Investor Presentation - gruma
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Investor Presentation
COMPANY OVERVIEW
GRUMA IS THE WORLD’S LARGEST CORN FLOUR AND TORTILLA
PRODUCER, WITH OPERATIONS IN THE UNITED STATES, MEXICO, CENTRAL
AMERICA, EUROPE, ASIA AND OCEANIA
Subsidiaries Products % Sales % EBITDA
Family: 52% GRUMA USA • Corn flour
• Tortillas, other
Float: 48%
GIMSA • Corn flour 54 59
GRUMA,
S.A.B. de C.V. GRUMA EUROPE • Grits, corn flour
• Tortillas, other
BMV: GRUMAB
LTM SEP’181 GRUMA CENTROAMÉRICA • Corn flour, other
Sales: US$3.9 billion 28
EBITDA2: US$628 million
27
Market Cap: US$5 billion3 GRUMA ASIA-OCEANÍA
MISSION MEXICO • Tortillas, other
74 plants and 20,600
TECHNOLOGY AND SERVICES
7 4
employees
ELIMINATIONS 6 4
1 5 6
Convenience translation at an exchange rate of Ps.18.8120/dollar as of September 30, 2018.
2 EBITDA = Operating income + depreciation, amortization and impairment of long lived assets +(-) expenses (income)
3 unrelated to core business operations.
3 As of November 6, 2018
GRUMA’S LEADING BRANDS SHOW STRONG AWARENESS AND
CONSUMER LOYALTY
REGION BRANDS PRODUCTS POSITION
CORN FLOUR 1
UNITED STATES TORTILLAS 1
TORTILLAS 2
MEXICO CORN FLOUR 1
CORN FLOUR 1
CENTRAL AMERICA TORTILLAS 1
TORTILLAS 2
EUROPE TORTILLAS 3
ASIA & OCEANIA TORTILLAS 1
4
GRUMA IS LEADING IMPORTANT PRODUCT INNOVATION TO SATISFY THE
GROWING MARKET OF HEALTH-ORIENTED CONSUMERS
• Consumers replacing breads with wraps
• Increased popularity of healthier snack options, such as
gluten-free organic corn chips
To satisfy these megatrends, GRUMA
offers a line of healthier alternatives,
such as: As a result, our healthier
product lines are generating
• Organic • Multi-grain low double-digit sales growth
• Gluten-free • Fat-free
• Carb-balance • Chia and quinoa wraps
• Preservative-free • Baked tostadas
• Whole-wheat
5
NEW PRODUCT LAUNCHINGS AND COLORFUL IN-STORE DISPLAYS
ENHANCE SALES OF VALUE-ADDED AND HIGHER-MARGIN PRODUCTS
6
GRUMA HAS ACHIEVED CONSISTENT GROWTH IN NET SALES DRIVEN
MAINLY BY THE U.S. OPERATIONS…
GRUMA GRUMA
Volume Net Sales and EBITDA
(thousand metric tons) (millions of pesos)
CAGR: CAGR Net Sales: CAGR EBITDA:
’15 – LTM SEP’18: 2% ’15 – LTM SEP’18: 9% ’15 – LTM SEP’18: 10%
4,009 4,064 73,293
3,959 68,206 70,581
3,831
58,279
11,344 11,822
10,964
9,139
2015 2016 2017 LTM SEP'18 2015 2016 2017 LTM SEP'18
EBITDA
15.7 16.1 16.1 16.0
Mg (%)
…WHICH HAS BEEN IN LINE WITH EBITDA EXPANSION
7
EBITDA GENERATION HAS CONTRIBUTED TO GRUMA’S SOLID FINANCIAL
POSITION…
GRUMA GRUMA
Debt Net Debt/EBITDA
(millions of US$) (times)
1,110
1,030
769 775
1.5
1.4
1.1
1.0
DEC'15 DEC'16 DEC'17 SEP'18 DEC'15 DEC'16 DEC'17 SEP'18
8
…WHILE THE COMPANY ENJOYS A HEALTHY DEBT MATURITY PROFILE,
WHERE 64% OF DEBT IS DOLLAR-DENOMINATED, BACKED BY OUR U.S.
OPERATIONS
GRUMA
Debt Maturity Profile
As of September 30, 2018
(millions of US$)
Rate 2018 2019 2020 2021 2022 2023 2024 TOTAL
Senior Notes 2024 (USD $400) Fixed 4.875% 400.0 400.0
Rabobank Syndicated Term Loan (USD $150) LIBOR + 1% 18.8 22.5 26.3 82.5 150.0
Rabobank Syndicated Revolving Facility (USD $250) LIBOR + 1% 160.0 160.0
CEBURES 2023 (MSN $3,000) TIIE + 0.38% 159.5 159.5
Scotiabank Syndicated Term Loan (MXN $2,000) TIIE + 0.55% 106.3 106.3
Other:
MXN 8.27% 111.6 111.6
USD 3.24% 4.5 4.5
EUR 1.48% 1.2 5.0 3.8 2.4 2.1 2.0 2.0 18.4
TOTAL 5.61% (avg.) 117.4 23.7 26.3 135.0 244.6 161.4 402.0 1,110.4
9
IMPROVEMENTS IN RESULTS IN ALL SUBSIDIARIES, HIGHER CASH
GENERATION AND HEALTHY FINANCIAL STRUCTURE HAS ENABLED
GRUMA TO INCREASE ITS DIVIDEND PAYMENT…
GRUMA
Dividend Payments
(millions of pesos)
1.9 %
1.7 %
1.0 %
0.8 % 1,848 1,852
0.8 %
865
649 692
2014 2015 2016 2017 2018
Total Dividend Payment ($) Dividend Yield
10…AND BUY BACK SHARES, TAKING ADVANTAGE OF THE CURRENT
VALUATION
2017 NOVEMBER 20181
REPURCHASE FUND Ps.650 MM Ps.2,500 MM
SHARES REPURCHASED
- SHARES - 4.5 MM
- DOLLARS - US$51 MM
1 As of November 6, 2018
11MAIN SUBSIDIARIES
GRUMA USA
GRUMA USA IS THE LARGEST SUBSIDIARY, AND THE LEADING CORN FLOUR
AND TORTILLA PRODUCER IN THE UNITED STATES
Net Sales LTM SEP’18: US$2.1 billion
GRUMA USA
Fife, WA
New Brighton, MN
McMinnville, OR
* Mountain Top, PA
Hayward, CA Omaha, NE Corn Flour
Madera, CA Evansville, IN Tortilla
Fresno, CA Pueblo, CO Operations Operations
Panorama City, CA Goldsboro, NC
Olympic, CA Henderson, KY
Rancho Cucamonga, CA 80% 20%
Albuquerque, NM Amarillo, TX Jefferson, GA
Tempe, AZ • 20 Plants in the U.S. • 6 Mills in the U.S.
Dallas, TX Lawrenceville, GA
Plainview, TX
Houston, TX • Installed Capacity: • Installed Capacity:
San Antonio, TX Lakeland, FL 1 million metric tons/year 850,000 metric tons/year
Edinburg, TX
• Corn flour tortillas • Tortilla corn flour
• Wheat flour tortillas • Chip corn flour
Corn flour mills (6) • Corn chips
• Other related products
Tortilla plants (20)
* Temporarily closed
14THERE IS GROWTH POTENTIAL FOR THE U.S. TORTILLA AND CORN FLOUR
INDUSTRIES
Growth Drivers Estimated U.S. Markets
• Hispanic Population1
–18% of total U.S. population, out of which 63% are
Mexican
–Hispanic population increased 63% between 2000
and 2016, accounting for half of total U.S. Tortillas/Tortilla chips
population growth US$5 billion
• Popularity of Mexican Food
Corn Flour2
–Non-Hispanics account for the majority of Mexican US$1.3 billion
food service purchases
–The number of Mexican food restaurants continues
to grow
–More restaurants are featuring Mexican dishes in
their menus
• Adoption of tortillas in non-Mexican dishes
(wraps)
• Wraps, burritos, tacos, quesadillas, nachos, etc.
becoming mainstream foods
1 United States Census Bureau, updated as of July 2016
15 2 Includes traditional methodAS GRUMA USA CONTINUES TO SEE GROWTH POTENTIAL, ITS LARGEST
PLANT BUILT IN DALLAS STARTED OPERATIONS IN AUGUST
• 10% of additional tortilla capacity in the first stage, which could be doubled on
a second stage when required
• Closing of the former plant in Dallas in October
• Production efficiencies through better technology
• Transportation and logistic efficiencies
• Opportunity to continue adding capacity at lower cost
• Capabilities to produce preservative-free tortillas and healthier alternatives
• Flexibility to develop new types of products (i.e. flatbreads)
16OVER THE PAST FEW YEARS, SALES VOLUME GROWTH HAS BEEN LOWER
DUE TO SIGNIFICANT SKU RATIONALIZATION, WHICH HAS RESULTED IN
IMPROVED PROFITABILITY
GRUMA USA
GRUMA USA Net Sales and EBITDA
Volume (millions of pesos)
(thousand metric tons)
CAGR: CAGR Net Sales: CAGR EBITDA:
’15 – LTM SEP’18: 1% ’15 – LTM SEP’18: 2% ’15 – LTM SEP’18: 6%
1,374 1,367 1,391 2,096
1,341
2,051
2,024
1,989
369
345 352
311
2015 2016 2017 LTM SEP'18 2015 2016 2017 LTM SEP'18
EBITDA
Mg (%)
15.6 17.1 17.2 17.6
17GRUMA USA EXPECTS CONTINUED MARGIN IMPROVEMENT BASED
PRINCIPALLY ON:
• Change of sales mix toward higher margin SKUs
– Healthier alternatives
– More value-added products
– Smaller counts
• SKU rationalization, especially in the food service channel
• Efficiencies arising from the new plant expected from 2019 and onwards
• Important benefits resulting from tax reform
ONCE SKU RATIONALIZATION IS COMPLETE, GRUMA USA SALES VOLUME
IS EXPECTED TO GROW AT HIGHER THAN RECENT RATES
18GIMSA
GIMSA IS GRUMA’S SECOND LARGEST SUBSIDIARY AND THE LEADER OF
THE CORN FLOUR INDUSTRY IN MEXICO
Mexicali
GIMSA
Chihuahua
• Net Sales LTM SEP’18: US$1.1 billion1
Obregón
• 18 plants, with total annual capacity of 2.4
Río Bravo
million metric tons of corn flour
Culiacán Nuevo León • GIMSA’s market share within the corn flour
La Paz industry is approximately 74%
Tampico
Acaponeta
Bajío
* México Mérida
Jalisco
Celaya Veracruz
Chalco
Chinameca
Corn flour mills (18) Chiapas
* Temporarily closed
20 1 Convenience translation at an exchange rate of Ps.18.8120/dollar as of September 30, 2018.CORN FLOUR IS ONLY USED TO PRODUCE 34% OF THE TORTILLAS IN
MEXICO, THUS THERE IS A GREAT POTENTIAL FOR LONG-TERM GROWTH
Potential Corn Flour Market in Mexico
7.3 Million Metric Tons of Corn Flour1
US$4.2 billion2
Corn Flour Market in Mexico
2.5 Million Metric Tons of Corn Flour1
US$1.4 billion2
GIMSA
25%
MINSA
HARIMASA 3% 20%
OTHERS 2%
MINSA GIMSA
7% CARGILL 1% 74%
HARIMASA 1%
CORN 66%
OTHERS 1%
1 One corn flour metric ton = 1.8 tortilla metric tons.
21 2 Based on an exchange rate of Ps.18.8120/dollar as of September 30, 2018.GIMSA’S SALES GROWTH MAINLY REFLECTS COMMERCIAL INITIATIVES
AIMED AT STRENGTHENING CUSTOMER SERVICE…
GIMSA GIMSA
Volume Net Sales and EBITDA
(thousand metric tons) (millions of pesos)
CAGR: CAGR Net Sales: CAGR EBITDA:
’15 – LTM SEP’18: 4% ’15 – LTM SEP’18: 9% ’15 – LTM SEP’18: 3%
19,601 20,335
2,039 2,073
1,965 17,866
1,847
15,871
2,942 2,964 3,084 3,173
2015 2016 2017 LTM 2015 2016 2017 LTM SEP'18
SEP'18
EBITDA Mg
18.5 16.6 15.7 15.6
(%)
…TAKING GIMSA TO MARGIN LEVELS WHERE IT CAN GROW AT 2-3% RATES
22EXPECTATIONS FOR GIMSA’S RESULTS ARE BASED ON:
• Stability of its operations arising from the defensive nature of its
products, not impacted by economic or political matters
• Sales volume growth coming mainly from the substitution of the
traditional method
23GRUMA EUROPE
GRUMA EUROPE IS THE COMPANY’S THIRD LARGEST SUBSIDIARY,
FOCUSED MAINLY ON THE TORTILLA BUSINESS
Net Sales LTM SEP’18: US$281 million1
GRUMA Europe
Tortilla Corn Milling
Operations Operations
70% 30%
• 6 Plants in Europe • 3 Mills in Europe
• England (2) • Italy
• The Netherlands • Ukraine
• Russia • Turkey
• Spain (2)
• Installed Capacity: • Installed Capacity:
169,000 Metric tons/year 345,000 Metric tons/year
• Wheat flour tortillas • Tortilla corn flour
• Corn chips • Chip corn flour
Corn flour mills (3) • Grits
Tortilla plants (6)
• Flatbreads
• Other related products
25 1 Convenience translation at an exchange rate of Ps.18.8120/dollar as of September 30, 2018.THERE IS GROWTH POTENTIAL FOR THE TORTILLA MARKET IN EUROPE
Growth Drivers Estimated European Markets
• Adoption of tortillas in non-Mexican dishes
(wraps)
• Wraps, burritos, tacos, quesadillas, nachos,
etc. becoming mainstream foods
• Popularity of Mexican food
–The number of Mexican food restaurants
continues to grow
–More restaurants are including Mexican
dishes in their menus Tortillas/Tortilla chips
US$1.2 billion
Corn Milling
US$400 million
26GROWTH IN GRUMA EUROPE’S RETAIL TORTILLA BUSINESS HAS
IMPROVED ITS EBITDA MARGINS, A TREND THAT IS EXPECTED TO
CONTINUE
GRUMA EUROPE GRUMA EUROPE
Volume Net Sales and EBITDA
(thousand metric tons) (millions of dollars)
CAGR: CAGR Net Sales: CAGR EBITDA:
’15 – LTM SEP’18: (6)% ’15 – LTM SEP’18: 0% ’15 – LTM SEP’18: 5%
404 281 272 281
374 265
370
344
18.8 16.5 18.3 19.8
2015 2016 2017 LTM SEP'18 2015 2016 2017 LTM SEP'18
EBITDA
Mg (%)
7.4 6.9 7.7 8.4
27IMPROVED PROFITABILITY FOR GRUMA EUROPE WILL RESULT FROM:
• A better sales mix favoring the retail tortilla business, particularly
with branded products, supported by enhanced marketing and
distribution efforts
• Production efficiencies at tortilla plants, coupled with packaging
automation
• Potential M&A of tortilla companies to increase footprint, scale and
better absorb marketing and logistic expenses
28ADDITIONAL OPPORTUNITIES
FOR GRUMAALONG WITH ITS THREE MAIN SUBSIDIARIES, GRUMA SEES
OPPORTUNITIES IN OTHER GROWING MARKETS
• Presence in Asia and Oceania with three tortilla production facilities and sales
close to US$200 million, growing at a double digit rate
• In Mexico, packaged tortilla business represents a huge potential market,
where GRUMA has grown from US$30 million to US$70 million over the last
three years
− Product portfolio has expanded to corn and wheat tortilla, tostada, snacks,
corn chips, and related products
− Construction of a plant in central Mexico to expand capacity and coverage
30GRUMA’S KEY CONSIDERATIONS TO CREATE VALUE
• Worldwide leader in an attractive & non-cyclical industry with staple products
• Growing markets for its products in all regions
• Global footprint with approximately 60% USD EBITDA generation
• No impact from NAFTA negotiation outcomes
• Margin improvements expected at Gruma USA, Europe and Asia-Oceania
• Important cash tax benefits arising from the U.S. tax reform
• Solid financial position, supported by low debt leverage
31Contact Information
Rogelio Sánchez Lilia Gómez
+52 (81) 8399 3312 +52 (81) 8399 3324
rsanchezm@gruma.com lgomez@gruma.com
Investor Relations
+52 (81) 8399 3349
ir@gruma.com
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