HSBC 2006
Mexico Conference
DESC
During this presentation management might discuss forward-looking
statements which reflect the current opinions of DESC regarding
future events. The words “anticipate,” “believe,” “expect,” “hope,”
“have the intention of,” “might,” “plan,” “should” and similar
expressions generally indicate comments on expectations. These
comments are subject to risks, uncertainties and changing
circumstances. The final results may be materially different from
current expectations due to several factors, which include, but are
not limited to, global and local changes in politics, the economy,
business, competition, market and regulatory factors, cyclical trends
in the automobile parts and chemical sectors; as well as other
factors. DESC has no obligation whatsoever to update these
comments on expectations.
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DESC
Unless otherwise noted, the results in this report are being
compared to adjusted 2003 and 2004 results, which are pro forma
since they exclude DESC’s Constant Velocity Joint, Valve Lifter and
Acrylic Laminate businesses to make them more comparable with the
2005 results.
Management believes that investors can better
evaluate and analyze DESC’s historical and future business trends on
a comparative basis if they consider results of operations without
these divested businesses.
¿Who we are?
DESC currently has 13,200 employees, distributed
among the corporate area and four sectors.
2005 annual sales total more than US $2.2 billion
which includes exports of over US $1 billion:
¿Who we are?
SALES
1,959
2,216
1,717
2003
2004
Domestic
Millions of Dollars
2005
Exports
EBITDA
170
199
127
2003
Millions of Dollars
2004
2005
NET DEBT
62
43
990
44
674
2003
2004
Net Debt
Millions of Dollars
587
2005
Cash
DEBT PROFILE
315
231
200
185
105
110
54
2006
Millions of Dollars
130
16
2007
Dec 2004
2008
2009
Dec 2005
1
2010
Core Business
Chemical
Real Estate
Automotive
Consumer
Chemical
Chemical
Business
Only Mexican producer of synthetic rubber and carbon
black; Mexico’s leading producer of polystyrene and phosphates.
Manufactures 6 product lines, at 8 plants
located in 4 states of
Mexico and one in Spain , using propietary technology and third parties.
Sales: Exports products to 40 countries.
Main Customers:
Procter & Gamble, “La Corona” , Coca-Cola Company, Koch,
Michelin, Central de Bolsas Jaguar (Pactiv), Cooper Tire & Rubber, Rubber Company
“Tornel”, Bridgestone-Firestone, Total-Fina-Elf among others.
Products and Aplications
PRODUCTS AND APPLICATION
Synthetic Rubber
Plastics, tires, pavements
Phosphates
Detergents
Polystyrene
Disposable cups and plates , packing
Carbon Black
Tires
Chemical
SALES
842
729
595
405
341
276
319
2003
Domestic
Millions of Dollars
388
437
2004
2005
Export
Chemical
Chemical
EBITDA
64
50
37
0
2003
Millions of Dollars
2004
2005
Chemical
Automotive
Business
Automotive
Manufactures and sells several autoparts and components in 14 plants throughout
Mexico and 1 in the U.S. In 2005 DESC announced a JV agreement between CIE
Automotive and DESC Automotive to encourage a strategic relation in the
manufacturing of automotive parts.
Products
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•
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•
•
Light and heavy transmissions.
Stamping.
Pistons,pins and seals.
Wheels.
Aftermarket.
*
*
*
*
Propeller shafts.
Axles.
Gears.
Forging.
*JV with Dana
Main Customers: General Motors, Ford, Renault-Nissan, DANA, Eaton,
International, DCX, Hummer, among others.
Automotive
Products and Aplications
PRODUCTS AND APPLICATION
Ring Gear
Pistons
Axles
Manual Transmissions
Automotive
Products and Aplications
PRODUCTS AND APPLICATION
Stamping, Painting & Assembly
Axe Tube
Gears
End Yokes and Diff. Cases
Automotive
Products and Aplications
PRODUCTS AND APPLICATION
Diesel and Gas Pistons
Seals
Steel Wheels
Automotive
SALES
755
654
591
431
394
498
197
223
257
2003
2004
2005
Domestic
Millions of Dollars
Export
Automotive
Automotive
EBITDA
60
2003
Millions of Dollars
51
51
2004
2005
Automotive
Consumer
Business
Consumer
With 4 plants located in Mexico, this business produces and distributes a wide
variety of non-perishable products such as tomato puree, canned vegetables, corn
oil, tuna, coffee, chili, hot sauces, among others under the brands “Del Fuerte”, “La
Gloria”, “Embasa”, “Nair”, “Smuckers” and “Blason”.
In the U.S. under the brand “La Victoria”, the Branded Food Business mainly sells
hot salsas and chiles with an excellent market share in the west coast.
Main Customers:
Wal Mart, Sam’s Club, Casa Ley, Soriana, Comercial
Mexicana, Gigante, Kroger, Costco, US Food Service, among other retail stores, both
wholesale and retailer.
The particle board Business which includes Wood Plantations is distributed among 3
facilities in Mexico as well as in 12,000 eucalyptus acre. Exports are mainly focus in
the United States.
The Pork Meat Business includes from the production of feed stock to the
commercialization of pork meat.
Consumer
Products and Aplications
PRODUCTS
U.S.A Products
Salsas
Chiles
Particle Board
(Rexcel)
Consumer
SALES
506
462
124
406
118
108
344
298
2003
2004
Domestic
Millions of Dollars
382
2005
Exports
Consumer
Consumer
EBITDA
55
60
31
2003
Millions of Dollars
2004
2005
Consumer
Real Estate
Business
Real Estate
Mexico’s most prestigious real estate development company was
founded in 1978, oriented to the real estate projects for the
highest income sector in Mexico, establishing world quality
projects in residential, commercial, leisure and corporate real
estate developments.
Dine’s specialties are:
– High income market segment
– Unique developments
– Large scale projects
Real Estate
– High specifications, design and quality
Real Estate
Project Pipeline
Mexico City
•
•
•
•
•
•
•
•
•
•
Bosques de las Lomas,
La Estadia,
Santa Fe Shopping Mall,
Corporativo Arcos Bosques,
Hacienda de las Palmas,
Santa Fe Land Reserve,
La Punta Bosques,
Bosques de Santa Fe,
Bosques de Santa Fe Condos,
Lagos de la Estadía,
1972 - 1989 Residential
1975 - 1977 Residential
1990 - 2001 Retail
1991 - 2004 Office
1993 - 1995 Residential
2001 - 2004 Commercial
1993 - 1996 Residential
1998 - 2005 Residential
2006 Residential
2006 Residential
Pacific Coast Resorts
• Punta Ixtapa Phase 1,
• Punta Mita,
– Four Seasons Hotel,
– J.Nicklaus Golf Course,
• Punta Gorda,
• Punta Ixtapa Phase 2,
1992 - 1996 Residential
1994 Residential
1998 - 1999
1998 - 1999
2006 Residential
2006 Residential
Real Estate
Punta Mita
Real Estate
Punta Mita
Project Overview
• Punta Mita is a tropical sanctuary that encompasses more than 1,500
acres on a majestic peninsula surrounded on three sides by 9.5 miles of
pristine shoreline. Occupying a premier location on the Pacific Coast of
Mexico in the northern tip of Banderas Bay and a leisure drive from
Puerto Vallarta.
• The development is 100% owned by Desc with project partnership with
Four Seasons, Starwood, Strategic Hotel Capital, Casa Mexicana/AIG,
Inspired developments, B.W. and Others.
• The master plan includes:
– 3 luxury hotels
– 3 Championship Golf Courses
– 5 Beach Clubs, an equestrian facility, pier and wellness center
– 1,100 residential units in different gated communities.
Real Estate
Market
Punta Mita
• Punta Mita’s natural market is the Southern, Western and Mid-western
United States, being just a few hours from San Francisco, Los Angeles,
Dallas and other main US cities.
• There is a particularly large demand for resort developments with luxury
hotels and world-class golf courses in a gated community.
• Punta Mita satisfies the requirements
of our clients by offering:
– Ready to use residential units,
– Residential homesites for single
family,
– Multifamily residential lots for
developers.
Real Estate
Current Status
Punta Mita
Resorts and Hotels:
• A Four Seasons Resort with 170 rooms and a
Jack Nicklaus Signature Golf Course are in
operation since December 1999. Dine is
developing 60+ whole ownership Four
Seasons villas averaging 3 M dollars and a
fractional project is under construction with 38
units.
• A 2nd Four Seasons hotel with 70 suites and
aditinional villas are in planning stages.
• A St. Regis Resort, including a 120 room
deluxe hotel schedule to open late 2007 is
under construction,St Regis branded
fractional units and villas will complement this
resort.
Real Estate
Punta Mita
Current Status
Residential Homesites:
• The first five developments with 86 residential
homesites are soldout. The next development consists
of 31 statelots averaging over 3 M dollars per unit.
Ready to use residential units:
• 20 Four Seasons villas are sold out. Phase 3
consisting of 12 villas are under development.
Third party projects under development:
• Hacienda de Mita 100 oceanfront condos, avg. price 1.0 M usd - Mexican
developer.
• El Encanto 68 villas and townhouses, avg. price 2.0 M usd - Mexican developer.
• Las Palmas 100 villas and condos, avg. price 1.5 M usd - American developer.
• Porta Fortuna 70 residences and condos, avg. price 2.5 M usd - American
developer.
Real Estate
Current Status in Other Projects
Bosques de Santa Fe
• More than 98% of the single-family lots and 55% of the apartment units are
already sold.
• Dine plans to develop 150, 1.0 M dollar luxurious apartments:
Punta Gorda
• The project is located 6 miles west of San José del Cabo and just a 10
minute drive from the international airport.
• In its 1,850 acres of land with 4 miles of coast-line, the master plan
contemplates a 27 hole golf course, single family lots and villas with
great ocean views.
• Dine owns a 50% interest and has a joint venture with a local developer
with broad experience in the area.
Real Estate
Future Overview
What’s Next
• The company is currently in a deep analysis process in order to consider
participating in the following real estate segments:
– Middle income housing.
– Commercial malls.
– Industrial parks.
Real Estate
SALES
105
2003
Millions of Dollars
111
2004
116
2005
Real Estate
Real Estate
LAND BANK
(Book Value)
324
292
263
2003
Millions of Dollars
2004
2005
Real Estate