Alicorp: Consumer goods

The Company

Alicorp is a leading manufacturer of branded products based in Peru, with operations in Argentina, Brazil, Chile, Colombia and Ecuador. It is listed on the Lima Stock Exchange and represents 4.44% of the General Index (IGBVL). The company has over 153 family brands in 16 categories in the consumer goods segment, 14 brands in the food industry and two brands of fish and shrimp feed. Its majority shareholder, the Peruvian Romero family, owns 45.3% of shares. Peruvian pension funds and others represent 29.8% and 24.9% of total shares, respectively.

In the consumer goods segment, Alicorp produces margarines, mayonnaise, sauces, biscuits, pasta, juices, baking flour, jelly, pet food, washing powder and laundry detergent. As for industrial products, it produces flour, pre-mix, edible oil and shortening. In the animal nutrition segment, it makes shrimp and fish food. 59% of the company’s revenues are derived from the consumer goods segment, 27% from the industrial products unit and 14% from animal nutrition.

In the second quarter of 2013, the company’s revenues for the last twelve months (LTM) totalled $1.96bn, 20% more than in the second quarter of 2012. Net income LTM fell 21% year-on-year to $95.6m. Alicorp has a price-to-earnings ratio of 29.5 and offers a dividend yield of 1.2%. In the second quarter of 2013, 69% of revenues came from Peru, while 31% was earned abroad. This figure is notably higher than the 7% of revenues from abroad registered in 2005. This is in line with the geographical diversification of revenues targeted in the company’s strategy ( revenues of $5bn and a 50/50 geographical diversification by 2021). It aims to become one of the 250 largest companies operating in Latin America.

Alicorp is the leader in all its product categories in Peru. It has 96% of market share in mayonnaise, 70% in animal nutrition, 63% in margarines, 66% in juice powder, 57% in edible oils, 55% in laundry detergents, 53% in industrial baking flour, 50% in pasta, and 45% in cookies and crackers. Thanks to its continued strategy of launching new products, exploring further market segments, as well as its ambitious capital expenditure programme, Alicorp is expected to maintain its position of leadership in the Peruvian consumer goods market, where strong expansion of private consumption is forecast over the next few years. Key investments have also been made in the field of detergents, including $22m to build a new factory.

Development Strategy

Since 2007, Alicorp has been growing regionally. That year the company acquired Helados Eskimo, which produces and sells ice cream, and renamed it Alicorp Ecuador. This unit also imports, exports, produces and sells a range of other consumer goods. In 2008 Alicorp acquired The Value Brand Company in Argentina, a producer of personal care products that has a significant market share in Argentina. In the same year Alicorp also acquired Propersa, a Colombia-based company that produces personal care products. In 2010 the firm acquired Sanford in Argentina, a producer of biscuits and pound cakes. In 2011 Alicorp continued its expansion strategy and acquired Italo Manera y Pastas Especiales in Argentina, which produces and sells pastas.

In 2012 Alicorp acquired Salmofood, a fish feed producer in Chile; UCISA, an oil and fat producer; and Industrias Teal, a consumer goods producer in Peru. Further to this, in 2013, the firm acquired Pastifício Santa Amália, a leading consumer goods company in Brazil with a diversified portfolio of products that includes pasta, mixtures such as jelly and juice powder, and third-party products, for some $96m.

Alicorp plans to continue its strategy of regional expansion funded partially with new debt. In March 2013, the company was rated Baa2 by Moody’s and BBB by Fitch Ratings, and sold a $450m, 10-year bond in the international market with a coupon of 3.895%. The firm’s investment-grade rating is based on Alicorp’s solid financial metrics, including a net leverage of 2.81x, which measures net debt to earnings before interest, taxes, depreciation and amortisation.

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The Report: Peru 2014

Capital Markets chapter from The Report: Peru 2014

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