Food & Beverage — Q3 2020 Preview Oct 16, 2020 | Quarterly Preview

Enrique Mendoza | Senior Analyst Expecting A Healthy Recovery [email protected] Ext.1693 BIMBO & AC Should Post The Best Results Actinver:(55)11036600

 The earnings season should become a positive catalyst Exhibit 1 across the food & beverage industry due to the healthy 3Q20 E Sales Operating EBITDA recovery that we expect. ∆YoY Income

The pandemic has generated difficulties for all economies, but the BIMBO +14.1% +7.9% +14.2% AC +3.6% +8.6% +12.4% lock-down has had very different effects for companies in the food KOF -3.2% -5.5% -4.3% and beverage sector for both, their operating results and their FEMSA -6.1% -13.9% -7.1% stock prices as well. While food companies have been favored by Average +2.3% -0.73% +3.8% higher demand for their products, beverage companies have had negative effects on volumes and product mixes. Therefore, the shares of companies such as BIMBO and GRUMA have shown gains, while shares such as AC, KOF, and FEMSA reflect falls (e. 3).

It is also important to highlight the differences between geographic Exhibit 2 regions, companies with exposure to Peru, Colombia, and Ticker Rating Last Mkt Cap Argentina have been strongly affected in volumes, and although in Price (US$M) Brazil the crisis has hit a little less strong, the depreciation of its (P$) currency has severely affected results when shown in pesos. FEMSA ubd Outperform 121.97 20,490 BIMBO a Outperform 41.19 8,771 KOF ubl Outperform 86.63 8,544 For the Q3 2020, we expect demand for food to remain high, AC* Outperform 94.41 7,820 favoring the volumes of BIMBO, GRUMA, and LALA. The volumes CUERVO* Mkt.Perform 46.16 7,919 of soft drink companies, although they would continue to fall, GRUMA b Outperform 244.99 4,980 BACHOCO b Mkt.Perform 69.95 1,970 would show a clear recovery from what was observed in the Q2. LALA b Outperform 13.06 1,518 In the case of beverage companies, we expect double-digit growth in EBITDA for AC (e. 6), which we believe should give a clear boost to its share price.

In the case of KOF and FEMSA, although they could report a decrease in EBITDA, we believe that the signs of recovery, both in volumes and in profitability, should also help improve investor confidence. Lastly, if BIMBO manages to demonstrate that growth Relative Performance Since COVID Outbreak E. 3

is sustainable (e. 4), the market will realize that the valuation is 160 now cheaper even if its share continues to rise. 150 140 130 120 110 100 90 80 70 60 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20

IPC AC BACHOCO BIMBO CUERVO FEMSA GRUMA KOF LALA

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Earnings Season Calendar Q3 2020

Oct 2020 Monday Tuesday Wednesday Thursday Friday 19 20 21 22 23 LALA BIMBO CUERVO1

26 27 28 29 30 KOF1 AC1 BACHOCO1 FEMSA GRUMA

1Before markets open

Data for Conference Calls

LALA Oct 20 11am EST/10am City. 1 877 705 6003 (US toll-free) 01 800 522 0034 (México, toll-free) 1 201 493 6725 (Internacional, toll) Webcast: http://public.viavid.com/index.php?id=141668

BIMBO Oct 21 6pm EST/ 5:pm Mexico City. U.S.:+1(844)450 3853. International +1(412) 317 6375 Mexico:(55)88808040 ID: Webcast www.grupobimbo.com/en/investors/pressevents/events

CUERVO Oct 23, 9am Mexico City /10am. EST Mexico Toll-free 01 800 522 0034 U.S. 1-877-407-0792 International 1-201-689-8263 ID: 13711745 Webcast: http://public.viavid.com/index.php?id=141896 or www.becle.com.mx.

KOF Oct 26, 11am EST/ 9hrs Mexico City México: 01 800 062 2962 U.S.: 888-394-8218 International: +1 323-701-0225 ID: 9876896

AC Oct 27, 10am Mexico City/12pm EST. +1-877-712-5080 U.S. +1-334-245-3009 International ID 36151

FEMSA Oct 29, 9am Mexico City /11am EST . Internacional: +1 (646) 828 8143 US: (800) 263 0877 ID 2585646

BACHOCO Oct 29 9am Mexico City(10am ET. U.S.: 1 (888) 771-4371 Mexico: 001 866 779 0965 Local Mexico: 52 55 6722 5257 Brazil: 0800 761 0710 http://web.meetme.net/r.aspx?p=12&a=ULauaiMkmstPAu

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Grupo BIMBO

A strong volume growth that should more than offset pressures in cost of sales. While the company should start to receive pressures from BIMBO.- Quarterly Estimates Exhibit 4 Consensus higher raw-material prices, we estimate BIMBO P$ M 3Q20E 3Q19 YoY 2Q20 QoQ 3Q20E YoY should continue to post double-digit growth in both, Total revenues 85,823 74,965 14.1% 86,411 -1.0% 85,127 13.6% revenues and EBITDA. Even if Mexico’s operations COGS 40,871 35,404 15.4% 39,443 3.6% should remain stable, we expect further volume % of revenues 47.8% 47.2% 45.6% growth in the and . In addition, Gross profit 44,652 39,561 12.9% 46,968 -4.9% those results in USD should also benefit from % of revenues 52.2% 52.8% 54.4% currency tailwinds. SG&A expenses 38,835 34,169 13.7% 40,092 -3.1% % of revenues 45.4% 45.6% 46.4% Op income 5,817 5,392 7.9% 6,876 -15.4% % of revenues 6.8% 7.2% 8.0% EBITDAR 11,729 10,720 14.2% 11,375 3.1% 11,534 % of revenues 13.7% 13.7% 13.2% 13.5% Net Income 2,309 1.939 19.1% 2,581 -10.5% 2,551 44.0% 2.7% 2.6% 3.0%

Coca-Cola FEMSA KOF.- Quarterly Estimates Exhibit 5 Consensus A sharp recovery in volumes but KOF is still P$ M 3Q20E 3Q19 YoY 2Q20 QoQ 3Q20E YoY facing large currency headwinds. Volumes fall- Volume (MUC) 827.4 842.13 -1.8% 780.75 6.0% ing by 1.8%YoY. In Mexico, after some quarters of Ave price $52.01 $51.61 0.78% $50.56 2.9% declines, volumes didn't fell so much in the last Total revenues $46,727 $48,292 -3.2% $43,075 8.5% 47,034 -3.4% quarter and for the 3Q we expect -2.4%YoY. For COGS $5,849 $26,808 -3.6% $24,000 7.7% South America, in Brazil volumes should had almost % of revenues 55.3% 55.5% 55.7% recovered from the 3Q19 levels, Colombia and Gross profit $20,878 $21,484 -2.8% $19,075 9.5% %of revenues 44.7% 44.5% 44.3% Uruguay should reduce declines to the single-digits, SG&A expenses $3,941 $14,556 -4.2% $3,630 2.3% and only Argentina might continue to plunge in the %of revenues 29.8% 30.1% 31.6% 3Q20. On the other hand, large currency headwinds Op income $6,594 $6,982 -5.5% $5,130 28.5% in Brazil’s reais should still drag company’s results % of revenues 14.1% 14.5% 11.9% when translated into Mexican pesos. EBITDAR $9,573 $10,002 -4.3% $8,221 16.4% 8,712 % of revenues 20.5% 20.7% 19.1% 18.5% Net Income $3,487 $4,038 -13.7% $2,115 64.9% 3,072 -28.0%

Arca Continental AC.- Quarterly Estimates Exhibit 6 Strong growth despite lower volumes. Volumes Consensus falling by 4.8%YoY. In Mexico, after two years of P$ M 3Q20E 3Q19 YoY 2Q20 QoQ 3Q20E YoY healthy growth, the comparison base is more difficult to Volume (MUC) 558.84 587.3 -4.8% 527.12 6.0% overcome and we expect a decline of 3.8%YoY. In the Ave price $74.02 $67.69 9.4% $76.75 -3.6% Total revenues $43,960 $42,415 3.6% $42,945 2.4% 45,422 7.1% United States we estimate volumes falling by 1.1%, but COGS $24,178 $23,306 3.7% $23,595 2.5% South America should reflect the strongest recovery; % of revenues 55.0% 54.9% 54.9% while Peru might still show double-digit declines when Gross profit $19,782 $19,109 3.5% $19,349 2.2% compared to the previous year, the performance should % of revenues 45.0% 45.1% 45.1% be much better when considering the 35%yoy plunge SG&A expenses $13,630 $13,391 1.8% $13,825 -1.4% registered in the 2Q20. On the other hand, we expect % of revenues 31.0% 31.6% 32.2% double-digit growth in EBITDA coming from higher Op income $6,002 $5,527 8.6% $5,487 9.4% average prices in local currencies, and in the US % of revenues 13.7% 13.0% 12.8% EBITDAR $9,019 $8,024 12.4% $8,235 9.5% 8,523 segment the average price when translated into % of revenues 20.5% 18.9% 19.2% Mexican pesos will improve even more. Net Income $2,943 $2,733 7.7% $2,335 26.0% 3,085

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FOMENTO ECONOMICO MEXICANO

The COVID-19 pandemic should continue to impact FEMSA’s business units, we expect a FEMSA. - Quarterly Estimates Exhibit 7 slow recovery at OXXO’s stores. While we expect Consensus a healthy recovery from the 2Q20’s low levels, we P$ M 3Q20E 3Q19 YoY 2Q20 QoQ 3Q20E YoY still expect negative effects from social distancing Total revenues 122,298 130,271 -6.1% 114,514 6.8% 125,867 -3.5% measures that should continue to translate into a COGS 75,084 81,469 -7.8% 70,970 5.8% slow recovery at both Oxxo’s same-store-sales and % of revenues 61.4% 62.5% 62.0% store openings as well. On the other hand, we expect Gross profit 47,214 48,802 -3-3% 43,544 8.4% strong results in the Health Division and in the recent % of revenues 38.6% 37.5% 38.0% investments, the minority stake in Jetro Restaurant SG&A expenses 31,064 30,702 1.2% 30,165 3.0% % of revenues 25.4% 23.6% 26.3% Depot and the majority stakes in WAXIE Sanitary Op income 10,865 12,621 -13.9% 7,456 45.7% Supply and North American. % of revenues 8.9% 9.7% 6.5% EBITDAR 18,334 19,732 -7.1% 15,136 21.1% 17,411 % of revenues 15.0% 15.1% 13.2% 13.8% Net Income 5,405 7,277 -25.7% -11,692 n.s. 5,389 -21.9%

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