Cemex' Third Quarter 2001 Results

Second Quarter 2004 Alsea (ALSEA) Alejandra Marcos Iza [email protected] (52-55) 5169-9374

July 26, 2004

ALSEA * The Consolidation of Operadora West Price: Mx Ps 18.30 Significantly Boosts Alsea's Results

52 Week Range: Ps 18.70 to Ps 8.03 • Substantial increase in revenues to Ps 861 million. Shares Outstanding: 123.3 million However, this improvement was largely due to the Market Capitalization: US$ 196.8 million consolidation of Operadora West's results, as organic Enterprise Value: US$ 198.5 million growth was estimated to be at around 5%. Alsea's core Avg. Daily Trading Value US$ 142.0 thousand business—Domino's Pizza—which accounts for 60% of total revenues, grew 2.8% thanks to increases in the number Ps/share of orders and stores, despite the sale of 7 company-owned 2Q EPS 0.46 stores to a franchisee. This was an extraordinary event, as T12 EPS 1.30 these stores were not profitable and mostly were of the T12 EBITDA 3.56 T12 Net Cash Earnings 3.13 Express store format. Growth in Domino's Pizza Brazil was Book Value 10.21 driven by the opening of 5 new stores over the past few months, which led to an 8% increase in revenues. T12 2004e • The opening of 19 Starbucks stores since June 2003 P/E 14.03x caused sales to increase by 162%. We must note, P/BV 1.79x however, that Starbucks' results are competing against a P/NCE 5.85x low comparative base, as the company only had 9 stores in EV/EBITDA 5.18x #DIV/0! 2003.

T12 2Q04 • At Burger King, revenues were up 35%, driven by 12 new ROE 13.6% 18.1% store openings. ROA 14.8% 18.9% Interest Coverage Ratio 4.05x 40.04x Number of Stores 2Q04 2Q03 Change Total Debt to EBITDA 0.43x 0.33x Total Stores 580 531 9.20% Domino's Pizza 480 466 3.00% T12 = Trailing 12 months as of June 30, 2004 Company-Owned 306 313 ENTERPRISE VALUE (EV) = Mkt cap.+ Net Debt+ Min.Int. Franchises 174 153 NCE=Net income+Montry Loss+Fx Loss+Depr.+Deffered Tax Domino's Pizza Brazil 29 24 20.80% ROA=T12m Op.Profit to Avg. Assets Starbucks Coffee 28 9 211.10% ROE=T12m Net Profit to Avg. Equity Burger King 44 32 37.50%

ALSEA IBMV • At DIA (logistics and distribution division), quarterly 19.00 16,074 results were down 2.4%, attributable to lower revenues from Exim del Caribe, as well as the opposite effect of the consolidation of Operadora West's results. 16.00 13,624 • Costs rose 18%, due to an increase in input requirements 13.00 11,174 for the new “Double Decker” pizza launched during the quarter, new store openings at Domino's Pizza Brazil and Starbucks, and the consolidation of Operadora West. 10.00 8,724

7.00 6,274 A-03 S-03 N-03 E-04 A-04 J-04

MATERIAL DISCLOSURES AT THE END OF THIS REPORT. The information contained herein has been obtained from sources that we believe to be reliable, but we make no representation as to its accuracy or completeness. Neither Casa de Bolsa Banorte nor Banorte Securities International Ltd. accepts any liability for any losses arising from any use of this report or its contents. 1 Second Quarter 2004 Alsea (ALSEA) Alejandra Marcos Iza [email protected] (52-55) 5169-9374

July 26, 2004

INCOME STATEMENT • Substantial increase in operating expenses. The (millions of constant pesos as of June 30, 2004) strongest increases were the following: Higher advertising 1H04 1H03 Change 2Q04 2Q03 Change expenses at Domino's Pizza Mexico across the Tijuana Net Sales 1,637 1,363 20.2% 861 717 20.2% region, as competition is fierce in this area; marketing Gross Profit 948 765 23.8% 497 408 21.9% expenses in Brazil; and, the consolidation of Operadora EBITDA 241 210 15.1% 140 123 14.3% West. The increase in fixed expenses was mainly Operating Profit 154 132 17.1% 97 82 17.9% ICF 1 4 -76.8% 1 1 121.0% attributable to higher wages and salaries, in turn derived Interest Expense 7 10 -26.6% 4 5 -23.4% from new unit openings (mostly Starbucks), coupled with Interest Income 4 5 -19.4% 3 2 4.6% store repair and maintenance expenses. As a result, Foreign Exchange Loss -1 1 #N/A 0 -2 #N/A EBITDA grew by 14%. Monetary Loss -1 -1 7.3% 0 0 -95.8% Other Financial Expenses -0 20 #N/A -0 16 #N/A • Despite higher costs and expenses, operating profit Pretax Income 153 107 42.9% 95 66 44.8% rose 18%. Gross margin improved to 57.8%, thanks to a Taxes 58 31 89.9% 33 15 126.3% Non-Cons. Subsidiaries 1 5 -84.4% 1 3 -79.7% Ps 2.7 million increase in DIA's gross profit, in turn Extraord. Items (gains) -2 26 #N/A 1 27 -94.8% attributable to a favorable shift in sales mix. Operating Minority Interest 7 -2 #N/A 4 -1 #N/A margin, however, contracted by 20 bp. Net Income 91 57 58.2% 57 28 104.5% • Net income rose 104%, with the margin expanding by 270 Gross Margin 57.9% 56.2% 57.8% 56.9% bp. This was mainly due to the consolidation of Operadora Ebitda Margin 14.7% 15.4% 16.3% 17.1% West and the aforementioned increases in sales. Another Operating Margin 9.4% 9.7% 11.2% 11.4% Net Margin 5.5% 4.2% 6.6% 3.9% contributing factor was that last year, under the other financial expenses line item, the company recorded the A/R Turnover (days) 17 23 proceeds from provisions for assets write-offs under Inventory Turnover Domino's Pizza's equipment renovation program, as well (days) 24 29 A/P Turnover (days) 46 39 as research and development consulting fees in Brazil. WC net of debt to Sales 7.6% 7.6% • Interest-bearing debt was up 12% due to the incorporation BALANCE SHEET of Operadora West's debt. However, Alsea continues to (millions of constant pesos as of June 30, 2004) reinforce its solid financial position. In June, Fitch Jun-04 Mar-04 Jun-03 Ratings upgraded its rating on Alsea's notes from “AA- Total Assets 2,042 1,934 1,624 (mex)” to “AA(mex)”. Cash & Equivalents 302 201 122 Other Current Assets 277 319 293 Long Term 3 2 63 • Alsea seems to have an interesting outlook, with similar Fixed (Net) 1,108 1,066 856 growth figures expected for the rest of the year, as Deferred 326 302 271 comparative bases will still be low given Operadora Other 26 44 20 West's recent consolidation. With improving economic Total Liabilities 647 528 470 conditions in Mexico, as well as Alsea's aggressive Short Term Debt 145 126 32 expansion program and brand positioning, the company is Other Current Liab. 331 225 208 set to continue to post strong results. Long Term Debt 42 30 135 Other Liabilities 129 147 95 Shareholders Equity 1,395 1,406 1,154 Minority Interest 135 131 45

FINANCIAL ANALYSIS Current Ratio 1.2x 1.5x 1.7x ST Debt to Totl Debt 77.7% 80.7% 19.4% Foreign Liab/Totl Liab 9.4% 8.4% 8.4% Net Debt/Total Equity -8.3% -3.1% 3.9% Totl Liab./Totl Equity 46.4% 37.6% 40.7%

Upgrading Target Price BUY Re ite r ate d from Ps 18.00 to Ps 25.00. $25.00 Initial Opinion: Long-Term BUY SELL 0% $20.00

$15.00

HOLD 36% $10.00

Downgraded $5.00 Downgraded to BUY to HOLD Upgrading Target Price Upgraded to BUY 64% to Ps 25.20. STRONG BUY $- 1 1 1 2 2 1 2 0 0 0 0 01 02 01 0 0 ------t-0 r r g- g- b b n n ec- Oc Fe Ap Ju D Fe Ap Ju

Au Au 0% 20% 40% 60% 80%

Analyst Certification I, Alejandra Marcos Iza, hereby certify that the views expressed in this research report accurately reflect my personal views about the subject company(ies), its (their) affiliate(s) and its (their) securities. I also certify that I have not been, am not, and will not be receiving direct or indirect compensation in exchange for expressing the specific opinion(s) in this report. Material Disclosures Casa de Bolsa Banorte and its affiliates, including Grupo Financiero Banorte, provide a vast array of services in addition to investment banking, such as corporate banking, among others, to a large number of corporations in Mexico and abroad. The reader should assume that Casa de Bolsa Banorte or its affiliates receive compensation for those services from such corporations. Under Mexican laws currently in force, Research Analysts are permitted to directly hold long positions in shares of companies listed on the Bolsa Mexicana de Valores and mutual funds. However, Research Analysts must keep observance of certain bylaws that regulates their participation in the market preventing, among other things, misuse of private information in their own benefit.

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