GRUPO LALA, S.A.B. DE C.V.

GRUPO LALA, S.A.B. DE C.V.
I N V E S T O R R E L A T I O N S
January 2014
INVESTMENT HIGHLIGHTS
1
Scale and leadership in branded healthy foods
2
Highly attractive markets
3
Megabrands
4
Refrigerated distribution platform
5
Innovation and proven growth
6
Experienced team
7
Sustentable growth strategy
2 Scale and leadership in
branded healthy foods
THE LARGEST HEALTHY FOODS COMPANY IN MEXICO
Founded in La Laguna, Mexico
Summary
We have more than 60 years with a successful track record of
growing our business in a profitable way
Milk
56%
US $2,437mm
More than 3 billion USD in sales
100% of our sales come from branded products
Expanding our presence in Central America
Breakdown
of 9M13 net
sales¹
Two mega brands (>US$1bn annual sales)
Umbrella
brands
1 Assumes
Ranked among Mexico’s Top 5
average FX rate of 13.16 MXN/USD .
4 Dairy
& Ot Products
her
44%
THE LARGEST HEALTHY FOODS COMPANY IN MEXICO
LALA in figures LTM
Operations
In milk,
creams and
cheese
Market
Share
In yoghurt
and
desserts
17
PLANTS
Financials
Net revenues1
US $3,227 mm
EBITDA1
US $394 mm
Net income1,2
US $181 mm
SKU´s
600
Brands
25
500,000
161
DISTRIBUTION
CENTERS
Products
1 As
2Net
OF 3th Quarter 2013, assuming an average FX rate of 13.16 MXN/USD.
income excluding non-recurring items
31,000
EMPLOYEES
5 EXTENSIVE PORTFOLIO OF PRODUCTS TARGETING A WIDE VARIETY OF CONSUMERS
Premium milk
Cheese
Cream
Premium
milk
Yoghurt
Dairy Products
Beverages
Probiotics
Flavored milk
Desserts
Functional milk
6 A GROWTH STORY
Mission:
Vision:
‟Nurture for a
Lifetime’’
“Global leader in
value-added dairy
food and beverages”
SALES
~US$1,000
(2001)
mm
~US$100
(1990)
1950s – 1970
o  Founded in 1949
o  Local growth
o  From glass bottle to
carton packaging
1970 - 1980s
o  Regional reach
o  Focus on pasteurized milk
o  Merged business with its main
competitor in Northern Mexico
Note: Figures for illustra4ve purposes 1 Ultra High Temperature 2Direct Distribu4on System mm
1990 - 2000
o 
o 
o 
o 
o 
National reach
Marketing activities begin
Product portfolio expansion
UHT1 penetration
Capex in DDS2
7 ~US$3,000mm
(2012)
2000-2012
o  One of the best known brands in Mexico
o  Focus on marketing as a consumer
packaged goods company
o  Product innovation
o  Value added products: Yoghurts and
desserts, Functional milk and Cheese
o  Complemented expansion with M&A
Highly attractive markets
SCALE AND LEADERSHIP IN BRANDED HEALTHY FOODS
Market Share (2012)
Place
Place
Cream
Milk
Place
Desserts
Place
Place
Yoghurt
Pre-packaged cheese
31.2%
53.0%
51.5%
53.0%
36.5%
51.5%
43.0% 35.4% 31.5%
22.3%
43.0%
th 13
Grow
.2 pp
31.2%
22.3%
9.1%
2003 2012 2003 2012 2003 2012 Source: Nielsen Modern Trade Channel – December 2012 9 2003 31.2%
5.8%
2012 2003 2012 GROWTH POTENTIAL
Attractive population pyramid…
MALE
5% 4% 3% Population (%)
2% 1% 100+ 95–99 90–94 85–89 80–84 75–79 70–74 65–69 60–64 55–59 50–54 45–49 40–44 35–39 30–34 25–29 20–24 15–19 10–14 5–9 0–4 0% 0%
Age group
Growing middle class1
FEMALE
Denotes middle class D/E Over 60% of total populaAon is below 30 years old D+ C C+ AB 8.0% 7.0% 14.0% 17.0% Middle class 17.0% +69.0mm people 30.0% 35.0% 25.0% 1%
2%
3%
4%
Population (%)
5%
26.0% 2010 Source: EIU, INEGI, AMAI, CONEVAL, Banco de Mexico, Euromonitor, Economist, Bain Analysis, UN World popula4on prospects; ¹ Classes are defined by the following monthly family income: AB>MX$98,500,C+ MX$40,600-­‐$98,499, C MX$13,500–40,599, D+ MX$7,880–$13,499, D MX$3,130-­‐$7,879 and E <MX$3,129 10 20.0% 2025E GROWTH POTENTIAL
…With upside potential (2012)
Milk consumption (lts per capita)
273 Cheese consumption (kg per capita)
Latam avg. 129.0 257 198 194 139 138 23.7 Latam avg. 5.4 14.5 125 13.9 121 12.3 4.7 53 Western Europe 0.7 Eastern Europe Yoghurt consumption (kg per capita)
Fruit/vegetable juice consumption (lts per capita)
Latam avg. 10.6 26.9 19.0 2.2 63.3 18.6 11.9 7.3 Latam avg. 5.7 22.2 6.6 5.0 7.8 5.9 Source: BMI; Note: Milk consump4on per capita avg. considers Argen4na, Brazil, Chile, Colombia, Peru and Mexico; Yoghurt consump4on Latam avg. considers Peru, Chile , Mexico and Argen4na; Cheese consump4on Latam avg. considers Peru, Chile, Mexico and Brazil ; Fruit/vegetable juice consump4on Latam avg. considers Peru, Brazil and Mexico 11 3.3 Megabrands
MEGABRANDS
PLACE
BRAND
PENETRATION
Mexico’s
top 5
FREQUENCY
99%
84
98%
39
99%
38
75%
26
97%
20
consumer
brands
Source: Kantar Worldpanel 2012; Note: ¹ Penetra4on based on number of households that purchase a brand; 2 Frequency of purchase (# of 4mes per year) 13 MEGABRANDS >US$1 BILLION
Milk
o 
o 
o 
o 
o 
o 
o 
o 
o 
Fresh UHT Yoghurt Cheese Desserts Cream Buner Beverages Others Milk
Category extension / Track record
14 o 
o 
o 
o 
o 
o 
UHT dairy product Dairy product Yoghurt Cheese Cream Others TARGET ALL SOCIOECONOMIC SEGMENTS
BENEFIT
QUALITY PRODUCTS
Functionality
Wholesomeness
and nutritious
alternatives
Affordablity
SELECTED PRODUCTS
PRICE INDEX
Premium
Medium to High
Medium to Low
15 Refrigerated distribution platform
MANUFACTURING & DISTRIBUTION NETWORK
Production & distribution
Route network
Production facilities
Distribution Centers
Production facilities
Distribution centers
Distribution fleet
(primary)
17
161
~6,100
Highly efficient network run by
SAP
~ 500,000 Points of Sale
17 Innovation and proven growth
SUSTAINABLE GROWTH
EBITDA (MXNbn)
NET SALES (MXNbn)
4.8
40.3
1.1
8.9
2000
2012
2000
Source: Company; Note: Prior to 2011, financials are under Mexican FRS; commencing in 2011 financials are under IFRS. This may affect comparability 19 2012
Experienced team
EXPERIENCED TEAM
Name
Position
Consumer sector
Arquimedes Celis Ordaz
CEO
38 years
Antonio Zamora Galland
CFO
10 years
Ricardo Arista Puigferrat
R&D
30 years
Antonio Hernández Astorga
Manufacturing
32 years
Jose Luis Chavarría Alarcón
Logistics
33 years
Alejandro Campomanes Morantes
Sales
24 years
Efraín Tapia Córdova
General Counsel
5 years
Alejandro Zenteno Sanchez
Human Resources
19 years
21 Sustentable growth strategy
WHAT´S NEXT…?
23 GROWTH STRATEGY
EXPAND
INCREASE
distribution and
depth in existing
markets
into new categories
and channels
Focus on
CREATE VALUE
PRODUCTIVITY
organically and
through M&A
improvement
24 INCREASE DISTRIBUTION AND DEPTH IN EXISTING MARKETS
Cross selling opportunities (milk 100%)
% of clients that acquire LALA milk that also acquire:
Sour cream
Cheese
75% 30% Yoghurt
Drinkable yoghurt
49% 47% 25 EXPAND INTO NEW CATEGORIES AND CHANNELS
Focused on consumer needs
Expanding categories
Flavor segmentation
(diversity)
Milk
Good for you
(health & wellness)
Busier lifestyles
(convenience)
Crave
(indulgence)
Yoghurt
Combine with food
(new consumption occasions)
Storage at home
(new consumption occasions/
convenience)
Prepackaged
cheese
26 Developing new products
SUCCESS STORIES
New consumer needs
CAGR ’06-’12:
23.5%
CAGR ’06-’12:
20.2%
Lactose free
o  30% of the Mexican popula4on is lactose intolerant o  LALA has a variety of product presenta4ons targeted to several consumer segments CAGR ’06-’12:
18.7%
NutriLeche
Cheese
o  Porqolio evolu4on through innova4on o  New types of cheese o  UHT, Fresh, Cream & Cheese, and Yoghurt & Powder milk o  Packaging innova4on o  Expanded distribu4on o  Expands milk category and anracts new customers Innovative and successful stories with proven double digit growth
27 PRODUCTIVITY
Capture productivity opportunities in middle of the P&L
Increase
Productivity
28 INORGANIC GROWTH OPPORTUNITIES
Overview
29 o 
Invest in regions that have growth
profiles and market dynamics similar to
the countries where LALA operates
o 
LALA follows a disciplined methodology
when analyzing M&A alternatives
o 
LALA is evaluating acquisition
opportunities in countries where they
can replicate their business model
SALES BY CATEGORY
Overview (MXN$mm)
10
CAGR ´
- ´12
7.0%
42,462
40,345
37,992
35,214
CAGR ´10-12´
11.7%
41.8% 43.5% 40.0% 44.1% Functional dairy
and others
CAGR ´10-12´
3.8%
60.0% 58.2% 56.5% 2010 2011 2012 Milk
55.9% LTM 3Q`13 Source: Company; Prior to 2011, financials are under Mexican FRS; commencing in 2011 financials are under IFRS. This may affect comparability 30 KEY FINANCIAL STATISTICS
Net sales (MXN$mm)
EBITDA (MXN$mm)
Net income1 (MXN$mm)
Margin:
Margin:
9.6%
´10 –’12 CAGR: 7.0
35,214 37,992 2011 9.5%
40,345 AG
´10 –’12 C
5.5%
5.4%
5.7%
5.6%
42,462 2,3081 2,3851 2012 LTM 9M13 2010 LTM 9M13 8%
´10 –’12 CAGR: 8.
R: 6.4%
5,182 3,849 2,985 2011 2012 Margin:
12.2%
32,064 29,947 2,041 2010 2011 2012 2.6%
5.9%
1,892 3,898 783 3,481 9M13 LTM 9M13 1,948 Margin:
11.6%
9M12 12.2%
%
3,397 2010 7.9%
9M12 9M13 9M12 Source: Company; Note: Prior to 2011, financials are under Mexican FRS; commencing in 2011 financials are under IFRS. This may affect comparability; 1 Considers consolidated net income from con4nued opera4ons, adjusted for one-­‐off of MXN$638mm in 2012 31 9M13 STRONG FINANCIAL POSITION
Capital structure
$4,282
$952
$607
$3,949
4Q´12
3Q´13
Net debt / EBITDA
0.7x
0.6x
EBITDA / Interest paid
20.6x
23.0x
4Q´12
$3,330
$3,342
3Q´13
Weighted average cost of debt (1)
5.8%
Leverage (2)
33.1%
4Q´13
Net Debt (MXN$mm)
Stockholders equity
6,731 mdp
Cash (MXN$mm)
Source: Company; Note: Prior to 2011, financials are under Mexican FRS; commencing in 2011 financials are under IFRS. This may affect comparability; Ra4os are calculated in local currency ¹Excludes opera4ng leases of MXN$125mm in 2012; TIIE 28= 3.79% as of December 2013; considers only Debt in MXN. 2 Leverage = Net debt / (Net debt + Stockholders equity) 32 ATTRACTIVE VALUATION
Average Daily Liquidity US $8.4 mm
Price
Share Outstanding
Free Float
EV
v Stock Info
October 16, 2013
$27.50
2,474.4 mm
20.6%
11.8x
EV/EBITDA (2013E´)
25 20.2x
20 $30.50"
11.8x
$30.00"
$28.91
$29.50"
15 10 $28.00"
5 $27.50"
$27.00"
$26.50"
0 $26.00"
Source: Bolsa Mexicana de Valores, analyst research. 33 15.3x
12.3x
Avg. 13.1x
11.2x
$29.00"
$28.50"
12.6x
8.2x
DISCLAIMER
This material does not constitute an offering document. This material was prepared solely for
informational purposes and is not to be construed as a solicitation or an offer to buy or sell any
securities. Any offering of securities will be made solely by means of an offering memorandum,
which will contain detailed information about the company and its business and financial
results, as well as its financial statements.
Securities may not be offered or sold in the United States unless they are registered or exempt
from registration under the U.S. Securities Act of 1933, as amended.
This presentation includes forward-looking statements or statements about events or
circumstances which have not yet occurred. We have based these forward-looking statements
largely on our current beliefs and expectations about future events and financial trends
affecting our businesses and our future financial performance. These forward-looking
statements are subject to risk, uncertainties and assumptions, including, among other things,
general economic, political and business conditions, both in Mexico and in Latin America as a
whole. The words “believes”, “may”, “will”, “estimates”, “continues”, “anticipates”, “intends”,
“expects”, and similar words are intended to identify forward-looking statements. We undertake
no obligations to update or revise any forward-looking statements because of new information,
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 the information contained herein. It should not be regarded by
recipients as a substitute for the exercise of their own judgment. We and our affiliates, agents,
directors, employees and advisors accept no liability whatsoever for any loss or damage of any
kind arising out of the use of all or any part of this material.
This material does not give and should not be treated as giving investment advice. You should
consult with your own legal, 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 such advisers as you deem
necessary and not upon any information in this material.
34 Apendix
35 SHAREHOLDER STRUCTURE
2,474,432,111 shares
Ownership
structure
36 OUR BRAND
1950
1982
1990
2000
2001
2005
2010
2011
2013
OUR SUPPLIERS
38 OUR SUPPLIERS
39 CONTACT
Antonio Zamora
CFO
+52 (55) 9177 5900
[email protected]
Enrique González
Investor Relations
+52 (55) 9177 5928
[email protected]
40