Alfa|SIGMA: A Food Giant's EBITDA Surge and the Alpek Spin-off

Alfa|SIGMA, the Mexican conglomerate, has reported a significant surge in its Comparable EBITDA for 2024, reaching US $1 billion, with Alpek now accounted for as discontinued operations. This impressive financial performance is a testament to the company's strategic transformation and focus on its core food business, Sigma. The spin-off of Alpek has unlocked unique value opportunities and enhanced Alfa|SIGMA's investment appeal.

Sigma, the food business unit, has delivered record-high annual volume and EBITDA, surpassing its upwardly revised guidance of US $1.0 billion. This remarkable performance was driven by strong sales growth across all regions, with Mexico, the U.S., and Latin America posting record sales and EBITDA. Notably, Europe's EBITDA more than doubled year-over-year, demonstrating the effectiveness of the company's profitability enhancement initiatives.

The company's financial strength is further underscored by its successful capital increase of Ps $7,952 million (US $392 million) and robust cash flow generation. These factors have enabled Alfa|SIGMA to reduce its net debt to US $2.5 billion, down from US $3.2 billion in 4Q23. This deleveraging effort has resulted in a net leverage ratio of 2.5 times, aligning with the company's internal target.

Alfa|SIGMA's transformation process, which began in 2020, has been marked by a series of strategic milestones. The final spin-off of Alpek, approved by shareholders on October 24, 2024, represents a significant inflection point for the company. The spin-off has allowed investors direct access to a growing food business with operations in 17 countries and leading brands in all its categories and regions.

The spin-off of Alpek has also unlocked a unique value opportunity for Alfa|SIGMA, as it allows each business unit 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. The narrowing valuation gap against global consumer peers indicates that Alfa|SIGMA is gradually being recognized for its attractive branded food sector fundamentals.

Alfa|SIGMA's financials already reflect its concentration in Sigma, with Alpek accounted for as discontinued operations. The company's strong financial performance, combined with its simplified corporate structure and deleveraging efforts, has led to a credit rating upgrade by Fitch Ratings to 'BBB' from 'BBB-'. This upgrade is a testament to the company's improved financial position and commitment to maintaining investment-grade balance sheets in all entities throughout the transformation process.

In conclusion, Alfa|SIGMA's EBITDA surge and the Alpek spin-off have significantly impacted the company's financial performance and valuation. The spin-off has unlocked unique value opportunities and enhanced the company's investment appeal. With a strong focus on Sigma, the company's core food business, Alfa|SIGMA is well-positioned for future growth and continues to attract investors seeking exposure to a growing food business with a global footprint.