ALFA reports 1Q20 EBITDA of US $563 million

MONTERREY, Mexico, April 16, 2020 /PRNewswire/ -- ALFA, S.A.B. de C.V. (BMV: ALFAA) (ALFA), a leading holding company that manages a diversified portfolio of subsidiaries with global operations announced today its unaudited results for the first quarter of 2020 ("1Q20"). All figures have been prepared in accordance with International Financial Reporting Standards ("IFRS").

1Q20 Highlights

Message from ALFA's President

"We are living through an unprecedented event that has impacted the global community and changed many aspects of our daily lives. Governments, companies and individuals worldwide are fighting against COVID-19 amid a growing number of cases. In addition to its effect on health, the virus is significantly affecting economic activities around the world.

ALFA is adapting to rapidly changing industry conditions; providing essential goods and services in these trying times, supported by talented and dedicated teams at all levels and by a solid financial position.

We are focusing our efforts on Safety and Business Continuity. Safety is our top priority as we reinforce health and safety standards in all our operations to protect the well-being of our employees, customers, suppliers and communities.

Actions undertaken to ensure this include: increased hygiene and sanitization protocols, reduction of  on-site personnel via virtual collaboration, physical distancing and travel restrictions. ALFA also seeks to maintain close contact with stakeholders in all regions, including health and government agencies, to identify and implement additional actions in support of worldwide efforts to minimize the transmission of the virus. 

It is also crucial that we preserve the continuity and long-term sustainability of our operations; protecting our employee's jobs, serving our customers responsibly and looking for ways to contribute to our communities in the fight against COVID-19.

Business continuity task forces are in place at the Local, Subsidiary and Corporate levels; closely monitoring this situation and coordinating our response to the immediate challenges posed by rapidly changing conditions. We are working with stakeholders in all our value chains to adapt our operations accordingly. Alpek, Sigma and Axtel are focused on operating to the full extent of their capacities amid increased demand for food, packaging materials, medical supplies and telecommunication services.

In contrast, the auto industry is being impacted by light-vehicle production cuts and temporary shutdowns amid emergency declarations issued in Mexico and other countries. As a result, Nemak has also temporarily ceased operations at certain plants and production lines.

ALFA and all its Subsidiaries are implementing cost reduction initiatives and capturing other cash flow benefits such as deferral of capital expenditures and working capital optimization. ALFA's Chairman of the Board and I have decided to voluntarily reduce our salaries by 30% during 2Q20 to complement other cost saving initiatives. We will also formalize a voluntary salary reduction program by which ALFA's Corporate employees will have full discretion to contribute a portion of their compensation to: i) fund special programs in support of our communities and/or, ii) enhance cost savings under this new operating environment.

Each of our subsidiaries is working on company-specific initiatives and programs. In particular, Nemak has taken several additional steps to reduce costs and expenses, including broader salary reductions for Executives and reduced working hours for salaried employees, among others.

In addition, the previously approved dividends at Nemak and Alpek will be subject to a thorough review by their Boards to provide Shareholders an updated recommendation considering the current market conditions. The implementation of updated recommendations would be subject to Shareholder approval.

We are facing an uncertain global macro environment, characterized so far by a significant drop in commodity prices, FX volatility, rising unemployment and demand distortions. It is important to note that the impact to our results from some of these variables is partially offset by the positive effect from others. However, it is difficult to forecast the future repercussions of COVID-19 based on information available currently. Therefore, we are withdrawing our 2020 guidance and expect to revisit this as soon as a reliable estimate can be determined.

ALFA and all its Subsidiaries reported a solid financial position at the end of 1Q20. The Company's consolidated Cash balance of US $2.3 billion is comparable to the EBITDA generated in 2019, and is larger than the aggregate amount of consolidated Debt maturities over the next three years. Furthermore, Net Debt to EBITDA was 2.7 times, flat versus 4Q19.

Our total cash position increased US $923 million when compared to 4Q19 as we strengthened liquidity by drawing down a portion of available credit facilities to enhance our financial flexibility. Also, Axtel received the proceeds from the sale of its Data Centers during the first quarter.

Furthermore, 1Q20 results were generally trending ahead of expectations before the impact from COVID-19. Consolidated EBITDA was US $563 million, including a US $107 million one-time gain from the sale of Axtel's Data Centers.

Looking ahead, ALFA and its Subsidiaries will continue to ensure the highest safety standards and focus on business continuity. I am confident that we are taking the right actions to protect the well-being of our employees, to serve our customers responsibly and to contribute in the global fight against COVID-19. Our long-term growth plans and strategic initiatives remain unchanged, but the immediate focus of the entire organization is on managing through and overcoming these challenging times.

I thank every member of our teams for their hard work and dedication in order to maintain essential food supply at Sigma; essential materials for food & beverage packaging and medical supplies at Alpek; essential connectivity for virtual collaboration at Axtel; and to rapidly adjust operations at Nemak. I also extend my appreciation to our customers, suppliers and partners who have all come together to address this situation.

Let me end by expressing my best wishes to you and to your families to stay safe and healthy."

Álvaro Fernández

About ALFA

ALFA is a holding company that manages a diversified portfolio of subsidiaries with global operations: Alpek, one of the world's largest producers of polyester (PTA, PET and fibers), and the leader in the Mexican market for polypropylene, expandable polystyrene (EPS) and caprolactam. Sigma, a leading multinational food company, focused on the production, marketing and distribution of quality foods through recognized brands in Mexico, Europe, United States and Latin America. Nemak, a leading provider of innovative lightweighting solutions for the global automotive industry, specializing in the development and manufacturing of aluminum components for powertrain, structural components and for electric vehicles. Axtel, a provider of Information Technology and Communication services for the enterprise and government segments in Mexico. Newpek, an oil and gas exploration and production company with operations in Mexico and the United States. In 2019, ALFA reported revenues of Ps. 337,750 million (US $17.5 billion), and EBITDA of Ps. 44,280 million (US $2.3 billion). ALFA's shares are quoted on the Mexican Stock Exchange and on Latibex, the market for Latin American shares of the Madrid Stock Exchange. For more information, please visit www.alfa.com.mx

Disclaimer

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

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