By Robin Emmott and Gabriela Lopez
MONTERREY, Mexico (Reuters) - Mexican conglomerate Alfa aims to make more acquisitions this year and generate record income levels next year, the company said on Wednesday.
Alfa (ALFAA.MX: Quote, Profile, Research, Stock Buzz), whose businesses range from petrochemicals to cold meats and telecoms, told the Reuters Latin American Investment Summit in Monterrey it expected record earnings before interest, taxes, depreciation and amortization, or EBITDA, of more than $1 billion a year from next year.
That compares with EBITDA of $765 million in 2006 and a previous record of $825 million in 1998, according to company data.
"This year is a watershed (for Alfa), given that in 2006 we took strategic decisions to really boost the company," Chief Financial Officer Alejandro Elizondo said in an interview, referring to Alfa's expansion in aluminum and auto parts.
So far this year, Alfa has bought 10 auto parts plants in Europe, Latin America and the United States from Italy's Teksid Aluminum and Norway's Norsk Hydro (NHY.OL: Quote, Profile, Research, Stock Buzz).
Elizondo said the company aims to buy two more auto parts plants, in Poland and China, from Teksid in the next few months as it bets on growing demand for cars in Asia and Europe.
"We estimate that once all the acquisitions are integrated and we have about 12 months of operations behind us, we will be at EBITDA levels of above $1 billion," Elizondo said, adding that he expects to complete the process in the second quarter.
Elizondo said the company would also benefit from lower international commodity prices over the next few years and a stronger cash flow that could lead it to buy companies in other business areas, such as cold meats.
"We have a growth program for our Sigma refrigerated food unit that contemplates acquisitions in meats and cheese ... but we are not going to rush that plan because we don't want to overpay for assets," Elizondo said.
EXPANDING IN MEATS, TELECOMS
Alfa plans to open a new U.S. cold meats plant in Oklahoma next year to target the Hispanic market. But it sees Sigma's U.S. sales growth slowing slightly in percentage terms compared with a 60 percent expansion in 2006 as the company consolidates its position in the United States.
In telecoms, Elizondo said growth at its Alestra unit is solid, with possible 10 percent growth in EBITDA by its corporate subscriber base this year compared with 2006.
The company also sees strong demand for its petrochemical products such as polypropylene, which is used in everything from food packing to clothing, he added.
The rosy outlook for the company means that Alfa expects to announce a 2007 dividend of around 9 U.S. cents a share next week, similar to 2006 , but which should keep rising.
"It is very probable that this year's dividend will be in line with last year's ordinary dividend. It is going to be similar to 9 cents," Elizondo said. "Ideally, we want to see our dividend showing growth," he added.
(For more on the Reuters Latin American Investment Summit, see ID:nN15302956
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