grupo lala, s.a.b. de c.v. · innovation and marketing of milk and dairy ... our strategy follows...

Grupo LALA, S.A.B. de C.V.

INVESTOR RELATIONS PRESENTATION

December, 2016

1949 1980 1990 2000 2010 2015

ABOUT US

WHO WE ARE

LALA is a Mexican Company focused in thehealthy and nutritious food industry with over65 years of experience in the production,innovation and marketing of milk and dairyproducts under the highest quality standards.LALA operates 22 production plants and 164distribution centers in Mexico, CentralAmerica and United States, and is supportedby more than 34,000 employees. LALAoperates one of the largest chilled distributionnetworks in the region, with 6,500+ deliveryroutes. Our product portfolio includes over 600SKUs under 56+ brands, which are available atmore than 550,000 points-of-sale.

“Nourishing your life is our passion”

“To be the favorite dairy company in the Americas”

MISSION

VISION

4

OUR FOOTPRINT

MexicoUnited StatesGuatemalaHondurasEl SalvadorNicaraguaCosta Rica

5

OUR PRODUCTS

MILK

7 Milk: Pasteurized, UHT and functional milks, pasteurized and UHT dairy-based beverages, and powdered milk.

OTHER DAIRY PRODUCTS

8 Other Dairy Products: Cream, butter, cream-based spreads, yoghurt, cheese, ice cream and desserts.

BEVERAGES AND OTHERS

9 Beverages and Others: Beverages, juices, cold cuts and other income.

COMSUMPTION & DAIRY OUTLOOK

“Investing today to capture Mexico´s future growth opportunities”

CONSUMER OUTLOOK

11

Today’s market trends and consumption are movingtowards foods and beverages categories that havefunctional benefits.

More than half the consumers across allgenerations are willing to pay a premium forproducts that provide health benefits.

The reinvention of dairy as a completely natural foodplays an important role in this consumer trend.

Creating new products that appeal to the health trendis not enough—marketing, processing technology and

convenience are important factors to be consider.

(1) Central America includes: Costa Rica, Dominican Republic, Guatemala, Nicaragua and other Central America / Caribean countries.(2) Others includes: Ecuador, Bolivia, Uruguay, Venezuela and other South America Countries.

Source: Euromonitor, Company information.

World Dairy Market value is ~US$550 billion.

The U.S., Mexico and Central America represents 58.0% of total Americas Dairy Market.

Americas Dairy Market it´s projected to grow by ~US$16 billion in next 5 years.

AMERICAS DAIRY MARKET

12

TOTAL AMERICAS DAIRYMARKET VALUE IS ~US$160 BILLION

Brazil México

46%

USA

24%

Brazil

9%

8%

México

Canada

3% Central America2% Others

3% Colombia

2% Argentina

1% Peru

2% Chile

“Sustainable Growth Strategy”

LALA 2016 STRATEGIC PRIORITIES

ACCELERATING ORGANIC GROWTH IN MEXICO

On-trend products and packing innovation

World-Class go-to market execution

New marketing campaign

14

ON-TREND PRODUCTS AND PACKING INNOVATION

15

LALA 100

Since the introduction of LALA 100 only 3 monthsago the fresh milk category has reached doubledigit growth (10.5% vs P8´15) with 85% of thegrowth coming from LALA 100.

*Considering the data reported by Nielsen in their ScanTrack service for the Fresh Milk category (without milk formula). Growth comparingP8 2016 vs P8 2015 in Total Mexico. Weighted distribution considered as the maximum reached since launch (June 2016)

Innovation capable of changing the habits of consumers


16

CHEESE

• New resealable technology• Shredded and slice presentation• Non-lactose

NUTRI LECHE PANELA CHEESE

• Leverage Nutri Leche franchise to increase product offering among emerging consumers


17

LALA SEMILLAS

• Super food seeds• Low sugar and fat content


18

NUTRI LECHE

• Top-five consumer brand in Mexico• Annual sales above US$1 billion• Nutri umbrella brand to increase product

offer among low-incomes classes

99%

98%

99%

75%

89%

85

39

37

27

20

Source: Kantar Worldpanel 20151. Penetration based on number of households that purchase a brand;2. Frecuency of purchase (# of times per year)

MEXICO TOP FIVE CONSUMER BRANDS

19

FREQUENCYPLACE BRAND PENETRATION

The Largest Healthy FoodCompany in Mexico

Classified among Mexico´s top five consumer brands.

DEVELOPING INTERNAL CAPABILITIES

20

ARIBA Software implementation

STRATEGIC PROCUREMENT

Improve Customer Service

SALES & OPERATIONAL PLANNING

Structure and location

SHARED SERVICE STRUCTURE

2Pre-sale Motorcycle

Secondary Distribution Vehicle

Handheld Device

+900 distribution routes with pre-sale

EXPAND & CONSOLIDATE CENTRAL AMERICA OPERATIONS

Distribution Capacity

Raw milkSupply assurance

Production Capacity

New Central America headquarters in Panama

Production Plant San Ramón Alajuela, Costa Rica

Costa Rica agreement with Florida Bebidas adds:

21

M&A AND ALLIANCES

22

OPPORTUNITIES

The Americas

Dairy & Dairy alternatives

Infrastructure, brands, value- added categories and talent.

LALA OPERATES IN 7 COUNTRIES

REGION

MARKET

ADDING

Our Strategy Follows

a Disciplined Process

LALA U.S. PORTFOLIO

23

“Building brands to grow the business”

LALA U.S. PRODUCTION FACILITIES

24

OMAHA, NEBRASKA

FLORESVILLE, TEXAS

SINTON, COLORADO

• Drinkable Yoghurt• Spoonble Yoghurt

• Sour Cream

• ESL Milk• Cultured

• ESL Milk

25

While blended yoghurt is declining, drinkable is growing

double digit

“Drinkable yoghurt represents 9.0% of the total yoghurt category value in the U.S.”

Source: IRI; US MULO (MULti-Outlet) 26 Weeks Ending 8-28-16

91% Yoghurt

(Blended)

9% YoghurtDrinks

+11.5%

(1.7)%

U.S. YOGHURT CATEGORY OVERVIEW

+$3.88B USD

LALA U.S. YOGHURT MARKET

LALA U.S. PREMIUM MILK

26

Jersey Cows less than 10% of milk supply

Natural Milk Higher ProteinHigher CalciumSimple IngredientsRicher, Creamier Texture

“Right Time for Promised Land National Expansion”

Sept. 2016ACV: 64.0%

16,796 STORES

Presence in Big Retailers

with nationwide exposure

27

;LALA yoghurt brand is growing twice (21.2%) as fast as the drinkable yoghurt category

LALA U.S. is the Brand Leader in Adult Drinkable Yoghurts and the #2 in total

Drinkables which includes kids

Source: IRI; US MULO (MULti-Outlet) 26 Weeks Ending 8-28-16

LALA U.S. PRESENCE

CAPEX INVESTMENTS 2016

A total investment of +3,000mm MXN

CHEESE PRODUCTION CAPACITY

29

Investment: +1,000mm MXN

Delivery: Q1-2017

Location: Complejo Laguna, Torreon, Mexico

* All figures and dates are according to Company´s estimations.

Increasing cheese productioncapacity and new packingtechnology

WHITE BASE CAPACITY (YOGHURT)

30

Investment: +250mm MXN

Delivery: Q4-2016

Location: Complejo Irapuato, Irapuato, Mexico


Increase of production capacity andnew topping technology

WATER TREATMENT PLANT


Delivery: Q3-2016

Location: Complejo Laguna, Torreon, Mexico

New facility for water treatment

31

NEW PASTEURIZATION PLANT, NORTH MEXICO

32

Construction of a new state of the art pasteurization facility



Delivery: Q2-2017

Location: Cd. Obregon, Mexico

AUTOMATED INDUSTRIALWAREHOUSE

33


Delivery: Q3-2016

Location: Complejo Irapuato, Irapuato, Mexico


New automated industrial warehouse to increase storage capacity100% Refrigerated capacityUp to 23,000 storage positions

NANO FILTRATION - LALA 100 MILK

34


Delivery: Q3-2016

Location: Aguascalientes, Mexico


Production capacity using Nano-Filtration TechnologyThe first production line withPET packing material in Mexicoand Central America

NEW TETRA PAK EQUIPMENT OF 1.5L UHT PRODUCTS

35


Delivery: Q4-2016

Location: Aguascalientes, Mexico


New equipment andtechnology for Tetra Pakpacking of 1.5L for UHTproducts

OTHER INVESTMENTS

36 * All figures and dates are according to Company´s estimations.


New UHT Multi-Packing Complejo Laguna - Torreon, Mexico

Increase of production capacity Guadalajara, Mexico

Increase cooler space at point of sale

37

KEY FINANCIAL INFORMATION

FINANCIAL RESULTS (P&L)

Income Statement(1) 3Q-15 % 3Q-16 % Growth

Net Sales $ 12,176 100.0% $13,701 100.0% 12.5%

Gross Profit 4,714 38.7% 5,055 36.9% 7.2%

Operating Income 1,404 11.5% 1,048 7.7% (25.3)%

EBITDA(2) 1,695 13.9% 1,483 10.8% (12.5)%

Net Income 976 8.0% 753 5.5% (22.8)%

1. Company Data, in Mexican Pesos. (´000)2. EBITDA=Earnings Before Interest, Taxes, Depreciation and Amortization.

38

3 MONTHS ENDED SEPTEMBER 30, 2016

SALES BY TRADE CHANNELS 2016

57.0% 43.0%

SALES BY SEGMENT

39

Segment 3Q-15 3Q-16 % Variation

Milk $ 7,883 $8,595 9.0%

Other Dairy Products 3,690 4,385 18.8%

Beverages and Other 603 721 19.6%

62.7% 32.0% 5.3%

1. Company Data, in Mexican Pesos. (´000)

3Q-2016 NET SALES BRIDGE

(*) Company Data, in Mexican Pesos. (´000)(1) Organic: Volume and pricing.(2) CAM: Guatemala, Nicaragua & Costa Rica.(3) Inorganic: Additional sales from acquisitions.

40

$798

6.5%$179

1.5%$548

4.5%

YEAR-ON-YEAR GROWTH

3M ended September 30th,2016

(1) (3) (3)

(2)

41

3Q-2016 EBITDA MARGIN BRIDGE

13.9%

10.8%

ONE-OFFSHORT-TERM ONGOING

IMPACTS

(2)

3M ended September 30th, 2016

YEAR-ON-YEAR CONTRACTION (bps)

(*) Company Information, (bps) basis points.(1) FX (Peso/Dollar): Exchange rate depreciation effect over total COGS exposure.(2) CAM: Guatemala, Nicaragua & Costa Rica.(2) CAM Integration: Extraordinary effects from production consolidation & Venezuela sales short-fall.(3) Net dilutive effect from consolidating 2 months of the US Branded Business.(4) Corporate Restructure: One-offs from headcount reduction, Shared Services provisions & others.

(1) (3) (4)

YEAR TO DATE RESULTSHIGHLIGHTS

1. Company Data, in Mexican Pesos. (´000)2. EBITDA=Earnings Before Interest, Taxes, Depreciation and Amortization.

42

5,008 5,260

9M-15 9M-16

2,919 2,965

9M-15 9M-16

35,65339,113

9M-15 9M-16

9 MONTHS ENDED SEPTEMBER 30, 2016

NET SALES (1)

(MXN$mm)

100.0% 100.0%

EBITDA (2)

(MXN$mm)NET INCOME (1)

(MXN$mm)

Margin

14.0% 13.4% 8.2% 7.6%

Margin Margin

Source: Company InformationRatios are calculated in local currencyFigures in Mexican Pesos (´000)

3Q-15 3Q-16

Total Debt (MXN$mm)

Cash (MXN$mm)

$58

$2,268

$6,263

$10,071

STRONG FINANCIAL POSITION

AS OF SEPTEMBER 30,

43

Key Metrics 3Q-15 3Q-16

Net Debt / EBITDA (1.5)x (0.6)x

EBITDA / Interest Paid 527.9x 371.5x

EARNINGS PER SHARE $1.46 $1.59

Financial Position 2015 2016

Total Assets $34,354 $39,773

Cash 10,071 6,263

Total Liabilities 9,318 12,265

Shareholder Equity 25,035 27,508

30.00

32.00

34.00

36.00

38.00

40.00

42.00

44.00

46.00

48.00

17

-11

-15

13

-12

-15

08

-01

-16

03

-02

-16

29

-02

-16

26

-03

-16

21

-04

-16

17

-05

-16

12

-06

-16

08

-07

-16

03

-08

-16

29

-08

-16

24

-09

-16

20

-10

-16

Source: Company Information, Bolsa Mexicana de Valores, Analyst Research.

SHAREHOLDERS STRUCTURE

2,475,932,111 shares

LALA B OVERVIEW

44

(22.7)%

SHARE PRICE DECLINED YTD

US$5.7mm

AVERAGE DAILY LIQUIDITY 2016

November 14th, 2016 (LALA B)

OWNERSHIP

STRUCTURE

55.0% Control Trust

21.4% Free Float

1.1% Others

22.5% Underwriting

Trust

$30.86

14

-11

-16

DISCLAIMER

This material does not constitute an offering document. This material was prepared solely for informational purposes and is not to beconstrued as a solicitation or an offer to buy or sell any securities. Any offering of securities will be made solely by means of an offeringmemorandum, which will contain detailed information about the Company and its business and financial results, as well as its financialstatements.

Securities may not be offered or sold in the United States unless they are registered or exempt from registration under the U.S. SecuritiesAct of 1933, as amended.

This presentation includes forward-looking statements or statements about events or circumstances which have not yet occurred. Wehave based these forward-looking statements largely on our current beliefs and expectations about future events and financial trendsaffecting our businesses and our future financial performance. These forward-looking statements are subject to risk, uncertainties andassumptions, including, among other things, general economic, political and business conditions, both in Mexico and in Latin America as awhole. The words “believes”, “may”, “will”, “estimates”, “continues”, “anticipates”, “intends”, “expects”, and similar words are intendedto identify forward-looking statements. We undertake no obligations to update or revise any forward-looking statements because of newinformation, future events or other factors.

In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this presentation might not occur.Therefore, our actual results could differ substantially from those anticipated in our forward-looking statements.

No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of theinformation contained herein. It should not be regarded by recipients as a substitute for the exercise of their own judgment. We and ouraffiliates, agents, directors, employees and advisors accept no liability whatsoever for any loss or damage of any kind arising out of the useof all or any part of this material.

45

This material does not give and should not be treated as giving investment advice. You should consult with your ownlegal, regulatory, tax, business, investment, financial and accounting advisers to the extent that you deem it necessary,and make your own investment, hedging and trading decision based upon your own judgment and advice from suchadvisers as you deem necessary and not upon any information in this material.

46

CONTACT INFORMATION

Investor RelationsEnrique González+52 (55) 9177 [email protected]

Forward-looking statementsThis document contains certain assumptions, projections andforward-looking statements regarding the Company’s financialsituation, operative results and information, Grupo LALA’sbusiness and that of its subsidiaries as well as with regards tothe Company’s related plans and objectives. This executivesummery does not constitute a public securities offering onbehalf of LALA and is intended to be used for informationalpurposes only.

Stock InformationGrupo LALA has been traded under the ticker ‘LALA B’ on the Bolsa Mexicana de Valores (BMV) since October 16, 2013.

For more information: www.grupolala.com

mailto:[email protected]

http://www.grupolala.com/

“Nourishing your life is our passion”

http://www.grupolala.com/en1_Inversionistas?id=1

grupo lala, s.a.b. de c.v. · innovation and marketing of milk and dairy ... our strategy follows...

Documents