This has been an exceptional year for our Company, marked by numerous successes and significant growth in our main financial metrics. In addition to the positive impact of our sustainable growth strategy, backed by a dynamic business portfolio and a solid presence in various sectors and geographies. These strengths allowed us to successfully adapt to a global environment full of challenges and opportunities, consolidating us as an organization that prioritizes sustainability, innovation and positive impact towards all our stakeholders, aligned with our mission of Creating Value.

Global context
‍Throughout 2024, the global environment experienced various challenges arising from political and economic uncertainty in different regions, as well as key transitions affecting the international situation. Furthermore, disruptions in supply chains and inflationary pressures persisted in critical sectors.

In Mexico, macroeconomic stability was maintained, supported by greater integration with the North American bloc through the USMCA. However, there were internal challenges, such as the appreciation of the Mexican peso against the US dollar in the first half of the year, which affected the competitiveness of our exports and had an impact on the conversion of revenues from the Group in international markets, directly affecting the financial results.

Nevertheless, and facing a volatile economic environment, we were able to adapt and capitalize on our strengths. The actions implemented not only boosted our position in key markets, but also resulted in tangible results, such as progress in strategic sectors and the strengthening of our operational capacities, laying the foundations for sustainable and competitive long-term development.

During 2024, the Consumer sector stood out, especially the Pork Meat Business, having achieved its best historical performance, generating a significant impact on the results at the Operating Profit and EBITDA level. This result is attributed to a solid strategy focused on operational efficiencies, a decrease in raw material prices, high sustainability standards and an integrated value chain, from gestation to commercialization and the circularity of resources. With a retail network of around 450 Maxicarne stores throughout Mexico, our distribution capacity and proximity to the customer were key to meeting growing demand.

Additionally, recognition for the quality of our pork in both domestic and export markets, together with our strong presence, reinforced our leadership position in the sector and consolidated our competitiveness at the international level. Likewise, both domestic and export market recognition of the quality of our pork, together with our solid presence, endorsed our leadership position in the sector and consolidated our competitiveness at the international level. Especially in Japan, where we are the largest individual Mexican supplier of pork, reinforcing our presence and leadership in one of the most demanding markets in the world.

The Herdez del Fuerte business significantly contributed to the results in the Consumer sector, with outstanding performance in the tomato puree, sauces and guacamole categories, which continued to show strong preference in both Mexico and the United States. However, we faced pressures in the US market due to increased raw material costs, particularly avocados, which affected this segment’s profitability. Despite these challenges, the quality of our products and the strength of our brands, as well as our strong focus on innovation, were decisive in maintaining positive results.

Across the Industrial sector, the Synthetic Rubber, Polymers and Transmissions businesses faced a challenging environment, but nevertheless made significant progress in several areas. At Synthetic Rubber, we made progress towards the completion of a new production line in Spain, which will strengthen our global competitiveness. Additionally, Dynasol, our joint venture with Repsol, celebrated 25 years, consolidating its leadership in the industry. At Polymers, we are promoting circularity and sustainability initiatives, together with a reduction in operating costs, reinforcing our value proposition.

Meanwhile, the Transmissions business faced significant challenges during the year due to lower volumes in some OEM and aftermarket applications, which impacted its performance.

The Consumer sector accounted for 57% of total revenues, the Industrial sector contributed 43%, while Exports represented 54% of total revenues.

Financial and operational performance
During 2024, proforma consolidated revenues reached $51,872 million, representing an increase of 5% over the previous year, mainly explained by the outstanding performance of the Pork Meat Business, higher sales in the Chemical sector businesses, as well as lower sales in the Transmissions business.

Beyond this, Herdez del Fuerte experienced increased demand for its main product categories, particularly tomato puree, sauces, vegetables and mole in Mexico, as well as guacamole in the United States.

These factors, together with better sales prices, greater volume and operational efficiencies in the Pork Meat Business, as well as a higher level of volume in applications in the Chemical sector businesses, generated an increase of 42% over the previous year in the proforma consolidated Operating Cash Flow, which reached $4,630 million.

Revenues in the Consumer sector increased by 6% compared to the previous year, due to better prices and higher sales volume in the main distribution channels of the Pork Meat Business. In addition, Herdez Del Fuerte achieved higher volume in the main categories. At the Operating Cash Flow level, there was significant growth of 81%, which can be explained by the solid performance of the Pork Meat Business, where better prices and higher sales volumes were observed, as well as operational efficiencies, in addition to a favorable mix in Herdez Del Fuerte, despite higher raw material costs, especially the price of avocado.

Industrial sector businesses registered a 3% growth in revenues due to better prices and higher application volume, which offset lower demand in Transmissions. At the Operating Cash Flow level, there was a slight increase compared to the previous year due to higher volume and the favorable mix of applications in the Chemicals business, as well as operational efficiencies, which was partially offset by lower demand in the Transmissions business, as well as higher expenses.
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Portfolio optimization
One of the most significant milestones of this year was the completion of the Automotive Aftermarket business sale to Frasle Mobility. This strategic operation reflected our commitment to portfolio optimization, prioritizing businesses with greater potential for growth and sustainable value creation. The resources obtained were used to strengthen our capital structure, including debt prepayments, investments in strategic projects and other corporate purposes.

We would like to recognize and acknowledge the dedication of the Aftermarket team, whose effort and professionalism were key to its success during the years it was part of KUO. Their contribution has left a significant impact on our story, and we are convinced that this transaction will enhance the development of all parties involved.

Sustainabilityas a core strategy
‍Sustainability is a guiding principle for the company’s strategic decisions and a central element in guaranteeing operational continuity, competitiveness and the generation of long-term value.

During 2024, we carried out a comprehensive update of our dual materiality analysis, allowing us to identify and prioritize the issues that generate the greatest value for our stakeholders.

Key issues include product safety and quality, efficient water management, health, safety and well-being at work, as well as the reduction of Greenhouse Gases (GHGs). In addition, we are making progress in aligning with international standards, reinforcing our capacity to manage climate risks and improving the resilience of our strategy in different scenarios.

These actions not only strengthen our business model but also consolidate our positive contribution to the environment and the communities in which we operate. At KUO, we believe that sustainability is a continuous journey, and we are committed to constantly improving our practices to generate a positive long-term impact.