Economic Performance - KUO - Annual Report 2025

IMPULSE

Message from the Chairman of
the Board and Chief Executive Officer

How to read this report

HOW TO
READ THIS
REPORT

GRI 2-3, 2-4

We present our ninth Integrated Annual Report, in which we reaffirm our ongoing commitment to sustainable management and transparent disclosure, in line with the strategic priorities that shape our Sustainability Model.

In this document, we report on our progress in managing Environmental, Social and Corporate Governance impacts, as well as the most relevant financial and operational results for the year.
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The Report details our sustainability performance during 2025, with a focus on continuous improvement and innovation in our business practices, aimed at generating long-term value for both our shareholders and all our stakeholders.

The printed version of this Report serves as an executive summary of the most relevant messages, results, and milestones of the year. To access the extended and detailed version—including expanded content and technical appendices—we invite readers to visit our website, where the complete Report is available.

Below the title of each chapter, we indicate the applicable GRI Standards and SASB metrics, as appropriate.
The Download section of the digital version includes the appendices corresponding to the main sustainability indicators, the GRI and SASB content indexes and relevant financial information.

For any additional information related to the content of this Report, please visit our website at www.kuo.com.mx or direct further inquiries to:

Corporate Headquarters
Paseo de los Tamarindos 400-B, Piso 31,
Bosques de las Lomas, Mexico City, CDMX,
Zip Code 05120
ir@kuo.com.mx

Leadership and Responsible Management

Sustainability Vision and Strategy

Risk Management and Monitoring

People

Community

Environmental Management

Economic
Performance

GRI 201-1

During 2025, we recorded an increase in our proforma revenue, reflecting our strategy focused on driving sustainable growth across all our divisions, as well as the continued strengthening of innovation in the products and services we offer through our various business lines.

The Consumer sector showed solid performance, mainly supported by the Pork Meat Business, as a result of improvements in operational efficiency and lower raw material costs. Additionally, Herdez del Fuerte contributed positively through process optimization and the implementation of pricing strategies that strengthened the segment’s overall performance.

In a global context marked by the reconfiguration of supply chains, we maintain a diversified international presence, with assets and operations in the United States, Spain, China, and Belgium, which strengthens our operational and commercial base. This participation across multiple markets expands opportunities, while also requiring active management of economic, political, and regulatory risks.

In contrast, we faced more challenging environments driven by external factors that led to highly competitive market conditions, particularly in the Industrial sector. In Transmissions, we experienced lower demand in North America, as well as impacts from tariffs and the appreciation of the Mexican peso against the U.S. dollar, which pressured margins. Likewise, the Polymers and Synthetic Rubber businesses faced adverse effects from increased Asian supply. Despite these challenges, we maintain a solid financial position that supports our ability to adapt and execute in an increasingly dynamic market environment.

Our performance in 2025 reflects disciplined financial management and prudent risk management, through which we achieved one of the lowest leverage levels in our history, with a net leverage ratio of 1.18x. In September 2025, we made an early repayment of our international bond, which allowed us to optimize our debt profile, strengthen our financial position, and foster greater flexibility to navigate a volatile environment.

These actions translated into improved operating performance. At the end of 2025, pro forma operating cash flow reached $5,021 million pesos, driven mainly by lower feed costs, operational efficiencies, and improved pricing in the Pork Meat Business, as well as lower tomato prices and operational efficiencies at Herdez del Fuerte. This was partially offset by pressures in the Transmissions business, associated with tariffs, exchange rates, and distribution costs.

In this environment, foreign exchange management is a key element. Since the Mexican peso and the U.S. dollar are our main functional currencies, and their fluctuations can affect the competitiveness of our exports, the cost of inputs, and, consequently, profitability. As a significant portion of our revenue is generated in dollars, we reinforce our financial strategy through an appropriate dollar-denominated debt structure, which helps reduce exposure and volatility associated with exchange rate movements.

At the same time, we continue to drive investment in productive assets to strengthen operational capabilities and efficiencies. Notable is the investment in the Pork Meat Business, focused on farm maintenance and the acquisition of equipment for process automation.

At Synthetic Rubber, we completed construction of the SSBR rubber production line in Santander, Spain, and in Altamira, we allocated resources to upgrade the wastewater treatment facilities. At Herdez del Fuerte, investments were directed toward strengthening production capacity and improving operational efficiency.