Management´s analysis

2014

The following report should be read in conjunction with the letter to the Stockholders (pages 13 – 15) and the Audited Financial Statements (pages 41 – 105). Unless otherwise indicated, the figures from 2012 to 2014 are stated in millions of nominal Mexican pesos (Ps.) Percentage fluctuations are stated in nominal terms. In addition, some figures are stated in millions of dollars from the United States (US dollar or US$) and millions of Euros (€).

The financial information contained in this Management’s Analysis corresponds to the last three years (2012, 2013 and 2014), and has been adjusted to the International Financial Reporting Standards (IFRS). Furthermore, some sections of this information have been expanded in order to include three years and adjust it to the General Regulations, applicable to the Issuers and other Securities Market Participants, issued by the National Banking and Securities Commission (CNBV by its Spanish acronym) up to September 24, 2014.

San Pedro Garza García, N. L., March 17, 2015.


ECONOMIC ENVIRONMENT

During 2014, the global economy experienced a divergence in the regional growth rates. The economy of the United States grew at a robust pace of 2.4%, while that of the Eurozone barely reached 0.9%, and that of Japan stalled with 0.1%. Given these growth rate differences, their corresponding monetary authorities implemented opposing policies, causing a strong appreciation of the U.S. Dollar against other major currencies, such as the Euro and the Japanese Yen.

Meanwhile, in emerging economies the growth decelerated. In China, the growth was one of the lowest in two decades, reaching 7.4%; and in Mexico, the growth was below trend, at 2.1%.

Finally, the oversupply of oil production led to a pronounced fall of more than 50% in its prices during the second half of the year. This event boosted growth in oil-importing countries and hindered that of oil-exporting countries.

The economic indicators of Mexico relevant to understand ALFAs results, are described below:

The GDP growth of Mexico was 2.1% in 2014, slightly higher than that of 2013. The consumer inflation was 4.0% (b) in 2014, higher than the 3.8% (b) average 2013. The Mexican Peso experienced a nominal depreciation of 12.5% (c) in 2014, higher than the 0.5% (c) depreciation of 2013. In real terms, the annual average overvaluation of the Mexican peso vis-á-vis the US dollar amounted to 15.6% (d) in 2014 and 15.5% (d) in 2013.

The 28-day TIIE nominal interest rate for Mexican pesos averaged 3.5% (b) in 2014, below the 4.3% average of 2013. In real terms, the interest rates were negative, averaging 0.4% in 2013 to -0.5% in 2014.

The nominal 3-month Libor for U.S. Dollars averaged a historic low 0.2% (b) in 2014, slightly lower than the 0.3% (b) average of 2013. Taking into account the nominal depreciation of the Mexican peso and its inflation, the real rate of the 3-month Libor was 8.4% (a) in 2014, higher than the negative rate of -3.1% (a) in 2013.


Sources:

(a) National Institute of Statistics and Geography (INEGI).
(b) The Bank of Mexico (Banxico).
(c) Banxico. Exchange rate to liquidate liabilities denominated in foreign currency and payable in Mexico.
(d) Own calculations with data from INEGI, bilateral with the United States, adjusting for consumer prices.


ALFA CONTINUES TO GROW

During 2014, ALFA made investments in organic growth and acquisitions in order to enter into new geographies, expand its production capacity and add value to its products. This is how ALFA successfully faced a volatile and pressure-filled environment relative to margins in some of its main businesses.


RESULTS
REVENUES

The following table shows ALFA’s revenues for the years 2014, 2013 and 2012 breaking down by volume and price components (indexes are calculated on a 2009=100 base):

Concept 2014 2013 2012 Var. 2014-2013 (%) Var. 2013-2012 (%)
Consolidated Revenues 229,226 203,456 200,167 13 2
Volume index 163.0 151.5 147.4 8 3
Price index in Mexican pesos 116.9 112.0 113.4 4 (1)
Price index in US dollars 123.1 123.0 120.7 0 2

The consolidated revenues broken down by ALFA’s business groups are as follows:


Concept 2014 2013 2012 Var. 2014-2013 (%) Var. 2013-2012 (%)
Alpek 86,072 90,061 96,163 (3,989) (6,102)
Sigma 71,465 48,989 45,476 22,476 3,513
Nemak 61,665 56,299 51,385 5,366 4,914
Alestra 5,519 5,067 4,634 452 433
Newpek 2,259 1,706 1,227 553 479
Others 2,246 1,334 1,282 912 52
Total 229,226 203,456 200,167 25,770 3,289

The revenues behavior is explained as follows:

Revenue indexes
(2009=100)

2014-2013:

Consolidated revenues in 2014 amounted to Ps229,226 (US$17,224), 12.7% higher than in 2013 (8.5% in US dollars). Following is an explanation of the performance of each of ALFA’s business groups:

Alpek’s sales in US dollars during 2014 were 8% lower than in 2013, due to an excess of capacity in Asia and the raw materials price volatility. The plastic and chemicals business showed a favorable performance, except for caprolactam, which continued to be affected by the excess capacity in China. However, the Company’s financial performance allowed it to continue implementing projects seeking to reduce costs, as well as improve the efficiency and integration of its operations.

In 2014, Sigma sold 1.4 million tons of food, 21% more than in 2013. Revenues were increased to US$5,359, 40% more than in 2013 supported by the consolidation of Campofrío beginning on July 2014. On the other hand, the Mexican consumer market showed weakness and the prices of raw materials experienced strong increases. The Company faced this environment by strengthening its marketing and distribution efforts, launching new products, investing in brand capital, as well as making operations more efficient. The Food service business was strengthened by capitalizing synergies derived from the acquisition of ComNor in 2013.

On the other hand, the sales volume of Nemak grew 4%, adding 49.8 million equivalent pieces. As a result, revenues increased to US$4,645, an increase of 6% compared to 2013. The Company took advantage of the North American automotive industry growth, a slightly better performance in Europe and its new production capacity in Asia. As evidence of the trust it has earned, during the year, Nemak got 60 new contracts, representing future revenues of US$1.7 billion. Five of these are related to the production of structural pieces, new market with a great potential.

In Alestra, revenues added up to US$415, 5% more than in 2013. The increase was due to a growth in revenues from added value services (AVS), mainly those related to IT security, integration of systems and cloud services, among others. The SVA represented 85% of the Company’s total revenues.

Finally in 2014, Newpek connected 122 new Wells to sales in the Eagle Ford Shale to add up to 497 producing Wells in such formation. In the Wilcox formation, nine exploratory wells were drilled and completed in the year. In Oklahoma, Newpek operates 29 additional wells. Overall, the production of all these formations amounted to 8.2 thousand average equivalent oil barrels per day, 21% more than in 2013. Sales amounted to US$170, 28% more than in 2013.


2013-2012:

Consolidated revenues in 2013 amounted to Ps203,456 (US$15,870), 2% higher than 2012 (5% in US dollars). Following is an explanation of the performance of each of ALFA’s companies:

Alpek’s sales in US dollars during 2013 were 3% lower than in 2012. An environment of lower prices and margins in the polyester and caprolactam global markets translated into a reduction in the sales volume. However, the Company continued to implement the projects that will improve the efficiency and the integration of its operations.

In 2013, Sigma sold 1.2 million tons of food, 4% higher than in 2012. The revenues increased to US$3,820, 11% higher than in 2012. These increases reflect higher sales in cold meats and dairy in Mexico, in addition to improvements in productivity and its distribution network.

The sales volume of Nemak increased 11%, for a total of 47.6 million equivalent pieces. As a result, revenues increased to US$4,391, a 13% progress compared to 2012. In North America, car sales grew 8%, for a total of 15.6 million vehicles. A repressed demand and the availability of consumer credit were the main drivers of this increase. In Europe, the market decreased by 2%, however, the greater concentration of Nemak with German assemblers, who have been successful in finding export opportunities outside of the Eurozone resulted in an increase of the sales volume of 3% for the Company.

Furthermore, the use of aluminum auto parts to replace iron parts continues to increase, favoring the Company.

Alestra continued to promote added value services, such as cloud applications, security and managed networks, as well as data services, local and Internet services for the business segment, which contributed 84% of the Company’s revenues in 2013. Revenues amounted to a total of US$395, 13% more than in 2012.

Finally, Newpek connected 125 new wells to sales, for a total of 411. Of these 411 wells, 371 operate in Eagle Ford Shale and 40 in Edwards Trend. The net sales production of equivalent crude barrels amounted to 6,737, 37% more than in 2012. Out of the total volume, 52% were liquids and oil with a value considerably higher than dry gas, with respect to 50% in 2012.


OPERATING PROFIT

The operating profit of ALFA in 2014, 2013 and 2012 is explained as follows:


2014-2013:

Operating profit       Change by Group
  2014 2013 Var. Alpek Sigma Nemak Alestra Newpek Other
Revenues 229,226 203,456 25,770 (3,989) 22,476 5,366 452 553 912
Operating profit 17,226 14,085 3,141 813 1,159 1,203 45 (379) 300
Consolidated operating margin (%) 7.5 6.9  
Alpek (%) 4.3 3.2  
Sigma (%) 9.0 10.8  
Nemak (%) 9.3 8.0  
Alestra (%) 24.9 26.2  
Newpek (%) 19.7 48.4  

The 22% increase in consolidated operating profit from 2013 to 2014 is explained by the individual performance of the Group’s Companies, as described below:

In the case of Alpek, additionally to the lower margin environment in global markets of polyester and caprolactam, the price fall in crude oil put even more pressure on the margins and resulted in a non-cash charge of US$71 for inventory devaluation. It is important to keep in mind that the operating profit for 2013 was affected by an impairment of fixed assets due to the closing of the Cape Fear plant, amounting to $2,421. In this sense, even though the above explanation, the operating profit of 2014 is higher than of 2013.

In Sigma, the operating profit showed a strong increase mainly due to the consolidation of Campofrío beginning on July 2014. Excluding this effect, the operating profit showed a slight decrease despite the increase in prices of raw materials that had to be compensated through higher sales prices.

In Nemak, the operating profit grew 27% in pesos during the year. This was due to the increase in sales already explained above, as well as to the implementation of actions to reduce costs and increase efficiency.

In 2014, Alestra increased its operating profit by 3%, mainly derived from an increase of added value service revenues and reduced costs. It is important to point out that the operating profit of 2013 was benefited due to an extraordinary revenue amounting to US$21 as a result of a favorable resolution of disputes over interconnection costs from prior years.

The operating profit of Newpek decreased by 46% in 2014 vs 2013, mainly due to an extraordinary charge of $310 for depreciation not included in 2013. Without this charge, revenues would have increased by 47%, since the Company currently has more operating oil and gas wells. The production of liquids, including condensed and oil, represented 62% of the total volume as compared to 52% in 2013. The best production mix also contributed to a better operating profit.


2013-2012:

Operating profit       Change by Group
  2013 2012 Var. Alpek Sigma Nemak Alestra Newpek Other
Sales 203,456 200,167 3,289 (6,102) 3,513 4,914 433 479 52
Operating profit 14,085 16,672 (2,587) (4,550) 495 961 370 148 (11)
Consolidated operating margin (%) 6.9 8.1  
Alpek (%) 3.2 7.8  
Sigma (%) 10.8 10.5  
Nemak (%) 8.0 6.9  
Alestra (%) 26.2 20.8  
Newpek (%) 48.4 55.3  

The 14% decrease in consolidated operating profit from 2012 to 2013 is explained by the individual performance of ALFA’s companies, as explained below:

In Alpek’s case, additionally to the lower margin environment in the global polyester and caprolactam markets, an item of Ps2,421 was charged related to the cost from closing the facilities and reducing fixed assets in Cape Fear, which affected the operating profit.

In Sigma, the increase in sales explained above was evident in an increase in operating profit.

Nemak recorded an operating profit 27% higher than in 2012. This was the result of an increase in sales volume, as well as more efficiency in the use of its assets and obtaining synergies among its 34 plants globally, and the incipient integration of some added value services, such as manufacturing of parts.

In 2013, Alestra continued to strengthen its revenue mix, increasing its margins and strengthening its infrastructure to reduce costs. Additionally, it obtained a favorable legal resolution on fixed interconnection tariffs. This allowed Alestra to increase its operating income by 43% as compared to 2012. It is important to mention that in 2012 the income included the benefit of an agreement in favor of Alestra for fixed-mobile interconnection tariffs.

Newpek’s operating profit increased 22% in 2013 vs. 2012. This was a result of having more operating wells. It is important to mention that the operating profit to sales ratio decreased in 2013 in relation to 2012 due to expenses related to new projects that the Company will start to develop in 2014.


COMPOSITION OF REVENUES AND OPERATING PROFIT

The percentage structure of revenues and operating profit of ALFA experienced changes between 2014 and 2013 mainly due to the decrease in sales and operating profit of Alpek and an increase in the operating profit of Sigma and Nemak, all of which are explained above.

The following table shows these effects:

  Integration %
  Revenues   Operating profit
  2014 2013 2012   2014 2013 2012
Alpek 38 44 48   22 21 45
Sigma 31 24 23   37 37 29
Nemak 27 28 26   33 32 21
Alestra 2 2 2   8 9 6
Newpek 1 1 1   3 6 4
Others 1 1 0   (3) (5) (5)
Total 100 100 100   100 100 100

FINANCE COST

The exchange loss is explained mainly by the macroeconomic environment during the year. As explained in the beginning, the Mexican peso had an annual nominal depreciation of 12.5% in 2014. Therefore, it was a determining factor of ALFA’s finance cost during 2014. Another significant item was the impairment in fair value of the financial investment available for sale corresponding to the investment in Pacific Rubiales Energy, considered as non-cash.

Determinants of finance cost 2014 2013
General inflation (Dec.- Dec.) 4.1 4.0
Variation % in nominal exchange rate at year end (12.5) (0.5)
Closing exchange rate, nominal 14.72 13.08
Real appreciation (depreciation)
Mexican pesos / dollars with respect to the prior year:
Year end (9.0) 1.9
Average of the year (1.3) 5.1
Average interest rate:
Nominal LIBOR 0.2 0.3
Nominal implicit, ALFA debt 5.7 5.9
LIBOR in real terms 8.4 (3.1)
Real implicit, ALFA debt 14.3 2.6
Average monthly debt of ALFA in US$ 5,737 4,170

Expressed in US$, the finance cost, net for the years 2014, 2013 and 2012 were US$328, US$295 and US$279, respectively.

Variation in finance cost, net in US $ 14/13 13/12
Due to a (higher) lower interest rate 62 (34)
Due to a (higher) lower net petty cash debt (95) 18
Net change (33) (16)

Net financial expenses in profit include premiums paid in operations, such as: refinancing, operating interests, in 2014, 2013 and 2012, besides financial bank expenses.

Measured in pesos, the finance cost, net was integrated as follows:

          Change
Finance Cost, net 2014 2013 2012   14/13 13/12
Financial expenses (4,957) (3,978) (4,412)   (979) 434
Financial income 222 270 719   (48) (449)
Financial expenses, net (4,735) (3,708) (3,693)   (1,027) (15)
Result from exchange fluctuation, net of derivative
financial exchange rate operations.
(5,221) (349) 962   (4,872) (1,311)
Impairment in the fair value of financial investments
available for sale
(8,665)       (8,665)  
Total finance cost, net (18,621) (4,057) (2,731)   (14,564) (1,326)

The fair value of ALFA’s derivative financial instruments at December 31, 2014 and 2013 is as follows:

  Fair value
(Millions of US dollars)
Type of derivative, value or contract Dec. 14 Dec. 13
Exchange rate (5) 0
Cross Currency Swaps (49) (29)
Interest rate (1) (2)
Energy (72) 2
Total (127) (29)

INCOME TAX

Following is an analysis of the principal determinants of income tax in each one of the years in comparison, starting from the concept of taxable income defined as operating profit less finance cost and other expenses, net.

        Change
INCOME TAX 2014 2013 2012 14/13 13/12
Profit (loss) before income tax (1,686) 9,987 13,941 (11,673) (3,954)
Share of losses of associates
Recognized by the equity method
291 41   250 41
  (1,395) 10,028 13,941 (11,423) (3,913)
           
Statutory rate 30% 30% 30%    
Income tax at statutory rate 419 (3,008) (4,182) 3,427 1,174
+ / (-) Tax effect of permanent tax-accounting differences:
Tax vs. Accounting basis finance cost, net
875 338 652 537 (314)
Other permanent differences, net (556) (139) 241 (417) (380)
Total tax effect of permanent differences 319 199 893 120 (694)
Income tax provision based on operations of the year 738 (2,809) (3,289) 3,547 480
Recalculation of back taxes and other (181) (383) (101) 202 (282)
Total income tax provision (charged) credited to income 557 (3,192) (3,390) 3,749 198
Effective tax rate 39% 32% 25%    
Income tax :          
Currently payable (3,539) (3,531) (3,315) (8) (216)
Deferred 4,096 339 (75) 3,757 414
Total income tax provision charged to income 557 (3,192) (3,390) 3,749 198

NET PROFIT

During the year, ALFA generated a net consolidated loss, as broken down in the table below, and it is the result of the before explained with regard to the operating profit, finance cost, net and taxes:

          Change
Statement of income 2014 2013 2012   14/13 13/12
Operating profit 17,226 14,085 16,672   3,141 (2,587)
Finance cost, net (1) (18,621) (4,057) (2,731)   (14,564) (1,326)
Equity in losses of associates (291) (41)     (250) (41)
Taxes (2) 557 (3,192) (3,390)   3,749 198
Net consolidated income (loss) (1,129) 6,795 10,551   (7,924) (3,756)
Net income (loss) of the controlling interest (2,037) 5,926 9,361   (7,963) (3,435)

(1) Comprehensive financing result

(2) Income tax (payable and deferred)


COMPREHENSIVE INCOME

Comprehensive income is shown in the statement of changes in stockholders’ equity and its objective is to show the total effect of all transactions and events which affected earned surplus, regardless of whether these were recorded in the statement of income, or directly in the capital account. Operations between the Company and its shareholders are excluded, mainly dividends paid. Comprehensive income in 2014, 2013 and 2012 was as follows:

  Consolidated
Comprehensive income 2014 2013 2012
Net profit (1,129) 6,795 10,551
Effects of translation of foreign entities 3,679 456 (2,887)
Effects of derivative financial instruments (744) 234 87
Remeasurement of obligations for employees’ benefits (238) 734 (306)
Consolidated comprehensive income 1,568 8,219 7,445
Owners of the controlling company (315) 7,740 6,332
Non-controlling interest 1,883 479 1,113
       
Comprehensive income for the year 1,568 8,219 7,445

A previous section of this report explains the net profit obtained in 2014, 2013 and 2012. The translation effect of subsidiaries abroad, which shows the effect from using different exchange rates between asset and liability accounts, against income and capital accounts, experienced an important change due to the volatility of the exchange rates of the currencies of different countries where ALFA has presence.

Durante el presente ejercicio tuvo un movimiento importante debido a la volatilidad de los tipos de cambio de las monedas de distintos países donde ALFA tiene presencia.

The effect in capital of derivative instruments represents the effect for energy by-products that, in accordance with International Financial Reporting Standards, is shown in stockholders’ equity. The effect of remeasurement of obligations for employees’ benefits is the gain(loss) in actuarial estimates.

DIVIDENDS DECLARED AND INCREASE IN STOCKHOLDERS’ EQUITY

  • In 2014 no dividend was declared due to the extraordinary dividend paid in December 2013. In 2013, the payment of an ordinary dividend of $1,513 was approved, equal to 0.29 pesos per share, 12% higher than that paid in 2012. Furthermore, in December 2013, an additional dividend of $2,006 equal to 0.39 pesos per share was declared. In 2012 an ordinary dividend was declared for $1,348 equal to 2.60 pesos per share.
  • In 2014, the stockholders’ equity was increased by 6%. On the one hand, it was decreased by the net loss, on the other, it was increased by the monetary capital of Campofrío.

INVESTMENT IN DAYS NWC(1)

In 2014, the sales to NWC ratio at a consolidated level decreased, which resulted in consolidated NWC days to decrease, from 26 in 2013 to 20 in 2014.

Days in NWC 2014 2013 2012
Alpek 47 49 46
Sigma 5 18 17
Nemak 12 13 17
Alestra (32) (49) (49)
Newpek (39) (44) (12)
Consolidated 20 26 28

(1) Net working capital


INVESTMENTS

Property, plant and equipment
The total investments by group were as follows:

      % Change Last 5 years
  2014 2013 14/13 Investment %
Alpek 4,191 2,275 84 8,300 18
Sigma 1,871 1,522 23 6,677 14
Nemak 5,254 4,336 21 19,475 42
Alestra 1,310 1,538 (15) 5,140 11
Newpek 1,771 2,473 (28) 6,617 14
Others 33 54 (39) 603 1
Total 14,430 12,198 18 46,812 100

Business acquisitions
The acquisition process by Sigma of 58% of the shares of Campofrío concluded in 2014. In Ecuador, Sigma acquired Fábrica Juris, company engaged in the processing of cold meats in such country, expanding its presence in South America. On the other hand, Alpek acquired CabelmaPET in Argentina, company engaged in recycling PET.


CASH FLOWS

Based on the cash flows generated by operations, the following table shows the main transactions in 2014.

  2014 2013
Cash flows provided by operations 23,953 19,758
Property, plant and equipment and others (14,430) (12,198)
Acquisition of financial assets available for sale (14,135)
 
Business acquisitions (1,353) (5,983)
Increase in Bank Financing 15,677 4,918
Dividends paid by ALFA SAB   (3,510)
Dividends paid to the non-controlling interest (183) (1,612)
Repurchase of shares (258) (99)
Net Interest Paid (4,490) (3,631)
Other (707) 548
     
Increase (decrease) in cash 4,074 (1,809)
Adjustment in cash flows from changes in exchange rates 693 50
Cash, cash equivalents and restricted cash at beginning of year 11,902 13,661
     
Total cash at end of year 16,669 11,902

The principal changes in the net debt of ALFA and its groups were as follows:

Changes in net cash debt US$ Consolidated Alpek Sigma Nemak Alestra Newpek Other
Balance at December 31, 2013 3,473 766 1,319 1,140 175 83 (10)
Long-term financing, net of payments:              
Financing 1,778 277 207 5 185 21 1,083
Payments (777) (287) (132) (67) (199) (2) (90)
  1,001 (10) 75 (62) (14) 19 993
               
Short term financing, net of payments 207 (23) (47) 173 40 - 64
Total financing, net of payments 1,208 (33) 28 111 26 19 1,057
Translation effect (325) 7 (279) (51) (2) (1) 0
Debt variation in the statement of cash flows 883 (26) (251) 60 24 18 1,057
Debt from acquired companies and others 981 3 971 0 5 0 2
Total debt variation 1,864 (23) 720 60 29 18 1,059
Decrease (increase) in cash and restricted cash (230) (28) (185) 71 14 (3) (99)
Change in interest payable 16 0 8 (1) (8) 0 17
Increase (decrease) in debt net of cash 1,650 (51) 543 130 35 15 978
Balance at December 31, 2014 5,123 715 1,862 1,270 210 98 968


  Alpek Sigma Nemak Alestra Others
Short and long term debt by group 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013
Debt balance (US$) 1,094 1,118 2,189 1,465 1,352 1,293 260 230 1,361 273
 
Debt balance percentage
Short-term debt 2 3 1 4 15 3 13 0 26 37
Long-term 1 year 0 2 2 15 8 6 1 87 0 18
Long-term 2 2 6 31 0 11 8 14 0 13 34
Long-term 3 2 4 14 4 11 12 3 13 1 0
Long-term 4 4 0 40 0 18 13 4 0 1 9
                     
Long-term 5 years or more 90 85 12 77 37 58 65 0 59 2
Total 100 100 100 100 100 100 100 100 100 100
 
Average life, long-term debt (years) 7.3 8.1 2.8 4.5 5.5 6.0 6.1 2.5 10.4 2.1
Average life, total debt (years) 7.2 7.7 2.8 3.7 4.3 5.5 5.3 0.8 8.7 1.2


Consolidated short and long term debt: US$     % of total
2014 2013 Var.   2014 2013
Short-term debt 510 243 267   8 6
Long-term 1 year 147 561 (414)   2 13
Long-term 2 991 271 720   16 6
Long-term 3 504 286 218   8 7
Long-term 4 1,180 191 989   19 4
Long-term 5 years or more 2,915 2,826 89   47 64
Total 6,247 4,378 1,869   100 100
 
Average term of, long-term debt (years) 7.3 5.9        
Average term of, total debt (years) 6.6 4.9        

FINANCIAL RATIOS

LIQUIDITY
Debt net of cash / Cash flow (in US dollars, last 12 months)

Groups 2014 2013
Alpek 1.65 1.34
Sigma 2.93 2.52
Nemak 1.78 1.87
Alestra 1.24 1.03
Newpek 0.85 0.91
Consolidated 2.51 1.81


Interest coverage (in US dollars) * Change   Due to
2014 2013 14/13   Cash Flow Financial
expenses
Alpek 6.5 7.1 (0.6)   (1.8) 1.2
Sigma 5.6 6.7 (1.1)   1.4 (2.5)
Nemak 9.8 6.1 3.7   1.1 2.6
Alestra 7.3 7.5 (0.2)   (0.1) (0.1)
Consolidated 6.1 6.7 (0.6)   0.4 (1.0)

* Defined as operating profit plus depreciation and amortization, divided by net financial expense.


FINANCIAL STRUCTURE

ALFA’s financial structure indicators improved during 2014, as observed in the table below:

Financial ratios 2014 2013
Total liabilities / Stockholders’ equity 2.36 1.54
Long-term debt / Total debt (%) 89 82
Total currency debt / Total debt (%) 94 88