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LETTER FROM THE CHAIRMAN OF
THE BOARD AND THE PRESIDENT

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Despite the challenges we faced in 2013, our company reported positive results, both financially, and in terms of corporate social responsibility actions.

Revenues and EBITDA continue to grow, fueled primarily by solid performances from our auto parts and refrigerated food businesses. We invested U.S. $1,550 million in capex and company acquisitions, bolstering our competitiveness and market leadership in the businesses where we participate. Projects of the year included the progress in the constuction of a power cogeneration plant in Veracruz, Mexico, which will give us our own source of clean and efficient energy starting in 2014, to serve the Cosoleacaque plants. In the auto parts business, the new plant in Chongqing, China started up, increasing our presence in that country. In Mexico, Alestra built its fifth Data Center, the most modern and environmentally friendly of its kind in Latin America. Sigma carried out three acquisitions in 2013: a cheese company in Costa Rica, a processed meats company for the Mexican foodservice market and, finally, a 45% stake in the Spanish company Campofrio Food Group, the leading European maker of processed meats.

In the field of corporate social responsibility, ALFA Foundation started up the first Extracurricular Talent Center in Monterrey, Mexico. This Center follows an innovative educational model that seeks to stimulate the development of outstanding junior high students in underprivileged areas of the city, encouraging them to continue their studies through college and thus promoting social mobility. This project, now a reality, is a result of a redefinition of the goals and strategies of ALFA Foundation made in 2012, for the purpose of maximizing its impact on the community.

In the area of industrial safety, we continue to make progress in reducing the number and seriousness of workplace accidents. This reflects strategies undertaken by our companies in their ongoing pursuit of an accident-free workplace.

Faced with the challenge of a water shortage in some of the regions where we operate, we created the ALFA Water Commission. During the year, we launched various projects to improve our performance in this area. Another area of progress was in our Waste Reduction programs, with more of our companies joining in.

In general, the economic environment looks more favorable for Mexico and the world in 2014. Experts believe the U.S. economy will continue to improve, and that Europe will begin its recovery. In Mexico, the gradual enactment of recently approved reforms, particularly the energy reform, could boost investment and create more and better jobs. Nevertheless, we continue to face specific challenges in the various industries in which we participate, so we must avoid complacency.

We invite you to peruse this document, which details our companies’ main actions and results in the area of corporate social responsibility over the course of the year. Here you will find further proof of our commitment to operate responsibly in pursuit of the common good, which is the only way to continue building a better company and more promising future for this and future generations.

San Pedro, Garza Garcia, N.L., Mexico, January 31, 2014.

Armando Garza Sada

CHAIRMAN OF THE BOARD OF DIRECTORS

Álvaro Fernández Garza

PRESIDENT



Safety:

The number and seriousness of workplace accidents continues to decline.

ALFA Foundation:

ALFA foundation starts up its extracurricular talent center.

Environment:

The use of clean energy sources continues to grow.

Recycling:

Progress in recycling and waste reduction programs.

GLOBAL FOOTPRINT AND BUSINESSES

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ALPEK

Products / Services:
Polyester (PTA, PET and fibers). Plastics and chemicals (polypropylene, EPS, polyurethanes and caprolactam).

Markets:
Food and beverages, consumer products, textiles, construction and automotive.

Revenues in 2013:
U.S. $7,028 million

Employees:
4,528

Plants:
16

Presence:
Argentina, USA, Mexico

NEMAK

Products / Services:
Aluminum heads and blocks for gas and diesel engines; transmission parts.

Markets:
Automotive

Revenues in 2013:
U.S. $4,391 million

Employees:
20,724

Plants:
34

Presence:
Germany, Argentina, Austria, Brasil, Canada, China, USA, Slovakia, Spain, Hungary, India, Mexico, Poland, Czech Republic

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SIGMA

Products / Services:
Processed meats (ham, hot dogs), cheese, yogurt and prepared meals.

Markets:
Food

Revenues in 2013 (U.S.$ Million):
3,820

Employees:
29,562

Plants:
41

Presence:
Costa Rica, USA, El Salvador, Mexico, Peru, Dominican Republic

ALESTRA

Products / Services:
CData centers, cloud applications, information security, managed networks and consultancy services, vertical applications for specific industries.

Markets:
Business Customers

Revenues in 2013:
U.S. $395 million

Employees:
1,860

Plants:
Presence in 200 cities in Mexico.

Presence:
Mexico

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NEWPEK

Products / Services:
Hydrocarbons

Markets:
Energy, oil and gas

Revenues in 2013:
U.S. $133 million

Employees:
25

Plants:
-

Presence:
USA, Mexico

A Vision With A Sense of Responsibility

ALFA is well aware of the challenges of being a responsible company in both social and business terms. It has therefore developed a business strategy sustained by four pillars:

> INTERNAL WELL-BEING: to provide conditions of health, safety and development opportunities for employees.
> COMMUNITY: to be a responsible citizen towards the community.
> ENVIRONMENT: to control and reduce emissions in the air, soil and water.
> ECONOMIC: to obtain adequate business returns based on the investment and risk taken.


MISSION

To become a source of pride for our workers and shareholders, and to exceed stakeholder expectations through leadership, innovation and long-term exceptional performance.



VISION

Commitments with our stakeholders:
> Stockholders: To achieve outstanding long-term value creation through profitable growth, continuous portfolio optimization and selective investment in new opportunities.
> Employees: To be a great place to work. To attract and develop the best talent, motivating them to achieve their full potential.
> Clients: To exceed expectations with superior experiences and innovative offerings.
> Suppliers: To build long lasting mutually beneficial relationships.
> Community: To encourage safe and sustainable operations. To contribute to the development of our communities.



STAKEHOLDERS


ALFA HAS DEFINED FIVE MAJOR STAKEHOLDER GROUPS, BASED ON THEIR RELATIONSHIP TO THE COMPANY AND DEGREE IN WHICH THEY ARE AFFECTED BY ITS OPERATIONS. THESE ARE: EMPLOYEES, SHAREHOLDERS, CLIENTS, SUPPLIERS AND THE COMMUNITY.

For ALFA, all of them deserve respect and attention. To this end, the ALFA companies have made a commitment to treat each of them in a responsible, ethical and transparent manner, and to establish permanent communication channels to remain aware of their concerns.


ALFA ETHICS AND VALUES

The ALFA Code of Ethics defines the guidelines for the behavior expects from its companies and employees. Visit http://www.alfa.com.mx/NC/philosophy.htm


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VALUES

Integrity: Our actions are governed by our commitment to ethical conduct and social responsibility.
RESPECT AND EMPATHY: We consider diversity as a strength. We seek to incorporate individuals with different backgrounds and experiences. We aspire to provide a work environment that promotes trust and cooperation.
RESULTS ORIENTED: We are committed to value creation and to the continuous improvement of our businesses. All our employees embody a personal commitment to improving the performance of the company.
INNOVATION AND ENTREPRENEURIAL APPROACH: Encourage and reward innovation and development of new business opportunities.
CLIENT-FOCUSED: Dedicated to exceeding our clients' needs.



PARTICIPATION IN THE UN GLOBAL COMPACT

Since its foundation in 1974, ALFA has assumed the commitment of being a responsible company in all of its spheres of action (economic, social and environmental). In pursuit of this principle, every year since 2006, ALFA has signed the UN Global Compact, an initiative that promotes social economic development, as well as universal human values. ALFA remains committed to carrying out its activities within the framework of the 10 principles of the UN Global Compact.

ALFA Achievements in 2013


OUTSTANDING PROGRAMS AND THEIR RESULTS

ALFA’s social responsibility has no boundaries.
The following lists some programs and achievements undertaken in 2013.

OUR ASSOCIATES

Company Achievements
Nemak Czech Republic 380 days free of incapacitating accidents.
Terza One year without incapacitating accidents.
Nemak Spain 23% reduction in accident index.
Nemak Monterrey 52% reduction in the incapacitating accidents rate and 50% reduction in the frequency and loss rates.
Sigma 13% reduction in the number of accidents and 30% drop in the number of lost days rate.
AKRA Polyester 2,652 people, including employees and their families, benefited from Family Development programs.
Nemak Poland 1,800 people attended Family Day.
Nemak Mexico 1,250 academic support given to employees’ children.
DAK Americas 1,300 employees participated in the company’s health program.
Sigma 17,100 employees participated in courses at Sigma University.
Nemak Mexico 140,000 participants in social development events.

OUR COMMUNITY

Company Achievements
DAK Americas 44 schools supported, benefiting 6,000 students.
Terza 1,200 students benefited from support to 14 schools.
Alestra 70 students did internships at the company.
Petrotemex Altamira 750 people trained in the “Safe School” program.
Nemak Wisconsin 600 students benefited from support to four schools.
Sigma 90 charitable institutions supported.
Nemak Brasil/Argentina 5,000 people benefited from community support programs.
Nemak Alabama Supported the Alabama Childhood Food Solutions program in its community.
Nemak Hungary Donated a robot for educational purposes to a local high school.
Nemak Kentucky Supported the Barren County Heart Walk program, to raise awareness about heart health in the community.
DAK Americas 111 people participated in volunteer programs.
Nemak Canada Supported the Juvenile Diabetes Research Foundation and the United Way.
Nemak Wernigerode 23 disabled people work at the plant.

OUR ENVIRONMENT

Company Achievements
Alestra Saved 20% on energy consumption through improvements to Data Centers.
DAK Americas 57,650 GJ saved through streamlining PTA/PET line 2.
Nemak Hungary Saved 3,952 GJ by taking advantage of the heat from the sand recovery furnace and air compressors.
Nemak Tennessee Annual savings of more than 8,000 GJ through optimization of lighting and gas extraction control systems.
Sigma Reduced water consumption by 21% since 2007.
Nemak Spain 12.7% reduction in water consumption.
Nemak Mexico Wastewater recovery increased from 24% to 30%.
Nemak Canada Reduced water consumption by 7,000 m3.
Petrotemex 10% reduction in energy consumption (Altamira) by improving plant processes.
Nemak Alabama Reduced wastewater generation by 13,448 m3 compared to 2012.
DAK Americas Argentína Reduced wastewater generation by 13,448 m3 compared to 2012.
Nemak Slovakia Reduced sand purchases by 20% by recycling this input.
Nemak Poland Waste recovery program successfully recuperated 90% of waste.
Polioles 50% reduction in nonhazardous waste.
DAK Americas Reduced 65% in waste volume sent to landfills through recycling, composting, or energy conversion.
Indelpro Donated 100 trees to the community at the close of the Safety, Hygiene and Ecology week.
Peotrotemex 1,832 students from 20 participating schools took part in the Vive Verde program sponsored by the company.
Univex 10 years with zero liquid effluents discharges in 2013.