Alfa|SIGMA reports 3Q24 EBITDA of US $275 million, up 13% vs 3Q23, with Alpek as Discontinued Operations
SAN PEDRO GARZA GARCÍA, N.L. Mexico, Oct. 28, 2024 /PRNewswire/ -- ALFA, S.A.B. de C.V. (BMV:ALFAA) ("ALFA") announced today its unaudited results for the third quarter of 2024 ("3Q24"). All figures have been prepared in accordance with International Financial Reporting Standards ("IFRS").
3Q24 HIGHLIGHTS
Alfa|SIGMA
ALFA's conglomerate composition being effectively simplified into single, wholly-owned food business unit, in which ALFA is Sigma
Advanced capital increase of Ps $7,952 million (approx. US $400 million), proceeds expected on November 4, 2024
Received consents from bondholders of Senior Notes due 2044 to amend Indenture in preparation for Alpek spin-off
Consolidated Net Leverage ratio of 2.9 times; paying down parent-level debt totaling US $575 million with proceeds from Capital Increase and Dividends from Alpek and Sigma
Process to spin off Alpek is moving forward as approved by ALFA shareholders on October 24, 2024
SIGMA
Fourteenth consecutive quarter of year-on-year sales growth, supported by record volume of 465 ktons, up 2% versus 3Q23
Accumulated EBITDA of US $824 million, up 24% year-on-year driven by strong growth across all regions
Net Leverage ratio of 1.7 times represents lowest level in 16 years
Alpek
(Discontinued Operations)
Volume growth, higher ocean freight costs benefiting parts of the business and slight reference margin improvements in 3Q24
3Q24 Comparable EBITDA of US $218 million, up 37% year-on-year
2024 Comparable EBITDA Guidance raised 13% to US $675 million
Paid cash dividend to Shareholders of US $132 million; net leverage ratio decreased to 3.1 times from 3.3 times in 2Q24
Message from ALFA's Chairman & CEO
"Beginning in 2020 we embarked on a profound transformation to simplify our conglomerate down to a single, wholly-owned food business unit. The third quarter marked a significant milestone as we fulfilled essential conditions to move forward with the proposal to execute the final spin-off.
The Alpek spin-off approval on October 24, 2024 marks the beginning of an exciting inflection point for ALFA, offering investors direct access to a growing food business with operations in 17 countries and leading brands in all its categories and regions. Shareholders will soon have full autonomy to balance their investments across four independent business units that have grown beyond ALFA's legacy corporate structure: 1) Nemak (Automotive lightweighting solutions), 2) Controladora Axtel (Information and communications technology), 3) Controladora Alpek (Petrochemicals), and 4) Sigma (Food).
Such fundamental reorganization allows for each business to be valued based on its individual merits and potential. The recent rally in ALFA's share price reflects a portion of the significant valuation gap currently implied around Sigma.
Sigma and Alpek have been the two largest and most profitable businesses within ALFA's portfolio over the last two decades. Both have grown significantly in all metrics to become leaders in their respective industries. The final spin-off is also a decisive moment for each as their independence from one another is effectively formalized, unlocking a unique value opportunity amid the ongoing re-rating of ALFA as Sigma ("Alfa|SIGMA").
Pursuant to the process approved by our shareholders, ALFA will transfer all its Alpek shares, as well as certain assets, liabilities and capital to a new entity ("Controladora Alpek") which is being constituted as the spun-off company and will be listed on the on the Mexican Stock Exchange ("BMV"). The ALFA shareholders will receive one share of Controladora Alpek for each of their ALFA shares, in addition to retaining their share ownership in ALFA's equity. Completion of the Alpek spin-off is expected in 2025.
Broad support from all stakeholders throughout the process has been crucial. As a result, ALFA has a solid foundation for an orderly transition, based on key milestones achieved in previous stages, a clear path towards deleverage and significantly better-than-expected results at Sigma and Alpek.
We thank ALFA's shareholders for their firm support to implement a Capital Increase of Ps $7,952 million (approx. US $400 million), which is expected to conclude on November 4, 2024. These proceeds, combined with cash dividends from both business units, will allow us to pay down parent-level debt totaling US $575 million. This reduction in Net Debt is aligned with our steady-state leverage target ratio of 2.5 times Net Debt to EBITDA.
Similarly, we thank ALFA's bondholders for supporting our consent solicitation process. We successfully obtained consents from more than 91% of holders of our Senior Notes due 2044 to implement certain amendments that provided the necessary clarity to spin off Alpek. We also appreciate the opportunity to work closely with our credit rating agencies, all of which separately affirmed their Investment Grade ratings for ALFA, Sigma and Alpek.
It is encouraging to reach this stage of our transformation, with solid operating results from Sigma and Alpek, reflecting an outstanding growth trend in our food business and a remarkable turnaround in our petrochemical business.
During the third quarter 2024, Sigma delivered its 14th consecutive quarter of top line growth and reported record-high quarterly EBITDA of US $281 million driven by all regions.
Sigma offers investors a growing core supported by a dedicated team of over 47,000 members centered around a shared passion for the consumer. The company has developed a diverse portfolio of leading brands in all its food categories, backed by efficient food production and multi-channel distribution capabilities in 17 countries as well as two innovation centers. Importantly, Sigma is actively exploring and developing new sources of revenue with disruptive growth potential to complement its core into the future.
Alpek reported year-over-year growth in 3Q24 Volume, Revenues and EBITDA. Moreover, Comparable EBITDA of US $218 million represents the highest level since 4Q22. Stable demand in both business segments, higher ocean freight costs which benefit some parts of its business and a slight improvement in reference margins contributed to the better-than-expected performance. As a result, Alpek revised its 2024 Comparable EBITDA guidance up 13% to US $675 million.
Alpek has been directly available to investors through its listing on the BMV since 2012. As a public entity, Alpek has demonstrated superb cash generation capabilities in every stage of the petrochemical industry cycle. The company has achieved market-leading positions across its portfolio with a highly specialized team of more than 5,000 members operating 33 production facilities in 9 countries. Alpek is fully capable of extending its solid track record independent from ALFA, led by its experienced management team and autonomous corporate governance.
The outlook is promising for the businesses to realize their fair value potential by following two independent paths. The remaining steps to complete the final spin-off are straightforward. We express our sincere recognition and gratitude for the hard work of all the ALFA team members throughout this transformation.
Best regards,
Álvaro Fernández
Important notes on changes to ALFA'sConsolidated Financial Statements
Controladora Alpek
ALFA's shareholders approved to spin-off ALFA's share ownership of Alpek into a new, listed entity called "Controladora Alpek" on October 24, 2024. In accordance with International Financial Reporting Standards (IFRS), ...
