0161,151 1,174

1,0611,087 1,121 1,1181,059

1Q 4Q2Q 3Q

1,5321,759

1,9411,758

1,642 1,6431,523

1,407

1Q 4Q3Q2Q

82

142

80

393

2756 50

209

3Q1Q 2Q 4Q

2018 2019

Business

Comb.

M&G Recovery

220 220

136

2017 ComparableSource: Alpek

220 188 Cogen

Sale


Comparable EBITDA

41

Reported EBITDA

(US$ M)2015 2016 2017 2018 2019G 4Q19 4Q18 2019 2018

Polyester 344 349 147 788 723 122 316 428 788

Plastics & Chemicals 284 322 237 276 191 42 52 218 276

Cogeneration Plant’s Sale - - - - - 188 - 188 -

TOTAL 630 669 384 1,063 9181 356 369 850 1,063

Adjustments*

(US$ M)2015 2016 2017 2018 2019G 4Q19 4Q18 2019 2018

Polyester (35) 18 (87) 258 200 (1) 193 (47) 258

Plastics & Chemicals 11 14 8 1 - (4) (5) (13) 1

Cogeneration Plant’s Sale - - - - - 188 - 188 -

TOTAL (24) 32 (79) 259 200 184 188 128 259*Adjustments: Inventory and non-operating, one-time (gains) losses

Comparable EBITDA

(US$ M)2015 2016 2017 2018 2019G 4Q19 4Q18 2019 2018

Polyester 378 331 234 529 523 123 122 474 529

Plastics & Chemicals 273 308 229 275 191 46 57 231 275

TOTAL 654 637 462 804 7181 172 181 722 804

(1) EBITDA includes profits (US $5 M) from other activities such as natural gas sales


Extraordinary Effects on EBITDAComparable EBITDA + RMCF1 almost matched 2018 record figures

42

(1) Raw Material Carry Forward: Effect on margin generated from price change to raw materials between purchase vs. actual consumption. Positive or negative depending on price change

(2) Excludes PQS Badwill

(3) Excludes Cogeneration plants’ sale

2019 2018 Delta

US$M 1Q 2Q 3Q 4Q2 Total 1Q 2Q 3Q 4Q3 Total 1Q 2Q 3Q 4Q Total

Reported EBITDA 140 161 194 167 662 181 239 274 149 843 (41) (78) (80) 18 (181)

Inventory Adjustment (19) (27) (16) (6) (68) 16 20 33 (28) 41 (35) (48) (49) 22 (109)

Others 11 (1) (3) 1 9 (5) 1 7 (4) (2) 16 (1) (10) 5 10

Comparable EBITDA 148 189 213 172 722 170 218 234 181 804 (23) (29) (21) (10) (82)

Raw Material Carry

Forward(19) (28) (18) (2) (67) 11 9 (18) 2 4 (30) (36) (1) (4) (70)

Comparable EBITDA +

Raw Material Carry Forward167 217 231 173 789 160 210 251 179 800 7 7 (20) (6) (11)


Index

43

Alpek at a Glance


The Case for PET

Financials

Guidance

Relevant Events

Appendix


2020 GuidanceMacroeconomics & Key Assumptions

44

General

Business

2020G 2019 Ch. %

Crude Oil US$/Bbl 59.0 63.8 (8)

Asia PTA/PET Margin US$/Ton 255 306 (17)

MXN / USD (Avg.) MXN 20.2 19.3 5

Volume Kton 4,652 4,384 6

Net Sales US$M 5,677 6,216 (9)

EBITDA1 US$M 547 850 (36)

CAPEX US$M 277 270 3

1. EBITDA 2020G includes an estimated US$30 M non-cash gain from an estimated Business Combination effect stemming from the acquisition of our Wilton, UK facility


2020 GuidanceMajority of EBITDA reduction from industry margins

662

517

188

40

6532

201

2019 ReportedEBITDA

~30

2020Guidance

OthersNegativeEffects

850

PositiveEffects

547

2020 Guidance Bridge (US$M)

Cogeneration

Plants’ Sale

Wilton PET

Business

Combination

Effect (best

estimate)• Inventory Adj. ‘19

• Non-Recurring

• Other Items• Higher Volume

• Cost Improvement

Industry

Margins

241

’19 CoGen

EBITDA


Index

46

Alpek at a Glance


The Case for PET

Financials

Guidance

Relevant Events

Appendix


Relevant Events & Updates

47

1

2

3

4

Sale of Cosoleacaque & Altamira power cogeneration plants (US$801M)

• Sale finalized on November 25th / Proceeds used for debt reduction & one-time dividend payment

Acquired a 350,000-ton PET facility in Wilton, United Kingdom from Lotte Chemical

• Marking Alpek’s first acquisition outside of the Americas

• Increasing PET production capacity by 15% and improving Alpek’s PTA/PET capacity balance

• Alpek taking over plant operations as of January 1st, 2020

10 Year US$500M bond issued at 4.25% coupon on September 11th

• Lowest spread in Alpek’s history / Avg. debt maturity improved from 2.7 to 5.3 years

Corpus Christi Polymers (CCP) integrated PTA/PET facility

• Updated CAPEX & timeline to complete construction expected in 2Q20

M&G Mexico PET plant restructuring process

• Normalized M&G Mexico operations continue (supported by Alpek)

• Ruling on “Concurso Mercantil” with pre-arranged restructuring plan expected in 2020

5


Sale of Cogeneration plants finalized in 4Q19

48

Alpek sold its two Cogeneration plants for

US$801M

Sale finalized on November 25th

Proceeds used to pay down debt and pay a

US$143M dividend

Alpek companies to keep attractive cost-plus

Power & Steam contracts

CELCSA

• Cosoleacaque, Veracruz

• 95MW

• Started operations in 2014

Cogeneración Altamira

• Altamira, Tamaulipas

• Expected 350MW

• Started operations in 2019

Asset Description


Alpek acquires 350KTA PET facility in Wilton, U.K.

49

First Alpek acquisition outside of the Americas

Only PET producer in United Kingdom, mainly

serving domestic demand

Improved PTA/PET capacity net balance and

reduction to PTA spot sales

PTA will be sourced from existing Alpek sites,

providing stable utilization rates

Received all government approvals during 4Q19,

takeover as of January 1st, 2020Seller

Capacity

Technology

Start-Up

Location

Lotte Chemical Corporation

Line 1

200KTA

Line 2

150KTA

MTR Chemtex

2015 1996

Wilton, UK


Alpek issued bond for U.S. $500 million

50

Details Alpek Bonds on Emission (%)

Alpek Debt Profile - Proforma 2Q19 (US$ M)

Amount US$500M

Coupon 4.250% (Yield 4.285%)

Maturity 10 Years (2029)

Spread 255 bps

Orders 6.0x (US$3.02B)

2.550 2.950 2.737

1.735 1.586 2.638

4.250 4.500

5.375

Alpek ’29

Spread

10Y UST

Alpek ’22 Alpek ’23

Coupon

• Lowest spread in Alpek’s history

• High quality investor participation and with vast

geographic diversity

• 48% NA / 34% EUR / 10% Asia / 8% Other

• Improved avg. debt maturity from 2.7 to 4.9 years

287 300250

500

709

Cash 19

349

574

22

500

20 21 23 24 25 26 27 28 29

B


Index

53

Alpek at a Glance


The Case for PET

Financials

Guidance

Relevant Events

Appendix


Polyester Value Chain

54

Ethylene

Crude Oil Refinery Naphtha Reformer/BTX

PX

Ethylene OxideCracker

0.80 ton Ethylene

per ton EO

0.66 ton PX

per ton PTA

MEG

0.72 ton EO

por ton MEG

0.84 ton PTA

per ton PET

0.34 ton MEG

per ton PET

PTA

Fibers &

Filaments

PET

Source: Alpek, Nexant

rPET

Ethane(From Natural Gas)


Polypropylene (PP) Value Chain

Ethane /

Propane



Expandable Polystyrene (EPS) Value Chain

56

Ethylene

Crude Oil Refinery Naphtha Reformer

Benzene

StyreneEthane(From Natural Gas)

Cracker

Pentane

EPS

0.29 ton Ethylene

per ton Styrene

0.79 ton Benzene

per ton Styrene

0.94 ton Styrene

per ton EPS

0.06 ton Pentane

per ton EPS



Caprolactam (CPL) Value Chain

57

Natural Gas

Crude Oil Refinery

Cyclohexane

Naphtha Reformer

Benzene

Ammonia

Caprolactam

Ammonium SulfateSyngas

0.94 ton Bz per

ton Cyclohexane

0.99 ton CX

per ton CPL

Fertilizers

Nylon



Latest Quarter Results

58

Alpek: Selected Financial Information

(1) Times: Last 12 months

Source: Alpek

(%) 4Q19 vs.

4Q19 3Q19 4Q18 3Q19 4Q18 2019 2018 Ch.%

Total Volume (ktons) 1,059 1,118 1,061 (5) - 4,384 4,402 -

Polyester 851 895 851 (5) - 3,490 3,490 -

Plastics & Chemicals 208 223 210 (7) (1) 895 912 (2)

Consolidated Revenues 1,407 1,523 1,758 (8) (20) 6,216 6,991 (11)Polyester 1,075 1,162 1,295 (7) (17) 4,718 5,174 (9)

Plastics & Chemicals 311 345 400 (10) (22) 1,407 1,713 (18)

Consolidated EBITDA 356 194 369 83 (4) 850 1,063 (20)

Polyester 122 129 316 (6) (61) 428 788 (46)

Plastics & Chemicals 42 60 52 (30) (18) 218 276 (21)

Cogeneration Plants’ Sale 188 - - 100 100 188 - 100

Profit Attributable to Controlling Interest 209 50 393 316 (47) 342 697 (51)CAPEX and Acquisitions 115 49 262 (133) (56) 270 826 (67)

Net Debt 1,330 2,036 1,832 (35) (27)

Net Debt / EBITDA(1) 1.6 2.4 1.7

Interest Coverage(1) 7.2 7.8 9.9


Latest Quarter Results

59Source: Alpek

(%) 4Q19 vs.

4Q19 3Q19 4Q18 3Q19 4Q18 2019 2018 Ch.%

EBITDA 356 194 369 83 (4) 850 1,063 (20)

Net Working Capital & Others (67) (2) (45) (3,711) (48) (2) (321) 99

Capital Expenditures & Acq. (115) (49) (262) (133) 56 (270) (826) 67

Financial Expenses (39) (34) (28) (13) (38) (136) (107) (28)

Income tax (29) (25) (17) (16) (75) (144) (92) (57)

Dividends (25) - (24) (100) (4) (206) (53) (292)

Payment to affiliated companies - 2 - (100) (27) 10 10 (7)

Other Sources / Uses 625 (37) (221) 1,774 382 400 (245) 263

Decrease (Increase) in Net Debt 706 48 (228) 1,365 409 502 (569) 188

Alpek: Cash Flow

(%) 4Q19 vs.

4Q19 3Q19 4Q18 3Q19 4Q18 2019 2018 Ch.%

Consolidated Net Income 218 63 402 245 (46) 390 765 (49)

Non-Controlling Interest 8 13 10 (35) (14) 48 68 (30)

Controlling Interest 209 50 393 316 (47) 342 697 (51)

Earnings per Share (U.S. Dollars) 0.10 0.02 0.19 316 (47) 0.16 0.33 (51)

Avg. Outstanding Shares (Millions)* 2,116 2,117 2,118 2,117 2,118

Alpek: Net Income


4Q

Relevant References: Crude OilCrude Oil prices remained stable during 4Q19

Brent Crude Oil Price

53

44

54

71

100

80

40

20

120

60

US$/Bbl

Avg.99

64

2014 2015 2016 2017 20192018

60Source: Bloomberg

Guidance

68


Relevant References: ParaxylenePx prices were stable during 4Q19

61

1,7081,635 1,641

1,382

992

829898 878 900

989924 924

9771,056 1,100

1,258 1,2821,165

1,077955 937

0

500

1,000

1,500

2,000

2Q2015 3Q

US$/Ton

2Q20132011 2012 2014 1Q 2Q3Q 4Q 1Q 4Q 1Q 3Q 4Q 1Q 2Q 3Q 4Q

2016 2017 2018 2019

Source: IHS

NA Px Contract Price


Relevant References: Integrated PET Margins’19 Avg. of U.S. $306/ton exceeded guidance, but declined in 4Q

62

200

74 69 69 62 58 71 64 63 60 72 80 81 104133 135 117 110

155 14082

193

174 186 208165 153

189148 147

180204 184 202

238

346

242

215 214

214

164

145

0

100

200

300

400

500

600

2014 4Q

US$/Ton

2012 1Q2011 2013 2015

263

2Q

248

3Q 1Q 2Q 4Q3Q 4Q

277

1Q

478

2Q 3Q

342

1Q 2Q 3Q 4Q

PET

260

393

211

255

324

227

PTA

210240

276 284

212

333

370

304

227

377

China

2016 2017 2018 2019

Asian Margins (Px / MEG to PET)

Source: ICIS, PCI, CCFGroup


Relevant References: Propylene & PolypropyleneSlight decrease in both PGP contract prices & PP margins in 4Q19

63Source: IHS

NA Propylene Contract Price (PGP) NA Polypropylene Margin (PP to PGP)

12 1213

15

24

27

1920

2223 23

22 2221

20

0

2

4

6

8

10

12

14

16

18

20

22

24

26

28

1413

cpp

11 3Q1712 1615 1Q 2Q 4Q 1Q 2Q 3Q 4Q

2018 2019

76

60

6971

39

34

45

53 52

60

51

38 37 3835

0

10

20

30

40

50

60

70

80

2Q1412 3Q

cpp

11 1713 1615 1Q 2Q 3Q 4Q 1Q 4Q

2018 2019


Relevant References: Caprolactam

64

2,100

1,240

1,069

840 862

630684 699

897

1,216

839934

1,141 1,1371,231 1,272 1,281

1,075976

692 644

0

300

600

900

1,200

1,500

1,800

2,100

2,400

3Q2Q

US$/Ton

2011 20132012 1Q2014 2015 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 3Q1Q 2Q 4Q

2016 2017 2018 2019

Asian Caprolactam to NA Benzene Spread (Contract)

Source: IHS Markit


Stock Highlights (BMV: ALPEK)

65

Daily Average Traded Shares & Value (M Shares)

Daily Stock Price (MXN)

5

2

4

0

4 5

1

2

1

33

0

6

MF JJ SFAJ SA M J NJ O D M A M J A O N D

2019

20

30

15

25

35

Jan May Sep Jan May Sep

(M Shares) (US$ M)

2018 2019

Valuation 2017 2018

2019

4Q’194Q’19

Proforma

Market Cap. (US$ B) 2,951 2,916 2,307 2,307

Net Debt (US$ M) 1,262 1,832 1,330 1,330

EBITDA LTM (US$ M) 384 1,063 850 662

Enterprise Value /

EBITDA11.6 4.7 4.6 5.9

Price / Earnings N/A 3.8 5.9 11.6

Price per Share (MXN) 26.50 27.30 21.00 21.00

Exchange Rate

(MXN/USD)19.00 19.83 19.26 19.26

2018


Alpek’s Investor Relations Team

7 Years at Alfa/Alpek

Previously held roles in Talent and Culture at Alfa and Axtel

BA in International Relations from ITESM

Alejandra

Bustamante

IR Manager

[email protected]


Prior to being Alpek CFO, held roles as VP of Business Development and Director of South America

Business at Nemak

BS in Mechanical Engineering from ITESM, MBA from ITESM & Executive Management Program from

IPADE

José Carlos

Pons

CFO


Previously held roles as Director of Logistics & Procurement at Indelpro, Director of Energy Markets at Alfa,

and Project Leader at The Boston Consulting Group

BS in Industrial Engineering from Cornell University and MBA from Stanford Graduate School of Business

Alejandro

Elizondo

IRO

[email protected]

66

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