Corporate Presentation May 2014
Corporate PresentationMay 2014
Forward Looking Statements
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The material that follows presents general background information about Organización Cultiba, S.A.B. de C.V.(“CULTIBA” or the “Company”) as of the date of the presentation. This information consists of publiclyavailable information concerning the Company and the industries in which it participates. It is information insummary form and does not purport to be complete. It is not intended to be relied upon as advice topotential investors and does not form the basis for an informed investment decision.
This presentation includes forward-looking statements. All statements other than statements of historical factincluded in this presentation, including, without limitation, those regarding our prospective resources,contingent resources, financial position, business strategy, management plans and objectives, futureoperations and synergies are forward-looking statements. These forward-looking statements involve knownand unknown risks, uncertainties and other factors, which may cause our actual resources, reserves, results,performance or achievements to be materially different from those expressed or implied by these forward-looking statements. These forward-looking statements are based on numerous assumptions regarding ourpresent and future business operations and strategies and the environment in which we expect to operate inthe future. Forward-looking statements speak only as of the date of this presentation and we expresslydisclaim any obligation or undertaking to release any update of or revisions to any forward-lookingstatements in this presentation, any change in our expectations or any change in events, conditions orcircumstances on which these forward-looking statements are based.
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Our Company
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Organización Cultiba, S.A.B. de C.V. (“Cultiba”) is a holding company with a majority interest in GEPP;one of Mexico’s largest bottlers of soft drinks and jug water, and the exclusive bottler of PepsiCobeverage products in Mexico. As a holding company Cultiba also owns and operates GAM sugarmills; located in the western region of Mexico. The Company is listed on the Bolsa Mexicana deValores, where it trades under the symbol CULTIBA.
GEPP commercializes carbonated, non-carbonated soft drinks, and jug water underits own brands as well as third party brands. GEPP is the exclusive bottler ofPepsiCo’s brands in Mexico, it owns 44 bottling facilities and is the only Mexicanbottler with nationwide distribution. The Company produces, sells, and distributesan inclusive portfolio of non-alcoholic drinks; comprising: sodas, juices, bottledwater, iced tea, flavored water, and isotonic drinks. Within the water segment,GEPP also commercializes 10.1 and 20 liter jugs via Direct-to-Home delivery.
GAM is the third largest private sugar producer in Mexico. It operates and owns100% of three sugar mills in the country; located in Jalisco (Tala), Michoacan(Lazaro Cardenas), and Sinaloa (El Dorado). It also owns 49% of Benito Juarez Mill(located in Tabasco). GAM Mills have a combined crushing capacity of ~30,000sugar cane tons per day; its main clients are Industrial manufacturers in Mexico –with strong focus on PepsiCo affiliates (including GEPP). GAM also exports sugar toclients in the US.
2013: EquityOffering(Follow on)
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1978
2012
1990
2000
2010
1980
Company trajectory focused on corebusiness sustainability and value creation
Established in 1978as InmobiliariaTrieme
1987: InmobiliariaTrieme & GEUSAMerge
1989: GAM isestablished
1993-2000: GeographicAcquisitions: South &Garci Crespo, Metro,Southeast, and North;Chihuahua & EMVASAterritories
1992: GEUSA & PepsiCostart Méxicorelationship
2004-2006: GEUSAacquires BRET anddistribution rights inChiapas and Oaxaca
2008: 51% of BenitoJuarez Sugar Mill sold toINCAUCA
2010: GEUSAmerges intoGEUPEC
2011: PBC merges
with Gatorade
GEPP is established
GAM merges withCONASA
CONASA
2013:Local DebtCertificatesPlacement
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Corporate structure supports an integratedbusiness model
100%
20%29% 51%
L. CárdenasSugar Mill
ElDoradoSugar Mill
TalaSugar Mill
Benito JuarezSugar Mill
Beverages Sugar
100%
100% 100% 100% 49%
51%
100%
SteviaHoldings
Beverages$31.293%
Sugar$2.37%
2013 Revenue by segment(Ps$ Million)
TalaElectric
PolmexHolding S.L.
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A unique beverageoperation withnationwide presence
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From a regional bottler to a leading beveragescompany with nationwide distribution
Note: 2011 includes only 3 months of volume sales from PBC and Grupo Gatorade MexicoSource: CULTIBA & GEPP Management, financial and operating information 2010 – 2013
2010 2011* 20132012
614849
1,560 1,607
CONASA
Geographic coverage
Beverage volume(million 8 oz. uc)
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Extensive national network: competitive advantagethat enables greater market penetration
Notes: 1Production lines distributed as follows: 76 soft drinks 46 jug water. Source: CULTIBA & GEPP Management, operating information 2010 – 2013
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Proven capabilities tocapture efficienciesthrough an integratedbusiness model
Three partners with complementary strengths andproven capabilities
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Operational expertise in the Foodand Beverage industries
o Portfolio development
o Differentiated GTM2 models
o Proven Pepsi-Cola LatinAmerica experience
Deep market knowledge
1st PepsiCo JV outside the USmarket
Water jugs (5 gal) DTH GTM(1)
Strong nationwide distributionnetworks:Retail + Direct-to-Home
Gatorade portfolio
Strong / leading brands
Product innovation
Shared procurement
Investment commitment(1)Direct-to-Home Strategy (“DTH”), (2) Go-to-market (“GTM”)
PolmexHolding S.L.
Procurement SupplyChain
Organization
AdditionalSynergiesfound in
execution
Reduce transportation costs Optimize manufacturing and
distribution footprint Incorporate strong brands
logistics into GEPP’s nationalnetwork
Eliminate duplicities/redefine roles
Standardize human capitalratios
Integrate IT
Business strategy leverages nationwideinfrastructure for growth while capturing synergies
Leverage scale (key rawmaterials and other goodsand services)
Integration stagesuccessfully executed
after 2 years of
operation
Leverage vertical integration Process optimization
… to date, Cultiba’s beverages division has realized ~50% of Ps. 900 million in identified synergiesand remains on target to capture 100% by the end of 2014…
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Integration Synergies / Efficiencies
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Fullbeverageportfolio ofstrong andleadingbrands
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Brand architecture targets an inclusive andcompetitive beverage portfolio
Colas Multi-flavorsCore flavorsCarbonated
RTD Tea
Non-carbonatedSports drinks Bottled water
5-gallon Jug
From 49 to 22beverage brands;focus in 10 core /strongest brands
Portfolio of GEPP-owned andfranchised brands
(PepsiCo, Fruco, Jumex,Lipton Intl, and Dr.Pepper Snapple GroupMexico)
Juice drinks
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Diverse leading brands with national reach
Franchised(Fruco)
Franchised(PepsiCo)
Franchised(Jumex)
Proprietary(GEPP)
Franchised(PepsiCo)
Innovationplans with
local appeal
A singlenational brand
for multi-flavor CSDs
Distributionreach towards
TraditionalChannels
Juice drinkscategory
consolidation
A singlenational brand
for bottledwater
“Multi-franchise” approach seeks to develop local brands nationally
CSDs NCBs
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AttractiveMarket
(millions of 8 oz. cases)
Source: Canadean as of December 2012. Euromonitor as of December 2012; GEPP operating data 2010 – 2013Note: 1 Includes Carbonated Soft Drinks, non-Carbonated Beverages, Water (less than 5 lt. presentations), Flavored Water
Sizeable beverage market
’09-’12 ’12-’16
2.3%
5.0%
2.3%
1.1%
3.7%
1.1%
CAGR
2.7% 1.6%
8,075 8,2098,648 8,737
9,295
38%
8%
45%
9% 4.5% 4.1%
LRBs market evolution
+US$32bn
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2009 2010 2011 2012 2016E
CSDs NCBs BW 5-gallon jug
47% 47%47% 46%
45%
9%
7% 7% 8% 9%8%
7% 7% 8% 8%
38%
39% 39%39% 38%
163.0 149.0 141.0 139.0 127.0 116.0
Mexico USA Argentina Chile Uruguay Germany
27.0 23.015.4
9.6 7.2 5.8
China Mexico Indonesia Brazil Turkey USA
(liters per capita; 2012)
(billion liters; 2012)
Highest carbonated soft drinks consumption per capita
Second largest bottled water market world wide
#1market
#2market
(million eight-ounce cases)
Cultiba Beverages Division Volume
219.2 356.7793.1 806.9395
491.8
766.6 800.6
2010 2011 2012 2013
Bottledbeverages1
Jug Water
# 1 per capita consumption
2012 Litersper capita20 198 64 49 96 18
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Verticalintegrationprovides anaturalhedge
Integration at the basis of a competitive andsustainable cost structure
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• Sources 100% of sugar needs in beverages• Provides competitive cost advantage• Brings natural hedge to commodity price exposure• Sugar business also vertically integrated into sugarcane
• Sources 100% of sugar needs in beverages• Provides competitive cost advantage• Brings natural hedge to commodity price exposure• Sugar business also vertically integrated into sugarcane
GAM Sugar
• Energy co-generation investments within sugar mills• 25MW proprietary plant within Tala Sugar Mill – Phase 1
operating at 30% capacity; expected 78MW by 2014-2016• Continued co-generation projects envisioned for future
years
• Energy co-generation investments within sugar mills• 25MW proprietary plant within Tala Sugar Mill – Phase 1
operating at 30% capacity; expected 78MW by 2014-2016• Continued co-generation projects envisioned for future
years
GAM Energy
• 2 proprietary plastic production plants• Sources +85% of PET preforms and +75% of PET caps• 2 proprietary plastic production plants• Sources +85% of PET preforms and +75% of PET caps
GEPP Plastic
Source: CULTIBA, GAM, and GEPP Management
Advantageous market and geographic location inthe sugar business
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Unique business fundamentalsAdvantageous geographic location
Port / point of entryMajor Cities
Road routeShip route
GAM sugar MillsRail route
Tala Guadalajara
Manzanillo
New Orleans
Coatzacoalcos
Benito JuarezDos Bocas
Houston
Nogales
Laredo
El Paso
Mexico City
US Market: 10.5mm TonLong Beach
El Dorado
Lazaro Cardenas
Sinaloa
Corpus Christi
Focused on the North American industrialmarket where the PepsiCo system consumes~70% of GAM's production1. Our mills havean advantageous geographic position toserve this market
Mirrors integration into sugar productionseen with our main competitors in Mexico aswell as in beverage systems in othercountries. Provides wider, more stablemargins and eliminates price volatility
Integration represents approximately 20% ofthe beverage business cost structure. Inaddition, GAM has started to deliverelectricity to GEPP's plants
Well run and highly profitable businessintegrated into sugarcane production (+12%today and 40% expected by 2017) anddiversified into electricity cogeneration
Growth business plan fully funded with cashflows from operations positions GAM as aregional low cost producer
Note: 1Considering both PepsiCo’s beverages and food divisionSource: CULTIBA and GAM Management
Sugar production by state (%)
Sugar Production by Group / Corporation
Source: Cámara Nacional de la Industria Azucarera Zafra 2012- 13Note: 1Government-owned sugar mills
Strong positioning in the Mexican sugar market
FEESA, 20%
BSM, 13%
Zucarmex,9%
Santos,7%
Piasa,7%
GAM,7%
Saenz, 7%
Porres, 5%
La Margarita,5%
G. del Trópica,4%
Motzorongo,4%
Other, 12%
Veracruz 38%
Jalisco 12%
San Luis Potosí 10%
Oaxaca 6%
Chiapas 5%
Tamaulipas 4%
Nayarit 4%
Puebla 4%
Tabasco 3%
Other 14%
Total 100%
Group /corporation
# SugarMills
2012-13
FEESA1 9 1,422
BSM 6 942
Zucarmex 5 643
Santos 5 511
Piasa 2 487
GAM 4 464
Group /corporation
# SugarMills
2012-13
Saenz 3 462
Porres 3 354
La Margarita 3 332
G. del Trópico 2 283
Motzorongo 2 250
Other 11 825
Total 55 6,975
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Geographic Coverage
Sugar MillsSugar Cane AreasGAM
Veracruz
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FinancialHighlights
*On May 1, 2011, GAM and CONASA were merged into GEUPEC (today CULTIBA) and on September 30, 2011, CULTIBA completed the acquisition of PBC and Gatorade. Therefore, 2011results include only one quarter of the consolidated company. 4Q11 is first fully comparable quarter.1EBITDA = net income + depreciation & amortization + net financing cost + provision for taxes. **Consolidated figures (sugar + beverages)22013 EBITDA adjusted for one-time non-recurring expenses related to manufacturing footprint optimization (Ps. 2,917 and 8.7% EBITDA margin before adjustment)32013 Net Income includes 372 million in expenses related to fiscal reform: mainly due to IETU and consolidation changes in the new regulations42014 revenues are net of excise tax. With excise tax income 1Q14 revenues were 8,352 (+7.0% vs 1Q13)Source: Financial Information Cultiba
-21.0
-573.0
649.0
204.0-23.0 -314.0
2010 2011* 2012 2013 1Q13 1Q14
744 599
2,3933,029
618 386
2010 2011* 2012 2013 1Q13 1Q14
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Sustained growth in revenue and margins…
Revenue(Ps$ million)
8,60314,979
31,986 33,453
7,807 7603
2010 2011* 2012 2013 1Q13 1Q14
EBITDA1 margin(%)
8.6%
4.0%
7.5%9.1%
7.9%
5.1%
2010 2011* 2012 2013 1Q13 1Q14
EBITDA1
(Ps$ million)
Net income(Ps$ million)
2
2
3
4
*On May 1, 2011, GAM and CONASA were merged into GEUPEC (today CULTIBA) and on September 30, 2011, CULTIBA completed the acquisition of PBC and Gatorade. Therefore, 2011results include only one quarter of the consolidated company. 4Q11 is first fully comparable quarter.12013 Net Debt includes Ps.2,750 million of short-term debt incurred to finance anticipated payments in the beverages division for raw materials at attractive prices. Cost of financingembedded in obtained COGS discounts. Pro-forma Net Debt = Ps.$ 3,559 as of December 31, 2013.2As of March 31, 2014 short term debt related to anticipated payments from Dec 2013 in the beverages division was 1,750 MM – to be paid by the en do 1H14Source: Financial Information Cultiba
85
520 589
1,083 981
2010 2011* 2012 2013 1Q14
3,530
15,195 15,84218,869 18,555
2010 2011* 2012 2013 1Q14
1,403
5,4436,075
3,551 4,027
2,750 1,750
2010 2011* 2012 2013 1Q14
6,472
29,024 29,546 31,884 33,067
2010 2011* 2012 2013 1Q14
… while keeping a solid balance sheet
Total assets(Ps$ million)
Net debt(Ps$ million)
Cash & equivalents(Ps$ million)
Equity(Ps$ million)
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1
6,301 Short-term debt to fundanticipated payments in
Dec 2013 (beveragesDivision)2
5,777
2
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Why Cultiba?
Investment highlights
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A unique beverage operation with nationwide presence1
Integrated business model with proven capabilities to capture efficiencies and margins2
Full beverage portfolio of strong and leading brands3
Significant opportunities for growth in an attractive market4
Vertical integration provides a natural hedge to commodity price exposure5
Cultiba (Mexico City):Diana Gonzalez Flores, [email protected]+52-55- 5201-1947
Breakstone Group (New York):Kathleen Heaney / Kalle Ahl, [email protected]@breakstone-group.com+1-646-452-2330
INVESTORCONTACTS
www.cultiba.mx
Thank you
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