ALFA's Transformative Year: Record EBITDA Achieved Amid Restructuring

In a significant development for ALFA, S.A.B. de C.V. (BMV: ALFAA), the company announced its unaudited financial results for the fourth quarter of 2024, showcasing a remarkable Equivalent Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1 billion. This impressive figure reflects the successful execution of ALFA's strategic transformation concentrated on its food business unit, Sigma.

Recent Developments and Strategic Focus

One of the standout features of this report is ALFA's focus on enhancing its operations through the distribution of Controladora Alpek shares to its shareholders, a process described as actively progressing. This operation is part of a broader strategy to streamline ALFA into a unified food company, Sigma, while Alpek is categorized as a discontinued operation. The shift to concentrating solely on Sigma is expected to unlock higher potential values for its stakeholders.

The solid financial metrics of ALFA also reveal a consolidated net leverage ratio of 2.5, aligning with the company's internal benchmark. It indicates robust cash flow generation and successful capital increases have bolstered financial health, despite facing an extraordinary item impacting EBITDA negatively by $54 million, unrelated to Sigma operations.

Performance Highlights of Sigma

For Sigma, 2024 proved to be a landmark year, representing the fourth consecutive year of sales growth, backed by record-high volume levels and an EBITDA that exceeded initial projections. Notably, five more brands within Sigma’s portfolio achieved annual sales topping $100 million, totaling 16 brands recognized at this significant revenue milestone. Moreover, the company took a proactive approach by announcing record dividends of $228 million for the fiscal year.

With operations across the Americas, Sigma capitalized on the ongoing demand, achieving historic annual sales and EBITDA results in Mexico, the U.S., and Latin America, driven by consistent volume growth. Additionally, the performance in Europe considerably improved, as the company doubled its EBITDA year-over-year, emphasizing the focus on enhancing profitability within that region.

The Spin-Off of Alpek

A pivotal aspect of ALFA's recent financial evolution is the complete spin-off of its stake in Alpek, which shareholders endorsed on October 24, 2024. As a result of this restructuring, Alpek is presented as a discontinued operation in ALFA’s consolidated financial statements, illustrating a distinct separation in financial reporting and enabling more transparent financial analysis.

In terms of financial performance, Alpek also reported a comparable EBITDA of $699 million in 2024, significantly surpassing both original and revised forecasts. The organization effectively achieved its savings target of $75 million, working towards a more competitive long-term positioning. The net leverage ratio for Alpek stood at 2.9 times at the conclusion of the fourth quarter, marking a notable improvement from the previous year's 3.4 times.

Outlook and Future Direction

Reflecting on the year, ALFA's Chairman and CEO, Álvaro Fernández, emphasized that 2024 marked the company’s 50th anniversary, expressing satisfaction over closing the year with better-than-expected results. He reiterated the ongoing commitment to completing the transformation process by facilitating timely share distribution and ensuring strong corporate governance.

Fernández concluded with a heartfelt note, thanking all team members, shareholders, creditors, and business partners for their unwavering support throughout this transformative journey. His vision highlights an optimistic outlook, capturing an ongoing commitment to enhance ALFA's fair value potential through strategic decisions and operational excellence.

Overall, ALFA's 2024 results encapsulated a significant year of progress marked by strategic realignment towards a focused food business model, strong financial performance, and a future-oriented roadmap aimed at sustaining growth and profitability.