2023
ANNUAL REPORT
A
N
NUAL R E P
O RT
TABLE OF CONTENTS
2
3
ARMANDO GARZA SADA
CHAIRMAN OF THE BOARD
GRI: 2-22
TCFD: GOVERNANCE
MANAGEMENT
4
JORGE P. YOUNG
CERECEDO
CHIEF EXECUTIVE OFFICER
Dear Shareholders,
Throughout 2023, Alpek faced a major
shift in market dynamics on the heels
of a record breaking 2022. While
the first quarter was promising, with
strong reference margins and stable
volume figures, the following months
were accompanied by challenging
conditions. As freight rates returned
to historical norms amid slower-than-
anticipated economic growth in China,
there was global oversupply in the
petrochemical industry that intensified
competition, thereby impacting
the Company’s results, mainly in
the polyester and EPS businesses.
Furthermore, domestic Polypropylene
margins were affected as the North
American market adjusted to the recent
start of new capacity in the region.
In response to this environment, during
the second quarter Alpek adjusted
Guidance figures in line with a more
conservative outlook. Difficult conditions
endured however, leading to an
annual Comparable EBITDA of U.S. $734
million, a 47% decline compared to
the previous year, and 5% below the
revised Guidance. This figure includes
a non-cash effect derived from re-
expressing full-year Argentina results
under IFRS hyperinflation accounting,
which was present throughout the year,
with a greater impact in December, as
there was also a domestic currency
devaluation. Volume figures totaled
4,635 thousand tons, decreasing by 8%
year-over-year, yet in line with Guidance
figures.
To navigate these global effects, Alpek
implemented a comprehensive set
of initiatives aimed at improving the
Company’s competitiveness and
optimizing its free cash flow. These
included:
• Cost Competitiveness: After thoroughly
analyzing initiatives geared towards
enhancing the Company’s competitive
position across its operations, in 2023,
several projects were set in motion
focused on reducing variable costs,
primarily through improvements in
raw material procurement and energy
efficiency. In a move to address fixed
costs, a difficult decision was made to
reduce personnel mainly in our largest
business segment. These endeavors
are estimated to conclude in 2024,
with anticipated run-rate savings of
approximately U.S.$35 million per year.
Furthermore, Alpek will continue to
evaluate new opportunities for further
cost reduction in the year.
5
years, totaling U.S. $408 million. Given the
adverse global impacts of destocking,
imports rising, and a reduction in demand,
this was a significant accomplishment
for our Company. This Free Cash Flow
enabled us to partially overcome
the circumstances. At the annual
Shareholders’ Meeting held in March, a
payment of U.S. $159 million was approved,
therefore maintaining a 7.2% dividend yield.
In 2023, Alpek maintained its investment
grade ratings with a Stable outlook across
all agencies. It is crucial to emphasize
that despite concluding the year with a
leverage of 3.4 times, we remain firmly
committed to reducing leverage levels
to a target of below 2.5 times. We are
dedicated to executing the necessary
measures to achieve this goal and
ensuring our long-term financial strength.
U.S.
$408
MILLION
OPERATING FREE
CASH FLOW
• Footprint Optimization: Making two difficult decisions in 2023 - halting the PET resin operations at the Cooper River site in South Carolina while transferring its production to other facilities, and shutting down its filament facility located in Monterrey, Mexico. These optimization measures in the polyester operations are anticipated to deliver substantial cost reductions, exceeding U.S. $40 million on an annualized basis.• CAPEX Rationalization: Reducing by U.S. $168 million its investments when compared to the initial guidance of U.S. $445 million without affecting the execution of key projects. Additionally, and in collaboration with its joint venture partners, Alpek paused the construction of the integrated PTA-PET plant in Corpus Christi, Texas. This decision was driven by the impact of high inflationary rates, which caused construction and labor costs to exceed original projections.• Working Capital Reduction: Realizing a substantial improvement in its working capital of U.S. $596 million. This achievement was primarily attributed to lower prices and the implementation of key measures focused on inventory optimization, operational discipline, and supply chain management.• Debt Refinance: Successfully securing its first Sustainability-Linked loan, amounting to U.S. $200 million. This financing arrangement enables Alpek to efficiently refinance its outstanding balance from the 2023 bond, which was due last August and scheduled to mature in 2028; it also aligns with the Company’s commitment to environmental and social responsibility. This initiative improved Alpek’s average debt maturity to 5.2 years. Through these actions, Alpek successfully maintained a robust level of operating Free Cash Flow consistent with previous Remarkable ESG Results
ESG initiatives continue to gain momentum. This year Alpek made important strides
in reaching its targets, including the following achievements:
1
2
3
OCCUPATIONAL SAFETY:
Accomplished a TRIR indicator
that was 27% lower than the
previous year and aligned with
our Occupational Safety Target to
reach top-decile in the industry.
CARBON EMISSIONS
& ECO-EFFICIENCY:
Progressing towards our SBTi
(Science-Based Targets initiative)
goals, we achieved a 27% reduction
in CO2 emissions from our 2019
base. This was partly attributed to
our footprint optimization and the
integration of carbon-free energy
in operations across three of our
businesses.
SUSTAINABILITY
& CIRCULARITY:
The EPS business made progress in
this front with the development of
six different recycled and biobased
products with certifications for
all. Additionally, our biofertilizer,
Biovento®, received all necessary
government approvals to begin
commercialization.
4
GENDER EQUALITY:
Reinforced our commitment to
gender equality by pledging to the
Women’s Empowerment Principles
(WEPs), from the United Nations
Global Compact and UN Women.
Alpek maintains its mission to
create a safe work environment
through which everyone can grow,
contribute, and innovate.
6
9%
improvement
in S&P Global
CSA rating
since 2022
5
SUSTAINABILITY-LINKED
LOAN:
The aforementioned loan signifies
a milestone, incorporating a pricing
mechanism that incentivizes
improvements in two targets:
a reduction in Scope 1, 2, and 3
carbon emissions and a decrease
in the Lost-Time Incident Rate (LTIR)
for employees and contractors.
These actions, among others, led to
progress in all our ESG ratings, including
a 9% improvement in the S&P Global CSA
rating since 2022. Alpek is determined
to continue strengthening its results and
ESG practices.
7
Outlook 2024
The rapidly changing industry landscape
in 2023 presented its share of challenges.
Despite this, Alpek preserved and remains
committed to maximizing profitability and
ensuring competitiveness. As we venture
into 2024, we anticipate the industry
will grapple with prevailing headwinds,
especially with Chinese reference
margins expected to remain at low levels
due to overcapacity. According to our
outlook, we envision a slow but gradual
recovery throughout the year.
Alpek remains committed to maintaining
its leading position in the industry while
improving Free Cash Flow generation and
financial performance. We are confident
that our Management Team will guide
the Company through these evolving
market dynamics, propelling it toward a
new, sustainable, and prosperous era.
We would like to thank
all our employees,
customers, suppliers,
and Board members
for their dedication
and our Shareholders
for their unwavering
trust and support.
ARMANDO GARZA SADA
CHAIRMAN OF THE BOARD
JORGE P. YOUNG
CERECEDO
CHIEF EXECUTIVE OFFICER
8
ABOUT
ALPEK
WE CREATE THE BUILDING
BLOCKS OUR CUSTOMERS NEED
TO IMPROVE EVERYDAY LIVES
GRI: 2-1, 2-6
We develop products and technologies to help enrich
people’s lives and deliver real-world innovations in
very diverse and essential applications. This is how we
confirm our even more meaningful role as a supplier
for resolving the current global challenges.
Amidst the extraordinary conditions in which we have
been operating since 2020, it is through a robust
governance structure, focused leadership, and
our evolutionary nature that, in 2023, we continued
delivering solutions to transform the present into
a better future.
9
Working to meet global
societal and environmental
everyday needs has been,
and will always be,
ESSENTIAL
TO ALPEK’S
PURPOSE AND
VALUES.
MARKET PRESENCE
10
+5,900
EMPLOYEES
WORLDWIDE
35
PLANTS
9
COUNTRIES
PET
PET
rPET
rPET
rPET
PTA
RESIN
SHEET
FLAKE
PELLET
SPT
FIBERS
PP
EPS
ARCEL
OTHER
MEXICO
3,310 Kta
USA
2,753 Kta
CANADA
144 Kta
ARGENTINA
246 Kta
BRAZIL
1,226 Kta
CHILE
28 Kta
OMAN
1,072 Kta
SAUDI
ARABIA
11 Kta
UNITED
KINGDOM
220 Kta
211111214321211111111111131111 ALPEK IN THE DAILY LIVES
11
BUILDING
EPS
THERMAL
INSULATION
HOMES
PET
PERSONAL HYGIENE
PRODUCTS
ON THE GO
PP
FOOD
CONTAINERS
HOSPITALS
PP
MEDICAL
EQUIPMENT
LONG-TERM STRATEGY BASED ON 3 KEY PILLARS
TCFD: GOVERNANCE, RISK MANAGEMENT
GLOBAL COST
IMPROVEMENT
VALUE-ADDED
PRODUCTS
VALUE CHAIN
INTEGRATION
M&A
OPPORTUNITIES
12
STRENGTHEN
CORE BUSINESS
1
FOOTPRINT
OPTIMIZATION
PRODUCT
INNOVATION
Growth
catalysts
2
CAPTURE ESG-RELATED
OPPORTUNITIES
FOSTER PRODUCT
CIRCULARITY
STRATEGIC &
FOCUSED GROWTH
3
VALUE-CREATION IN CO2
EMISSIONS REDUCTION
Zero-based budgeting & process innovation (Mainly Operations, Logistics & SG&A).Seize opportunistic growth focused on synergies and geographic diversification.Shift to products with higher margins & barriers to entry (PET, Copolymers and others).Grow capacity selectively & integrate into value chain.Ensure global production grows across optimal sites & logistic networks.New products & business lines (Natural Gas Commercialization, Biovento®, Biopek® & others).Pursue opportunities & participate in new markets associated with reaching carbon neutrality before 2050 (Renewable energy, Green hydrogen, CO2 capture, Carbon offsetting).Increase mechanical (PET) & chemical recycling (PP, EPS) capacity through organic growth, M&A and Open Innovation to reach ESG goals. Offer biodegradable alternatives for EPS & PP.
13
2023
PERFORMANCE
14
FINANCIAL HIGHLIGHTS
VOLUME
(K TONS)
4,635 734
COMPARABLE EBITDA
(US$, MILLIONS)
2019
4,384
895
2020
4,802
883
2021
4,798
1,002
2022
5,065
966
3,490
3,918
3,796
4,099
849
3,785
5
232
497
2022
1,396
5
567
823
DEBT & LEVERAGE
(DEBT US$, MILLIONS & LEVERAGE, TIMES)
1.6
0
3
3
,
1
2.1
5
8
1
,
1
1.1
5
2
2
,
1
1.3
0
6
8
,
1
3.4
9
2
7
,
1
514
1,455
2023
2021
962
24
480
458
1,145
2020
601
11
218
372
565
2019
789
205
231
353
850
REVENUES
(US$, MILLIONS)
9
5
7
,
7
5
5
5
0
1
,
7
9
6
7
,
6
2
3
5
,
6
1
2
6
,
2019
2020
2021
2022
2023
2023
2022
2021
2020
2019
POLYESTER
PLASTICS & CHEMICALS
OTHERS
REPORTED EBITDA
LEVERAGE
FINANCIALSALPEK LEADING
PTA, PET AND
RECYCLED PET
PRODUCER
ACROSS THE
AMERICAS
ARGENTINA
BRAZIL
CANADA
MEXICO
22Plants
4,154Employees
7,363
Thousand tons
in capacity
POLYESTER
15
2ND
LARGEST PET
PRODUCER
WORLDWIDE
OMAN
SAUDI ARABIA
UK
USA
Through footprint optimizations, Alpek improved its capacity utilization by reallocating
its resources to sites where we can have better footing. This placed the company in a
position in which we have the necessary tools to enter the new year more prepared.
16
The Polyester segment began 2023 with solid results, in line with those seen the previous years and within the company’s expectations, with strong reference margins and stable volume results. However, Asian imports continued to prevail impacting demand and supply dynamics, shifting conditions to a more competitive market and normalization in the industry in both raw material prices and freight rates. This led to a decline in Asian integrated PET reference margins, averaging $308 dollars per ton, a 21% decline year-over-year. Through this change, Chinese reference margins became more relevant, in which alongside a to a slower-than-expected growth in Chinese economy, averaged $187 dollars per ton, declining by 37% year-over-year. Even though Asian margins are above historical levels, Chinese margins were well below historical levels in the industry, reaching its lowest towards the second half of the year. Extraordinary effects as seen in hyperinflation from Argentina also affected the company’s results throughout the year. Closing in on 2024 the effect would become more notable, resulting in a Polyester Comparable EBITDA of $497 million dollars, 40% lower than 2022. Volume results were closer to our expectations, after a revised guidance. This resulted in 3,785 thousand tons, 8% lower compared to 2022. Oversupply in the Americas also meant that exports would decline, adjusting to lower demand.To mitigate the effects seen throughout the year and maintain our competitiveness, we had to make 3 challenging decisions moving our strategy forward: to Alpek’s EBITDA. In recent years, local filament production couldn’t compete with imported capacity, and our site was the last remaining filament production in Mexico. Through these optimizations, we are expecting annualized cost reductions of approximately U.S. $40 million.Furthermore, we determined, along with our joint venture partners of Corpus Christi Polymers, to temporarily pause construction of the integrated PTA-PET plant in Corpus Christi, Texas as high inflationary rates have led construction and labor costs to surpass original expectations. We remain committed to maximizing value for CCP and the site will be properly preserved so that construction may resume in the future. We will focus on assessing options to optimize the project’s costs and timeline to maximize our Company’s success.In 2024, normalization and oversupply are still expected. Current market conditions will count with high inventory levels from Asian imports. Results will be closer to those seen during 2023, with a slight recovery towards year end. We will continue with our initiatives by continuing to strengthen our financial position through strategic advancements. GRI: 2-6We started the year by emphasizing facility streamlining, strategic growth projects, and advancement in recycling capabilities across our product portfolio by reallocating the PET resin operations at the Cooper River site in Charleston, South Carolina. This site had a capacity of 170,000 tons and represented 2% of our total assets. Another change we had to make was shutting down our filament site in Monterrey, Mexico. This site had an installed capacity of 100,000 tons of polymer and filament and represented minimal contribution PLASTICS
& CHEMICALS
1,689
Employees
1,648
Thousand tons
in capacity
13Plants
17
LEADING EPS
PRODUCER IN
THE AMERICAS
AND 3RD LARGEST
WORLDWIDE
WE PRODUCE
POLYPROPYLENE
(PP), EXPANDABLE
STYRENICS
(EPS & ARCEL®),
FERTILIZERS
AND SPECIALTY
CHEMICALS
ONLY PP
PRODUCER
IN MEXICO
18
The Plastics & Chemicals segment had
a similar effect during the year, returning
to historical levels. For Polypropylene, due
to the supply and demand dynamics
in the region, North American reference
margins remained flat, averaging 17
cents per pound. EPS North American
reference margins averaged 35 cents
per pound, 38% lower year-on-year,
primarily due to a lag in EPS reference
prices, mainly coming from higher
imports in the Americas.
Towards year end demand and
oversupply kept a firm hand on P&C
market conditions, which alongside
inflationary rates and maintenance
meant results would underperform
leading to a Comparable EBITDA of
U.S. $232 million, 59% lower than in
2022. Demand would also continue to
lower throughout the year, eventually
becoming more prevalent in the second
half, resulting in volume of 849 thousand
tons decreasing 12% year over year.
Continuing its effort towards recyclability
and sustainability. The growing EPS
recycling capabilities led to the
development and certification of 6
different products including biobased
materials and recycled content. Through
this effort, Alpek strives to promote the
sustainable use of EPS. Committing to our
target, to grow its long-term usage and
sustainable applications for EPS, work on
biodegradable alternatives, and increase
recycling content in select products to at
least 30% by 2030.
Alongside, our new product Biovento®, a
biofertilizer made from microorganisms,
received all necessary government
approvals to begin commercialization.
Biovento® has all the necessary qualities
of a natural fertilizer and improves upon
them by bringing full yield with no waste,
complete sustainability and complies
with all cropping regulations for safety.
Expect more information about this
product throughout 2024.
Moving forward, our presence in the
Plastics & Chemicals segment continue
to stay strong, focusing on durable and
reusable uses. Our advancements in
recycling from previous years continue
to prove results and through innovation
we can tap into new markets, placing
Alpek in other industries. The P&C
segment will continue to see similar
results as the industry continues to
normalize, yet a slight recovery is
expected towards year end.
19
ESG
2023 HIGHLIGHTS
20
~15%
EMISSIONS
REDUCTION VS. 2022
~37%
INCREASE IN
CARBON-FREE
ELECTRICITY VS. 2022
27%
TRIR REDUCTION
VS. 2022
$200
M USD
SUSTAINABILITY
LINKED LOAN
NEW CERTIFICATIONS
TO SELL EPS WITH
RECYCLED CONTENT
WEPS IN COMMITMENT
TO GENDER EQUALITY
ALLIANCES AND COMMITMENTS
21
GRI: 2-28, 2-29
IN 2023, ALPEK
PARTICIPATED IN
+80
CHAMBERS,
ASSOCIATIONS
AND INITIATIVES
Since 2021 Alpek has been committed to the
UN Global Compact’s corporate responsibility
initiative and its principles in the areas of human
rights, labor, the environment and anticorruption.
Alpek seeks to strengthen its alliances with entities and organizations that promote sustainable development. Alpek reaffirmed its commitment to the Sustainability Development Goals (SDGs) by pledging to the Women Empowerment Principles (WEPs). It also collaborated further with Science Based Targets Initiative (SBTi) and UN Global Compact, inviting other companies in Mexico to join. Additionally, Alpek has proactively collaborated with several recycling promoters as it continues to build up its rPET portfolio. OPERATIVE FRAMEWORK
22
GRI: 2-22
TCFD: GOVERNANCE, STRATEGY
& RISK MANAGEMENT
ESG STRATEGY
As part of Alpek’s ESG Risk Management, the Company has adopted a dynamic
materiality approach through which it conducts a comprehensive analysis of ESG and
industry trends, and how it is perceived by its stakeholders.
This process includes ongoing dialogue with stakeholders, which allows an adequate
response to be given to their demands and expectations, while also managing the
impact to their organization.
ESG RISK IDENTIFICATION
& ANALYSIS
Identify ESG Risks and
Opportunities (R&O)
Implement a dynamic
materiality analysis
Embed ESG R&O into its
business risk management
strategy
STRATEGY & EXECUTION
TARGETS & METRICS
COMMITMENT & OVERSIGHT
Identify the level of change
needed to establish
best-in class standards
Build and improve internal
capabilities to react quickly
Implement the right
initiatives to address R&O
Identify partnerships that
support improvement
Define key performance
indicators (KPIs) and set
targets to measure success
for each initiative
Measure result impact
Establish proper initiatives
for targets to be achieved
Assign the appropriate
people for decision-making
Set mechanisms to ensure
the achievement of targets
Communicate and report
progress at organizational
level
Review and improve
DOUBLE MATERIALITY UPDATE
23
GRI: 3-1, 3-2, 3-3
TCFD: RISK MANAGEMENT
In 2023, Alpek demonstrated its commitment to align its sustainability
management to leading international standards by updating its materiality matrix
and transitioning to a double materiality assessment.
The analysis involved evaluating Alpek's ESG stewardship maturity through
effective allocation of resources and implemented programs. Simultaneously,
the process evaluated risk exposure, considering Alpek's operational impacts on
society and environment, as well as financial outcomes.
1
EVALUATION CRITERIA
Establish criteria evaluating
external impacts of Alpek's
operations and potential
financial consequences for
the Company.
DEFINITION OF INDICATORS
Key ESG indicators aligned with
leading frameworks: GRI, IFRS, SDGS,
etc. were categorized into economic,
governance, environmental, and social
dimensions using Global Industry
Classification Standard (GICS).
2
3
MATURITY ASSESSMENT
Alpek's business model, initiatives
and commercial relationships were
evaluated and compared with
industry peers' performance. Market
conditions, financial results and ESG-
linked incentives were considered.
4
EXPOSURE TO ESG
AND FINANCIAL RISKS
RESULTS
Prioritization of material
issues within a matrix
based on the Company's
maturity level and overall
risk exposure.
Analysis of material
issues' relevance for external
stakeholders and alignment
with internal strategy,
ensuring a comprehensive
understanding of their
impact.
5
MATERIALITY MATRIX
24
GRI: 3-1 TO 3
TCFD: GOVERNANCE,
STRATEGY, RISK MANAGEMENT
CSA S&P: 1.2
T
S
E
H
G
H
I
R
E
H
G
H
I
H
G
H
I
Y
R
T
S
U
D
N
I
.
S
V
T
N
E
M
P
O
L
E
V
E
D
8
11
6
7
10
9
14
1
14 MATERIAL ISSUES
2
3
12
GROW RESPONSIBLY
1. Climate Change Strategy
2. Circularity and Product
Responsability
3. Environmental Management
4. Water Management
13
LEAD WITH EMPATHY
5
4
5. Occupational Safety
6. Human Rights
7. Diversity, Equity and Inclusion (DEI)
8. Social Impact
UPHOLD HIGHEST STANDARDS
9. Sustainable Corporate
Governance
10. Cybersecurity
11. Compliance and Transparency
EMBRACE CHANGE
12. ESG Risk and Impact
Management
13. Innovation and Sustainable
Development
14. Value Chain Management
HIGH
HIGHER
HIGHEST
RISK (RELEVANCE AND EXTERNAL IMPACT)
ESG MODEL
25
GRI: 2-22 TO 24
TCFD: GOVERNANCE, STRATEGY
Alpek’s ESG Model is an internal platform to launch programs and initiatives that
allows the tracking and development of its environmental, social, and governance
objectives. Involving different functions at all levels of the organization, Alpek
embraces a shared focus on its economic growth, development of stakeholders,
promotion of social equity and the protection of the environment.
GROW
RESPONSIBLY
LEAD WITH
EMPATHY
Climate Change Strategy
Circularity and Product
Responsibility
Water Management
Environmental Management
Occupational Safety
Diversity, Equity
and Inclusion (DEI)
Social Impact
Human Rights
UPHOLD
HIGHEST
STANDARDS
Sustainable Corporate
Governance
Compliance
and Transparency
Cybersecurity
EMBRACE CHANGE
ESG Risk and Impact Management
Innovation and Sustainable Development
Value Chain Management
26
ESG RISK AND IMPACT MANAGEMENT
EMBRACE CHANGE WE ACTIVELY MONITOR OUR CHANGING ENVIRONMENT AND DEVELOP
NEW WAYS TO TACKLE EMERGING CHALLENGES THROUGH OUR ENABLERS
GRI: 2-22, 2-23, 2-25
TCFD: ALL ELEMENTS
CSA S&P: 1.3 RISK AND CRISIS
MANAGEMENT
STRATEGY AND EXECUTION
Alpek has established and continuously
updates various processes to identify,
monitor, and develop effective action
plans to address potential risks for the
Company's short- and long-term strategy.
Any relevant findings and its corresponding
action plans are deliberated upon in the
Audit Committee and if needed the topic is
escalated to the Board Meetings.
Through the risk management process,
ESG-related risks such as shortages
in raw material and utilities, legal and
regulatory challenges concerning
plastics, cybersecurity attacks, among
others have been identified. Additionally,
the Company has been actively working
to incorporate threats derived from the
effects of climate change into its risk
management protocols, adhering to
recommendations from TCFD and SASB.
Alpek aims to measure and quantify
all potential environmental and social
effects, to be able to understand its cause
and mitigate any possible impacts.
RISK IDENTIFICATION
BY BUSINESS UNIT
1
RISK AND
ACTION PLAN
MONITORING
6
MITIGATION
PLAN EXECUTION
5
RISK
MANAGEMENT
PROCESS
RISK
EVALUATION
(By impact and
probability)
2
Board Meeting
Audit
Committee
Relevant risks
are escalated
3
RISK
PRIORITIZATION
AT GLOBAL LEVEL
4
MITIGATION PLAN
DEVELOPMENT
MAIN PHYSICAL CLIMATE RISKS
# OF SITES LOCATED IN HIGH-RISK AREAS
8
5
5
EXTREME HEAT
COAST FLOOD
RIVER FLOOD
OUR TARGET
"Alpek will continue strengthening
its governance practices and risk
management process to identify
and mitigate the potential impacts
on the environment, society and
the Company itself."
PROGRESS 2023
During 2023, Alpek developed a preliminary
analysis of its site-specific physical climate
risks using the ThinkHazard platform. This tool
enables the evaluation of any risks associated
with climate events such as cyclones,
landslides, floods, and droughts at each site.
The Company is currently dedicating and
enhancing this initial analysis, with a focus on
quantifying the economic impact of these
risks under various climate change scenarios.
This will help prioritize these risks and
strengthen any existing mitigation measures.
Acknowledging the potential threats posed
by climate change to Alpek's operations and
its entire value chain, the Company is in the
process of expanding its analysis to include
strategic supplier regions.
INNOVATION AND SUSTAINABLE DEVELOPMENT
EMBRACE CHANGE WE ACTIVELY MONITOR OUR CHANGING ENVIRONMENT AND DEVELOP
NEW WAYS TO TACKLE EMERGING CHALLENGES THROUGH OUR ENABLERS
27
GRI: 2-23 TO 25
TCFD: RISK MANAGEMENT
CSA S&P: 1.9 INNOVATION MANAGEMENT
STRATEGY AND EXECUTION
Innovation is responsible for creating new value, resulting in
top and/or bottom-line growth.
Alpek's innovation strategy integrates optimization and
research and development efforts to enhance operational
efficiency and foster forward-thinking, positioning the
Company as resilient in a dynamic business landscape.
PRODUCT
ADAPTATION FOR
NEW APPLICATIONS/
MARKETS
R&D
NEW
TECHNOLOGY
IMPLEMENTATION
PRODUCT
DEVELOPMENT
OUR TARGET
”We focus on
improving our current
products and processes
while discovering more
environmentally-friendly
alternatives for both.”
PROGRESS 2023
Throughout 2023, R&D teams contributed to
20% of innovation projects focused on new
product development and strategic market
expansion, with the remaining 80% dedicated
to enhancing operational efficiency, time
management, and cost-effectiveness across
all business departments.
The open innovation program was
strengthened by seeking to generate value
through the addition of new verticals such as
supply chain and digitalization; besides the
ESG approach.
Alpek carried out the Innovation Awards
In which 21 projects and 3 countries
participated with initiatives focused mainly
on diversifying its product portfolio and
sustainability initiatives.
VALUE CHAIN MANAGEMENT
EMBRACE CHANGE WE ACTIVELY MONITOR OUR CHANGING ENVIRONMENT AND DEVELOP
NEW WAYS TO TACKLE EMERGING CHALLENGES THROUGH OUR ENABLERS
28
GRI: 2-6, 414
CSA S&P: 1.6 SUPPLY CHAIN
MANAGEMENT
OUR TARGET
”Alpek will work with its customers and suppliers in an effort
to actively identify ESG-related risks and the corrective
actions needed to make our entire value chain more
sustainable.”
STRATEGY AND EXECUTION
Alpek recognizes that to accomplish
its sustainability vision and its strategic
objectives, it requires the alignment of
its core values through the fostering of
active collaboration across its entire
value chain, particularly with suppliers
and customers.
In its commitment to fostering a
sustainable value chain, Alpek has
actively explored ESG opportunities with
its customers such as innovation projects
for lowering environmental impacts of
products and processes. Adapting to the
evolving landscape of sustainable supply
chain management best practices, Alpek
is focusing to improve its relationships
through the development of a supplier
program to guarantee adherence to the
highest ethical, social, and environmental
standards.
Alpek's polyester business recognized by PepsiCo for innovative recycling solutions.
PROGRESS 2023
During 2023, Alpek developed a Supplier
Code of Conduct for all its Business Units. This
code will be implemented throughout 2024 to
encourage its suppliers to align with ESG best
practices. The Company believes that this
policy is the initial milestone for the effective
execution of the supplier program.
Additionally, Alpek’s expandable styrenics
business has achieved the ISCC Plus
certification for its bio-based product. This
certification assures that the bio raw materials,
and production process of this product, align
with the principles of a circular economy
and limit social and environmental impact.
Conducting transactions with certified suppliers
and customers enhances transparency and
traceability within the product’s value chain.
Furthermore, Alpek's polyester business
received an award this year from a major
customer, PepsiCo, for its unwavering
commitment and innovative recycling
solutions. Specifically, the company was
recognized for its valuable contributions of
solutions that increase recycled content in
the customer's final products, thereby
supporting the client in achieving its
sustainability objectives.
CLIMATE CHANGE STRATEGY
GROW RESPONSIBLY WE STRIVE TO CONTINUE GROWING SUSTAINABLY, MAKING SURE WE MINIMIZE
ANY ADVERSE EFFECTS FROM OUR PRODUCTS AND PROCESSES
29
GRI: 302-1 TO 4, 305-1 TO 4
TCFD: ALL ELEMENTS
SASB: RT-CH-110A.1, RT-CH-110A.2
CSA S&P: 2.3 OPERATIONAL
ECO-EFFICIENCY
STRATEGY AND EXECUTION
Alpek’s decarbonization commitments
have been approved by the Science-
Based Targets Initiative (SBTi) since
2022. To achieve this goal, Alpek has
embraced a dual-front strategy:
• Transition to Low or Zero-Emission
Energy Sources: Alpek is exploring
energy alternatives with minimal or
zero-carbon emissions, including
nuclear and solar energy.
• Energy Utilization Efficiency
Enhancement: Alpek actively
improves energy efficiency with
measures like adopting efficient
equipment, electrifying processes, and
implementing procedures for optimal
thermal energy use
OVERALL CO2 EMISSIONS
(SBTi S1&2)
0.4
0.4
0.4
0.4
2.8
2.6
2.4
2.0
4
.
1
4
.
1
5
.
1
1
.
1
4
.
1
0
.
1
2
.
1
8
0
.
OVERALL ENERGY
CONSUMPTION
X 106 GJ
6
35
8
1
1
5
1
5
32
7
2
1
3
1
5
28
7
9
2
1
2021
2022
2023
2021
2022
2023
2019
SBTi Base
Scope 1
Scope 2
CO2 Emissions Intensity:
(Ton CO2/Ton Produced)
Natural
Gas
Steam
Electricity
Other
Fuels
Energy Consumption Intensity
(GJ/Ton Produced)
ELECTRICITY
(% OF TOTAL
ELECTRICITY)
7
2
3
7
Carbon
Free EE
Note:
1. The emission figures provided adhere to the SBTi criteria, wherein the emissions from all plants acquired are taken into
account, regardless of the year of acquisition.
2. The energy consumption figures accurately reflect the actual use of energy, respecting the dates of acquisitions.
3. Carbon-free electric energy is estimated considering the renewable energy mix of some country's electric grids.
4. Due to the entrance of Octal, some adjustments have been made in 2022 data.
OUR TARGET
”Alpek commits to reduce
absolute scope 1 and 2 GHG
emissions by 27.5% by 2030
from a 2019 base year. Alpek
also commits to reduce
scope 3 emissions by 13.5%
within the same time frame.
Alpek also commits to reach
carbon neutrality by 2050.”
PROGRESS 2023
In 2023, Alpek transitioned some
of its electricity contracts to green
sources in Argentina, adopting solar
and hydroelectric power. Additionally,
nuclear-sourced electricity was
introduced in two Mexican sites. Alpek
purchased International Renewable
Energy Certificates (IRECs) for selected
facilities in Chile, Argentina, Mexico, and
Brazil. All these initiatives have effectively
reduced Scope 2 emissions.
Based on Alpek’s emissions results,
the Company is approaching its 27.5%
emission reduction target, however, it's
important to mention that this figure
reflects lower operating yields in 2023,
so the Company will continue efforts to
reduce its direct and indirect emissions.
During the current year, Alpek formulated a
comprehensive roadmap to prioritize and
implement actions or projects to achieve
its carbon neutrality objective by 2050.
30
NET ZERO ROADMAP
GROW RESPONSIBLY WE STRIVE TO CONTINUE GROWING SUSTAINABLY, MAKING SURE WE MINIMIZE
ANY ADVERSE EFFECTS FROM OUR PRODUCTS AND PROCESSES
GRI: 305-5
TCFD: TARGETS AND METRICS
SASB: RT-CH-110A.2
CSA S&P: 2.3 OPERATIONAL
ECO-EFFICIENCY
Alpek has made meaningful progress towards its SBTi 2030 objective; however, its long-term
commitment is to achieve carbon neutrality by 2050.
During 2023, Alpek developed a detailed roadmap towards a net zero future. This roadmap helps the
Company identify and value current and future technological opportunities to decarbonize all its sites.
In this exercise, Alpek went through a detailed analysis of the sites that represented over 90% of Alpek’s
Scope 1 and 2 emissions, determining the key strategies and stages for Alpek’s Net Zero Journey.
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2030 TARGET
27.5%
reduction
in 2030 (SBTi)
2%
20%
20%
22%
2%
27%
7%
2019
2022
2030
2035
2040
2045
2050
Other disruptive
technologies
Carbon-free
energy
Electrification
CCU/CCS*
Offsetting
Optimization
Remaining
emissions
Total emissions
Note:
Optimization considers process and site
portfolio optimization.
31
CIRCULARITY AND PRODUCT RESPONSIBILITY
GROW RESPONSIBLY WE STRIVE TO CONTINUE GROWING SUSTAINABLY, MAKING SURE WE MINIMIZE
ANY ADVERSE EFFECTS FROM OUR PRODUCTS AND PROCESSES
GRI: 2-25, 3-3, 201-2, 306-1, 306-2, 416-1
CSA S&P: 2.3 PRODUCT STEWARDSHIP
SASB: RT-CH-410A.1, RT-CH-410B.1, RT-CH-410B.2
R -PET CAPACITY
(Thousand tons)
9
6
1
1
4
3
9
0
3
3
0 3
2020
2023
8
6
2
2
3
1
BOTTLE TO
FLAKE
FLAKE TO
PELLET
SINGLE PELLET
TECHNOLOGY
r-PET-SHEET
STRATEGY AND EXECUTION
As a leading plastics manufacturing Company, Alpek is conscious of the challenges involving
pollution and depletion of finite raw materials. However, the Company is committed to
playing a key role in promoting a circular economy to mitigate these challenges.
Aligned with this vision, Alpek’s long-term strategy prioritizes the development of
products, as well as adapting its operations to generate a lower environmental
impact and foster circular economy principles. Increasing the integration of recycled
and bio-based raw materials, as well as optimizing the efficiency of its recycling
sites, is fundamental to continue the path towards a circular future.
PROGRESS 2023
Throughout the year, Alpek focused on
maximizing the efficiency of its existing
recycling facilities through the exploration
of innovative processes. Alpek’s polyester
business carried out various projects
to improve its yield and increase the
quality of the final recycled product. An
example of these efforts is the investment
of around $3 million USD in the addition
of 3 bottle sorters and other automated
equipment in its Richmond site,
improving its recycling yield.
Alongside, the Company has been
working to ensure that its circular
products adhere to the highest
standards of circularity practices.
In a significant milestone, Alpek’s
expandable styrenics business obtained
two different circularity-related
certifications: the Scientific Certification
System (SCS) Recycled Content
Certification and the International
Sustainability and Carbon Certification
(ISCC) Plus for its expandable
polystyrene with recycled content and
its bio-based product, respectively.
OUR TARGETS
PET:
"Alpek plans to increase its PET
bottle recycling capacity to 300
thousand annual metric tons
by 2025 to meet its customers'
recycled content needs."
PP:
"Alpek will leverage its partnerships
to develop recycling solutions for
Polypropylene and increase its
share of Copolymers, employed in
long-term usage applications."
EPS:
"Alpek commits to grow its
long-term usage and sustainable
applications for EPS, work on
biodegradable alternatives, and
increase recycling content in select
products to at least 30% by 2030."
Meanwhile, the polyester business
received a 3rd Party Post-Consumer
Recycled Content (PCR) Certification,
recognized by the Association of Plastic
Recyclers (APR), for their products
manufactured with recycled content in
Richmond and Reading sites.
32
WATER MANAGEMENT
GROW RESPONSIBLY WE STRIVE TO CONTINUE GROWING SUSTAINABLY, MAKING SURE WE MINIMIZE
ANY ADVERSE EFFECTS FROM OUR PRODUCTS AND PROCESSES
GRI: 303-2 TO 5
CSA S&P: 2.7 WATER-RELATED RISKS
SASB: RT-CH-140A.1, RT-CH-140A.3
STRATEGY AND EXECUTION
Alpek remains committed to its strategy
of optimizing water usage across all
its sites while adhering to state and
federal regulations. Recognizing the
vital importance of water, as a resource
essential to all life, Alpek is proactively
addressing any detected related
environmental challenges.
The Company constantly carries
out overall water risk analysis using
Aqueduct, allowing it to identify potential
threats from several water indicators
covering water quality, water depletion
and water stress. This allows the
Company to actively identify methods
to enhance efficiency and reduce water
usage in locations characterized by
drought and freshwater scarcity.
OUR TARGET
”Closely monitor our water
consumption intensity,
particularly in water-stressed
areas, and identify opportunities
to reduce it.”
% OF WATER INTAKE VOLUME BY
WATER-STRESS LEVEL
1%
1%
57%
41%
Extremely High Risk
High Risk
Medium Risk
Low Risk
Note:
1. The data presented reflects the Aqueduct
results from 2023 analysis.
PROGRESS 2023
Alpek has continued to adapt its sites to
current and future hydric challenges by
implementing practices to reduce water
consumption and maximize the utilization
of this resource. In Mexico, Alpek’s
polyester business installed a recirculation
system that it is estimated to recover
25,000 m3 of discharged water per year.
Following the commitment to mitigate
the impact of water-stress in the sites
located in high-risk zones, Alpek’s
expandable styrenics business has
implemented a reuse system for
discharged water for it to be utilized
in other activities in one of its Chile’s
facilities. On the other hand, Alpek’s
specialty chemicals business has
focused on reducing water consumption
by standardizing and optimizing its
processes. Additionally, Alpek is making
efforts to keep improving the water
quality of its effluents among its facilities.
WATER INTAKE
(Million m3)
24
24
24
153
149
133
2021
2022
2023
Water Intake Intensity
(m3/Ton Produced)
Note:
1. Breakdown of discharge and consumption will be disclosed
in Alpek's Sustainability Report 2023.
ENVIRONMENTAL MANAGEMENT
GROW RESPONSIBLY WE STRIVE TO CONTINUE GROWING SUSTAINABLY, MAKING SURE WE MINIMIZE
ANY ADVERSE EFFECTS FROM OUR PRODUCTS AND PROCESSES
33
GRI: 3-3, 306-1, 306-2
TCFD: GOVERNANCE
SASB: RT-CH-150A.1
CSA S&P: 2.3 WASTE MANAGEMENT
STRATEGY AND EXECUTION
Alpek's strategic focus to continue
pushing for a more circular economy,
particularly through increasing the
capacity of its PET bottle recycling
facilities, will continue to have an
impact against its post-industrial
waste initiatives. However, it's crucial to
recognize that the overall environmental
impact is reduced compared to the
alternative, for the purchased PET bottle
bales to end up in a landfill. Investing in
recycling operations allows the Company
to provide a new lease on life to its
product and ensure proper disposal of
any impurities.
As Alpek navigates these strategic
priorities, it remains determined in its
pursuit of innovative approaches to
diminish waste landfill disposal, mitigate
wastewater discharge, and abate air
pollutants.
WASTE GENERATION
(Ktons)
85
106
110
2
3
4
7
1
3
9
7
9
4
6
3
2021
2022
2023
Disposed
Recycled
Nota:
The data presented reflects hazardous and non-hazardous
waste.
OUR TARGET
”Alpek commits to
comply with all regulatory
environmental requirements
and look for new ways to
reduce its waste, water, air
and biodiversity impacts. ”
PROGRESS 2023
Currently, only 2% of Alpek’s waste is
hazardous and needs to be confined.
28% of the Company’s waste is currently
recycled, reused o commercialized,
and 30% of Alpek’s generated waste
is directly derived from its recycling
operations. Alpek has increased its
sorting capability in some of its recycling
facilities, improving the quality of
its flake and increasing the process
utilization rate. This allows the Company
to decrease the potential impact of
discarding valuable PET bottles. Alpek
is working on increasing the reuse of
packaging material, with the aim of
decreasing waste to landfill.
34
OCCUPATIONAL SAFETY
LEAD WITH EMPATHY WE EMPOWER OUR PEOPLE TO CREATE VALUE
FOR OUR COMPANY AND COMMUNITIES
GRI: 403-1 TO 403-10
SASB: RT-CH 320A.1
CSA S&P: 3.7 OHS
85 implemented initiatives that ranged
from safety training to facilities and machine
adaptation
STRATEGY AND EXECUTION
Alpek constantly invests to ensure a
safe and healthy workplace for all of its
employees and contractors.
All of Alpek's facilities have a Health and
Safety Management System based
on international standards or national
regulations.
PROGRESS 2023
During 2023, 2 of Alpek's business units
and 34% of its total sites achieved zero
recordable incidents.
By the end of 2023, a total of 42 initiatives
were carried out to boost health and
safety in its operations. Additionally, during
2023, Alpek had 43 safety related training
programs with more than 13 thousand hours
of training. These led to a reduction vs. its
2022 results of 27% in TRIR and 25% in LTIR.
RECORDABLE INCIDENTS
(TRIR & LTIR)
0.61
0.57
0.42
0.40
0.36
0.27
2021
2022
2023
2021
2022
2023
Total Recordable Incidents Rate (TRIR)
Loss-time Incidents Rate (LTIR)
Note:
1. TRIR and LTIR figures represent the cases per 200,000 worked hours.
OUR TARGET
”Alpek plans to reach a Total
Recordable Incident Rate
(TRIR) for its employees and
contractors in the top decile
of its industry, though its
goal remains to achieve zero
accidents every single day.”
35
DIVERSITY, EQUITY AND INCLUSION (DEI)
LEAD WITH EMPATHY WE EMPOWER OUR PEOPLE TO CREATE VALUE
FOR OUR COMPANY AND COMMUNITIES
GRI: 405-1 TO 2
FTSE4GOOD: SLS16-1, 3, 7
CSA S&P: 3.6 TALENT ATTRACTION AND RETENTION
STRATEGY AND EXECUTION
Alpek believes that a diverse representation of gender,
cultures and perspectives across all organizational levels and
an inclusive workplace promotes innovation, creativity, and
enhanced decision-making.
Implementing inclusive recruitment processes, minority-
focused development programs and DEI training are key
initiatives to achieve a diversified workforce.
GENDER DIVERSITY
82%
4,840
Men
18%
1,090
Women
19% of
management
positions are
occupied by
women
Note: Management positions consider top, middle and junior management positions
(from Jr. Management to Executives)
PROGRESS 2023
In 2023, Alpek reinforced its commitment to foster a more
inclusive workforce by endorsing two important causes:
Women Empowerment Principles by the United Nations Global
Compact and UN Women, dedicated to gender equality, as
well as Movimiento Congruencia, focused on occupational
inclusion of people with disabilities.
Throughout the year, Alpek has implemented several initiatives
aligned to its strategy:
1%
5%
13%
35%
45%
RACE
DIVERSITY
(% of Alpek's
workforce)
Hispanic or Latino
White
Asian
African American
Other races
• Provided unconscious bias training for managerial positions
• Sustained implementation of women’s networks and
Note:
1. Races classified according to S&P CSA report.
mentoring programs
• Continued facility adaptation for women and individuals with
disabilities
• Initiated preliminary gender pay gap analysis
“We embrace women's contributions to our organization and society,
acknowledging that equality is everyone's responsability. Alpek will
further diversify its workforce through strategic hiring, retention, and
organizational development. Our success relies on innovation that comes
from having different strengths perspectives, and experiences.”
JORGE YOUNG
ALPEK CEO
SOCIAL IMPACT
LEAD WITH EMPATHY WE EMPOWER OUR PEOPLE TO CREATE VALUE
FOR OUR COMPANY AND COMMUNITIES
GRI: 201-1. 203-1, 203-2, 304-3, 413-1
CSA S&P: 3.6 CORPORATE CITIZENSHIP
STRATEGY AND EXECUTION
Alpek is committed to fostering a positive
impact within the communities where it
operates through proactive involvement
in initiatives that prioritize environmental
preservation, enhance people's welfare,
and boost education.
+25,000
People
benefitted
2,732
Employees
and external
volunteers
Clearance of ~1.5 tons of organic residue and installation of
rain systems for over 500 trees. Altamira, Mexico
Reforestation with +700 trees in natural area.
Monterrey, Mexico.
OUR TARGET
”Alpek cares about all its
local communities and is
committed to investing
its time and profits on
activities that contribute
to their safety, education,
access to services, and
quality of life. ”
“Vive Verde” program raising recycling awareness for over
800 students . Mexico
36
+ US
$110,000
in donations
(cash, in-kind,
etc.)
PROGRESS 2023
During 2023, Alpek invested over U.S. $110,000
in community contributions, through
initiatives such as health campaigns,
infrastructure donations, and assistance
activities for nursing homes and children,
among others.
Alpek, acknowledging its responsibility
to promote environmental awareness,
volunteered in more than 20 schools
across Argentina, Brazil, Chile, Mexico,
United Kingdom and the United States,
conducting conferences and establishing
plastic collection centers to encourage
recycling. In Mexico, the “Vive Verde”
initiative fostered environmental
understanding among +800 students.
Furthermore, over 700 Alpek collaborators
and external volunteers engaged in
reforestation and cleanup initiatives in
beaches and rivers to preserve nearby
environmental areas.
37
HUMAN RIGHTS
LEAD WITH EMPATHY WE EMPOWER OUR PEOPLE TO CREATE VALUE
FOR OUR COMPANY AND COMMUNITIES
GRI: 2-16, 2-22, 2-23, 2-25, 3-3, 203-2, 401-2
CSA S&P: 3.2 LABOUR PRACTICES; 3.3 HUMAN
RIGHTS
STRATEGY AND EXECUTION
Alpek commits to establish policies
and practices dedicated to upholding
fundamental human rights and
principles across its operations,
value chain and communities. This
commitment is vital to the Company's
success and reflects its dedication to
contributing to societal well-being.
Progress 2023
During 2023, Alpek improved its Human Rights Policy to ensure its alignment to the International Labour Organization (ILO)
principles. Additionally, since 2021, Alpek has pledged to the UN Global Compact to advance the protection of human rights.
To ensure adherence, Alpek has implemented a rigorous framework with sanctions for violations, well-defined reporting channels,
and effective remediation processes. This approach guarantees compliance and accountability. Instances of human rights
violations can be reported through the Integrity and Transparency Helpline, ensuring prompt and thorough resolution. Alpek's
comprehensive strategy underscores its unwavering commitment to fostering a workplace and community that respects and
upholds fundamental human rights.
This is how Alpek’s Complaint-Case can be processed through the integrity and transparency helpline:
1 COMPLAINT FILING
2 COMPLAINT INFORMATION GATHERING
3
INVESTIGATION AND RESOLUTION
OUR TARGET
”Alpek is committed to
carry out its operations
under the highest standards
of respect and defense
of its employees and
communities' human rights,
as well as contributing to
the society's wellbeing.”
EMAIL Transparency@alfa.com.mx
MESSAGE
CLASSIFICATION
ANALYSIS AND
ASSIGNMENT
RESOLUTION
IDENTIFIABLE
TELEPHONES 0-800
WEB FORM www.alfa.com.mx/transparency.html
REPORT
TO AUDIT
COMMITTEE
CASE
EVALUATION
MEETING
ANONYMOUS
WHATSAPP +52 81 2353 9583
SUSTAINABLE CORPORATE GOVERNANCE
38
GRI: 2-12 TO 14, 2-17
TCFD: GOVERNANCE,
STRATEGY, RISK MANAGEMENT
CSA S&P: 1.1 CORPORATE
GOVERNANCE
OUR TARGET
”Alpek is committed to further
improving the composition
and effectiveness of its Board
by increasing the frequency
ESG topics & metrics
are reviewed, as well as
enhancing the diversity and
experience of its members.”
Board of
Directors
C-Suite
BOARD MEETINGS
All ESG topics*
Frequency: Quarterly
ESG EXECUTIVE COMMITTEE
All ESG topics
Frequency: Quarterly
Management
CIRCULARITY
COMMITTEE
Climate Change
Circularity
Innovation
Value Chain Management
OPERATIONS
COMMITTEE
Climate Change
Water
Environmental Management
Occupational Safety
IT
COMMITTEE
Cybersecurity
Frequency: Quarterly
Frequency: Quarterly
Frequency: Bimonthly
* During Board Meetings ESG topics are reviewed
UPHOLD HIGHEST STANDARDSWE ARE COMMITTED TO MEETING AND EXCEEDING THE HIGHEST ESG STANDARDS. OUR ONGOING FOCUS IS ON ENHANCING TRANSPARENCY AND ACCOUNTABILITY OF OUR PERFORMANCESTRATEGY AND EXECUTIONAlpek firmly believes that the success of its sustainability strategy relies on active engagement and strong leadership within its top management. Through the implementation of a comprehensive organizational structure and the establishment of periodic committees across management levels, Alpek ensures effective guidance, accountability, and stewardship of its ESG material topics, risks, and objectives. PROGRESS 2023To reinforce the alignment of Alpek’s business strategy with its sustainability focus, Alpek recently incorporated Dr. Ana Laura Magaloni and Montserrat Ramiro onto the Board of Directors. Dr. Magaloni, a renowned lawyer with broad knowledge of Human Rights and Diversity, Equity and Inclusion (DEI), and Ms. Ramiro, an expert in the field of energy and renewable sources with over 25 years of experience in this sector. This reflects Alpek's commitment to embedding sustainability into its core business strategy. Furthermore, in 2023, Alpek achieved recognition as a Leader in Sustainable Innovation by HSBC and EY, specifically in the Governance category. This acknowledgment is attributed to the Company's proactive efforts in creating a comprehensive ESG structure, which is overseen by its Board of Directors and its Executive Management. This alignment ensures the Company continues to tie executive compensation to ESG performance, increase transparency and reporting, as well as develop new policies to support its collaborators and value chain. TRANSPARENCY AND COMPLIANCE
39
GRI: 2-27
TCFD: GOVERNANCE, RISK MANAGEMENT
CSA S&P: 1.3 RISK MANAGEMENT
OUR TARGET
”Alpek is committed to comply
with all applicable laws and
regulations and enhance the
transparency and accountability
in its reporting process .”
The following
graphs show
Alpek’s progress
from the most
relevant rating
agencies from
2021 to 2023.
ESG SCORE
(SCORE IMPROVEMENT YOY)
51
54
59
ESG RISK RATING
(RISK REDUCTION YOY.
THE LESS RISK, THE BETTER)
29
26
26
CLIMATE CHANGE
(SCORE IMPROVEMENT YOY)
WATER SECURITY
(SCORE IMPROVEMENT YOY)
B
B
C
C
C
B-
2021
2022
2023
2021
2022
2023
2021
2022
2023
2021
2022
2023
90
91
94
Percentile
Chemical Industry
25
19
27
Risk percentile
Chemical Industry
B
B-
B
Average score
Chemical Industry
B
B
C
Average score
Chemical Industry
RECOGNITIONS
2023 Company
Leaders in
Sustainable
Innovation
S&P/BMV Total
Mexico ESG
Index Member
3rd in its segment
UPHOLD HIGHEST STANDARDSWE ARE COMMITTED TO MEETING AND EXCEEDING THE HIGHEST ESG STANDARDS. OUR ONGOING FOCUS IS ON ENHANCING TRANSPARENCY AND ACCOUNTABILITY OF OUR PERFORMANCESTRATEGY AND EXECUTIONAlpek acknowledges the importance of aligning its performance and practices with all industry regulations. Additionally, the Company commits to foster trust and credibility among its stakeholders and broader market through the transparency in its ESG performance.PROGRESS 2023During 2023, Alpek strengthened its compliance practices through the development of 5 new ESG-related policies and enhancement of 2 other policies. On the other hand, Alpek achieved and improvement in its ESG rating score thanks to its effort in improving its transparency and ESG performance. CYBERSECURITY
40
TCFD: RISK MANAGEMENT
CSA S&P: 1.7 CYBERSECURITY
V E R
O
R E C
ID
E
N
TIF
Y
D
N
O
P
S
E
R
ALPEK'S
CYBERSECURITY
FRAMEWORK
P R O TE C T
DETECT
Recognizing that a well-trained
workforce is the primary defense against
cybersecurity breaches, Alpek prioritized
internal training throughout the year. This
involved awareness campaigns, expert-
led conferences, online training for all
employees, as well as capacity-building
and certification programs for technical
specialists.
OUR TARGET
”Alpek is committed to
securing its information
and guaranteeing the
continuity of its business
by maintaining state-
of-the-art cybersecurity
systems, employee training,
and incident response
capabilities.”
PROGRESS 2023During 2023, Alpek strengthened its cybersecurity management by improving its incident response capabilities through the implementation of Digital Forensics and Incident Response (DFIR) systems. Additionally, the Company closely collaborated with each business unit to ensure steadfast progress in adapting and improving the cybersecurity framework. STRATEGY AND EXECUTIONAs cybersecurity challenges continue to evolve, Alpek acknowledges the importance and strategic priority of this material topic. In response, the Company’s cybersecurity strategy relies on its Chief Information Security Officer, who ensures the effective development of diverse initiatives to enhance the safety of all information systems. The cybersecurity strategy model has 3 focus areas:• Cybersecurity Framework NIST (National Institute of Standards and Technology)• Information Security Management• Defense Systems AssessmentUPHOLD HIGHEST STANDARDSWE ARE COMMITTED TO MEETING AND EXCEEDING THE HIGHEST ESG STANDARDS. OUR ONGOING FOCUS IS ON ENHANCING TRANSPARENCY AND ACCOUNTABILITY OF OUR PERFORMANCE 41
GOVERNANCE
GOVERNANCE
42
CORPORATE GOVERNANCE
GRI: 2-9, 2-10, 2-11
64% of our Board
members are
independent,
and 100% of the
committee members
are independent.
BOARD OF DIRECTORS
The Board of Directors together with
the Audit and Corporate Practices
Committee implement and maintain the
best practices and highest standards of
Corporate Governance in the Company.
As a public Company, we have the
obligation to keep our investors informed
of all our financial activities under required
standards, thus ensuring full transparency.
Our Board of Directors is our highest
governing body. Its members are chosen
based on the alignment of their skills and
previous experience with Alpek’s strategic
and ESG needs, as well as their integrity
and standing in the global community.
OF OUR BOARD
MEMBERS ARE WOMEN
21%
DIRECTORS
INDEPENDENT
BOARD MEMBERS
14
9
PROPRIETARY
DIRECTORS WITH
NO ALTERNATES
5
GOVERNANCE
43
AUDIT AND CORPORATE
PRACTICES COMMITTEE
The Audit and corporate practices
committee supports the Board, and is
composed of independent members.
They oversee, among others, the
following topics:
• Selection and determination of fees
for the external auditor
• Coordination with the Company’s
internal audit committee
• Assessment of accounting policies,
employment terms and severance
payments, as well as compensation
for senior executives
• Recommendations for succession
plans and replacement options
• ESG issues review
4 Board meetings called by the
Secretary in 2023. Annual meetings
may be called by the Board’s chairman,
the Audit and Corporate Practices
Committee’s chairman, the secretary
or at least 25% of its members. At least
one meeting is dedicated to defining
the Company’s medium- and long-term
strategies. Any conflict of interest must
be disclosed by involved parties and
they must abstain from participating.
• The Company has internal control
systems with general guidelines
that are submitted to the Audit and
Corporate Practices Committee for
its opinion. In addition, the external
auditor validates the effectiveness of
the internal control system and issues
the corresponding reports.
• The Board of Directors is advised by
the planning and finance department
when evaluating matters related to
the feasibility of investments, strategic
positioning of the Company, alignment
of investing and financing policies, and
reviewing investment projects. This is
carried out in coordination with the
finance and planning department of
the holding company, Alfa, S.A.B. de C.V.
• Alpek has a department that
is specifically responsible for
maintaining open communication
with its shareholders and investors.
This ensures that they have the
financial and general information
required to assess the Company’s
progress in developing its activities.
This function makes use of press
releases, notifications of relevant
events, conference calls for quarterly
reports, investor meetings, its website,
and other communication channels.
• Alpek promotes good corporate
citizenship and adheres to the
recommendations issued by its
holding company, Alfa, S.A.B. de C.V.
It has a mission, vision, values and
a code of ethics that are promoted
within the organization.
97.9% meeting
attendance during 2023
GOVERNANCE
44
BOARD OF DIRECTORS
ARMANDO
GARZA SADA
FRANCISCO
JOSÉ
CALDERÓN ROJAS
INDEPENDENT | AUDIT AND CORPORATE
PRACTICES COMMITTEE
ÁLVARO
FERNÁNDEZ GARZA
RODRIGO
FERNÁNDEZ MARTÍNEZ
CHAIRMAN OF THE BOARD OF ALPEK
CHIEF FINANCIAL OFFICER OF GRUPO
FRANCA INDUSTRIAS S.A. DE C.V.
CHIEF EXECUTIVE OFFICER OF ALFA,
S.A.B. DE C.V.
CHIEF EXECUTIVE OFFICER OF SIGMA
ALIMENTOS S.A.DE C.V.
Age: 66
Tenure: 12 years (2011)
Age: 57
Tenure: 11 years (2012)
Age: 55
Tenure: 12 years (2011)
Age: 47
Tenure: 11 years (2012)
Public boards (8):
ALFA (Chairman)
Axtel
BBVA México
Grupo Lamosa
Nemak (Co-Chairman)
CEMEX
Liverpool
CTAxtel (Co-Chairman)
Public boards (3):
BBVA México (Regional Advisor)
Citibanamex (Regional Advisor)
FEMSA (Alternate Member)
Public boards (5):
Axtel (Co-Chairman)
(Co-Chairman)
Cydsa
CTAxtel (Co-Chairman)
Nemak
Vitro
Public boards (0):
Education:
BA from UVA
MBA from Wharton
Education:
BA from MIT
MBA from Stanford
Education:
BA from ITESM
MBA from UCLA
Education:
BA from Notre Dame University
MBA from
ITESM
MBA from Georgetown University
RELEVANT EXPERTISE
PETROCHEMICALS
AUTOMOTIVE
ENVIRONMENTAL
SOCIAL
OPERATIONS
PUBLIC POLICY,
CONSTITUTIONAL RIGHTS
AND REGULATORY
CONSUMER
GOODS
CONSTRUCTION
AUDIT & RISK
MANAGEMENT
FINANCE
STRATEGIC
PLANNING
ENERGY
REAL ESTATE
M & A
GOVERNANCE
45
BOARD OF DIRECTORS
ANDRÉS E.
GARZA HERRERA
INDEPENDENT | AUDIT AND CORPORATE
PRACTICES COMMITTEE
MERICI
GARZA SADA
PIERRE FRANCIS
HAAS GARCÍA
INDEPENDENT
ANA LAURA
MAGALONI
INDEPENDENT
VICEPRESIDENT OF THE BOARD OF
QUALITA
Age: 55
Tenure: 11 years (2012)
INVESTOR
Age: 65
Tenure: 11 years (2012)
MANAGING DIRECTOR OF ENERGY AT
NAX GROUP
PARTNER AT MAGALONI ABOGADOS
| EDITORIALIST AT GRUPO REFORMA
Age: 71
Tenure: 11 years (2012)
Age: 60
Tenure: 2 years (2022)
Public boards (0):
Public boards (0):
Public boards (0):
Education:
BA from ITESM
MBA from San Diego
University
IMD Switzerland
Global Leadership Program
Education:
BA from ITESM
MA from Stanford
Education:
BA from ITESM
PGD in Economics from
MBA from IPADE
Cambridge University
Public boards (1):
BBVA México
Education:
BA from ITAM
Ph.D. from Universidad
Autónoma de Madrid
the Judicial Specialization Center of the
Mexican Supreme Court
Studies from
RELEVANT EXPERTISE
PETROCHEMICALS
AUTOMOTIVE
ENVIRONMENTAL
SOCIAL
OPERATIONS
PUBLIC POLICY,
CONSTITUTIONAL RIGHTS
AND REGULATORY
CONSUMER
GOODS
CONSTRUCTION
AUDIT & RISK
MANAGEMENT
FINANCE
STRATEGIC
PLANNING
ENERGY
REAL ESTATE
M & A
GOVERNANCE
46
BOARD OF DIRECTORS
MONTSERRAT
RAMIRO XIMÉNEZ
INDEPENDENT
JOSÉ ANTONIO
RIVERO LARREA
INDEPENDENT
JOSÉ DE JESÚS
VALDEZ SIMANCAS
INDEPENDENT CONSULTANT OF MEXICAN
ELECTRICITY MARKET
Age: 51
Tenure: 1 year (2023)
CHAIRMAN OF THE BOARD OF COMPAÑÍA
MINERA AUTLÁN | CEO AND CHAIRMAN
OF THE BOARD OF SFMH
Age: 70
Tenure: 5 years (2018)
SENIOR ADVISOR OF ALFA
Age: 71
Tenure: 1 year (2023)
ALEJANDRO
MARIANO
WERNER WAINFELD
INDEPENDENT
FOUNDING DIRECTOR AT GEORGETOWN
AMERICAS INSTITUTE
Age: 57
Tenure: 1 year (2023)
Public boards (1):
BlackRock Mexico
Education:
BA from ITAM | MEc from UCL
GradDip from Harvard Extension
School – Cambridge
Harvard Business School
GradDip from
Public boards (1):
Compañía Minera Autlán (Chairman)
Education:
Executive OPM Program from Harvard
Executive Program at MIT Sloan School
& IMD Business School
Public boards (1):
Betterware de México
Public boards (1):
Acciona Energía
Education:
BS and MBA from ITESM
Stanford University
MS from
Education:
BA from ITAM
PhD from MIT
RELEVANT EXPERTISE
PETROCHEMICALS
AUTOMOTIVE
ENVIRONMENTAL
SOCIAL
OPERATIONS
PUBLIC POLICY,
CONSTITUTIONAL RIGHTS
AND REGULATORY
CONSUMER
GOODS
CONSTRUCTION
AUDIT & RISK
MANAGEMENT
FINANCE
STRATEGIC
PLANNING
ENERGY
REAL ESTATE
M & A
GOVERNANCE
47
BOARD OF DIRECTORS
ENRIQUE
DE JESÚS
ZAMBRANO BENÍTEZ
INDEPENDENT | AUDIT AND CORPORATE
PRACTICES COMMITTEE
CHAIRMAN OF GRUPO PROEZA,
S.A. DE C.V.
Age: 67
Tenure: 11 years (2012)
JAIME
ZABLUDOVSKY KUPER
INDEPENDENT
VP OF IQOM INTELIGENCIA COMERCIAL
Age: 67
Tenure: 4 years (2019)
Public boards (1):
Fibrahotel
Public boards (1):
BBVA México
Education:
BA from ITAM
Ph.D. from Yale
Education:
BA from ITESM & MIT
MBA from
Stanford
RELEVANT EXPERTISE
PETROCHEMICALS
AUTOMOTIVE
ENVIRONMENTAL
SOCIAL
OPERATIONS
PUBLIC POLICY,
CONSTITUTIONAL RIGHTS
AND REGULATORY
CONSUMER
GOODS
CONSTRUCTION
AUDIT & RISK
MANAGEMENT
FINANCE
STRATEGIC
PLANNING
ENERGY
REAL ESTATE
M & A
GOVERNANCE
48
MANAGEMENT TEAM
DAVID
COINDREAU
GARZA
ALEJANDRO
LLOVERA
ZAMBRANO
GUSTAVO
TALANCÓN
GÓMEZ
TERESA
QUINTERO
MÁRMOL
JORGE P.
YOUNG
CERECEDO
JOSÉ CARLOS
PONS DE LA
GARZA
ALEJANDRO
ALANÍS
FERNÁNDEZ
ANDREAS
PLETTNER
RUTISHAUSER
ROBERTO
BLANCO
SÁNCHEZ
Senior Vice President Human CapitalChief Financial OfficerPresident of Polypropylene BusinessPresident of Expandable Styrenics BusinessPresident of Natural Gas BusinessPresident of Polyester BusinessPresident of Specialty Chemicals BusinessPresident of Polyester Filament and Fertilizer BusinessChief Executive Officer GOVERNANCE
49
CODE OF CONDUCT
All of Alpek’s
operations
are carried
out under a
framework
of legality,
respect
for human
rights and
ethical
conducts.
We have a code of conduct for all
employees, suppliers and any third
party involved in our business. This
document establishes the core values,
standards and culture that regulate our
daily behaviors. The most relevant topics
the Code addresses are anticorruption
practices (including bribes and gift
policies), conflict of interests, proprietary
information, intellectual property,
Human Rights, environmental protection,
community relations, and occupational
health and safety.
FOR MORE INFORMATION ON OUR
CODE OF CONDUCT, PLEASE VISIT
OUR WEBSITE.
50
FINANCIAL
REVIEW
MANAGEMENT'S ANALYSIS
In the United States, the economy
managed to continue to grow as consumer
spending remained robust throughout
the year amid challenges, including a run
up in interest rates to fight inflation, higher
mortgage rates, which caused lower home
sales, federal budget policy volatility and
growing geopolitical tensions.
The Mexican economy benefited from
multiple factors that led to Mexico´s
economic growth in 2023. The economy
experienced a boom in private
consumption, which remained resilient
even during a period of high inflation from
increased real wages, which encouraged
consumption, and a strong labor market
throughout the year. Nearshoring and
public investments also triggered the
economy to exceed expectations.
Throughout the year, the Mexican peso
strengthened, closing the year at 16.89(d)
pesos per dollar. The Mexican peso
was the second most appreciated
currency, after the Colombian peso. This
appreciation was due to factors such as
dollar flows from exports, remittances, and
foreign direct investment, in addition to
the wide interest rate differential between
Mexico and the United States.
Argentina economic conditions were
affected which by the end of year
presented a record increased inflation in
more than 30 years, reaching 211.4%. This
situation is mainly caused by a shortage
of reserves, elections and change of
government. Additionally, the Argentine
peso during the last month of the year
experienced a devaluation of the exchange
SOURCES:
(a) Bureau of Economic Analysis (BEA)
(b) National Institute of Statistics and Geography (INEGI)
(c) Bank of Mexico (Banxico)
(d) Banxico: Exchange rate for settling liabilities denominated in foreign currency
payable in Mexico
(e) Internal calculation based on INEGI, Bureau of Economic Analysis (BEA), and Bureau
of Labor Statistics (BLS), Bloomberg
51
rate of more than 50%, ~ 800 Argentine
pesos per dollar. This is one of the measures
of an austerity plan with the objective of
reducing the public deficit and inflation.
The behavior of the GDP and other variables
in Mexico and the United States, which is
essential to understanding the context of
Alpek’s results, is described below:
• In the United States, Gross Domestic
Product (GDP) increased 2.5%(a) in
2023, higher than the 1.9%(a) reported
in 2022. Consumer inflation was
3.4%(a) in 2023, lower than the 6.5%(a)
recorded in 2022.
• Mexico’s Gross Domestic Product
(GDP) increased 3.1%(b) in 2023,
compared to 3.1(b) in 2022. Consumer
inflation was 4.7%(c) in 2023, lower
than the 7.8(c) recorded in 2022. The
Mexican peso experienced an annual
appreciation of 12.7(d) in 2023.
• In Mexico, the average Interbank
Equilibrium Interest Rate (TIIE) was
11.4%(e) in nominal terms, as compared
to 7.9%(e) in 2022. In real terms, there
was an increase in the annual
aggregate of 6.2%(e) in 2023 and 0.3%(e)
in 2022. Regarding interest rates, the
annual average nominal 3month US
dollar SOFR rate, was 5.2%(c) in 2023,
compared to 2.2%(e) in 2022.
Unless otherwise specified, figures
are expressed in millions of nominal
pesos, while certain figures are
expressed as millions of dollars
(US$) due to the high dollarization
of Alpek’s revenues. Percentage
variations are stated in nominal
terms. All information is presented
in accordance with International
Financial Reporting Standards (IFRS).
VOLUME
Alpek experienced a shift
in industry and market
conditions affecting our
product portfolio reaching
4,635 thousands of tons in
2023, 8% lower than the 5,065
thousands of tons in 2022.
52
VOLUME
[Thousand
of tons]
2023
2022
2021
‘23 VS ‘22
[%]
‘22 VS ‘21
[%]
POLYESTER
3,785
4,099
3,796
PLASTICS &
CHEMICALS
TOTAL
VOLUME
849
966
1,002
4,635
5,065
4,798
-8
-12
-8
8
-4
6
PRICE INDEX
2023
2022
2021
‘23 VS ‘22
[%]
‘22 VS ‘21
[%]
MILLIONS OF
PESOS
MILLIONS OF
DOLLARS
MILLIONS OF
PESOS
MILLIONS OF
DOLLARS
MILLIONS OF
PESOS
MILLIONS OF
DOLLARS
105
119
69
78
92
104
POLYESTER
133
134
100
100
PLASTICS & CHEMICALS
102
103
TOTAL
129
130
100
100
100
100
-21
-11
-33
-24
-29
-20
33
34
2
3
29
30
REVENUES
2023
2022
2021
‘23 VS ‘22
[%]
‘22 VS ‘21
[%]
MILLIONS OF
PESOS
MILLIONS OF
DOLLARS
MILLIONS OF
PESOS
MILLIONS OF
DOLLARS
MILLIONS OF
PESOS
MILLIONS OF
DOLLARS
MILLIONS OF
PESOS
MILLIONS OF
DOLLARS
POLYESTER
102,154
140,717
98,000
5,739
6,991
4,828
PLASTICS & CHEMICALS
27,709
46,804
47,470
1,556
2,321
2,342
OTHERS
8,296
24,914
10,754
464
1,243
528
TOTAL REVENUES
138,159
212,435
156,224
7,759
10,555
7,697
-27
-18
-41
-33
-67
-63
-35
-26
44
45
-1
-1
132
135
36
37
REVENUES
Alpek’s total revenue in 2023 was $138,159 million (US $7,759
million), 35% lower than the $212,435 million (US $10,555
million) in 2022. This decrease was primarily driven by a
decrease in average prices of 29% and 20% in pesos and
dollars, respectively, from decreased feedstock prices
along with a subdued consolidated volume.
53
REVENUES BY BUSINESS
SEGMENT
Polyester’s net revenues in 2023 were
$102,154 million (US $5,739 million), 27%
less than the $140,717 million (US $6,991
million) in 2022. This segment posted a
decrease of 21% and 11% in average sale
prices in pesos and dollars, respectively.
Volume decreased 8% when compared
to 2022 mainly due to lower consumer
spending impacting demand. Plastics &
Chemicals posted revenues of $27,709
million (US$1,556 million) in 2023, in
comparison to the $46,804 million
(US$2,321 million) in 2022. The average
sale prices in pesos and in dollars
decreased by 33% and 24%, respectively,
with a volume decreased by 12% year-
over-year, from additional PP capacity
in the region and tempering demand,
resulting in an overall 35% decrease
in revenues.
54
EBITDA
[Millions of pesos]
2023
2022
2021
‘23 VS ‘22
[%]
‘22 VS ‘21
[%]
EBITDA
[Millions of dollars]
2023
2022
2021
‘23 VS ‘22
[%]
‘22 VS ‘21
[%]
POLYESTER
5,062
17,923
12,560
PLASTICS &
CHEMICALS
4,108
11,391
10,173
OTHERS
90
110
501
TOTAL EBITDA
9,260
29,424
23,234
-72
-64
-18
-69
43
12
-78
27
POLYESTER
PLASTICS &
CHEMICALS
281
228
OTHERS
5
886
564
5
618
503
25
TOTAL EBITDA
514
1,455
1,145
-68
-60
-
-65
43
12
-78
27
OPERATING PROFIT
AND EBITDA
In 2023, the operating (loss) income was
-$6,437 million (US -$386 million), 126%
lower than the $24,539 million (US $1,212
million) in 2022. As of December 31, 2023,
consolidated EBITDA was $9,260 million
(US $514 million) a decrease of 69%
compared to the $29,424 million (US
$1,455 million) of 2022. The consolidated
EBITDA includes a net negative effect from
extraordinary items of $3,831 million
(US $221 million), resulting in a
Comparable EBITDA of $13,092 million
(US $734 million), 53% lower than in 2022.
OPERATING PROFIT
AND EBITDA BY
BUSINESS SEGMENT
In 2023, the EBITDA for the Polyester
segment decreased by 72% to $5,062
million (US $281 million), including a
net negative effect from extraordinary
items of $3,781 million (US $216
million). Adjusting for these items, the
Comparable EBITDA for the Polyester
segment was $8,842 million (US $497
Million), a decrease of 47% year-over-
year from a softness in demand driven
from normalization of ocean freight
costs, an imbalance between supply
and demand. The EBITDA for the Plastics
& Chemicals segment decreased
64% to $4,108 million (US $228 million),
compared to $11,391 million (US $564
million) in 2022, including a net negative
effect from extraordinary items of $51
million (US $5 million). Adjusting for
these items, the Comparable EBITDA
for the Plastics & Chemicals segment
was $4,159 million (US $232 million), a
decrease of 64% year-over-year, from
greater influence from Asian imports
in the Americas, mainly for the EPS
businesses and additional PP capacity
in the region.
NET FINANCIAL RESULT
In 2023, the net financial cost was
-$2,668 million (US -$151 million), 11%
lower than in 2022. The net financing
expenses that comprise this item
increase from -$2,302 million (US -$114
million) in 2022, to -$2,665 million
(US -$149 million) in 2023. In addition,
variations in exchange rates resulted in
the recognition of a non-cash foreign
exchange loss of -$3 million (US -$1
million) in 2023, versus -$695 million (US
-$34 million) in 2022.
TAXES
In 2023, an income tax was posted for
-$727 million (US -$39 million) as a
result of a decreased pretax income,
while 2022 posted an income tax of
-$5,509 million (US -$272 million).
55
FINANCIAL RESULT,
NET
[Millions of pesos]
2023
2022
2021
‘23 VS ‘22
[%]
‘22 VS ‘21
[%]
FINANCIAL EXPENSE
-3,982
-3,224
-3,082
FINANCIAL INCOME
1,317
922
590
FINANCIAL
EXPENSES, NET
LOSS DUE TO
EXCHANGE
FLUCTUATION, NET
FINANCIAL RESULT,
NET
-2,665
-2,302
-2,492
-3
-695
-652
-2,668
-2,997
-3,144
11
-23
43
-16
100
-5
56
8
-6
5
TAXES
[Millions of pesos]
Income (loss) before
taxes
2023
2022
2021
‘23 VS ‘22
[%]
‘22 VS ‘21
[%]
-9,306
21,475
14,311
-143
50
Income tax rate
30%
30%
30%
Statuory income tax
rate
(expenses) benefit
Taxes for
permanent
differences between
accounting-taxable
profit
2,792
-6,443
-4,293
143
-50
-3,519
934
178
-477
423
TOTAL INCOME TAX
-727
-5,509
-4,115
87
-34
Effective tax rate
8%
26%
29%
COMPRISED AS FOLLOWS
Current income tax
-2,358
-5,345
-4,304
56
Deferred income tax
1,631
-164
189
1,095
TOTAL INCOME TAX
-727
-5,509
-4,115
87
-24
-187
-34
56
STATEMENT OF
INCOME
[Millions of pesos]
OPERATING
(LOSS) INCOME
FINANCIAL RESULT,
NET
EQUITY IN INCOME
OF ASSOCIATES
AND JOINT
VENTURES
2023
2022
2021
‘23 VS ‘22
[%]
‘22 VS ‘21
[%]
-6,437
24,539
17,494
-126
-2,668
-2,997
-3,144
11
40
5
-201
-67
-39
-200
-74
INCOME TAX
-727
-5,509
-4,115
87
-34
CONSOLIDATED NET
(LOSS) INCOME
(LOSS) INCOME
ATTRIBUTABLE TO
CONTROLLING
INTEREST
-10,033
15,966
10,196
-162
-10,914
13,744
7,756
-178
57
77
NET (LOSS) INCOME ATTRIBUTABLE TO
THE CONTROLLING INTEREST
In 2023, consolidated net (loss) income attributable to the controlling interest was
-$10,914 million (US -$636 million), 178% lower than the $13,744 million (US $679 million)
in the previous year, stemming from lower operating income.
INVESTMENTS IN FIXED AND INTANGIBLE ASSETS
In 2023, investments in fixed and intangible assets totaled $4,965 million
(US $277 million), 71% lower than the $17,339 million (US $862 million) posted in 2022.
A portion of the resources were allocated to CCP, asset replacements as well as
schedule maintenance.
57
FINANCIAL INDICATORS
[Times]
NET DEBT / EBITDA
INTEREST COVERAGE
TOTAL LIABILITIES
/ STOCKHOLDERS’ EQUITY
2023
2022
2021
3.4
3.4
2.1
1.3
11.4
1.6
1.1
8.7
1.5
SHORT AND LONG
TERM DEBT2
[Millions of Dollars]
2023
2022
‘23 VS ‘22
INTEGRATED
2023
INTEGRATED
2022
SHORT-TERM DEBT
41
49
-16%
CURRENT PORTION OF LT
DEBT
2 YEARS
0
0
3 YEARS
133
4 YEARS
503
300
-100%
25
0
50
-100%
100%
905%
5 YEARS
200
500
-60%
6 YEARS
499
7 YEARS
0
8+ YEARS
605
0
499
605
TOTAL
1,981
2,027
100%
-100%
0%
-2%
AVG. MATURITY LONG-
TERM DEBT (years)
AVG. MATURITY TOTAL
DEBT(years)
5.2
5.2
5.4
5.5
2%
0%
0%
7%
25%
10%
25%
0%
31%
2%
15%
1%
0%
2%
25%
0%
25%
30%
100%
100%
(1) Net Debt = Current debt plus non-current debt (excluding debt issuance costs), plus accrued interest payable, less cash and cash
equivalents, less restricted cash and cash equivalents.
(2) Excludes leases and lease interests.
NET DEBT1
Net debt was $29,205
million (US $1,729
million) as of December
31, 2023, 19% below the
$36,005 million (US
$1,860 million) as of
December 31, 2022. The
cash balance and cash
equivalents totaled
$7,714 million (US $457
million) Including
restricted cash at year
end 2023.
58
APPENDIX
GLOSSARY
59
Arcel®
A Polystyrene (PS) & Polyethylene (PE)
copolymer used in protective packaging
for high-end products like electronics. Due
to its resistance to tearing, puncturing,
cracking, and flaking, it absorbs shocks
without decreasing its protection.
Circularity
All products that have a circularity focus
are manufactured in a way so they can
be disassembled or come to their end-
of-life and their materials will either be
broken down by nature or returned to
production. It means that these products
are designed, and developed with their
end-of-life taken into consideration.
Clean industry Certification
Certification granted by The mexican
environmental Protection agency
(profepa) To companies that comply with
Environmental legislation.
Co2 emissions
Unit to measure the carbon dioxide
produced by the burning of solid, liquid
and gaseous fuels, Including natural gas.
Comprehensive responsibility
administrative system
(National Association of the
Chemical Industry, ANIQ)
Certification given to companies that
comply with the six comprehensive
responsibility requirements established by
the ANIQ, covering Process safety, Health
and safety in the workplace, Product
safety, Transportation and distribution,
Prevention and control of environmental
pollution and Community protection.
ESG
Environmental, Social and Governance.
Ethane
Hydrocarbon part of the natural gas
liquids, which at room temperature is
colorless and odorless. It is used as a raw
material to produce ethylene.
Ethylene
Compound produced from ethane. It is
the raw material used to produce vinyl
acetate, ethyl chloride, styrene, ethylene
oxide and polyethylenes.
Ethylene oxide
LTIR
Compound produced from ethylene and
used as an intermediate in the production
of MEG and other chemicals.
Lost Time Incident Rate is a standard
OSHA metric that calculates the number
of incidents that result in time away
from work.
Expandable
polystyrene (EPS)
Light, rigid, cellular plastic, product of
the polymerization of styrene monomer.
EPS is a versatile material because of its
properties as an impact reducer and
thermal insulator, with customized molding
capacity. These properties, combined with
the ease with which it can be processed,
make EPS a popular packaging for
impact-sensitive items and for protecting
perishables. It is also widely used in
construction systems, to lighten floor and
roof structures, and as an insulator.
Greenhouse gases (GHG)
Components of the atmosphere that
absorb and emit radiation within the
infrared range, causing the Earth’s surface
temperature to increase.
Megawatt (MW)
Unit of power, equal to 1 million watts.
Paraxylene (PX)
Hydrocarbon in the xylene family used
to produce PTA. It is also a component
of gasoline.
Polyethylene terephthalate
(PET/vPET)
Material widely used to manufacture
bottles and other containers for liquids,
food and personal hygiene, household
and healthcare products. PET flakes and
films are used to produce caps, trays and
recipients. Because of its transparency,
strength, durability and high protection
barriers, PET presents no known health
risks, is light and recyclable, and has a
wide range of applications in reusable,
temperature-sensitive packaging. PET
60
TRIR
“Total Recordable Incident Rate.” It is a
calculation that takes into account how
many OSHA recordable incidents your
company has per number of hours worked.
Watt
Unit of power in the International
System of Units (SI).
WEPs
Women's Empowerment Principles
GLOSSARY
has replaced glass and aluminum, as
well as other plastics such as PVC and
polyethylene, for making containers.
Recycled polyethylene
Terephthalate (rPET)
PET bottles are cleaned and crushed to
produce new PET products. Other rPET
uses include carpets, fabrics for the
clothing industry, and fibers.
Polypropylene (PP)
Thermoplastic polymer, produced
from the polymerization of propylene
monomer. Its properties include a low
specific gravity, great rigidity, resistance
to relatively high temperatures and
good resistance to chemicals and
fatigue. PP has diverse applications,
including for packaging, textiles,
recyclable plastic parts and different
kinds of containers, autoparts and
polymer (plastic) banknotes.
Propylene
Unsaturated, 3-carbon hydrocarbon,
coproduct of the cracking process at
petrochemical complexes and a by-
product at oil refineries. It is used in the
petrochemical industry to produce PP,
propylene oxide, cumene, isopropanol,
acrylic acid and acrylonitrile. It is also
converted into a gasoline component by
alkylation with butanes or pentanes
Propylene oxide
Compound produced from propylene
and used to manufacture commercial
and industrial products, including polyols,
glycols and glycol-ethers.
Purified terephthalic
acid (PTA)
Aromatic dicarboxylic acid, the main raw
material in polyester production. PTA is
produced by the oxidation of paraxylene.
It is used to manufacture PET, which is then
used to make bottles for water, soft drinks
and other beverages, containers and other
packaging, and polyester fiber for rugs,
clothing, furniture and industrial applications,
as well as other consumer products.
SBTi
Science Based Targets initiative (SBTi)
is a collaboration between the Climate
Disclosure Project (CDP), the United
Nations Global Compact, World Resources
Institute (WRI) and the World Wide Fund for
Nature (WWF) to help companies define a
target of emissions reduction.
Scope 1, 2 and 3
Scope 1 are emissions directly related to
the operations, Scope 2 are emissions
related to utilities (indirectly) and scope 3
are emissions that are generated up and
down the chain of a product creation
and use (suppliers and customers).
SDGs
Sustainable Development Goals.
Single-pellet technology™
The Single-pellet Technology creates
a pellet where mechanically Recycled
PET (rPET) flake is used as a raw material
feedstock in the virgin PET production
process. Once injected into the PET
manufacturing process, the rPET flake
melts and the polymer is chemically
integrated allowing the rebuilding of
polymer chains to create a new PET resin
pellet with an integrated recycle content
of up to 25% with performance equal to
that of virgin PET.
Styrene monomer
Unsaturated hydrocarbon used to make
a variety of plastics, synthetic rubber,
protective coatings and resins. It is the
main raw material in EPS production
and used as a solvent and chemical
intermediate.
OUR FOOTPRINT
61
NOTE: rPET flake capacity was modified to reflect inputs / totals and may reflect rounding.
Kta: Thousand tons per year.
SOURCE: Alpek estimates.
SITE
PTA
RESIN
SHEET
FLAKE
PELLET
SPT
FIBERS
PP
EPS
ARCEL
OTHER
MEXICO
MONTERREY
ALTAMIRA
1,000
SALAMANCA
COSOLEACAQUE
610
185
15
LERMA
160
640
240
360
100
SITE
PTA
RESIN
SHEET
FLAKE
PELLET
SPT
FIBERS
PP
EPS
ARCEL
OTHER
USA
170
170
725
430
FAYETTEVILLE, NC
CHARLESTON, SC
COLUMBIA, SC
640
BAY ST. LOUIS, MS
RICHMOND, IN
DARLINGTON, SC
MONACA, PA
CINCINNATI, OH
READING, PA
64
66
15
15
31
26
33
115
49
123
45
36
(3,310)(2,753) OUR FOOTPRINT
62
Canada
SITE
PTA
RESIN
SHEET
FLAKE
PELLET
SPT
FIBERS
PP
EPS
ARCEL
OTHER
MONTREAL
144
SITE
PTA
RESIN
SHEET
FLAKE
PELLET
SPT
FIBERS
PP
EPS
ARCEL
OTHER
Argentina
ZÁRATE
PACHECO
GENERAL LAGOS
190
22
15
SITE
PTA
RESIN
SHEET
FLAKE
PELLET
SPT
FIBERS
PP
GUARATINGUETA
IPOJUCA
640
450
90
19
EPS
46
ARCEL
OTHER
SITE
PTA
RESIN
SHEET
FLAKE
PELLET
SPT
FIBERS
PP
EPS
ARCEL
OTHER
SANTIAGO
PUERTO MONTT
PUNTA ARENAS
CONCÓN
5
2
1
20
Brazil
Chile
(144)(246)(28)(1,226) OUR FOOTPRINT
63
Oman
SITE
PTA
RESIN
SHEET
FLAKE
PELLET
SALALAH
576
400
48
SPT
48
FIBERS
PP
EPS
ARCEL
OTHER
Saudi
Arabia
UK
SITE
PTA
RESIN
SHEET
FLAKE
PELLET
SPT
FIBERS
PP
EPS
ARCEL
OTHER
RIYADH
11
SITE
PTA
RESIN
SHEET
FLAKE
PELLET
SPT
FIBERS
PP
EPS
ARCEL
OTHER
WILTON
220
TOTAL: 9,011 Kta
PTA
2,890
RESIN
3,260
SHEET
FLAKE
PELLET
433
268
169
SPT
93
FIBERS
250
PP
640
EPS
493
ARCEL
OTHER
36
479
(1,072)(11)(220) OUR VALUE CHAINS
OIL
REFINERY
NAPHTHA
REFORMER
PARAXYLENE
PTA
ETHANE
CRACKER
ETHYLENE
CRACKER
OIL
REFINERY
NAPHTHA
BENZENE
PENTANE
STYRENE
POLYETHYLENE
EPS
ARCEL
CRACKER
ETHYLENE OXIDE
MONOETHYLENE GLYCOL
PROPANE
PDH
PROPYLENE
POLYPROPYLENE
64
THERMOFORM
PACKAGING
LÁMINA
DE PET
rPET SHEET
rPET FLAKE
PET
rPET PELLET
Alpek’s
products
are used by
millions of
people daily,
in a wide
variety of
applications.
OUR APPROACH TO REPORTING
65
This report was prepared with reference to the GRI Standards 2021 and 2016 versions, ensuring compliance with the clarity, balance, comparability, completeness, and timeliness principles, as a minimum.Striving to improve how we manage ESG issues, in addition to the GRI contents and our contributions to the Sustainable Development Goals, we include information to meet the Sustainability Accounting Standards Board (SASB) applicable to Chemicals and our performance within the framework developed by the Task Force for Climate-related Financial Disclosures (TCFD).The publication of our sustainability performance information, aligned with our financial materiality, represents a significant step towards integrating environmental, social, and governance (ESG) criteria into our core business strategy. This initiative not only underscores the company's commitment to sustainability but also highlights its recognition of the growing importance of sustainable practices in today's corporate landscape.Likewise, we maintain our commitment to contribute to the Sustainable Development Goals (SDG) of the United Nations, 2030 Agenda.FOR ADDITIONAL INFORMATION, WE PREPARED AN ESG BOOKLET AVAILABLE ON:HTTPS://WWW.ALPEK.COM/ESG/GOVERNANCE/ 66
CONSOLIDATED
FINANCIAL
STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021,
AND INDEPENDENT AUDITORS’ REPORT DATED JANUARY 31, 2024
INDEPENDENT AUDITORS’ REPORT TO THE BOARD OF DIRECTORS
AND STOCKHOLDERS OF ALPEK, S. A. B. DE C. V. AND SUBSIDIARIES
67
(Figures in millions of Mexican pesos “$” and millions of U.S. dollars “US$”)
Opinion
We have audited the consolidated financial statements of Alpek, S. A. B. de C. V. and Subsidiaries (“Alpek”
or the “Company”), which comprise the consolidated statements of financial position as of December 31,
2023, 2022 and 2021, the consolidated statements of income, the consolidated statements of comprehensive
income, the consolidated statements of changes in stockholders’ equity and the consolidated statements
of cash flows for the years then ended, and the notes to the consolidated financial statements, including
material accounting policies information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the
consolidated financial position of Alpek, as of December 31, 2023, 2022 and 2021, and their consolidated finan-
cial performance and their consolidated cash flows for the years then ended, in accordance with International
Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board.
Basis for Opinion
We conducted our audits in accordance with International Standards on Auditing (“ISA”). Our responsibilities
under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Company in accordance with the
International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA
Code”) together with the Code of Ethics issued by the Mexican Institute of Public Accountants (“IMCP Code”),
and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code and with the IMCP
Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Other matters
The accompanying consolidated financial statements have been translated from Spanish to English for the
convenience of readers.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the consolidated financial statements for the year 2023. These matters were addressed in the context of our
audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. We have determined that the matter described below is the key
audit matter that should be reported in our report.
Impairment Assessment - Investment in Corpus Christi Polymers LLC Project Shares
As mentioned in Note 3 b) v. to the accompanying consolidated financial statements, the Company evaluates
at each reporting date whether there is objective evidence that the joint ventures are impaired. If so, the
Company calculates the amount of impairment as the difference between the recoverable value of the joint
venture and its carrying amount, and recognizes it in the consolidated income statement.
As mentioned in Note 2d. to the accompanying consolidated financial statements, on September 27, 2023,
the Company and its Corpus Christi Polymers, LLC (“CCP”) joint venture partners announced their decision to
temporarily pause construction of their integrated PTA-PET plant in Texas, due to high inflation rates and other
factors, construction and labor costs have exceeded initial expectations. The Company and its partners have
decided to evaluate options to optimize project costs and schedule, as well as properly preserve the site so
that construction can resume at a later date. As a result, the Company’s Management considered this event
as an indicator of impairment and estimated the recoverable value of the joint venture in accordance with the
requirements of IAS 36, Impairment of Assets, using the "discounted cash flows" ("DCF") valuation methodology,
under the revenue approach. As a result, the Company recognized in the consolidated statement of income
for the year ended December 31, 2023, an impairment expense of $9,591 (US$557).
Due to the significant judgments used by Management in the valuation model for determining the recoverable
value of the investment, we believe that it represents a key issue of our audit.
How our audit addressed this key audit issue:
To carry out audit procedures that mitigate the identified risk in a reasonable manner, we involve a team of
valuation experts to evaluate the premises and criteria used by Management, which include, among others,
the following procedures:
•
We tested the design and implementation of controls on the determination of the recoverable value and
the assumptions used.
• We reviewed the contractual agreements and of the Board of Directors of the Company.
•
We verified that the methodology and model used by Management so that the determination of the re-
coverable values were those used and recognized to value assets with similar characteristics.
We challenge Management's financial projections and compare them with similar business performance
indicators.
•
68
• We review the most relevant valuation assumptions (discount rate and projected operating margin).
•
Reviewed compliance with the presentation and disclosure requirements set forth in IAS 1, Presentation of
Financial Statements, IAS 28, Investments in Associates and Joint Ventures, and IAS 36.
The results of our procedures were satisfactory.
Emphasis Paragraph
As mentioned in Note 2 e. to the accompanying consolidated financial statements, derived from the acqui-
sition of Octal, Alpek assumed control on June 1, 2022, consolidating its operations as of that date, therefore,
the consolidated financial statements to and for the years ended December 31, 2023, 2022 and 2021 are not
comparable each other. Our opinion is not modified by what is mentioned in this paragraph.
Information Other Than the Consolidated Financial Statements and Auditor’s Report Thereon
The Company’s Management is responsible for the additional information presented. Additional information
includes: i) the information that will be incorporated in the Annual Report that the Company is required to pre-
pare in accordance with Article 33, section I, subsection b) of Title Four, Chapter One of the General Provisions
Applicable to Issuers and other Participants of the Stock Market in México and the Instructions that accompa-
ny these provisions (the "Provisions"), which is expected that the Annual Stock Exchange Filling and the Annual
Report to be available for reading after the date of this audit report; and ii) other additional information, which
is a measure that is not required by IFRS, and has been incorporated for the purpose of providing additional
explanation to its investors and main readers of its consolidated financial statements to evaluate the perfor-
mance of each of the operating segments and other indicators on the capacity to meet obligations regarding
the earnings before interest, taxes, depreciation, amortization and non-current asset impairment ("adjusted
EBITDA") of the Company; this information is presented in Note 29.
Report, we will issue the declaration on its reading, required in Article 33, Section I, subsection b) number 1.2 of
the Provisions. Also, and in connection with our audit of the consolidated financial statements, our responsibil-
ity is to read and recalculate the additional information, which in this case is the measure not required by IFRS,
and in doing so, consider whether the other information contained therein is materially inconsistent with the
consolidated financial statements or our knowledge obtained during the audit, or appears to be materially
misstated. If, based on the work we have performed, we conclude that there is a material misstatement in the
additional information; we would be required to report that fact. As of the date of this report, we have nothing
to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements
in accordance with IFRS, and for such internal control as Management determines is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the consolidated financial statements, Management is responsible for assessing the Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless Management either intends to liquidate the Company or to
cease operations, or has no realistic alternative but to do so.
Those charged with Company´s governance are responsible for overseeing the Company’s consolidated fi-
nancial reporting process.
Our opinion of the consolidated financial statements will not cover the additional information and we will not
express any form of assurance about it.
In connection with our audit of the consolidated financial statements, our responsibility will be to read the
additional information, when it becomes available, and when we do so, to consider whether the addition-
al information contained therein is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit or appears to contain a material misstatement. When we read the Annual
Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could rea-
sonably be expected to influence the economic decisions of users taken on the basis of these consolidated
financial statements.
69
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
We communicate with those charged with governance in the Company regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
–
–
–
–
–
–
Identify and assess the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
We also provide those charged with governance in the Company with a statement that we have complied
with relevant ethical requirements regarding independence, and to communicate with them all relationships
and other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting esti-
mates and related disclosures made by Management.
From the matters communicated with those charged with governance in the Company, we determine those
matters that were of most significance in the audit of the consolidated financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we deter-
mine that a matter should not be communicated in our report because the adverse consequences of doing
so would reasonably be expected to outweigh the public interest benefits of such communication.
Conclude on the appropriateness of Management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related
disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report.
However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of the financial statements, including the dis-
closures, and whether the consolidated financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Company and subsidiaries to express an opinion on the consolidated financial state-
ments. We are responsible for the direction, supervision, and performance of the audit of the consolidated
financial statements of the Company. We remain solely responsible for our audit opinion.
Galaz, Yamazaki, Ruiz Urquiza, S.C.
Affiliate of a member firm of Deloitte Touche Tohmatsu Limited
C. P. C. JESÚS ISRAEL ALMAGUER GÁMEZ
Monterrey, Nuevo León, México
January 31, 2024
70
Alpek, S. A. B. de C. V. and Subsidiaries (Subsidiary of Alfa, S. A. B. de C. V.)
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As of December 31, 2023, 2022 and 2021
In millions of Mexican pesos
Note
2023
2022
2021
Note
2023
2022
2021
ASSETS
Current assets:
Cash and cash equivalents
Restricted cash
Trade and other accounts receivable, net
Inventories
Derivative financial instruments
Prepayments
Total current assets
Non-current assets:
Restricted cash
Property, plant and equipment, net
Right-of-use asset, net
Goodwill and intangible assets, net
Deferred income taxes
Derivative financial instruments
Prepayments
Investments accounted for using the equity
method and other non-current assets
Total non-current assets
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Debt
Lease liability
Trade and other accounts payable
Income taxes payable
Derivative financial instruments
Provisions
Total current liabilities
6
6
7
8
4
9
6
10
11
12
20
4
9
13
16
17
15
20
4
18
$
$
$
7,391
8
17,473
23,322
86
744
49,024
314
40,952
3,170
3,494
1,334
9
6
4,381
53,660
102,684
689
701
27,129
390
253
749
29,911
$
$
$
6,319
193
23,248
33,893
7
765
64,425
360
48,451
3,452
4,425
1,709
3
7
13,987
72,394
136,819
7,712
821
31,985
1,410
1,220
794
43,942
$
$
$
10,541
13
24,502
25,705
333
686
61,780
-
39,405
3,554
3,348
1,630
18
31
14,179
62,165
123,945
2,660
733
29,853
1,630
248
546
35,670
Non-current liabilities:
Debt
Lease liability
Derivative financial instruments
Provisions
Deferred income taxes
Income taxes payable
Employee benefits
Other non-current liabilities
Total non-current liabilities
Total liabilities
Stockholders’ equity
Controlling interest:
Capital stock
Share premium
Retained earnings
Other reserves
Total controlling interest
Non-controlling interest
Total stockholders’ equity
Total liabilities and stockholders’ equity
16
17
4
18
20
20
19
21
22
14
32,648
2,755
12
739
2,024
-
880
493
39,551
69,462
6,019
8,909
17,298
(3,534)
28,692
4,530
33,222
102,684
$
$
31,369
2,803
21
1,060
3,845
-
1,025
560
40,683
84,625
6,021
8,917
31,032
933
46,903
5,291
52,194
136,819
29,333
2,875
6
835
4,124
241
1,029
246
38,689
74,359
6,028
8,976
24,591
4,121
43,716
5,870
49,586
123,945
$
The accompanying notes are an integral part of these consolidated financial statements.
Alpek, S. A. B. de C. V. and Subsidiaries (Subsidiary of Alfa, S. A. B. de C. V.)
CONSOLIDATED STATEMENTS OF INCOME
For the years ended December 31, 2023, 2022 and 2021
In millions of Mexican pesos, except for earnings (losses) per share amounts
71
Revenues
Cost of sales
Gross profit
Selling expenses
Administrative expenses
Other (loss) income, net
Operating (loss) income
Financial income
Financial expenses
Loss due to exchange fluctuation, net
Financial result, net
Equity in loss of associates and joint ventures recognized
using the equity method
(Loss) income before taxes
Income taxes
Note
2023
2022
2021
29
24
24
24
25
26
26
26
20
$
138,159
$
212,435
$
156,224
(127,863)
(181,401)
(131,537)
10,296
(2,132)
(3,718)
(10,883)
(6,437)
1,317
(3,982)
(3)
(2,668)
(201)
(9,306)
(727)
31,034
(3,144)
(3,799)
448
24,539
922
(3,224)
(695)
(2,997)
(67)
21,475
(5,509)
24,687
(2,570)
(3,466)
(1,157)
17,494
590
(3,082)
(652)
(3,144)
(39)
14,311
(4,115)
Net consolidated (loss) income
$
(10,033)
$
15,966
$
10,196
(Loss) income attributable to:
Controlling interest
Non-controlling interest
$
(10,914)
$
13,744
$
881
2,222
7,756
2,440
$
(10,033)
$
15,966
$
10,196
(Losses) earnings per basic and diluted share, in Mexican pesos
$
(5.18)
$
6.52
$
Weighted average outstanding shares (millions of shares)
2,107
2,108
3.67
2,111
The accompanying notes are an integral part of these consolidated financial statements.
72
Alpek, S. A. B. de C. V. and Subsidiaries (Subsidiary of Alfa, S. A. B. de C. V.)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the years ended December 31, 2023, 2022 and 2021
In millions of Mexican pesos
Net consolidated (loss) income
Other comprehensive (loss) income for the year:
Note
2023
2022
2021
$
(10,033)
$
15,966
$
10,196
Items that will not be reclassified to the statement of income:
Remeasurement of employee benefit obligations, net of taxes
19, 20
5
(19)
344
Items that will be reclassified to the statement of income:
Equity in other comprehensive income of associates
and joint ventures recognized through the equity method
(1)
1
Effect of derivative financial instruments designated
as cash flow hedges, net of taxes
Translation effect of foreign entities
Total other comprehensive (loss) income
for the year
4, 20
4, 20
765
(5,923)
(855)
(2,652)
(5,154)
(3,525)
22
(1)
(431)
110
Consolidated comprehensive (loss) income
$
(15,187)
$
12,441
$
10,218
Attributable to:
Controlling interest
Non-controlling interest
Comprehensive (loss) income for the year
$
(15,381)
$
10,556
$
194
1,885
7,586
2,632
$
(15,187)
$
12,441
$
10,218
The accompanying notes are an integral part of these consolidated financial statements.
73
Alpek, S. A. B. de C. V. and Subsidiaries (Subsidiary of Alfa, S. A. B. de C. V.)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
For the years ended December 31, 2023, 2022 and 2021
In millions of Mexican pesos
Balance as of January 1, 2021
Net income
Total other comprehensive loss for the year
Comprehensive income
Dividends declared
Reissuance of shares
Repurchase of shares
Other
Balance as of December 31, 2021
Net income
Total other comprehensive loss for the year
Comprehensive income
Dividends declared
Reissuance of shares
Repurchase of shares
Other
Balance as of December 31, 2022
Net loss
Total other comprehensive loss for the year
Comprehensive loss
Dividends declared
Reissuance of shares
Repurchase of shares
Other
Capital
stock
Share
premium
Retained
earnings
Other
reserves
Total
controlling
interest
Non-
controlling
interest
Total
stockholders’
equity
$
6,035
$
9,025
$
-
-
-
-
30
(37)
-
6,028
-
-
-
-
19
(26)
-
6,021
-
-
-
-
36
(38)
-
-
-
-
-
206
(255)
-
8,976
-
-
-
-
161
(220)
-
8,917
-
-
-
-
176
(184)
-
21,035
7,756
-
7,756
(3,806)
-
-
(394)
24,591
13,744
-
13,744
(7,515)
-
-
212
31,032
(10,914)
-
(10,914)
(2,866)
-
-
46
$
4,291
$
40,386
$
-
(170)
(170)
-
-
-
-
4,121
-
(3,188)
(3,188)
-
-
-
-
933
-
(4,467)
(4,467)
-
-
-
-
7,756
(170)
7,586
(3,806)
236
(292)
(394)
43,716
13,744
(3,188)
10,556
(7,515)
180
(246)
212
46,903
(10,914)
(4,467)
(15,381)
(2,866)
212
(222)
46
5,126
2,440
192
2,632
(1,889)
-
-
1
5,870
2,222
(337)
1,885
(2,464)
-
-
-
5,291
881
(687)
194
(955)
-
-
-
$
45,512
10,196
22
10,218
(5,695)
236
(292)
(393)
49,586
15,966
(3,525)
12,441
(9,979)
180
(246)
212
52,194
(10,033)
(5,154)
(15,187)
(3,821)
212
(222)
46
Balance as of December 31, 2023
$
6,019
$
8,909
$
17,298
$
(3,534)
$
28,692
$
4,530
$
33,222
The accompanying notes are an integral part of these consolidated financial statements.
Alpek, S. A. B. de C. V. and Subsidiaries (Subsidiary of Alfa, S. A. B. de C. V.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2023, 2022 and 2021
In millions of Mexican pesos
2023
2022
2021
2023
2022
2021
74
Cash flows from operating activities
(Loss) income before income taxes
Depreciation and amortization
Impairment of long-lived assets
Allowance for doubtful accounts
Financial result, net
Gain on business combinations
Loss on sale of property, plant and equipment
Statutory employee profit sharing, provisions and other items
Subtotal
Movements in working capital
(Increase) decrease in trade receivables and other assets
Decrease (increase) in inventories
Increase (decrease) in trade and other accounts payable
Income taxes paid
Net cash flows generated from operating activities
Cash flows from investing activities
Interest collected
Cash flows in acquisition of property, plant and equipment
Cash flows in sale of property, plant and equipment
Cash flows in acquisition of intangible assets
Cash flows in business acquisition, net of cash acquired
Cash flows paid in investment in associates and joint ventures
Loans granted to related parties
Notes receivable
Collection of notes
Restricted cash
$
(9,306)
$
21,475
$
4,619
11,078
(101)
2,007
-
66
2,247
10,610
(2,107)
6,623
4,296
(4,398)
15,024
1,258
(2,501)
13
(40)
(512)
(1,925)
(65)
-
273
179
4,639
246
(163)
2,699
(425)
74
764
365
(5,525)
(3,218)
(5,721)
15,210
511
(3,068)
93
(11)
(10,198)
(831)
-
(35)
883
(252)
Net cash flows used in investing activities
(3,320)
(12,908)
(3,860)
Cash flows from financing activities
14,311
4,280
1,460
25
Proceeds from debt
Payments of debt
Lease payments
Interest paid
2,951
Dividends paid by Alpek, S. A. B. de C. V.
(29)
Dividends paid by subsidiaries to non-controlling interest
29
302
Repurchase of shares
Reissuance of shares
29,309
23,329
Loan payments to related parties and others
Net cash flows used in financing activities
Increase (decrease) in cash and cash equivalents
Effect of changes in exchange rates
Cash and cash equivalents at the beginning of the year
(8,159)
(8,994)
9,448
(2,394)
36,732
(37,104)
(1,170)
(3,059)
(2,966)
(955)
(222)
212
-
(8,532)
3,172
(2,100)
6,319
15,600
(7,474)
(1,109)
(2,541)
(7,443)
(2,464)
(246)
180
(118)
(5,615)
(3,313)
(909)
10,541
13,038
(12,708)
(1,049)
(2,566)
(3,710)
(1,889)
(292)
236
(46)
(8,986)
384
13
10,144
13,230
Cash and cash equivalents at the end of the year
$
7,391
$
6,319
$
10,541
The accompanying notes are an integral part of these consolidated financial statements.
322
(4,418)
5
(18)
78
(227)
-
-
398
-
75
Alpek, S. A. B. de C. V. and Subsidiaries (Subsidiary of Alfa, S. A. B. de C. V.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of and for the years ended December 31, 2023, 2022 and 2021
Millions of Mexican pesos, except where otherwise indicated
1. GENERAL INFORMATION
Alpek, S. A. B. de C. V. and Subsidiaries (“Alpek” or the “Company”) is a petrochemical company with opera-
tions through two major business segments: “Polyester” and “Plastics and Chemicals”. The Polyester segment
comprises the production of purified terephthalic acid (“PTA”), polyethylene terephthalate (“PET”), recycled
PET (“rPET"), and polyester fibers, which are mainly used for food and beverage packaging, textile and indus-
trial filament markets. The Plastics & Chemicals business segment comprises the production of polypro-
pylene (“PP”), expandable styrene (“EPS” and “Arcel®”), fertilizers and other chemicals, which serves a wide
range of markets, including the consumer goods, automotive, construction, agriculture, pharmaceutical and
other markets.
Alpek is one of the largest petrochemical companies in México and the second largest in Latin America.
Additionally, it is the main integrated producer of polyester and one of the main producers of rPET in America.
It operates the largest EPS plant in the continent, and one of the largest PP plants in North America.
When reference is made to the controlling entity Alpek, S.A.B. of C.V. as an individual legal entity, it will be re-
ferred to as “Alpek SAB”.
The shares of Alpek SAB are traded on the Mexican Stock Exchange (“MSE”) and has Alfa, S. A. B. de C. V. (“Alfa”)
as its main holding company. As of December 31, 2023, 2022 and 2021, the percentage of shares that traded on
the MSE was 17.37%, 17.39%, and 17.51%, respectively.
Alpek SAB is located at Avenida Gómez Morín Sur No. 1111, Col. Carrizalejo, San Pedro Garza García, Nuevo León,
México and operates productive plants located in México, the United States of America, Oman, Saudi Arabia,
Canada, Argentina, Chile, Brazil and United Kingdom.
The Company started the process of decommissioning and dismantling of assets, as well as environmental
cleanup and remediation, which is why, the Company registered provisions for these concepts for $379
(US$20.8). Additionally, the Company had other direct costs attributable to the closure, mainly for severance
pay and cancellation of contracts for $169 (US$9.1).
Derived from the interruption in production, the Company performed impairment tests on the fixed assets
associated with the plant and recorded an impairment charge related to these assets of $950 (US$51.9).
Additionally, it recognized and inventory impairment of $63 (US$3.4).
b. US$200 million loan linked to sustainability
On August 3, 2023, Alpek announced that it refinanced the outstanding balance of the bond due in August
2023, with bank debt that includes a US$200 Sustainability Linked Credit maturing in 2028.
The loan incorporates a pricing mechanism that incentivizes progress on two of the Company’s ESG
objectives:
• Reduction in carbon emissions Scope 1, 2 and 3.
• Reduction in its incidence rate for its employees and contractors.
c. Closure of the filament production plant
On August 18, 2023, the Company announced the closure of its textile and industrial fiber production plant
located in Monterrey. Alpek made the decision to close operations at these facilities and not replace their
production because the excess production experienced worldwide in recent years has represented a sig-
nificant reduction in its profitability for the filament industry and it is not expected that this situation will
change in the near future.
In the following notes to the financial statements when referring to pesos or "$", it means millions of Mexican
pesos. When referring to dollars or "US$", it means millions of dollars from the United States of America. When
referring to Euros or "€" it means millions of Euros.
The Company recognized an impairment of inventories and fixed assets for $121 (US$7) and $409 (US$23.7),
respectively, for the year ended December 31, 2023. Additionally, it had impacts due to employee termina-
tions for $193 (US$11.1).
2. SIGNIFICANT EVENTS
2023
a. Interruption for an indefinite term of Cooper River's PET resin production
On March 1, 2023, the Company announced the indefinite interruption of PET resin production at its Cooper
River plant, located in Charleston, South Carolina. The plant had an installed capacity of 170,000 tons of
PET resin.
d. Corpus Christi Polymers construction pause
On September 27, 2023, Alpek announced that Corpus Christi Polymers (“CCP”) temporarily paused con-
struction of the integrated PTA-PET plant in Corpus Christi, Texas. The partners decided to pause it because
high inflation rates and other factors caused construction and labor costs to exceed initial expectations.
Options will also be evaluated to optimize the project's costs and schedule. This site will be adequately
preserved so that construction can resume in the future.
Based on the requirements of IAS 28 and IAS 36, the Company identified that the pause in construction of
the plant generated signs of impairment on its investment in the joint venture. Alpek determined through
the discounted cash flow model and considering the decisions of its Board of Directors, to recognize an
impairment of its investment in the joint venture of $9,591 (US$557) for the year ended December 31, 2023.
2022
e. OCTAL Acquisition
On January 31, 2022, a subsidiary of Alpek signed an agreement to acquire the Octal business (see Note
3b). This acquisition represents a growth through vertical integration for Alpek into the high value PET sheet
business. Octal is a major global producer of PET sheet through a strategically centered logistics position
in Oman.
Alpek acquired Octal for a consideration of $12,147 (US$620). On June 1, 2022, Alpek assumed control of
Octal's operations.
From the acquisition date, working capital and recovery of cost adjustments related to the transaction
were made, and together reduced the initial consideration by $186.1 (US$9.5); additionally, an adjustment
was made for cash surplus against debt which increased the initial consideration by $1,782.9 (US$91). The
contract includes a contingent consideration based on future business results and other considerations,
which, in compliance with the requirements of IFRS 3, Business Combinations (“NIIF 3”), was valued at $914.9
(US$46.7) and that together with the aforementioned adjustments derived in a total consideration that was
equivalent to $14,658.7 (US$748.2).
Total cash flows paid for the acquisition amounted to $13,397.1 (US$682.9), which were made by wire transfer.
Financing for the acquisition was through a combination of free cash flow generated from existing busi-
nesses and dedicated bank loans.
The amount pending payment as of December 31, 2022 retained by Alpek pursuant to the agreement for
possible litigation is $360.1 (US$18.6), was deposited in a trust, and is presented within restricted cash and its
corresponding liability.
The acquisition of Octal met the criteria for a business combination in accordance with the requirements
of IFRS 3; therefore, the Company applied the acquisition method to measure the acquired assets and
assumed liabilities in the transaction. The fair values are as follows:
Current assets (1)
Non-current assets (2)
Intangible assets (3)
Current liabilities (4)
Non-current liabilities (5)
Net assets acquired
Gain on business combination
Final consideration
Cash surplus net of debt
Total consideration net of cash surplus
76
US$ 551.4
604.8
83.4
(432.2)
(37.5)
769.9
(21.7)
748.2
(91)
US$ 657.2
(1)
Current assets consist of cash, restricted cash, accounts receivable, inventories and other assets for US$160.6, US$14.9,
US$118.8, US$252.7 and US$4.4, respectively.
(2) Non-current assets consist of property, plant and equipment and right of use assets of US$591.6 and US$13.2, respectively.
(3)
(4)
(5)
Intangible assets consist of patents.
Current liabilities consist of suppliers and other accounts payable, current portion of debt, and other liabilities for US$388.2,
US$41.0 and US$3.0, respectively.
Non-current liabilities consist of debt, lease liability and other liabilities for US$20.6, US$13.7 and US$3.2, respectively.
As a result of this transaction, a gain associated with the business combination was recognized for an
amount of $425.0 (US$21.7), recognized in 2022 in the other income (expenses), net item (see Note 25). Under
the terms of IFRS 3, the gain associated with the business combination was primarily generated because
the sale of the business followed the strategy maintained by the selling shareholders of taking the oppor-
tunity to exit, even sacrificing the value of the assets at that time.
Revenues and net income for the seven-month period ended December 31, 2022, contributed by Octal
amounted to $17,174 (US$858) and $3,013 (US$150), respectively.
The results of the acquired operations have been included in the consolidated financial statements
since the acquisition date, therefore, the consolidated financial statements as of and for the year ended
December 31, 2022 are not comparable with previous years. The consolidated statement of cash flows for
the year ended December 31, 2022, presents the disbursement for the acquisition of Octal in a single line
within investment activities, net of the cash acquired.
77
If the acquisition had occurred on January 1, 2022, proforma consolidated revenues and net income for the
year ended December 31, 2022, would have been $29,317 (US$1,455) and $4,805 (US$238), respectively. These
amounts were calculated using the results of the subsidiary and adjusting them for the additional depre-
ciation and amortization that would have been recognized assuming the fair value of the adjustments of
property, plant and equipment and intangible assets as of January 1, 2022.
concentrated in a group of similar identifiable assets. In line with the above, the Company determined that
the transaction did not meet the criteria of a business combination, therefore it was classified as an asset
acquisition. In the initial recognition of the operation, the Company identified and recognized all the assets,
allocating the purchase price to the individual assets identified, on a proportional basis in relation to their
fair values at the acquisition date. Consequently, the transaction did not give rise to goodwill or gain from
a bargain purchase.
f. Corpus Christi Polymers resumes construction
On July 18, 2022, Alpek announced that the three partners of Corpus Christi Polymers LLC ("CCP") would
resume the construction of the plant in August 2022 with completion expected in early 2025. The project
will have a total capacity of 1.1 million tons and 1.3 million tons per year of PET and PTA, respectively, with
which Alpek would have approximately 367,000 tons of PET and 433,000 tons of PTA. CCP expects to have the
most competitive state-of-the-art plant in the Americas, which will use Alpek's IntegRex technology for PTA
processes, among others.
During the year ended December 31, 2022 the investments made were for $733 (US$36.5). During the year
ended December 31, 2023, construction of the plant was temporarily paused (see Note 2d).
2021
g. Debt issuance
On February 18, 2021, Alpek SAB issued Senior Notes, on the Irish Stock Exchange, to qualified institutional
investors under the Rule 144A and other investors outside the United States of America under Regulation S,
for an amount of US$600, gross of issuance costs of US$5 and discounts of US$2. The Senior Notes have a
ten-year maturity and a 3.25% coupon payable semi-annually. Proceeds from the transaction were primar-
ily used to prepay debt including accrued and unpaid interest.
h. Acquisition of a rPET plant from CarbonLITE
On June 10, 2021, the Company acquired a PET recycling and pelletizing facility from CarbonLite Recycling
LLC (“CarbonLITE”) in Reading, Pennsylvania in the United States. The plant was acquired, free of debt, for
US$96, plus working capital.
CarbonLITE Reading facility is equipped with incoming bottle handling, washing and solid-state polym-
erization (“SSP”) systems, which enable the production of food-grade pellets and are required for bot-
tle-to-bottle recycling. The site has a bottle-to-flake and flake-to-pellet capacity of 60,000 tons and 40,000
tons of production per year, respectively.
This acquisition is in line with the objective of promoting a circular economy in accordance with the
Company´s long-term strategic growth plan. Additionally, it increases Alpek´s installed rPET capacity to
160,000 tons of production per year and advance towards the Company´s goal of supplying certain cus-
tomers with 25% rPET content by 2025.
The Company´s consolidated financial statements include the financial information of the acquired assets.
The Company applied the optional test established in IFRS 3, Business Combinations, to assess the con-
centration of the fair value of the acquired assets and determine whether such fair value is substantially
i.
Impairment in Univex
In November 2021, the Company decided to close its caprolactam production area (raw material for the
production of Nylon 6) of its Univex, S.A. de C.V. plant., subsidiary of Unimor, S.A. de C.V., as well as its affiliate
Sales del Bajío, S.A. de C.V. that produces carbonates; the aforementioned, derived from the fall in the
market prices and profit margins worldwide.
The Company is in process of evaluating the future use of the Univex, S.A. de C.V. facilities since they contin-
ue to be used for fertilizer production line, which continues in operation.
As a result, the Company recognized an impairment of long-lived assets for $936, deferred income tax
asset for $257, other liabilities for $308 and early insurance cancellation for $8, approximately.
j. Announcement of closure of the staple fibers operations in Cooper River
On May 4, 2021, the Company through its subsidiary Dak Americas LLC, announced the closure of its polyes-
ter staple fiber operations at its Copper River site, in Charleston, SC.
As a result, the impact was $679 (US$33), approximately, recognized in the statement of income.
The plant ceased operations of staple fiber during the month of December 2021.
k. Adjustments from previous years in Univex
During 2021 in Univex S. A. de C. V. adjustments from previous years were identified and corrected in such
subsidiary, the net effect of these adjustments is reflected in the consolidated statement of changes in
stockholders' equity of Alpek in “others”.
l. Acquisition of a styrenics business from NOVA Chemicals
On October 19, 2020, the Company announced that one of its subsidiaries signed an agreement with NOVA
Chemicals Corporation (“NOVA Chemicals”) for the purchase of its expanded styrenics business, through
the acquisition of a 100% interest in BVPV Styrenics LLC, owner and operator of two facilities in the United
States. The first facility, located in Monaca, Pennsylvania, has an annual capacity of 123,000 tons of EPS
and 36,000 tons of ARCEL®, in addition to a world-class research and development (R&D) pilot plan; and a
second facility located in Painesville, Ohio, with an annual capacity of 45,000 tons of EPS.
The initial value of the consideration amounted to US$50, which was paid in cash by means of a transfer
on the closing date of the transaction, which occurred on October 30, 2020, which corresponds to the date
on which the Company acquired control of the business. During 2021, net working capital adjustments were
made that resulted in a recovery of US$4 on the purchase price, resulting in a final consideration of US$46.
78
The acquisition of BVPV Styrenics LLC met the criteria of a business combination in accordance with the
requirements of IFRS 3, Business Combinations; therefore, the Company applied the acquisition method
to measure the acquired assets and the assumed liabilities in the transaction. The purchase price alloca-
tion was determined in 2021, and the adjustments derived from the acquisition method were not material,
therefore were recognized in 2021. The fair values of the acquired assets, and assumed liabilities as a result
of this acquisition are as follows:
The preparation of the consolidated financial statements in conformity with IFRS requires the use of certain
critical accounting estimates. Additionally, it requires Management to exercise judgment in the process of
applying the Company's accounting policies. The areas involving a higher degree of judgment or complex-
ity, or areas where judgments and estimates are significant to the consolidated financial statements are
disclosed in Note 5.
Current assets (1)
Non-current assets (2)
Intangible assets (3)
Current liabilities
Non-current liabilities
Acquired net assets
Gain from a bargain purchase
$
US$
56
15
2
(17)
(9)
47
(1)
Paid consideration
$
46
(1) Current assets consist of accounts receivable of US$18, inventories of US$38
(2) Non-current assets consist of fixed assets of US$14 and right-of-use assets of US$1.
(3)
Intangible assets consist of trademarks for US$1 and patents for US$1.
As a result of this transaction, a gain from a bargain purchase of $29 (US$1.3), was recognized in 2021 under
other income, net (Note 25). In terms of IFRS 3, the gain from a bargain purchase was mainly generated
because the disposal was due to strategic plans of the seller.
3. SUMMARY OF MATERIAL ACCOUNTING POLICIES
The following are the material accounting policies followed by the Company and its subsidiaries, which have
been consistently applied in the preparation of their financial information in the years presented, unless other-
wise specified:
a) Basis of preparation
The consolidated financial statements of Alpek have been prepared in accordance with International
Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”). IFRS
include all International Accounting Standards ("IAS") in force and all related interpretations issued by the
International Financial Reporting Interpretations Committee (“IFRIC”), including those previously issued by
the Standing Interpretations Committee (“SIC”).
The consolidated financial statements have been prepared on a historical cost basis, except for the cash
flow hedges, which are measured at fair value, and for the financial assets and liabilities at fair value
through profit or loss with changes reflected in the consolidated statement of income and for financial
assets available for sale.
b) Consolidation
i. Subsidiaries
The subsidiaries are all the entities over which the Company has control. The Company controls an entity
when it is exposed or has the right to variable returns from its interest in the entity and it is capable of
affecting the returns through its power over the entity. When the Company's participation in subsidiaries
is less than 100%, the share attributed to outside stockholders is reflected as non-controlling interest.
Subsidiaries are fully consolidated from the date on which control is transferred to the Company and up
to the date it loses such control.
The accounting method used by the Company for business combinations is the acquisition method.
The Company defines a business combination as a transaction through which it obtains control over
a business, whereby it has the power to steer and manage the relevant operations of all assets and
liabilities of the business with the purpose of providing a return in the form of dividends, lower costs or
other economic benefits directly to investors.
The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred,
the liabilities incurred and the equity interests issued by the Company. The consideration transferred
includes the fair value of any asset or liability resulting from a contingent consideration arrangement.
Identifiable acquired assets and liabilities and contingent liabilities assumed in a business combination
are initially measured at their fair values at the acquisition date. The Company recognizes any non-con-
trolling interest in the acquiree based on the share of the non-controlling interest in the net identifiable
assets of the acquired entity.
The Company accounts for business combinations of entities using the predecessor method in a joint-
ly controlled entity. The predecessor method involves the incorporation of the carrying amounts of the
acquired entity, which includes the goodwill recognized at the consolidated level with respect to the ac-
quiree. Any difference between the carrying value of the net assets acquired at the level of the subsidiary
and its carrying amount at the level of the Company is recognized in stockholders’ equity.
The acquisition-related costs are recognized as expenses in the consolidated statement of income
when incurred.
Goodwill is initially measured as excess of the sum of the consideration transferred and the fair value of
the non-controlling interest over the net identifiable assets and liabilities assured. If the consideration
transferred is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain
purchase, the difference is recognized directly in the consolidated statement of income.
If the business combination is achieved in stages, the value in books at the acquisition date of the equity
previously held by the Company in the acquired entity is remeasured at its fair value at the acquisition
date. Any loss or gain resulting from such remeasurement is recorded in the consolidated income of
the year.
Transactions, intercompany balances and unrealized gains on transactions between Alpek’s compa-
nies are eliminated in preparing the consolidated financial statements. Alpek’s subsidiaries consistently
apply the accounting policies as those disclosed in these consolidated financial statements.
As of December 31, 2023, 2022 and 2021, the main companies that comprise the consolidated financial
statements of the Company are as follows:
79
Shareholding (%) (2)
Country(1)
2023
2022
2021
Styropek do Brasil, LTD
Brazil
Unimor, S. A. de C. V. (Holding Company)
Univex, S. A.
Alpek Polyester UK LTD
BVPV Styrenics LLC (9)
Octal (10)
United
Kingdom
USA
Oman
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
Functional
Currency
Brazilian real
Mexican peso
Mexican peso
Pound sterling
US dollar
US dollar
Shareholding (%) (2)
Country(1)
2023
2022
2021
Alpek, S. A. B. de C. V. (Holding Company)
Alpek Polyester, S. A. de C. V. (Holding
Company) (3)
Alpek Polyester USA, LLC (11)
USA
Alpek Polyester México, S.A. de C.V. (12)
DAK Américas Exterior, S. L.
(Holding Company)
Alpek Polyester Argentina S.A. (4)
Compagnie Alpek Polyester Canada
(Selenis) (5) (6)
Tereftalatos Mexicanos, S. A. de C. V. (Temex)
Akra Polyester S. A. de C. V.
Alpek Polyester Pernambuco S. A. (7)
Alpek Polyester Brasil S. A (8)
Indelpro, S. A. de C. V. (Indelpro)
Polioles, S. A. de C. V. (Polioles)
Grupo Styropek, S. A. de C. V.
(Holding Company)
Styropek México, S. A. de C. V.
Styropek, S. A.
Aislapol, S. A.
Spain
Argentina
Canada
Brazil
Brazil
Argentina
Chile
100
100
100
100
100
100
91
93
100
100
51
50
100
100
100
100
100
100
100
100
100
100
91
93
100
100
51
50
100
100
100
100
100
100
100
100
100
50
91
93
100
100
51
50
100
100
100
100
Functional
Currency
Mexican peso
US dollar
US dollar
US dollar
US dollar
(1) Companies incorporated in México, except those indicated.
(2) Ownership percentage that Alpek has in the holding companies and ownership percentage that such holding compa-
nies have in the companies integrating the groups. Ownership percentages and the voting rights are the same.
(3) On July 31, 2021, Grupo Petrotemex, S.A. de C.V. (Grupo Petrotemex), changed its company name to Alpek Polyester S.A.
de C.V.
(4) During 2022, DAK Américas Argentina, S. A. changed its legal name to Alpek Polyester Argentina S. A.
(5) The sale and purchase agreement of this entity included a clause for the payment of future benefits (earn-out) for the
production of PETG, which was still in force as of December 31, 2021. Under said clause, the shares not acquired for legal
purposes by Alpek are deposited in favor of the selling party or to Alpek, based on results obtained from the potential
production of PETG. At the end of 2021, Alpek held 50% + 1 share of the legal shareholding. On August 25, 2022, Alpek
acquired the remaining 50% - 1 share of the shareholding in this entity in exchange for a consideration of $119.6 (US$6);
Argentine peso
derived from the negotiation for the acquisition of the remaining shares, the contingent liability that Alpek had for the
earn-out for 149.5 (US$7.5) was canceled, together with a compensation asset for $25.9 (US$1.3), both came from the sale
and purchase agreement. The net effects of these transactions were recognized within "Other income (expenses), net"
in the consolidated statement of comprehensive income for the year ended December 31, 2022.
(6) During 2022, DAK Compagnie Selenis Canada changed its legal name to Compagnie Alpek Polyester Canada.
(7) During 2022, Companhia Petroquímica de Pernambuco-PetroquímicaSuape changed its legal name to Alpek Polyester
Pernambuco S. A.
(8) During 2022, Companhia Integrada Têxtil de Pernambuco- CITEPE changed its legal name to Alpek Polyester Brasil S. A.
(9) Entity acquired in 2021. (Note 2l).
(10) Group of entities acquired in 2022 and integrates the following entities: Octal Holding UK LTD, Octal Holding SAOC, Octal
SAOC FZC, Crystal Pack FZC LLC, Crystal Packing Solutions LLC, Octal DMCC, Octal Inc, Octal Extrusion Corp, Octal Saudi
Arabia Plant LLC and OCTAL FINANCE BV (liquidated in 2023). (Note 2e)
(11) During 2023, DAK Americas LLC changed its legal name to Alpek Polyester USA, LLC.
(12) During 2023, Dak Resinas Américas México, S.A. de C.V. changed its legal name to Alpek Polyester México, S.A. de C.V.
US dollar
US dollar
US dollar
Brazilian real
Brazilian real
US dollar
US dollar
Mexican peso
US dollar
Argentine peso
Chilean peso
80
As of December 31, 2023, 2022 and 2021, there are no significant restrictions for investment in shares of
subsidiary companies mentioned above.
The Company assesses at each reporting date whether there is objective evidence that the investment
in the associate is impaired.
ii. Absorption (dilution) of control in subsidiaries
The effect of absorption (dilution) of control in subsidiaries, in example, an increase or decrease in the
percentage of control, is recorded in stockholders' equity, directly in retained earnings, in the period in
which the transactions that cause such effects occur. The effect of absorption (dilution) of control is
determined by comparing the book value of the investment before the event of dilution or absorption
against the book value after the relevant event. In the case of loss of control, the dilution effect is recog-
nized in the consolidated income.
Unrealized gains on transactions between the Company and its associates are eliminated to the extent
of the Company’s equity in such gains. Unrealized losses are also eliminated unless the transaction pro-
vides evidence that the asset transferred is impaired. In order to ensure consistency with the policies ad-
opted by the Company, the accounting policies of associates have been modified. When the Company
ceases to have significant influence over an associate, any difference between the fair value of the
remaining investment, including any consideration received from the partial disposal of the investment
and the book value of the investment is recognized in the consolidated statement of income.
When the Company issues purchase obligations on certain non-controlling interests in a consolidated
subsidiary and non-controlling stockholders retain the risks and awards on these shares in the consol-
idated subsidiary, these are recognized as financial liabilities for the present value of the refundable
amount of the options, initially recorded with a corresponding reduction in the stockholders' equity, and
subsequently accruing through financial charges to income during the contractual period.
iii. Sale or disposal of subsidiaries
When the Company ceases to have control any retained interest in the entity is re-measured at fair val-
ue, and the change in the carrying amount is recognized in the consolidated statement of income. The
fair value is the initial carrying value for the purposes of accounting for any subsequent retained interest
in the associate, joint venture or financial asset. Any amount previously recognized in comprehensive
income in respect of that entity is accounted for as if the Company had directly disposed of the related
assets and liabilities. This results in the amounts previously recognized in the consolidated comprehen-
sive income being reclassified to the consolidated income for the year.
iv. Associates
Associates are all entities over which the Company has significant influence but not control. Generally,
an investor must hold between 20% and 50% of the voting rights in an investee for it to be an associate.
Investments in associates are accounted for using the equity method and are initially recognized at
cost. The Company's investment in associates includes goodwill identified at acquisition, net of any
accumulated impairment loss.
If the equity in an associate is reduced but significant influence is maintained, only a portion of the
amounts recognized in the consolidated comprehensive income are reclassified to the consolidated
income for the year, where appropriate.
The Company's share of profits or losses of associates post-acquisition is recognized in the consolidat-
ed statement of income and its share in the consolidated other comprehensive income of associates
is recognized as other consolidated comprehensive income. When the Company's share of losses in
an associate, equals or exceeds its equity in the associate, including unsecured receivables, the
Company does not recognize further losses unless it has incurred obligations or made payments on
behalf of the associate.
v. Joint ventures
Joint arrangements are those where there is joint control since the decisions over relevant activities
require the unanimous consent of each one of the parties sharing control.
Investments in joint arrangements are classified in accordance with the contractual rights and obli-
gations of each investor such as: joint operations or joint ventures. When the Company holds the right
over assets and obligations for related assets under a joint arrangement, this is classified as a joint
operation. When the company holds rights over net assets of the joint arrangement, this is classified as
a joint venture. The Company has assessed the nature of its joint arrangements and classified them as
joint ventures. Joint ventures are accounted for by using the equity method applied to an investment in
associates.
The Company evaluates at each reporting date whether there is objective evidence that there are in-
dications of impairment on the joint agreement. If there are indications, it determines the recoverable
value based on the requirements of IAS 36 and recognizes an impairment if such recoverable value is
below the carrying amount of the joint agreement.
c) Foreign currency translation
i. Functional and presentation currency
The amounts included in the financial statements of each of the Company's subsidiaries, associates and
joint ventures should be measured using the currency of the primary economic environment in which
the entity operates (the “functional currency"). The consolidated financial statements are presented in
Mexican pesos.
When there is a change in the functional currency of one of the subsidiaries, according to International
Accounting Standard 21, Effects of Changes in Foreign Exchange Rates (“IAS 21”), this change is accounted
for prospectively, translating at the date of the functional currency change, all assets, liabilities, equity,
and income items at the exchange rate of that date.
81
ii. Transactions and balances
Transactions in foreign currencies are translated into the functional currency using the foreign exchange
rates prevailing at the transaction date or valuation date when the amounts are re-measured. Gains
and losses resulting from the settlement of such transactions and from the translation of monetary
assets and liabilities denominated in foreign currencies at the closing exchange rates are recognized
as foreign exchange gain or loss in the consolidated statement of income, except for those which are
deferred in comprehensive income and qualify as cash flow hedges.
Changes in the fair value of securities or monetary financial assets denominated in foreign currency
classified as available for sale are divided between fluctuations resulting from changes in the amortized
cost of such securities and other changes in value. Subsequently, currency fluctuations are recognized
in income and changes in the carrying amount arising from any other circumstances are recognized as
part of comprehensive income.
iii. Translation of subsidiaries with recording currency other than the functional currency
The financial statements of foreign subsidiaries having a recording currency different from their func-
tional currency were translated into the functional currency in accordance with the following procedure:
a) The balances of monetary assets and liabilities denominated in the recording currency were trans-
lated at the closing exchange rate.
b) To the historical balances of monetary assets and liabilities and stockholders' equity translated into
the functional currency the movements that occurred during the period were added, which were
translated at the historical exchange rates. In the case of the movements of non-monetary items
recognized at fair value, which occurred during the period, stated in the recording currency, these
were translated using the historical exchange rates in effect on the date when the fair value was
determined.
c) The income, costs and expenses of the periods, expressed in the recording currency, were translated
at the historical exchange rate of the date they were accrued and recognized in the consolidated
statement of income, except when they arose from non-monetary items, in which case the historical
exchange rate of the non-monetary items was used.
d) The exchange differences were recognized as income or expense in the consolidated statement of
c) Income and expenses for each statement of income are translated at average exchange rate (when
the average exchange rate is not a reasonable approximation of the cumulative effect of the rates of
the transaction, the exchange rate at the date of the transaction is used); and
d) The resulting exchange differences are recognized in the consolidated statement of other compre-
hensive income as translation effect.
Hyperinflationary environment
a) Assets, liabilities and equity in the statement of financial position, as well as income and expenses
in the income statement, are translated at the closing exchange rate of the statement of financial
position, after being restated in its functional currency (Note 3d); and
b) Assets, liabilities, equity, income and expenses of the comparative period, are maintained according
to the amount obtained in the translation of the year in question, that is, the financial statements of
the preceding period. These amounts are not adjusted to subsequent exchange rates because the
Company presents its financial information in Mexican pesos, which correspond to a currency of a
non-hyperinflationary environment.
The primary exchange rates in the various translation processes are listed below:
Local currency to Mexican pesos
Closing exchange rate
at December 31,
Average annual
exchange rate
2023
16.89
0.02
3.48
0.02
21.53
2022
19.36
0.11
3.66
0.02
2021
20.58
0.20
3.69
0.02
2023
17.61
0.07
3.53
0.02
23.29
27.88
21.96
2022
20.06
0.15
3.91
0.02
24.71
2021
20.38
0.21
3.77
0.03
28.02
Currency
US dollar
Argentine peso
Brazilian real
Chilean peso
Pound sterling
income in the period they arose.
d) Hyperinflationary effects
iv. Translation of subsidiaries with functional currency other than the presentation currency
The results and financial position of all Company entities that have a functional currency different from
the presentation currency are translated into the presentation currency as follows, depending on wheth-
er the functional currency comes from a non-hyperinflationary or hyperinflationary environment:
Non-hyperinflationary environment
a) Assets and liabilities for each statement of financial position presented are translated at the closing
exchange rate at the date of the statement of financial position;
b) Stockholders’ equity of each statement of financial position presented is translated at historical ex-
change rate;
As of July 1, 2018, the cumulative inflation from the prior 3 years in Argentina exceeded 100%; consequently,
the Argentine peso was classified as a currency of a hyperinflationary economic environment. As a re-
sult, the financial statements of the subsidiaries located in that country, whose functional currency is the
Argentine peso, have been restated and adjusted for inflation in accordance with the requirements of the
International Accounting Standard 29, Financial Information in Hyperinflationary Economies ("IAS 29"), and
have been consolidated in compliance with the requirements of IAS 21. The purpose of applying these re-
quirements is to consider changes in the general purchasing power of the Argentine peso in order to pres-
ent the financial statements in the measuring unit current at the date of the statement of financial position.
The financial statements before including any inflation adjustments were prepared using the historical
cost method.
82
The Company determined the inflation adjustments in its consolidated financial statements in the following
manner:
a. The amounts corresponding to non-monetary items of each statement of financial position, which are
not measured at the date of the statement of financial position at their fair value or net realizable value,
as the case may be, are restated by applying to their historical cost the change of a general price index
from the date of acquisition or the date of its last measurement at fair value, to the date of the statement
of financial position;
b. The amounts corresponding to monetary items of the statement of financial position are not restated;
c. The components of stockholders’ equity of each statement of financial position are restated:
1) At the beginning of the first period of application of IAS 29, except for retained earnings, by applying
the change of a general price index from the dates the components were originated to the date of
restatement. Restated retained earnings are derived from all the other balances in the statement of
financial position;
2) At the end of the first period and in subsequent periods, all components of stockholders’ equity are
restated by applying a general price index from the beginning of the period or the date of contribu-
tion, if later.
d. Revenues and expenses are restated by applying the change in the general price index, from the date
on which the expenses and revenues were recognized, up to the reporting date.
f) Financial instruments
Financial assets
The Company subsequently classifies and measures its financial assets based on the Company’s business
model to manage financial assets, and on the characteristics of the contractual cash flows of such assets.
This way financial assets can be classified at amortized cost, at fair value through other comprehensive
income, and at fair value through profit or loss. Management determines the classification of its financial
assets upon initial recognition. Purchases and sales of financial assets are recognized at settlement date.
Financial assets are entirely written off when the right to receive the related cash flows expires or is trans-
ferred, and the Company also has substantially transferred all the risks and rewards of its ownership, as well
as the control of the financial asset.
Classes of financial assets
i. Financial assets at amortized cost
Financial assets at amortized cost are those that i) are held within a business model whose objective is
to hold said assets in order to collect contractual cash flows; and ii) the contractual terms of the financial
asset give rise, on specified dates, to cash flows that are solely payments of principal and interest on the
amount of outstanding principal.
e. Gains or losses arising from the net monetary position are recognized in the consolidated statement of
ii. Financial assets at fair value through profit or loss
income.
The Company reflects the effects of hyperinflation on the financial information of its subsidiaries in
Argentina using price indexes that are considered appropriate in accordance with Resolution JG 539/18
(the “Resolution") of the Argentine Federation of Professional Councils of Economic Sciences. This resolution
establishes that a combination of price indexes should be used in the calculation of the effects of restate-
ment of financial statements. Therefore, the Company has decided to use the Consumer Price Index (“CPI”)
to restate balances and transactions.
The effects of the restatement of the financial statements of the subsidiaries located in Argentina were not
material and are presented under the heading of "Financial result, net" for the years ended December 31,
2023, 2022 and 2021.
e) Cash and cash equivalents
Cash and cash equivalents include cash on hand, bank deposits available for operations and other short-
term investments of high liquidity and high credit quality with original maturities of three months or less, all
of which are subject to insignificant risk of changes in value. Bank overdrafts are presented as loans as part
of the current liabilities.
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset
is classified in this category if it is mainly acquired for the purpose of being sold in the short term.
Derivatives are also classified as held for trading unless they are designated as hedges. In addition
are those that do not meet the characteristics to be measured at amortized cost or fair value through
other comprehensive income, since: i) they have a business model different to those that seek to collect
contractual cash flows or collect contractual cash flows and sell the financial assets, or otherwise ii) the
generated cash flows are not solely payments of principal and interest on the amount of outstanding
principal.
Impairment of financial assets
The Company uses an impairment model based on expected credit losses rather than losses incurred,
applicable to financial assets subject to such assessment (i.e. financial assets measured at amortized
cost and at fair value through other comprehensive income), as well as lease receivables, contract assets,
certain written loan commitments, and financial guarantee contracts. The expected credit losses on these
financial assets are estimated from the initial recognition of the asset at each reporting date, using as a
reference the past experience of the Company's credit losses, adjusted for factors that are specific to the
debtors or groups of debtors, general economic conditions, and an assessment of both the current direc-
tion and the forecast of future conditions.
83
a. Trade receivables
The Company adopted the simplified expected loss calculation model, through which expected credit
losses during the account receivable’s lifetime are recognized.
The Company performs an analysis of its portfolio of customer receivables, in order to determine if there
are significant customers for whom it requires an individual assessment; meanwhile, customers with
similar characteristics that share credit risks (participation in the portfolio of accounts receivable, type
of market, sector, geographic area, etc.), are grouped to be evaluated collectively.
In its impairment assessment, the Company may include indications that the debtors or a group of
debtors are experiencing significant financial difficulties, and also observable data indicating that there
is a significant decrease in the estimated cash flows to be received, including arrears.
For purposes of the historical estimate, the Company considers that the following constitutes an event of
default, since historical experience indicates that financial assets are not recoverable when they meet
any of the following criteria:
• The debtor does not fulfill its financial agreements; or
•
Information obtained internally or from external sources indicates that it is unlikely that the debtor will
pay its creditors, including the Company, in its entirety (without considering any guarantee held by
the Company).
The Company defined the breach threshold as the period from which the recovery of the account
receivable subjected to analysis is marginal, which is in line with internal risk management.
Financial liabilities
Non-derivative financial liabilities are initially recognized at fair value and are subsequently valued at
amortized cost using the effective interest method. Liabilities in this category are classified as current
liabilities if expected to be settled within the next 12 months, otherwise they are classified as non-current.
Trade payables are obligations to pay for goods or services that have been acquired or received from
suppliers in the ordinary course of business. Loans are initially recognized at fair value, net of transaction
costs incurred. Loans are subsequently carried at amortized cost; any difference between the funds
received (net of transaction costs) and the settlement value is recognized in the consolidated statement
of income over the term of the loan using the effective interest method.
Derecognition of financial liabilities
The Company derecognizes financial liabilities if, and only if, the obligations of the Company are fulfilled,
cancelled or have expired. The difference between the carrying amount of the derecognized financial
liability and the consideration paid and payable is recognized in profit or loss.
Additionally, when the Company carries out a refinancing transaction and the previous liability qualifies
to be derecognized, the costs incurred in the refinancing are recognized immediately in profit or loss at
the date of termination of the previous financial liability.
Offsetting financial assets and liabilities
Assets and liabilities are offset and the net amount is presented in the consolidated statement of fi-
nancial position when the right to offset the recognized amounts is legally enforceable and there is an
intention to settle on a net basis or to realize the asset and settle the liability simultaneously.
b. Other financial instruments
g) Derivative financial instruments and hedging activities
The Company recognizes credit losses expected during the asset’s lifetime of all financial instruments for
which credit risk has significantly increased since its initial recognition (assessed on a collective or indi-
vidual basis), considering all the reasonable and sustainable information, including the one referring to
the future. If at the presentation date, the credit risk a financial instrument has not significantly increased
since its initial recognition, the Company calculates the loss allowance for that financial instrument as
the amount of expected credit losses in the following 12 months.
All derivative financial instruments are identified and classified as fair value hedges or cash flow hedges,
for trading or the hedging of market risks and are recognized in the consolidated statement of financial
position as assets and/or liabilities at fair value and similarly measured subsequently at fair value. The fair
value is determined based on recognized market prices and its fair value is determined using valuation
techniques accepted in the financial sector.
In both cases, the Company recognizes in profit or loss of the period the decrease or increase in the
expected credit loss allowance at the end of the period.
The fair value of hedging derivatives is classified as a non-current asset or liability if the remaining maturity
of the hedged item is more than 12 months and as a current asset or liability if the remaining maturity of the
hedged item is less than 12 months.
Management assesses the impairment model and the inputs used therein at least once every 3 months,
in order to ensure that they remain in effect based on the current situation of the portfolio.
84
Derivative financial instruments classified as hedges are contracted for risk hedging purposes and meet
all hedging requirements; their designation at the beginning of the hedging operation is documented,
describing the objective, primary position, risks to be hedged and the effectiveness of the hedging relation-
ship, characteristics, accounting recognition and how the effectiveness is to be measured.
The fair value of derivative financial instruments reflected in the consolidated financial statements of the
Company is a mathematical approximation of their fair value. It is computed using proprietary models of
independent third parties using assumptions based on past and present market conditions and future
expectations at the closing date.
Cash flow hedges
h) Inventories
The changes in the fair value of derivative instruments associated to cash flow hedges are recorded in
stockholders' equity. The effective portion is temporarily recorded in comprehensive income, within stock-
holders' equity and is reclassified to profit or loss when the hedged position affects these. The ineffective
portion is immediately recorded in income.
Net investment hedge in a foreign transaction
The Company applies the hedge accounting to currency risk arising from its investments in foreign trans-
actions for variations in exchange rates arising between the functional currency of such transaction and
the functional currency of the holding entity, regardless of whether the investment is maintained directly or
through a sub-holding entity. Variation in exchange rates is recognized in the other items of comprehensive
income as part of the translation effect, when the foreign transaction is consolidated.
To this end, the Company designates the debt denominated in a foreign currency as a hedging instrument;
therefore, the exchange rate effects caused by the debt are recognized in other components of compre-
hensive income, on the translation effects line item, to the extent that the hedge is effective. When the
hedge is not effective, exchange differences are recognized in profit or loss.
Suspension of hedge accounting
The Company suspends hedge accounting when the derivative financial instrument or the non-derivative
financial instrument has expired, is cancelled or exercised, when the derivative or non-derivative financial
instrument is not highly effective to offset the changes in the fair value or cash flows of the hedged item.
The replacement or successive renewal of a hedging instrument for another one is not an expiration or res-
olution if such replacement or renewal is part of the Company's documented risk management objective,
and it is consistent with this.
On suspending hedge accounting, in the case of fair value hedges, the adjustment to the carrying amount
of a hedged amount for which the effective interest rate method is used, is amortized to income over
the period to maturity. In the case of cash flow hedges, the amounts accumulated in equity as a part of
comprehensive income remain in equity until the time when the effects of the forecasted transaction affect
income. In the event the forecasted transaction is not likely to occur, the income or loss accumulated in
comprehensive income are immediately recognized in the consolidated statement of income. When the
hedge of a forecasted transaction appears satisfactory and subsequently does not meet the effectiveness
test, the cumulative effects in comprehensive income in stockholders' equity are transferred proportionally
to the consolidated statement of income, to the extent the forecasted transaction impacts it.
Inventories are stated at the lower of cost or net realizable value. Cost is determined using the average cost
method. The cost of finished goods and work-in-progress includes cost of product design, raw materials,
direct labor, other direct costs and production overheads (based on normal operating capacity).
It excludes borrowing costs. The net realizable value is the estimated selling price in the normal course of
business, less the applicable variable selling expenses. Costs of inventories include any gain or loss trans-
ferred from other comprehensive income corresponding to raw material purchases that qualify as cash
flow hedges.
i) Property, plant and equipment
Items of property, plant and equipment are recorded at cost less the accumulated depreciation and any
accrued impairment losses. The costs include expenses directly attributable to the asset acquisition.
Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropri-
ate, only when it is probable that future economic benefits associated with the item will flow to the Company
and the cost of the item can be reliably measured. The carrying amount of the replaced part is derecognized.
Repairs and maintenance are recognized in the consolidated statement of income during the year they are
incurred. Major improvements are depreciated over the remaining useful life of the related asset.
When the Company carries out major repairs or maintenance of its property, plant and equipment assets,
the cost is recognized in the book value of the corresponding asset as a replacement, provided that the
recognition criteria are met. The remaining portion of any major repair or maintenance is derecognized.
The Company subsequently depreciates the recognized cost in the useful life assigned to it, based on its
best estimate of useful life.
Depreciation is calculated using the straight-line method, considering separately each of the asset's com-
ponents, except for land, which is not subject to depreciation. The estimated useful lives of the classes of
assets are as follows:
Buildings and constructions
Machinery and equipment
Vehicles
Furniture and lab and IT equipment
Other
40 to 50 years
10 to 40 years
15 years
2 to 13 years
20 years
85
The spare parts to be used after one year and attributable to specific machinery are classified as property,
plant and equipment in other fixed assets.
Borrowing costs related to financing of property, plant and equipment whose acquisition or construction
requires a substantial period (nine months), are capitalized as part of the cost of acquiring such qualifying
assets, up to the moment when they are suitable for their intended use or sale.
Assets classified as property, plant and equipment are subject to impairment tests when events or circum-
stances occur indicating that the carrying amount of the assets may not be recoverable. An impairment
loss is recognized in the consolidated statement of income in other expenses, net, for the amount by which
the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of
fair value less costs to sell and value in use.
The residual value and useful lives of assets are reviewed at least at the end of each reporting period and,
if expectations differ from previous estimates, the changes are accounted for as a change in accounting
estimate.
Gains and losses on disposal of assets are determined by comparing the sale value with the carrying
amount and are recognized in other expenses, net, in the consolidated statement of income.
j) Leases
The Company as lessee
The Company evaluates whether a contract is or contains a lease agreement at inception of a contract. A
lease is defined as an agreement or part of an agreement that conveys the right to control the use of an
identified asset for a period of time in exchange for a consideration. The Company recognizes an asset for
right-of-use and the corresponding lease liability, for all lease agreements in which it acts as lessee, except
in the following cases: short-term leases (defined as leases with a lease term of less than 12 months); leases
of low-value assets (defined as leases of assets with an individual market value of less than US$5,000
(five thousand dollars)); and, lease agreements whose payments are variable (without any contractually
defined fixed payment). For these agreements, which exempt the recognition of an asset for right-of-use
and a lease liability, the Company recognizes the rent payments as an operating expense in a straight-line
method over the lease period.
The right-of-use asset comprises all lease payments discounted at present value; the direct costs to ob-
tain a lease; the advance lease payments; and the obligations of dismantling or removal of assets. The
Company depreciates the right-of-use asset over the shorter of the lease term or the useful life of the
underlying asset; therefore, when the lessee will exercise a purchase option, the lessee shall depreciate
the right-of-use asset from the commencement date to the end of the useful life of the underlying asset.
Depreciation begins on the lease commencement date.
The lease liability is initially measured at the present value of the future minimum lease payments that have
not been paid at that date, using a discount rate that reflects the cost of obtaining funds for an amount
similar to the value of the lease payments, for the acquisition of the underlying asset, in the same currency
and for a similar period to the corresponding contract (incremental borrowing rate). When lease payments
contain non-lease components (services), the Company has chosen, for some class of assets, not to sepa-
rate them and measure all payments as a single lease component; however, for the rest of the class of assets,
the Company measures the lease liability only considering lease payments, while all of the services implicit
in the payments, are recognized directly in the consolidated statement of income as operating expenses.
To determine the lease term, the Company considers the non-cancellable period, including the probability
to exercise any right to extend and/or terminate the lease term.
Subsequently, the lease liability is measured increasing the carrying amount to reflect interest on the lease
liability (using the effective interest method) and reducing the carrying amount to reflect the lease pay-
ments made.
When there is a modification in future lease payments resulting from changes in an index or a rate used to
determine those payments, the Company remeasures the lease liability when the adjustment to the lease
payments takes effect, without reassessing the discount rate. However, if the modifications are related
to the lease term or exercising a purchase option, the Company reassesses the discount rate during the
liability’s remeasurement. Any increase or decrease in the value of the lease liability subsequent to this
remeasurement is recognized as an adjustment to the right-of-use asset to the same extent.
Finally, the lease liability is derecognized when the Company fulfills all lease payments. When the Company
determines that it is probable that it will exercise an early termination of the contract that leads to a cash
disbursement, such disbursement is accounted as part of the liability’s remeasurement mentioned in the
previous paragraph; however, in cases in which the early termination does not involve a cash disburse-
ment, the Company cancels the lease liability and the corresponding right-of-use asset, recognizing the
difference immediately in the consolidated statement of income.
k) Intangible assets
Intangible assets are recognized in the consolidated statement of financial position when they meet the
following conditions: they are identifiable, provide future economic benefits and the Company has control
over such benefits.
Intangible assets are classified as follows:
i.
Indefinite useful life
These intangible assets are not amortized and are subject to annual impairment assessment. As of
December 31, 2023, 2022 and 2021, no factors have been identified limiting the life of these intangible
assets.
86
ii. Finite useful life
These assets are recognized at cost less the accumulated amortization and impairment losses rec-
ognized. They are amortized on a straight line basis over their estimated useful life, determined based
on the expectation of generating future economic benefits, and are subject to impairment tests when
triggering events of impairment are identified.
Development costs
Non-compete agreements
Customer relationships
Patents
Software and licenses
Intellectual property
Defined life brands
15.5 years
5 to 10 years
6 to 7 years
10 years
3 to 7 years
20 to 25 years
5 to 22 years
Development costs
Research costs are recognized in income as incurred. Expenditures for development activities are recog-
nized as intangible assets when such costs can be reliably measured, the product or process is technically
and commercially feasible, potential future economic benefits are obtained and the Company intends and
also has sufficient resources to complete the development and to use or sell the asset. Their amortization is
recognized in income by the straight-line method over the estimated useful life of the asset. Development
expenditures that do not qualify for capitalization are recognized in income as incurred.
Licenses
Licenses acquired in a separate transaction are recorded at acquisition cost, while those acquired in a
business combination are recognized at fair value at acquisition date.
Licenses that have a defined useful life are presented at cost less accumulated amortization. Amortization
is recorded by the straight-line method over its estimated useful life.
The acquisition of software licenses is capitalized based on the costs incurred to acquire and use the
specific software.
Software development
Costs associated with the maintenance of software are recorded as expenses as incurred.
-
-
The availability of adequate technical, financial or other type of resources, to complete the development
and use or sell the intangible asset; and
The ability to reliably calculate the disbursement attributable to the intangible asset during its
development.
The amount initially recognized for an intangible asset generated internally will be the sum of disburse-
ments incurred from the moment the element fulfills the conditions for recording, as established above.
When no intangible asset internally generated may be recognized, the disbursements for development are
charged to income in the period they are incurred.
l) Goodwill
Goodwill represents the excess of the acquisition cost of a subsidiary over the Company's equity in the fair
value of the identifiable net assets acquired, determined at the date of acquisition, and is not subject to
amortization. Goodwill is shown under goodwill and intangible assets and is recognized at cost less accu-
mulated impairment losses, which are not reversed. Gains or losses on the disposal of an entity include the
carrying amount of goodwill relating to the entity sold.
m) Impairment of non-financial assets
Assets that have an indefinite useful life, for example, goodwill, are not amortizable or depreciable and are
subject to annual impairment tests. Assets that are subject to amortization and depreciation are reviewed
for impairment when events or changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognized for the amount by which the asset's carrying amount ex-
ceeds its recoverable amount. The recoverable amount is the higher of the asset's fair value less costs to
sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels at
which separately identifiable cash flows exist (cash generating units). Non-financial long-term assets other
than goodwill that have suffered impairment are reviewed for possible reversal of the impairment at each
reporting date.
When an impairment loss is reversed, the carrying amount of the asset or cash generating unit, is increased
to the revised estimated value of its recoverable amount, in such a way that the adjusted carrying amount
does not exceed the carrying amount that would have been determined if an impairment loss had not
been recognized for that asset or cash generating unit in previous years. The reversal of an impairment loss
is recognized immediately in the consolidated statement of income.
Development costs directly related with the design and tests of unique and identifiable software products
controlled by the Company are recorded as intangible assets when they fulfill the following criteria:
The amount of income taxes in the consolidated statement of income represents the sum of the current
and deferred income taxes.
n) Income tax
Technically, it is possible to complete the intangible asset so that it may be available for its use or sale;
-
- The intangible asset is to be completed for use or sale;
- The ability to use or sell the intangible asset;
- The way in which the intangible asset is to generate probable future economic benefits;
The amount of income taxes included in the consolidated statement of income represents the current tax
and the effects of deferred income tax assets determined in each subsidiary by the asset and liability meth-
od, applying the rate established by the legislation enacted or substantially enacted at the consolidated
statement of financial position date, wherever the Company operates and generates taxable income. The
87
applicable rates are applied to the total temporary differences resulting from comparing the accounting
and tax bases of assets and liabilities, and that are expected to be applied when the deferred tax asset
is realized or the deferred tax liability is expected to be settled, considering, when applicable, any tax-loss
carryforwards, prior to the recovery analysis. The effect of the change in current tax rates is recognized in
current income of the period in which the rate change is determined.
Management periodically evaluates positions taken in tax returns with respect to situations in which the ap-
plicable law is subject to interpretation. Provisions are recognized when appropriate, based on the amounts
expected to be paid to the tax authorities.
The Company determines the net finance expense (income) by applying the discount rate to the liabili-
ties (assets) from net defined benefits.
Past-service costs are recognized immediately in the consolidated statement of income.
ii. Post-employment medical benefits
The Company provides medical benefits to retired employees after termination of employment. The
right to access these benefits usually depends on the employee’s having worked until retirement age
and completing a minimum of years of service. The expected costs of these benefits are accrued over
the period of employment using the same criteria as those described for defined benefit pension plans.
Deferred tax assets are recognized only when it is probable that future taxable profits will exist against
which the deductions for temporary differences can be taken.
iii. Termination benefits
The deferred income tax on temporary differences arising from investments in subsidiaries and associates
is recognized, unless the period of reversal of temporary differences is controlled by the Company and it is
probable that the temporary differences will not reverse in the near future.
Deferred tax assets and liabilities are offset when a legal right exists, and when the taxes are levied by the
same tax authority.
o) Employee benefits
i. Pension plans
Defined contribution plans:
A defined contribution plan is a pension plan under which the Company pays fixed contributions into
a separate entity. The Company has no legal or constructive obligations to pay further contributions if
the fund does not hold sufficient assets to pay all employees the benefits relating to their service in the
current and past periods. The contributions are recognized as employee benefit expense on the date
that is required the contribution.
Defined benefit plans:
Termination benefits are payable when employment is terminated by the Company before the normal
retirement date or when an employee accepts voluntary termination of employment in exchange for
these benefits. The Company recognizes termination benefits in the first of the following dates: (a) when
the Company can no longer withdraw the offer of these benefits, and (b) when the Company recognizes
the costs from restructuring within the scope of the IAS 37 and it involves the payment of termination
benefits. If there is an offer that promotes the termination of the employment relationship voluntarily by
employees, termination benefits are valued based on the number of employees expected to accept the
offer. The benefits that will be paid in the long term are discounted at their present value.
iv. Short-term benefits
The Company grants benefits to employees in the short term, which may include wages, salaries, annual
compensation and bonuses payable within 12 months. The Company recognizes an undiscounted pro-
vision when it is contractually obligated or when past practice has created an obligation.
v. Employee participation in profit and bonuses
The Company recognizes a liability and an expense for bonuses and employee participation in profits
when it has a legal or assumed obligation to pay these benefits and determines the amount to be
recognized based on the profit for the year after certain adjustments.
A defined benefit plan is a plan, which specifies the amount of the pension an employee will receive on
retirement, usually dependent on one or more factors such as age, years of service and compensation.
p) Provisions
The liability recognized in the consolidated statement of financial position in respect of defined benefit
plans is the present value of the defined benefit obligation at the consolidated statement of financial
position date less the fair value of plan assets. The defined benefit obligation is calculated annually by
independent actuaries using the projected unit credit method. The present value of the defined benefit
obligation is determined by discounting the estimated future cash outflows using discount rates in con-
formity with IAS 19, Employee Benefits, that are denominated in the currency in which the benefits will be
paid and have maturities that approximate the terms of the pension liability.
Provisions represent a present legal obligation or a constructive obligation as a result of past events where
an outflow of resources to meet the obligation is likely and where the amount has been reliably estimated.
Provisions are not recognized for future operating losses.
Provisions are measured at the present value of the expenditures expected to be required to settle the ob-
ligation using a pre-tax rate that reflects current market assessments of the value of money over time and
the risks specific to the obligation. The increase in the provision due to the passage of time is recognized as
interest expense.
Actuarial gains and losses from adjustments and changes in actuarial assumptions are recognized
directly in other items of the comprehensive income in the year they occur and will not be reclassified to
the results of the period.
When there are a number of similar obligations, the likelihood that an outflow will be required in settlement
is determined by considering the class of obligations as a whole. A provision is recognized even if the likeli-
hood of an outflow with respect to any one item included in the same class of obligations may be small.
88
A restructuring provision is recorded when the Company has developed a formal detailed plan for the
restructure, and a valid expectation for the restructure has been created between the people affected,
possibly for having started the plan implementation or for having announced its main characteristics
to them.
q) Share based payment
The Company's compensation plans are based 50% on the market value of the shares of its holding entity
and the other 50% on the market value of the shares of Alpek SAB, granted to certain senior executives of
the Company and its subsidiaries. The conditions for granting such compensation to the eligible executives
include compliance with certain financial metrics such as the level of profit achieved and remaining in the
Company for up to 5 years, among other requirements. The Board of Directors of Alfa has appointed a tech-
nical committee to manage the plan, and it reviews the estimated cash settlement of this compensation at
the end of the year. The payment plan is subject to the discretion of Alfa’s senior Management. Adjustments
to this estimate are charged or credited to the consolidated statement of income.
The fair value of the amount payable to employees in respect of share-based payments which are settled
in cash is recognized as an expense, with a corresponding increase in liabilities, over the period of service
required. The liability is included within other liabilities and is adjusted at each reporting date and the
settlement date. Any change in the fair value of the liability is recognized as compensation expense in the
consolidated statement of income.
r) Capital stock
When treasury shares are repurchased, they are converted into treasury shares and the amount is charged
to stockholders' equity at their purchase price. These amounts are expressed at their historical value.
Alpek SAB's common shares are classified as capital stock within stockholders’ equity. Incremental costs
directly attributable to the issuance of new shares are included in equity as a reduction from the consider-
ation received, net of tax.
s) Revenue recognition
Revenues comprise the fair value of the consideration received or to receive for the sale of goods and
services in the ordinary course of the transactions, and are presented in the consolidated statement of
income, net of the amount of variable considerations, which comprise the estimated amount of returns
from customers, rebates and similar discounts and payments made to customers with the objective that
goods are accommodated in attractive and favorable spaces at their facilities.
price to each performance obligation in the contract; and (5) recognize revenue when the Company satis-
fies a performance obligation.
i. Revenue from the sale of goods and products
Contracts with customers are formalized by commercial agreements complemented by purchase or-
ders, whose costs comprise the promises to produce, distribute and deliver goods based on the con-
tractual terms and conditions set forth, which do not imply a significant judgment to be determined.
When there are payments related to obtaining contracts, they are capitalized and amortized over the
term of the contract.
Performance obligations held by the Company are not separable, and are not partially satisfied, since
they are satisfied at a point in time, when the customer accepts the products. Moreover, the payment
terms identified in most sources of revenue are short-term, with variable considerations including dis-
counts given to customers, without financing components or guarantees. These discounts are recog-
nized as a reduction in revenue; therefore, the allocation of the price is directly on the performance
obligations of production, distribution and delivery, including the effects of variable consideration.
The Company recognizes revenue at a point in time, when control of sold goods has been transferred
to the customer, which is given upon delivery of the goods promised to the customer according to the
negotiated contractual terms. The Company recognizes an account receivable when the performance
obligations have been met, recognizing the corresponding revenue; moreover, the considerations re-
ceived before completing the performance obligations of production and distribution are recognized as
customer advances.
Dividend income from investments is recognized once the rights of stockholders to receive this payment
have been established (when it is probable that the economic benefits will flow to the Company and the
revenue can be reliably determined).
t) Earnings per share
Earnings per share are calculated by dividing the profit attributable to the stockholders of the controlling
interest by the weighted average number of common shares outstanding during the year. As of December
31, 2023, 2022 and 2021, there are no dilutive effects from financial instruments potentially convertible
into shares.
u) Changes in accounting policies and disclosures
i. New standards and changes adopted
To recognize revenues from contracts with customers, the comprehensive model for revenue recognition is
used, which is based on a five-step approach consisting of the following: (1) identify the contract; (2) identify
performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction
In the current year, the Company has applied a number of amendments to IFRS issued by the IASB that
are mandatorily effective for an accounting period that begins on or after January 1, 2023. The conclu-
sions related to their adoption are described as follows:
89
IFRS 17 – Insurance contracts
IFRS 17 establishes principles for the recognition, measurement, presentation, and disclosure of insur-
ance contracts. The objective of this standard, which replaces IFRS 4, Insurance Contracts, is to ensure
that an entity provides relevant information that faithfully represents those contracts. This information
provides a basis for users of financial statements to evaluate the effect that insurance contracts have
on the financial position, financial performance, and cash flows of the entity, being applicable to both
insurance companies and companies that have reinsurance contracts.
Amendments to IAS 8 – Definition of accounting estimates
The amendments replace the definition of a change in accounting estimates. Under the new definition,
accounting estimates are “monetary amounts in the financial statements that are subject to measure-
ment uncertainty.”
The definition of a change in accounting estimates was eliminated.
This IFRS describes a general model, which is modified for insurance contracts with direct participation
features, which is described as the variable rate approach.
The Company evaluated the modifications to IAS 8 and determined that the implementation of the
change in the definition of accounting estimates did not have an impact on the consolidated financial
statements since there is no present situation that implies a change in accounting estimates.
The overall model is simplified if certain criteria are met when measuring liability for remaining coverage
using the premium allocation method.
The overall model will use current assumptions to estimate the amount, timing and uncertainty of future
cash flows and will explicitly measure the cost of that uncertainty, considering market interest rates and
the impact of options and guarantees.
The Company had no implications in the adoption of this new IFRS, since the Company does not main-
tain contracts that meet the definition of an insurance contract established by IFRS 17.
Amendments to IAS 1, and Practice Statement 2 – Disclosure of accounting policies
The amendments change the requirements to IAS 1 regarding the disclosure of accounting policies.
The amendment replaces the terms “significant accounting policies” with “material accounting policies
information.” Accounting policy information is material when it is considered that, together with other
information included in the financial statements of an entity, it can influence the decision making of the
primary users of the financial statements of general use and that they are made in the basis for said
financial statements.
The supporting paragraphs in IAS 1 are amended to clarify information on accounting policies that relate
to immaterial transactions, other events or conditions that are themselves material. Accounting policy
information may be material due to the nature of the related transactions, other events or conditions,
even if the amounts are immaterial. However, not all accounting policy information relating to material
transactions, other events or conditions is itself material.
The IASB has developed guidance and examples to explain and demonstrate the application of the “four
steps of the materiality process” described in the IFRS Practice 2 Statements.
The Company undertook a process to define the accounting policies that are considered material, and
not only significant, by making modifications to Note 3 of its consolidated financial statements, main-
taining those accounting policies that, due to their nature and relevance, together with other information
included in the consolidated financial statements, may influence decision-making.
Amendments to IAS 12, Income Taxes – Deferred tax related to assets and liabilities arising from a single
transaction
The amendments introduced a further exception from the initial recognition. Under the amendments,
an entity does not apply the initial recognition exemption for transactions that give rise to equal taxable
and deductible temporary differences on initial recognition. Following the amendments to IAS 12, an
entity is required to recognize the related deferred tax assets and liabilities, with the recognition of any
deferred tax assets being subject to the recoverability criteria in IAS 12.
Depending on the applicable tax law, equal taxable and deductible temporary differences may arise on
initial recognition of an asset and liability in a transaction that is not a business combination and affects
neither accounting profit nor taxable profit.
The Company evaluated the modification of IAS 12 and determined that the implementation of this mod-
ification had no effect on its consolidated financial information, due to the fact that the Company has
not previously applied the exception to initial recognition described above.
Amendments to IAS 12, International tax reform – Pillar Two Model Rules
The Company has adopted the amendments to IAS 12 for the first time in the current year. The IASB
amends the scope of IAS 12 to clarify that the Standard applies to income taxes arising from tax law en-
acted or substantively enacted to implement the Pillar Two model rules published by the OECD, including
tax law that implements qualified domestic minimum top up taxes described in those rules.
On July 18, 2023, the government of the United Kingdom, where the closest tier holding company is
incorporated, enacted Pillar Two income tax legislation, effective from January 1, 2024. According to the
legislation, the holding company must pay, in the United Kingdom, a complementary tax on the profits of
its subsidiaries that are taxed at an effective tax rate of less than 15%. The main jurisdictions in which ex-
posures to this tax may exist include countries in the Middle East. The estimated impact that the Second
Pillar income tax legislation would have had on the Company’s results if it had been in effect for the year
ended December 31, 2023, and the percentage of the Company’s annual profits that could be subject to
this income tax, were considered not relevant to the Company’s consolidated financial statements.
90
The Company applied the temporary exception to the accounting requirements for deferred taxes in IAS
12, so the Company neither recognise nor discloses information about deferred tax assets and liabilities
related to Pillar Two income taxes.
transactions which the Company proposes to enter into, as well as the renewal or cancellation of deriva-
tive arrangements, must be approved by both Alpek’s and Alfa’s CEO, according to the following schedule of
authorizations:
The Company will continue to evaluate the impact of the Pillar Two income tax legislation on its future
financial performance.
ii. New, revised and issued IFRS, but not yet effective
As of the date of these consolidated financial statements, the Company has not applied the following
amendments to IFRS that have been issued, but are not yet in force, and that the adoption of IFRS does
not expect to have a material impact on the consolidated financial statements in future periods, consid-
ering that they are not of significant applicability. The Company expects the impacts to be primarily re-
lated to the disclosures included in its consolidated financial statements, primarily due to amendments
to IAS 7 and IFRS 7. The amendments to IFRS are as follows:
• Amendments to IFRS 16 – Lease liability on a sale and leaseback (1)
• Amendments to IAS 7 and IFRS 7 – Supplier financing agreements (1)
• Amendments to IAS 1 – Classification of Liabilities as Current or Non-current (1)
• Amendments to IAS 1 – Classification of debt with covenants (1)
• Amendments to IAS 21 – Lack of exchangeability (2)
(1) Effective for annual reporting periods beginning on January 1, 2024.
(2) Effective for annual reporting periods beginning on January 1, 2025.
4. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Company’s activities expose it to various financial risks: market risk (including exchange rate risk, price risk
and interest rate variation risk), credit risk and liquidity risk.
The Company has a general risk management program focused on the unpredictability of financial markets
and seeks to minimize the potential adverse effects on its financial performance.
The objective of the risk management program is to protect the financial health of its business, taking into
account the volatility associated with foreign exchange and interest rates. Sometimes, the Company uses
derivative financial instruments to hedge certain exposures to risks. In addition, due to the nature of the in-
dustries in which it participates, the Company has performed hedges of input prices with derivative financial
instruments.
Alfa has a Risk Management Committee (“RMC”), comprised of the Board’s Chairman, the Chief Executive
Officer, Chief Financial Officer and a Risk Management Officer acting as technical secretary. The RMC reviews
derivative transactions proposed by the subsidiaries of Alfa, including Alpek, in which a potential loss analysis
surpasses US$1. This Committee supports both the CEO and the President of Board of Alfa. All new derivative
Chief Executive Officer of the Company
Risk Management Committee of Alfa
Finance Committee
Board of Directors of Alfa
Maximum possible loss US$1
Individual transaction
Annual cumulative
transactions
1
30
100
>100
5
100
300
>300
The proposed transactions must meet certain criteria, including that the hedges are lower than established
risk parameters, that they are the result of a detailed analysis and are properly documented. In addition, sen-
sitivity analysis and other risk analyses should be performed and documented prior to the operation.
Alfa's risk management policy indicates that hedging positions should always be less than the projected expo-
sure to allow an acceptable margin of uncertainty. Exposed transactions are expressly prohibited.
The Company’s policy indicates that the further the exposure is, the lower the coverage, based on the following
table:
Maximum coverage (as a percentage of the projected exposure)
Commodities
Energy costs
Exchange rate for operating transactions
Exchange rate for financial transactions
Interest rates
Capital management
Current year
100
75
80
100
100
The Company’s objectives when managing capital is to safeguard its ability to continue as a going concern,
so that it can continue to provide returns to stockholders and benefits to other stakeholders, as well as main-
taining an optimal capital structure to reduce the cost of capital.
To maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to stock-
holders, return equity to stockholders, issue new shares or sell assets to reduce debt.
91
Alpek reviews capital based on a leverage ratio. This percentage is calculated by dividing total liabilities by
total stockholders’ equity.
The financial ratio of total liabilities/total equity was 2.09, 1.62, and 1.50 as of December 31, 2023, 2022 and 2021,
respectively, resulting in a leverage ratio that meets the Company’s management and risk policies.
As of December 31,
2023
2022
2021
Carrying
amount
Fair
value
Carrying
amount
Fair
value
Carrying
amount
Fair
value
Financial instruments by category
The following are the Company’s financial instruments by category.
As of December 31, 2023, 2022 and 2021, financial assets and liabilities consist of the following:
Financial assets:
Non-current accounts receivable
Financial liabilities:
Non-current debt
$ 2,456
$ 2,453
$ 3,344
$ 3,339
$
3,471
$ 3,469
32,702
30,484
37,344
34,519
31,436
32,724
Cash and cash equivalents
Restricted cash
Financial assets measured at amortized cost:
Trade and other accounts receivable
Other non-current assets
Financial assets measured at fair value through profit or loss
Derivate financial instruments (1)
Financial liabilities measured at amortized cost:
Debt
Trade and other accounts payable
Lease liability
Financial liabilities measured at fair value:
Derivative financial instruments (1)
As of December 31,
2023
2022
2021
$
7,391
$
6,319
$
10,541
322
553
13
13,236
3,140
19,669
3,960
20,725
4,085
95
10
351
$
24,184
$
30,511
$
35,715
$ 33,337
$
39,081
$
31,993
25,995
3,456
30,505
3,624
27,657
3,608
265
1,241
254
$ 63,053
$
74,451
$
63,512
(1) The Company designated the derivative financial instruments that comprise this balance as accounting hedges, in accor-
dance with what is described later in this note.
Fair value of financial assets and liabilities valued at amortized cost
The amount of cash and cash equivalents, restricted cash, trade and other accounts receivable, other current
assets, trade and other accounts payable, current debt and other current liabilities approximate their fair
value, due to their short maturity. The net carrying amount of these accounts represents the expected cash
flows to be received as of December 31, 2023, 2022 and 2021.
The carrying amount and estimated fair value of assets and liabilities valued at amortized cost is presented
below:
The carrying amount of the debt, for the purpose of computing its fair value, is presented gross of interest
payable and issuance costs.
The estimated fair values as of December 31, 2023, 2022 and 2021 were determined based on discounted cash
flows, using rates reflecting a similar credit risk, depending on the currency, maturity period and country where
the debt was acquired. The primary rates used for financial liabilities are the Interbank Equilibrium Interest Rate
(“TIIE” for its acronym in Spanish) for instruments in Mexican pesos, Secured Overnight Financing Rate (“SOFR”),
for instruments in U.S. dollars, and EURIBOR, for instruments in Euros. Measurement at fair value for non-current
accounts receivable is deemed within Level 3 of the fair value hierarchy, while, for the financial debt, the mea-
surement at fair value is deemed within Levels 1 and 2 of the hierarchy, as described herein below.
Market risks
(i) Exchange rate risk
The Company is exposed to foreign exchange risk, primarily derived from the transactions and balances
that the subsidiaries conduct and have in foreign currency, respectively. A foreign currency is that which
is different from the functional currency of an entity. In addition, the Company is exposed to changes in
the value of foreign investments (subsidiary entities that have a functional currency different from that of
the ultimate holding company), which arise from changes in the exchange rates between the functional
currency of the foreign operation and the functional currency of the holding company (pesos); therefore,
the Company applies hedge accounting to mitigate this risk, designating financial liabilities as hedging
instruments, regardless of whether the foreign investment is directly or indirectly maintained through a
subholding.
The behavior of the exchange rates fluctuations between the Mexican peso, U.S. dollar and the euro rep-
resents an important factor for the Company due to the effect that such currencies have on its consolidated
results, and because, in addition, Alpek has no interference in its determination. Historically, in certain times
when the Mexican peso has appreciated against other currencies, such as the U.S. dollar, the Company’s
profit margins have been reduced. On the other hand, when the Mexican peso has lost value, Alpek’s profit
margins have been increased. However, there is no assurance that this correlation will be repeated in case
the exchange rate between the Mexican peso and any other currency fluctuates again, because these
effects also depend on the balances in foreign currency that the entities of the Company hold.
MXN
USD
EUR
Senior Notes 144A fixed rate
22
Alpek Polyester Ms
Accordingly, the Company sometimes enters into derivative financial instruments in order to keep under
control the integrated total cost of its financing and the volatility associated with exchange rates. Additionally,
as most of the Company’ revenues are in U.S. dollars, there is a natural hedge against its obligations in
U.S. dollars.
The Company has the following assets and liabilities in foreign currency in relation to the functional cur-
rency of the subsidiary entities, translated to millions of Mexican pesos at the closing exchange rate as of
December 31, 2023:
Financial assets
Financial liabilities
$ 27,375
$ 32,273
$
1,237
(25,232)
(44,932)
(304)
Foreign exchange financial position
$
2,143
$
(12,659) $
933
The exchange rates used to translate the foreign currency financial positions to Mexican pesos are those
described in Note 3c.
Based on the financial positions in foreign currency maintained by the Company, a hypothetical variation
of 10% in the MXN/USD and MXN/EUR exchange rate and keeping all other variables constant, would result in
an effect of $958 on the consolidated statement of income and consolidated stockholders' equity.
Financial instruments to hedge net investments in foreign transactions
The Company designated certain non-current debt instruments as hedging instruments to net investments
in foreign transactions, in order to mitigate the variations in exchange rates arising between the functional
currency for such transactions and the functional currency of the holding or sub-holding company that
maintains these investments.
The Company formally designated and documented each hedging relationship establishing objectives,
strategy to hedge the risk, the identification of the hedging instrument, the hedged item, the nature of
the risk to be hedged, and the methodology to assess the effectiveness. Given that the exchange rate
hedging relationship is clear, the method that the Company used to assess the effectiveness consisted of
a qualitative effectiveness test by comparing the critical terms between the hedging instruments and the
hedged items.
The hedge will be effective as long as the notional debt designated as a hedging instrument is equal to or
less than the value of the net assets of the covered foreign operation. On the other hand, when the value of
the net assets of the foreign operation is less than the notional value of the designated debt, the Company
rebalances the hedging relationship and recognizes the ineffectiveness in the income statement.
22
251
95
120
92
As of December 31, 2023, 2022 and 2021, Alpek maintains the following hedging relationships:
As of December 31, 2023
Holding
Functional
Currency
Alpek SAB
MXN
Hedging
Instrument
Bank loan
Bank loan
Notional
Value
Hedged Item
Net assets of
the hedged
item
US$
200
Indelpro
US$
254
100
Temex
Senior Notes 144A fixed rate
100
Alpek Polyester México
Akra Polyester
US$
422
US$
742
As of December 31, 2022
Holding
Functional
Currency
Hedging
Instrument
Notional
Value
Hedged Item
Net assets of
the hedged
item
Alpek SAB
MXN
Senior Notes 144A fixed rate US$
-
Indelpro
US$
Senior Notes 144A fixed rate
300
Temex
Senior Notes 144A fixed rate
22
Alpek Polyester Ms
Senior Notes 144A fixed rate
100
Alpek Polyester México
Akra Polyester
US$
422
US$
As of December 31, 2021
240
68
232
82
195
817
Holding
Functional
Currency
Hedging
Instrument
Notional
Value
Hedged Item
Net assets of
the hedged
item
Alpek SAB
MXN
Senior Notes 144A fixed rate US$
49
Indelpro
US$
Senior Notes 144A fixed rate
267
Temex
Senior Notes 144A fixed rate
22
Alpek Polyester Ms
Senior Notes 144A fixed rate
100
Alpek Polyester México
Akra Polyester
261
42
240
101
179
US$
438
US$
823
For the years ended December 31, 2023, 2022 and 2021, the Company’s average hedging ratio amount-
ed to 56.3%, 48.9%, and 54.9%, respectively. Therefore, the exchange rate fluctuation generated by the
hedging instruments for the years ended December 31, 2023, 2022 and 2021 amounted to a net gain
(loss) of $873, $545, and $(238), respectively, which was recognized in other comprehensive income,
offsetting the translation effect generated by each foreign investment. The hedging effectiveness
results confirm that the hedging relationships are highly effective due to the economic relationship
between the hedging instrument and the hedged items.
Derivative financial instruments to hedge exchange rate risks
As of December 31, 2023, 2022 and 2021, the Company holds forwards (EUR/USD) and during 2023
contracted forwards (GBP/USD), to hedge different needs. For 2023, 2022 and 2021, these forwards are
mirrored to an entity with the functional currency of pound sterling (GBP), because part of its revenue
is received in euros and part of its purchases are made in US dollars. Therefore, a highly probable
forecasted transaction related to budgeted sales and purchases in each corresponding currency
has been documented as a hedged item.
For accounting purposes, the Company has designated such forwards as cash flow hedging rela-
tionships to hedge the aforementioned items, and has formally documented these relationships,
setting the objectives, management's strategy to hedge the risk, identification of hedging instru-
ments, hedged items, the nature of the risk to be hedged and the methodology of the effectiveness
assessment.
The conditions of the derivative financial instruments and the considerations of their valuation as
hedging instruments are mentioned below:
Characteristics
Currency
Notional amount
Strike (average)
Maturity
Carrying amount
Change in the fair value to measure ineffectiveness
Reclassification from OCI to profit or loss
Recognized in OCI, net of reclassifications
Change in the fair value of the hedged item
to measure ineffectiveness
Forwards EUR/USD
2023
2023
2022
2021
GBP
10
EUR
29
EUR
24
EUR
8.1
1.2639
1.0877
1.0738
1.2421
Monthly
through
December
30, 2024
Monthly
through
December
30, 2024
Monthly
through
December
30, 2023
Monthly
through
December
30, 2022
$(0)
(2)
-
(0)
2
$(8)
(10)
-
(8)
10
$(2)
1.6
-
(2.3)
(1.6)
$17
15.9
-
16.5
(15.9)
Change in the fair value of the forward
(0)
(5.7)
(18.8)
28.4
93
As of December 31, 2023, 2022 and 2021, the Company held EUR/USD forwards that were contracted with
the objective of reducing transaction costs; therefore, for accounting purposes and for hedge evalua-
tion, derivatives are divided into synthetic derivatives to hedge each hedged item individually (revenue
in euros and purchases in dollars). During 2023, the Company also contracted EUR/GBP forwards directly
for this same hedging relationship. The Company determined that they are highly effective according to
the characteristics and modeling of both hedged items, resulting in 99% effectiveness for 2023, 2022, and
2021. Furthermore, both the credit profile of the Company and the counterparty are adequate and are not
expected to change in the medium term, so the credit risk component is not considered to dominate the
hedging relationship.
In accordance with the reference amounts described and the way in which the flows of the derivatives
are exchanged, the average coverage ratio for the EUR/USD and GBP/USD exchange rate for 2023 is 68%,
for 2022 is 25%, and 55% for 2021. If necessary, a rebalancing will be done to maintain this relationship for
the strategy.
The source of ineffectiveness may be caused by the difference in the settlement date of the derivative and
the hedged item, and that the expected amount becomes a lower amount than the hedging instruments,
as well as the credit risk. For the years ended December 31, 2023, 2022 and 2021, no ineffectiveness was
recognized in profit or loss.
(ii) Price risk
In carrying out its activities, the Company depends on the supply of raw materials provided by its suppliers,
both in México and abroad, among which are intermediate petrochemicals, principally.
In recent years, the price of certain inputs has shown volatility, especially those related to oil and natural gas.
In order to fix the selling prices of certain of its products, the Company has entered into agreements with
certain customers. At the same time, it has entered into transactions involving derivatives on natural gas
that seek to reduce price volatility of the prices of this input.
Additionally, the Company has entered into derivative financial instruments transactions to hedge pur-
chases of certain raw materials, since these inputs have a direct or indirect relationship with the prices of
its products.
The derivative financial operations have been privately contracted with various financial institutions, whose
financial strength was highly rated at the time by rating agencies. The documentation used to formalize
the contract operations is that based generally on the "Master Agreement", generated by the "International
Swaps & Derivatives Association" ("ISDA"), which is accompanied by various accessory documents known in
generic terms as "Schedule", "Credit Support Appendix" and "Confirmation".
Regarding natural gas, Pemex is the only supplier in México. The selling price of natural gas is determined
based by the price of that product on the “spot” market in South Texas, USA, which has experienced volatility.
For its part, the Mexican Electric Commission is a decentralized public company in charge of producing and
distributing electricity in México. Electricity rates have also been influenced by the volatility of natural gas,
since most power plants are gas-based.
The Company entered into various derivative agreements with various counterparties to protect it against
increases in prices of natural gas and other raw materials. In the case of natural gas derivatives, hedging
strategies for products were designed to mitigate the impact of potential increases in prices. The purpose
is to protect the price from volatility by taking positions that provide stable cash flow expectations, and thus
avoid price uncertainty. The reference market price for natural gas is the Henry Hub New York Mercantile
Exchange (NYMEX).
The average price in US dollars per MMBTU for 2023, 2022 and 2021 was $2.5, $6.4, and $3.8, respectively.
As of December 31, 2023, 2022 and 2021, the Company had hedges of natural gas prices for a portion ex-
pected of consumption needs in México and the United States.
Derivative contracts to hedge adverse changes in commodity prices
The Company uses natural gas to operate, and some of its main raw materials are paraxylene, ethylene
and monoethylene glycol (MEG), ethane and terephthalic acid (PTA). Therefore, an increase in the price of
natural gas, paraxylene, ethylene, monoethylene glycol (MEG), ethane or terephthalic acid (PTA), would have
a negative impact on the operating cash flows. The objective of the hedge designated by the Company is
to mitigate against the exposure in the price increase of the aforementioned commodities, for future pur-
chases by contracting swaps where a variable price is received and a fixed price is paid. In the case of PET,
the Company uses these derivatives to hedge against sales related to this commodity. The Company has
implemented strategies called roll-over, through which it analyzes on a monthly basis if more derivatives
are contracted to expand the time or the amount of coverage; currently, the Company has contracted
hedges until December 2023. Raw material derivatives are mirrored to Alpek Polyester USA, Alpek Polyester
México and Alpek Polyester UK, as the risk lies in such entities, and derivative financial instruments are
contracted by Alpek Polyester; this process is carried out through the formalization of internal derivatives to
be able to apply hedging accounting.
These derivative financial instruments have been classified as cash flow hedges for accounting purposes.
In this sense, management has documented, as a hedged item, a highly probable transaction in relation to
the budget for purchases of these commodities. The conditions of the derivative financial instruments and
the considerations of their valuation as hedging instruments are mentioned below:
94
As of December 31, 2023
Characteristics
Natural Gas
Swaps
Paraxylene
Swaps
MEG
Swaps
Ethylene
Swaps
Propylene
Swaps
Total notional
Units
Price received
24,042,090
277,280
157,474
3,304,623
3,261,920
MMBtu
MT
MT
LB
LB
Fair value
Fair value
Fair value
Fair value
Fair value
Price paid (average)
$3.9/MMBtu
$1,019/MT
$520/MT
$.19/LB
$.43/LB
Maturity (monthly)
Net position of the swap (1)
Ineffectiveness recognized
in the statement of income
Change in the fair value to measure
ineffectiveness
Balance recognized in OCI, net
of reclassifications
Change in the fair value to measure
ineffectiveness of hedge item
January
2025
January
2025
January
2025
January
2024
August
2024
$(200)
$28
-
(189)
(200)
-
36
4
24
$8
-
26
(16)
24
190
(36)
(26)
$1
-
-
1
-
-
$2
-
-
-
2
-
Reclassification from OCI to profit or loss
-
Effectiveness test results
99.92%
99.89%
99.89%
99.92%
99.93%
Characteristics
Total notional
Units
Price received
Price paid (average)
Maturity (monthly)
Net position of the swap (1)
Ineffectiveness recognized in the statement of income
Change in the fair value to measure ineffectiveness
Reclassification from OCI to profit or loss
Balance recognized in OCI, net of reclassifications
Change in the fair value to measure ineffectiveness
of hedge item
As of December 31, 2022
Natural Gas
Swaps
Paraxylene
Swaps
MEG
Swaps
70,973,855
272,650
136,350
MMBtu
MT
MT
Fair value
Fair value
Fair value
$4.43/MMBtu
$970/MT
$586/MT
December
2024
January
2024
January
2024
$(950.3)
$(140.8)
$(137.6)
-
(1,086.2)
-
(950.3)
-
(219.1)
31.2
(172.0)
1,086.5
219.3
-
(213.8)
(49.6)
(88.1)
213.9
Effectiveness test results
99.97%
99.92%
99.92%
As of December 31, 2021
As of December 31, 2022
Asset
Liability
Total
95
Characteristics
Total notional
Units
Price received
Price paid (average)
Maturity (monthly)
Net position of the swap (1)
Natural Gas
Swaps
Paraxylene
Swaps
Ethylene
Swaps
MEG
Swaps
57,025,808
274,000
2,000,000
174,400
MMBtu
MT
Lb
MT
Fair value
Fair value
Fair value
Fair value
$1.69/MMBtu
$821/MT
$0.1544/lb
$658/MT
June 2024
January 2023 January 2022 January 2023
$ (154.8)
$ 317.5
$ 6.4
$ (88.8)
Ineffectiveness recognized in the
statement of income
Change in the fair value to measure
ineffectiveness
Reclassification from OCI to profit or loss
Balance recognized in OCI, net
of reclassifications
Change in the fair value to measure
ineffectiveness of hedge item
-
(147.2)
-
(154.8)
-
363.7
87.9
229.4
147.2
(363.8)
Effectiveness test results
99.96%
99.9%
-
7.7
6.4
-
(7.7)
100%
-
(96.9)
32.2
(121)
96.9
99.99%
(1) Due to the high volume of operations, the net position of derivative financial instruments is presented; however, since these
instruments do not meet the criteria for the offsetting of financial instruments, they are presented in their gross amounts in
the consolidated statement of financial position.
The change in the fair value of the derivative financial instruments recognized in OCI for the year ended
December 31, 2023, 2022 and 2021 is $1,056, $(1,182), and $(592), respectively.
The fair value of the derivate financial instruments according to their classification in the consolidated
statement of financial position is as follows:
As of December 31, 2023
Asset
Liability
Total
Natural Gas
$
Paraxylene
Propylene
MEG/Ethylene
Forward
Total
$
-
54
2
36
3
95
$
(200)
$
(200)
(26)
-
(27)
(12)
28
2
9
(9)
$
(265)
$
(170)
Natural Gas
$
Paraxylene
MEG
Forward
Total
$
-
10
-
-
10
(950)
(950)
(151)
(138)
(2)
(1,241)
(141)
(138)
(2)
(1,231)
As of December 31, 2021
Asset
Liability
Total
Natural Gas
$
Paraxylene
Ethylene
MEG
Forward
-
323
6
5
17
$
(155)
$
(155)
(5)
-
(94)
-
318
6
(89)
17
97
Total
$
351
$
(254)
$
With the reference amounts of these derivative financial instruments, the Company offsets the fluctuation
of the prices of these commodities that are used as raw material in the production processes of the entities.
For commodity hedging relationships, management is designating as a hedged item a specific risk, which
is defined by the underlying assets that are clearly determined that the risk component is separable, it can
be reliably measured and is also highly correlated.
On the other hand, in the measurement of the effectiveness of these hedges, the Company determined
that they are highly effective because the changes in the fair value and cash flows of each hedged item are
compensated within the range of effectiveness established by management. Due to the results shown on
the effectiveness tests, it is confirmed that there is an economic relationship between the hedging instru-
ments and the hedged item. The method used by the Company is to offset cash flows using a hypothetical
derivative, which consists of comparing the changes in the fair value of the hedging instrument with the
changes in the fair value of the hypothetical derivative that would result in a perfect hedge.
As of December 31, 2023, according to the reference amounts described and the way in which the flows of
the derivatives are exchanged, the average coverage ratio for the natural gas, paraxylene, ethylene and
ethane, PTA and PET for 2023, 2022 and 2021 are shown below and, if necessary, a rebalancing will be done
to maintain this relationship for the strategy.
96
Average coverage ratio
Natural gas
Paraxylene
Ethylene/MEG
Propylene
2023
17%
46%
32%
25%
2022
29%
45%
37%
-
2021
21%
44%
47%
-
The source of ineffectiveness can be caused mainly by the difference in the settlement date of the hedging
instruments and the hedged items, and that the budget becomes less than the hedging instruments. For
the years ended December 31, 2023, 2022 and 2021, there was no ineffectiveness recognized in profit or loss.
(iii) Interest rate risk
The Company is exposed to interest rate risk mainly for long-term loans bearing interest at variable rates.
Fixed-interest loans expose the Company to interest rate risk at fair value, which reflects that Alpek might
be paying interest at rates significantly different from those of an observable market.
As of December 31, 2023, 57% of the financing is denominated at a fixed rate, and 43% at a variable rate.
As of December 31, 2023, if interest rates on variable rate loans are increased or decreased by 100 basis
points in relation to the rate in effect, the income and stockholders’ equity of the Company would change
by $332.
Credit risk
Credit risk represents the potential loss due to non-compliance of counterparts in their payment obliga-
tions. Credit risk is generated from cash and cash equivalents, derivative financial instruments and depos-
its with banks and financial institutions as well as credit exposure to customers, including receivables and
committed transactions.
The Company determines, from a business standpoint and credit risk profile, the significant customers with
whom it maintains an account receivable, distinguishing those that require an individual credit risk assess-
ment. For the rest of the customers, the company carries out its classification according to the type of mar-
ket in which they operate (domestic or foreign), according with the business and internal risk administration.
Each subsidiary is responsible for managing and analyzing credit risk for each of its new customers before
setting the terms and conditions of payment. If wholesale customers are rated independent, these are the
ratings used. If there is no independent rating, the Company’s risk control group evaluates the creditwor-
thiness of the customer, taking into account their financial position, past experience and other factors. The
maximum exposure to credit risk is given by the balances of these items as presented in the consolidated
state of financial position.
Individual risk limits are determined based on internal and external ratings in accordance with limits set by
the Board of Directors. The use of credit risk is monitored regularly. Sales to retail customers are in cash or
by credit card. During the years ended December 31, 2023, 2022 and 2021, credit limits were not exceeded.
In addition, the Company performs a qualitative evaluation of economic projections, with the purpose of
determining the possible impact on probabilities of default and the rate of recovery that it assigns to its
clients.
During the year ended December 31, 2023, there have been no changes in the techniques of estimation or
assumption.
Liquidity risk
Projected cash flows are determined at each operating entity of the Company and subsequently the fi-
nance department consolidates this information. The finance department of the Company continuously
monitors the cash flow projections and liquidity requirements of the Company ensuring that sufficient cash
and highly liquid investments are maintained to meet operating needs, and it’s that some flexibility is main-
tained through open and committed credit lines. The Company regularly monitors and makes decisions
ensuring that the limits or covenants set forth in debt contracts are not violated. The projections consider
the financing plans of the Company, compliance with covenants, compliance with minimum liquidity ratios
and internal legal or regulatory requirements.
The Company’s treasury department invests those funds in time deposits and marketable securities whose
maturities or liquidity allow flexibility to meet the cash needs of the Company.
The following table analyzes the derivative and non-derivative financial liabilities of the Company, grouped
according to their maturity, from the date of the consolidated statement of financial position to the con-
tractual maturity date. Derivative financial liabilities are included in the analysis if their contractual matur-
ities are required to understand the timing of the Company's cash flows. The amounts disclosed in the table
are contractual undiscounted cash flows.
As of December 31, 2023
Less than
a year
From
1 to 5 years
More than
5 years
The specific valuation techniques used to value financial instruments include:
— Market quotations or trader quotations for similar instruments.
— The fair value of interest rate swaps is calculated as the present value of estimated future cash flows
based on observable yield curves.
Suppliers and other accounts payable
$
25,996
$
-
$
-
— The fair value of forward exchange agreements is determined using exchange rates at the closing
97
18,770
19,837
— Other techniques such as the analysis of discounted cash flows, which are used to determine fair value
balance date, with the resulting value discounted at present value.
Current and non-current debt (excluding debt
issuance costs)
Derivative financial instruments
1,981
253
12
As of December 31, 2022
Suppliers and other accounts payable
$
30,505
$
-
$
Current and non-current debt
(excluding debt issuance costs)
Derivative financial instruments
As of December 31, 2021
8,445
1,220
19,183
21
Suppliers and other accounts payable
$
27,657
$
-
$
Current and non-current debt
(excluding debt issuance costs)
Derivative financial instruments
3,519
248
10,540
6
-
-
23,515
-
-
25,828
-
Fair value hierarchy
The following is an analysis of financial instruments measured in accordance with the fair value hierarchy.
The 3 different levels used are presented below:
of the remaining financial instruments.
5. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
Estimates and judgments are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
5.1 Critical accounting estimates and assumptions.
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates
will be, by definition, seldom equal to the related actual results. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year are addressed below:
a) Estimated impairment of goodwill and intangible assets with indefinite useful lives
The Company performs annual tests to determine whether goodwill and intangible assets with indefinite
useful lives have suffered any impairment (see Note 12). For impairment testing, goodwill and intangible
assets with indefinite lives are allocated to those groups of cash-generating units (“CGUs”) from which the
Company has considered that economic and operational synergies of business combinations are gener-
ated. The recoverable amounts of the CGUs have been determined based on the calculations of their value
in use, which require the use of estimates. The most significant of these estimates are as follows:
— Level 1: Quoted prices for identical instruments in active markets.
— Level 2: Other valuations including quoted prices for similar instruments in active markets that are di-
-
rectly or indirectly observable.
— Level 3: Valuations made through techniques where one or more of their significant data inputs are
unobservable.
The derivative financial instruments of the Company that are measured at fair value as of December 31,
2023, 2022 and 2021, are located within Level 2 of the fair value hierarchy.
There were no transfers between Level 1 and 2 or between Level 2 and 3.
Estimates of future gross and operating margins, according to the historical performance and industry
expectations for each CGU group.
Discount rate based on the weighted average cost of capital (“WACC”) of each CGU or group of CGUs.
-
- Long-term growth rates.
b) Recoverability of deferred tax assets
Alpek has tax loss carryforwards, which can be used in the following years until maturity expires. Based on
the projections of taxable income that Alpek will generate in the subsequent years through a structured and
robust business plan, management has determined that current tax losses will be used before they expire
and, therefore, it was considered probable that the deferred tax assets for such losses will be recovered.
98
c) Long-lived assets
The Company estimates the useful lives of long-lived assets in order to determine the depreciation and
amortization expenses to be recorded during the reporting period. The useful life of an asset is calculated
when the asset is acquired and is based on past experience with similar assets, considering anticipated
technological changes or any other type of changes; or in the case of the right-of-use assets, based on
the term of the lease agreement. Were technological changes to occur faster than estimated, or differently
than anticipated, the useful lives assigned to these assets could have to be reduced. This would lead to the
recognition of a greater depreciation and amortization expense in future periods. Alternatively, these types
of technological changes could result in the recognition of a charge for impairment to reflect the reduction
in the expected future economic benefits associated with the assets.
The Company reviews depreciable and amortizable assets on an annual basis for signs of impairment,
or when certain events or circumstances indicate that the book value may not be recovered during the
remaining useful life of the assets. For intangible assets with an indefinite useful life, the Company performs
impairment tests annually and at any time that there is an indication that the asset may be impaired.
To test for impairment, the Company uses projected cash flows, which consider the estimates of future
transactions, including estimates of revenues, costs, operating expenses, capital expenses and debt
service. In accordance with IFRS, discounted future cash flows associated with an asset or CGU are com-
pared to the book value of the asset or CGU being tested to determine if impairment or a reversal of im-
pairment exist.
d) Estimation of default probabilities and recovery rate to apply the model of expected losses in the calcula-
tion of impairment of financial assets
The Company assigns to customers with whom it maintains an account receivable at each reporting date,
either individually or as a group, an estimate of the probability of default on the payment of accounts
receivable and the estimated recovery rate, with the purpose of reflecting the cash flows expected to be
received from the outstanding balances on such reporting date.
e) Business combinations
When business combinations are concluded, the acquisition method is required to recognize the identifi-
able net assets acquired at fair value, at the date of acquisition; any excess of the consideration paid, which
may include over the identified net assets, is recognized as goodwill, which is subject to impairment tests
at least once a year. On the other hand, any excess of the net assets acquired over the consideration paid
is recognized as a gain in profit or loss.
To estimate the fair value of the assets acquired and liabilities assumed, the Company uses observable
market data to the extent it is available. When the input data of Level 1 is not available, the Company
hires an independent qualified appraiser to perform the valuation. Management works closely with the
independent qualified appraiser to establish the valuation techniques, the premises, the appropriate input
data and the criteria to be used in the valuation models.
f) Estimation of the discount rate to calculate the present value of future minimum lease payments
The Company estimates the discount rate to be used in determining the lease liability, based on the incre-
mental borrowing rate (“IBR”).
The Company uses a three-tier model, with which it determines the three elements that make up the
discount rate: (i) reference rate, (ii) credit risk component and (iii) adjustment for characteristics of the
underlying asset. In this model, management also considers its policies and practices to obtain financing,
distinguishing between that obtained at the corporate level (that is, by the parent), or at the level of each
subsidiary. Finally, for real estate leases, or, in which there is significant and observable evidence of the
residual value, the Company estimates and evaluates an adjustment for characteristics of the underlying
asset, taking into account the possibility that said asset is granted as collateral or guarantee against the
risk of default.
g) Estimation of the lease term
The Company defines the lease term as the period for which there is a contractual payment commitment,
considering the non-cancelable period of the contract, as well as the renewal and early termination op-
tions that are likely to be exercised. To measure the lease liability, the Company estimates the term of the
contracts considering their contractual rights and limitations, their business plan, as well as management’s
intentions for the use of the underlying asset.
Additionally, the Company considers the early termination clauses of its contracts and the probability of
exercising them, as part of its estimate of the lease term.
5.2 Critical judgments in applying the entity's accounting policies
a) Determination of exercise of control over certain investments in shares
The Company has evaluated critical control factors and has concluded that it should consolidate the finan-
cial statements of its subsidiaries Polioles and Indelpro. The analysis performed by the Company included
the assessment of the substantive decision making rights of the respective shareholders set forth in their
bylaws, resulting in management’s conclusion that it has the power to govern their relevant activities.
b) Acquisitions of assets and business combinations
Management uses its professional judgment to determine whether the acquisition of a group of assets
represents a business combination or an acquisition of assets. Such determination could have a significant
impact on how acquired assets and assumed liabilities are accounted for, both in their initial recognition
and in subsequent years.
6. CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
The cash and cash equivalents are comprised as follows:
7. TRADE AND OTHER RECEIVABLES, NET
Trade and other accounts receivable, net are comprised as follows:
Cash on hand and in banks
Short-term bank deposits
As of December 31,
2023
2022
2021
$
5,898
$
4,787
$
1,493
1,532
7,784
2,757
Total cash and cash equivalents
$
7,391
$
6,319
$
10,541
Restricted cash
The restricted cash balance is made up of cash whose restrictions cause the definition of cash and cash
equivalents not to be met. The restricted cash balance is classified as current and non-current assets in the
consolidated statement of financial position, based on the expiration date of the restriction.
As of December 31, 2023, 2022 and 2021, the Company has restricted cash of approximately $322, $553, and
$13, respectively. As of December 31, 2023, the decrease is primarily related to the release of cash restrictions in
Octal, derived from the revocation of anti-dumping measures applicable to PET. As of December 31, 2022, the
increase relates primarily to funds that were restricted as part of the Octal acquisition.
Total
Trade and other accounts receivable from
related parties (Note 28)
Recoverable taxes
Notes receivable
Interest receivable
Sundry debtors
Allowance for impairment of trade and other
accounts receivable
Trade accounts receivable
$
14,594
$
21,377
$
22,003
99
As of December 31,
2023
2022
2021
454
4,237
7
4
264
497
3,579
12
14
300
622
3,777
776
1
251
(2,087)
(2,531)
(2,928)
$
17,473
$
23,248
$
24,502
100
The changes in the impairment allowance for trade and other receivables in 2023, 2022 and 2021, with the expected losses model used by the Company, are as follows:
For the year ended December 31, 2023:
Customers or customer groups
Alpek Polyester (1)
Grupo Styropek (1)
Polioles
Indelpro and other (1)
Total
Default
probability
range
0%-100%
0%
0%
0.65%
Loss given
default range
Opening balance –
Impairment
allowance
Increases in
the allowance
Cancellations
in the allowance
Translation
effect
Ending balance –
Impairment
allowance
0%-100%
0%-10%
0%-5%
3.42%
$
(2,362)
$
(165)
$
(109)
(29)
(31)
(6)
(8)
(1)
$
(2,531)
$
(180)
$
63
102
28
16
209
$
403
$
(2,061)
9
3
-
(4)
(6)
(16)
$
415
$
(2,087)
(1) The default probability range does not consider customers and groups of customers for which the probability is 100%.
For the year ended December 31, 2022:
Customers or customer groups
Alpek Polyester (1)
Grupo Styropek (1)
Polioles
Indelpro and other (1)
Total
Default
probability
range
Loss given
default range
Opening balance –
Impairment
allowance
Increases in
the allowance
Cancellations
in the allowance
Translation
effect
0%-81%
0%
0%
0.81%
0%-99%
0%-10%
0%-5%
8.22%
$
(2,596)
$
(232)
(23)
(77)
$
(87)
(25)
(7)
-
$
(2,928)
$
(119)
$
159
115
-
46
320
$
$
162
33
1
-
196
(1) The default probability range does not consider customers and groups of customers for which the probability is 100%.
For the year ended December 31, 2021:
Customers or customer groups
Alpek Polyester (1)
Grupo Styropek (1)
Polioles
Indelpro and other (1)
Total
Default
probability
range
0% - 81%
0%
0%
1.23%
Loss given
default range
Opening balance –
Impairment
allowance
Increases in
the allowance
Cancellations
in the allowance
Translation
effect
0% - 98%
0%- 10%
0% - 10%
0.25%
$
(2,521)
$
(99)
(28)
(66)
$
(2,714)
$
(42)
(129)
-
(17)
(188)
$
$
41
-
6
6
53
$
$
(74)
(4)
(1)
-
(79)
(1) The default probability range does not consider customers and groups of customers for which the probability is 100%.
As of December 31, 2023, 2022 and 2021, the Company has guaranteed accounts receivable of $1,540, $2,322, and $3,506, respectively.
Ending balance –
Impairment
allowance
$
(2,362)
(109)
(29)
(31)
$
(2,531)
Ending balance –
Impairment
allowance
$
(2,596)
(232)
(23)
(77)
$
(2,928)
The net change in the allowance for impairment of trade and other receivables of $(444) y $(397) in the years
ended December 31, 2023 and 2022, was primarily due to the decrease in the probability of default in certain
customers compared to the beginning of the year, as well as the translation effect. On the other hand, the
variation in the accounts receivable impairment estimate of $214, as of December 31, 2021, was mainly due to
the increase in the probability of default in some customer groups, as well as the translation effect.
The Company has long-term receivables that are guaranteed with the properties of M&G México’s PET produc-
tion plant in Altamira, México, which have been used by Management to mitigate the exposure to credit risk of
such financial assets, and therefore has not recognized an impairment in their carrying amount.
8. INVENTORIES
9. PREPAYMENTS
The current portion and non-current portion of prepaid expenses is summarized as follows:
Current portion (1)
Non-current portion
Total prepayments
As of December 31,
2023
2022
2021
$
$
744
$
765
$
686
6
7
750
$
772
$
31
717
As of December 31,
2023
2022
2021
(1) This item mainly consists of advance payments for raw materials and prepaid insurance.
101
Finished good
$
11,358
$
16,229
$
12,269
Raw material and other consumables
Materials and tools
Production in progress
9,020
2,383
561
14,320
2,585
759
10,746
2,255
435
$
23,322
$
33,893
$
25,705
For the years ended December 31, 2023, 2022 and 2021, a provision amounting to $125, $255, and $94, respec-
tively, related to damaged, slow-moving and obsolete inventory was recognized in the consolidated statement
of income.
As of December 31, 2023, 2022 and 2021, there were no inventories pledged as collateral.
102
10. PROPERTY, PLANT AND EQUIPMENT, NET
For the year ended December 31, 2021
Opening balance
Additions
Additions for business acquisitions
Disposals
Impairment (1)
Restatement and translation effect
Depreciation charges recognized in the year
Transfers
Ending balance as of December 31, 2021
As of December 31, 2021
Cost
Accumulated depreciation and accumulated impairment
Net carrying amount as of December 31, 2021
For the year ended December 31, 2022
Opening balance
Additions
Additions for business acquisitions
Disposals
Impairment
Restatement and translation effect
Depreciation charges recognized in the year
Transfers
Ending balance as of December 31, 2022
As of December 31, 2022
Cost
Accumulated depreciation and accumulated impairment
Net carrying amount as of December 31, 2022
Land
Buildings and
constructions
Machinery
and equipment
Vehicles
Furniture, lab and
information
technology
equipment
Construction
in progress
Other fixed
assets
Total
$
3,956
$
5,444
$
23,888
$
-
(36)
-
-
70
-
5
1
-
(1)
(256)
18
(290)
357
1,691
(162)
(23)
(965)
542
(2,554)
2,164
$
$
$
3,995
3,995
-
3,995
$
$
$
5,273
$
24,581
16,716
(11,443)
5,273
$
79,876
(55,295)
$
24,581
$
3,995
$
5,273
$
24,581
-
-
-
-
(142)
-
-
-
4,569
-
(6)
(327)
(352)
199
11
6,904
(150)
(135)
(1,574)
(2,756)
2,599
$
$
$
3,853
$
9,356
$
29,480
3,853
$
23,569
$
88,533
-
(14,213)
(59,053)
3,853
$
9,356
$
29,480
$
$
$
$
$
$
$
112
1
-
(1)
(2)
4
(16)
41
139
404
(265)
139
139
1
2
-
-
(9)
(16)
14
131
440
(309)
131
$
$
$
$
$
$
$
$
393
272
-
-
(7)
4
(97)
170
735
2,519
(1,784)
735
735
4
10
(1)
-
(64)
(110)
161
735
2,617
(1,882)
735
$
3,414
2,561
(28)
(7)
(111)
193
-
(2,746)
3,276
3,276
-
3,276
3,276
2,986
335
(10)
(5)
(322)
-
(3,002)
3,258
3,258
-
3,258
$
$
$
$
$
$
$
$
1,372
$
38,579
112
-
(88)
(23)
31
-
2
4,638
(226)
(120)
(1,364)
862
(2,957)
(7)
$
$
$
1,406
$
39,405
1,406
$
108,192
-
(68,787)
1,406
$
39,405
$
1,406
$
39,405
413
-
(80)
-
(101)
-
-
3,415
11,820
(241)
(146)
(2,539)
(3,234)
(29)
$
$
$
1,638
$
48,451
1,638
$
123,908
-
(75,457)
1,638
$
48,451
For the year ended December 31, 2023
Opening balance
Additions
Disposals
Impairment (2)
Restatement and translation effect
Depreciation charges recognized in the year
Transfers
Ending balance as of December 31, 2023
As of December 31, 2023
Cost
Land
Buildings and
constructions
Machinery
and equipment
Vehicles
Furniture, lab and
information
technology
equipment
Construction
in progress
Other fixed
assets
Total
103
$
3,853
$
9,356
$
29,480
$
-
(8)
(56)
(338)
-
-
-
(10)
(93)
(844)
(370)
(1,261)
15
(72)
(831)
(3,791)
(2,689)
3,548
$
$
3,451
$
6,778
$
25,660
3,451
$
17,460
$
76,364
131
1
-
(3)
(18)
(18)
31
124
369
(245)
124
$
735
$
3,258
$
1,638
$
48,451
7
(1)
(26)
(88)
(112)
101
616
2,233
(1,617)
2,881
(16)
(404)
(384)
-
(2,408)
2,927
2,927
-
$
$
162
(179)
(35)
(190)
-
-
3,066
(286)
(1,448)
(5,653)
(3,189)
11
$
$
1,396
$
40,952
1,396
$
104,200
-
(63,248)
616
$
2,927
$
1,396
$
40,952
$
$
$
$
$
$
Accumulated depreciation and accumulated impairment
-
(10,682)
(50,704)
Net carrying amount as of December 31, 2023
$
3,451
$
6,778
$
25,660
(1) Mainly corresponds to $433 from the closure of the polyester staple fiber operations at the Cooper River site, $829 from the shutdown of Univex, $10 from the shutdown of Sales del Bajío and the remainder to the normal operations of the Company.
(2) Mainly corresponds to $950 from the closure of the PET resin production operations at the Cooper River site, $409 from the closure of the filament production plant and the remainder to the Company's normal operations.
Depreciation expenses of $3,134, $3,176, and $2,905 were recorded in cost of sales, $12, $11, and $10, in selling expenses and $43, $47, and $42, in administrative expenses in 2023, 2022 and 2021, respectively.
104
11. RIGHT-OF-USE ASSET, NET
Alpek has leases of fixed assets including buildings, machinery and equipment, transportation equipment, and computer equipment. The average term of the lease contracts is 8 years.
The right-of-use recognized in the consolidated statement of financial position as of December 31, 2023, 2022 and 2021, is integrated as follows:
Net carrying amount:
Balance as of December 31, 2021
Balance as of December 31, 2022
Balance as of December 31, 2023
Depreciation for the year 2021
Depreciation for the year 2022
Depreciation for the year 2023
Land
Buildings
$
$
$
$
$
$
109
368
294
(7)
(29)
(31)
$
$
$
$
$
$
799
661
576
(54)
(60)
(85)
Machinery
and
equipment
$
$
$
$
$
$
934
781
472
(296)
(309)
(294)
Rail cars
$
$
$
$
$
$
1,666
1,584
1,775
(437)
(426)
(436)
Ships and
other leased
assets
$
$
$
$
$
$
46
58
53
(163)
(166)
(150)
Total
$
$
$
$
$
$
3,554
3,452
3,170
(957)
(990)
(996)
During the years ended December 31, 2023, 2022 and 2021, the Company recognized a lease expense of $559, $780, and $693, respectively, related to low value and short-term lease agreements.
Additions derived from business acquisitions, new contracts and modifications to the lease liability, reflected in the net book value of the right-of-use asset as of December 31, 2023, 2022 and 2021 amounted to $1,409, $1,075, and
$1,452, respectively.
As of December 31, 2023, 2022 and 2021, the Company does not have any commitments related to short-term lease agreements.
The Company has not signed lease contracts, which at the date of the consolidated financial statements have not started.
During the year, the Company did not execute significant extensions to the term of its lease contracts.
12. GOODWILL AND INTANGIBLE ASSETS, NET
Cost
As of January 1, 2021
Additions
Additions for business acquisitions
Disposals
Impairment
Transfers
Translation effect
As of December 31, 2021
Additions
Additions for business acquisitions
Disposals
Impairment
Transfers
Translation effect
As of December 31, 2022
Additions
Disposals
Transfers
Translation effect
As of December 31, 2023
105
Development
costs
Non-
compete
agreements
Customer
relationships
Patent
Software
and
licenses
Trademarks
with definite
life
Intellectual
property,
and others
Goodwill
Other
Total
Definite life
Indefinite life
$
950
$
79
$
1,032
$
$
501
$
215
$
3,759
$
399
$
10
$ 6,945
-
-
-
-
-
12
1,044
-
-
-
-
-
(47)
997
-
-
-
-
-
-
-
-
-
-
-
-
1,638
-
-
-
(30)
1,608
-
-
-
10
-
-
-
5
30
995
10
5
-
-
5
(63)
952
7
-
2
(120)
$
841
$
-
-
-
-
-
(2)
77
-
-
-
-
-
(3)
74
-
-
-
(3)
71
7
18
-
(221)
-
2
307
1
3
(31)
(53)
60
(10)
277
24
(1)
9
(17)
-
23
-
-
-
(3)
235
-
-
-
-
(30)
(7)
198
-
-
-
2
-
(1)
-
-
138
3,898
1
-
-
(16)
-
(215)
3,668
-
-
-
-
-
-
-
-
13
412
-
-
-
-
-
(25)
387
-
-
-
(17)
(482)
(49)
-
-
-
-
-
-
10
-
-
-
-
-
(1)
9
-
-
-
(1)
8
19
41
(1)
(221)
5
190
6,978
12
1,646
(31)
(69)
35
(401)
8,170
31
(1)
11
(1,009)
$
7,202
(104)
(216)
$
893
$
1,392
$
292
$
181
$
3,186
$
338
$
Amortization and Impairment
Development
costs
Non-
compete
agreements
Customer
relationships
Patent
Software
and
licenses
Trademarks
with definite
life
Intellectual
property,
and others
Goodwill
Other
Total
Definite life
Indefinite life
106
As of January 1, 2021
$
(586)
$
(79)
$
(561)
$
Amortization
Transfers
Impairment
Translation effect
As of December 31, 2021
Amortization
Transfers
Disposals
Impairment
Additions for business acquisitions
Translation effect
As of December 31, 2022
Amortization
Disposals
Translation effect
(28)
-
-
(18)
-
-
-
2
(632)
(77)
(26)
-
-
-
(4)
43
(619)
(24)
-
82
-
-
-
-
-
3
(74)
-
-
3
(59)
-
-
(15)
(635)
(59)
-
-
-
-
37
(657)
(53)
-
80
-
-
-
-
-
-
(98)
-
-
-
(7)
12
(93)
(151)
-
27
$
(305)
$
(152)
$
(1,625)
$
(55)
-
125
(1)
(236)
(11)
(30)
31
53
(2)
9
(186)
(8)
1
12
(5)
-
-
4
(153)
(5)
30
-
-
-
3
(125)
(4)
-
8
(219)
-
-
(53)
(1,897)
(216)
-
-
4
-
118
(1,991)
(194)
-
258
As of December 31, 2023
$
(561)
$
(71)
$
(630)
$
(217)
$
(181)
$
(121)
$
(1,927)
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Net carrying amount
Cost
Amortization and impairment
As of December 31, 2021
Cost
Amortization and impairment
As of December 31, 2022
Cost
Amortization and impairment
$
$
$
$
995
$
$
(632)
363
952
(619)
333
841
(561)
As of December 31, 2023
$
280
$
77
(77)
-
74
(74)
-
71
(71)
-
$
307
$
235
$
3,898
-
-
-
1,608
(93)
$
1,044
(635)
$
409
$
$
$
997
(657)
340
893
(630)
$
1,515
$
1,392
(217)
$
(236)
71
277
(186)
91
292
(181)
$
$
(153)
82
198
(125)
73
181
(121)
(1,897)
$
2,001
3,668
(1,991)
$
$
412
-
412
387
-
$
1,677
$ 387
$
3,186
(1,927)
338
-
$
263
$
1,175
$
111
$
60
$
1,259
$
338
$
$
$
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10
-
10
9
-
9
8
-
8
$
(3,308)
(366)
-
125
(81)
(3,630)
(415)
-
31
57
(13)
225
(3,745)
(434)
1
470
$
(3,708)
$
6,978
(3,630)
$ 3,348
8,170
(3,745)
$ 4,425
7,202
(3,708)
$
3,494
Of the total amortization expense, $425, $401, and $352 have been recorded in cost of sales and $9, $14, and $14
in administrative and selling expenses in 2023, 2022 and 2021, respectively.
13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD AND OTHER NON-CURRENT ASSETS
107
Incurred research and development expenses that have been recorded in the 2023, 2022 and 2021 consolidat-
ed statements of income were $68, $68, and $67, respectively.
Impairment testing of goodwill and indefinite lived intangible assets
As mentioned in Note 5, goodwill is allocated to operating segments that are expected to benefit from the
synergies of the business combination, irrespective of whether other assets or liabilities of the acquirer are
assigned to those units or groups of units. As of December 31, 2023, 2022 and 2021, goodwill of $338, $387, and
$412, respectively, arises primarily from the Polyester segment.
The recoverable amount from each group of CGU has been determined based on calculations of values in use,
which are formed by after-tax cash flow projections based on financial budgets approved by Management
covering a period of 5 years.
The gross and operating margins included in the estimates of value in use have been estimated based on the
historical performance and the growth expectations of the market in which each group of CGUs operates. The
long-term growth rate used in estimating the value in use is consistent with the projections included in industry
reports. The present value of the cash flows was discounted using a specific discount rate after taxes for each
group of CGU and reflects the specific risks associated with each of them.
The Company performed a sensitivity analysis considering a possible increase of 100 basis points in the dis-
count rate and a possible decrease in the long-term growth rate at a similar level. As a result of this analysis,
the Company concluded that there are no significant variations compared to the impairment calculation
prepared as of December 31, 2023.
The key assumptions used in calculating the value in use in 2023, 2022 and 2021, were as follows:
Estimated gross margin
Growth rate
Discount rate
2023
2022
2021
8.3%
2%
9.1%
8.3%
2.1%
8.9%
8.6%
1.9%
8.5%
As of December 31,
2023
2022
2021
$
1,693
$
2,495
$
2,595
763
684
849
616
876
614
4,085
9,045
906
143
Notes receivable (1)
Due from related parties (Note 28)
Trade receivables related with business acquisitions
Total other non-current financial assets
$
3,140
$
3,960
$
Investment in associates and joint ventures
Recoverable taxes
Other
261
886
94
9,162
765
100
Total investments accounted for using the equity
method and other non-current assets
$
4,381
$
13,987
$
14,179
(1) As of December 31, 2023, 2022 and 2021, this item mainly consisted of the financing provided to M&G Polímeros México, S.A. de C.V.
The Company’s account of investments in associates and joint ventures consists of the following:
Shareholding
%
2023
2022
2021
Clear Path Recycling, LLC
49.90%
$
105
$
Terminal Petroquímica Altamira, S.A. de C.V.
Agua Industrial del Poniente, S.A. de C.V.
Corpus Christi Polymers LLC (1)
Investment in associates and joint ventures
as of December 31
42.04%
47.59%
33.33%
61
95
-
$
201
55
88
251
43
81
8,818
8,670
$
261
$
9,162
$
9,045
(1) As a result of the temporary pause in the construction of the plant described in Note 2d, the Company determined that there
were indications of impairment in its investment, therefore, based on the requirements of IAS 36, Impairment of Assets, the
Company recognized an impairment of its investment in the joint venture of $9,591 during the year ended December 31, 2023.
Below is summarized the net loss of investments in associates and joint ventures, which are accounted for by
the equity method of the Company:
The summarized consolidated financial information as of December 31, 2023, 2022 and 2021, and for the years
then ended, corresponding to each subsidiary with a significant non-controlling interest is shown below:
108
Net comprehensive loss
$
(557)
$
(175)
$
(121)
2023
2022
2021
There are neither commitments nor contingent liabilities regarding the Company's investment in associates
and joint ventures as of December 31, 2023, 2022 or 2021.
14. SUBSIDIARIES WITH SIGNIFICANT NON-CONTROLLING INTEREST
The significant non-controlling interest is integrated as follows:
Non-controlling
ownership
percentage
Non-controlling
net interest income (loss)
for the period
Non-controlling
interest as of December 31,
2023
2022
2021(1)
2023
2022
2021(1)
Indelpro, S. A. de C. V.
and subsidiary
Polioles, S. A. de C. V.
and subsidiary
Other
49%
$
885
$
1,967
$ 2,341
$ 3,887
$ 4,461
$ 5,160
50%
145
(149)
120
135
53
46
487
156
438
392
366
344
$
881
$ 2,222
$ 2,440
$ 4,530
$ 5,291
$ 5,870
(1) During 2021, these entities merged their subsidiaries due to the effects of the labor reform in México.
Statement of financial position
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Stockholders’ equity
Statements of income
Revenues
Indelpro, S. A. de C. V.
and subsidiary
Polioles, S. A. de C. V.
and subsidiary
2023
2022
2021(1)
2023
2022
2021(1)
$ 3,972
$ 4,210
$ 6,790
$ 962
$
1,250
$
1,451
6,605
7,769
8,372
1,038
2,638
1,211
1,433
1,836
7,933
9,105
1,993
10,531
815
508
295
974
932
648
659
875
998
867
850
732
10,442
18,553
22,589
3,023
3,546
2,954
Consolidated net income
1,807
4,015
4,778
Total comprehensive income
of the year
Comprehensive income attributable
to non-controlling interest
Dividends paid to non-controlling
interest
Statements of cash flows
Net cash flows generated by
operating activities
Net cash flows (used in) generated
by investing activities
Net cash flows used in financing
activities
Net increase (decrease) in cash
and cash equivalents
636
3,459
5,150
312
1,695
2,524
886
2,394
1,816
289
152
76
27
240
164
82
10
1,838
5,215
4,156
206
346
(134)
(193)
(446)
(47)
(64)
(2,057)
(5,162)
(3,988)
(351)
(164)
(261)
(422)
(132)
(226)
(220)
90
(66)
107
113
57
10
133
57
(1) During 2021, these entities merged their subsidiaries due to the effects of the labor reform in México.
109
15. TRADE AND OTHER ACCOUNTS PAYABLE
Trade accounts payable
Short-term employee benefits
Advances from customers
Taxes other than income taxes
Due to related parties (Note 28)
Other accrued accounts and expenses payable
16. DEBT
As of December 31,
2023
2022
2021
$
24,650
$
28,493
$
25,595
Non-current:
709
54
371
153
1,192
827
76
577
224
1,788
1,263
242
691
261
1,801
Senior Notes
Unsecured bank loans
Other loans
Total
Less: current portion of non-current debt
$
27,129
$
31,985
$
29,853
Less: interest generated by non-current debt
As of December 31,
2023
2022
2021
$
18,648
$
27,271
$
30,895
14,177
127
32,952
-
(304)
10,177
147
37,595
(5,803)
(423)
619
156
31,670
(1,931)
(406)
Non-current debt
$
32,648
$
31,369
$
29,333
As of December 31,
(1) As of December 31, 2023, 2022 and 2021, short-term bank loans and notes payable incurred interest at an annual average rate of
9.56%, 6.15%, and 1.40%, respectively.
2023
2022
2021
(2) The fair value of bank loans and notes payable approximates their current carrying amount because of their short maturity.
Current:
Bank loans (1)
Current portion of non-current debt
Notes payable (1)
Interest payable
Current debt (2)
$
343
$
1,466
$
-
-
346
5,803
-
443
279
1,931
42
408
$
689
$
7,712 $
2,660
The carrying amounts, terms and conditions of non-current debt are as follows:
110
Description
Senior Notes 144A/Reg. S / fixed rate
Senior Notes 144A/Reg. S / fixed rate
Senior Notes 144A/Reg. S / fixed rate
Senior Notes 144A/Reg. S / fixed rate
Total Senior Notes
Bank loan, LIBOR + 2.60%
Bank loan, SOFR + 1.00%
Bank loan, SOFR + 1.71%
Bank loan, SOFR + 1.6%
Bank loan, SOFR + 1.05%
Bank loan, SOFR +1.00%
Bank loan, SOFR +1.05%
Bank loan, SOFR +1.00%
Bank loan, SOFR +1.00%
Total unsecured bank loans
Other loans
Total
Less: current portion and interest
of non-current debt
Currency
Outstanding
Balance
Debt
issuance
costs
Interest
payable
Balance as of
December 31,
2023 (1)
Balance as of
December 31,
2022 (1)
Balance as
of December
31, 2021 (1)
Maturity
date
Interest
rate
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
$
$
-
-
8,433
10,094
18,527
-
2,112
85
97
3,379
1,689
3,379
1,689
1,689
14,119
127
32,773
-
$
-
-
(42)
(53)
(95)
-
-
-
-
-
(7)
(8)
(8)
(7)
(30)
-
(125)
-
-
-
102
114
216
-
-
-
1
37
10
20
10
10
88
-
304
(304)
$
-
-
8,493
10,155
18,648
-
2,112
85
98
3,416
1,692
3,391
1,691
1,692
14,177
127
32,952
$
-
$
1,941
20-nov-22
5,926
9,722
11,623
27,271
486
-
-
-
-
1,936
3,882
1,936
1,937
10,177
147
37,595
6,290
10,324
12,340
30,895
08-aug-23
18-sep-29
25-feb-31
619
3-dec-24
01-may-26
29-jun-27
20-jun-26
21-jul-28
6-apr-27
7-apr-27
6-may-27
6-apr-27
-
-
-
-
-
-
-
-
619
156
31,670
4.50%
5.38%
4.25%
3.25%
2.77%
6.36%
7.06%
6.94%
6.44%
6.39%
6.43%
6.39%
6.39%
Various
Various
Non-current debt
$
32,773
$
(125)
$
-
$
32,648
$
31,369
$
29,333
(1) As of December 31, 2023, 2022 and 2021, issuance costs of the debt pending amortization were $125, $171, and $172, respectively.
(304)
(6,226)
(2,337)
As of December 31, 2023, the annual maturities of non-current debt, including current portion and interest
payable, and gross from issuance costs are as follows:
17. LEASE LIABILITY
2024
2025
2026
2027 and
thereafter
Total
Current portion:
Senior Notes
Bank loans
Other loans
$
$
-
-
-
-
$
$
-
-
-
-
$
-
$
18,743
$
18,743
2,209
-
11,998
127
14,207
127
$
2,209
$ 30,868
$ 33,077
As of December 31, 2023, 2022 and 2021, the Company has committed unused lines of credit totaling US$584,
US$610, and US$560, respectively.
USD
MXN
Other currencies
Current lease liability
Non-current portion:
USD
MXN
Other currencies
Covenants:
Less: Current portion of lease liability
111
As of December 31,
2023
2022
2021
$
454
$
128
119
701
$
537
121
163
821
$
$
2,671
$
2,686
261
524
3,456
(701)
308
630
3,624
(821)
$
$
$
462
123
148
733
2,641
304
663
3,608
(733)
Loan contracts and debt agreements contain restrictions, primarily relating to compliance with financial ratios,
which include the following:
Non-current lease liability
$
2,755
$
2,803
$
2,875
a) Interest hedge ratio: it is calculated by dividing the profit before financial result, net, share of result of asso-
ciates and joint ventures, income taxes, depreciation and amortization (EBITDA) by the net interest charges
for the last four quarters of the analyzed period. This ratio cannot be less than 3.0 times.
As of December 31, 2023, 2022 and 2021, respectively, changes in the lease lability related to finance activities in
accordance with the consolidated statement of cash flow are integrated as follows:
b) Leverage ratio: defined as the result of dividing the consolidated net debt (current and non-current debt,
excluding debt issuance costs less restricted and unrestricted cash and cash equivalents) by the EBITDA of
the last four quarters of the period analyzed. This ratio cannot be greater than 3.5 times.
Beginning balance
New contracts (1)
Write-offs
Additionally, there are other restrictions in regards of incurring additional debt or making loans that require
mortgaging assets, dividend payments and submission of financial information, which if not met or remedied
within a specified period to the satisfaction of creditors may cause the debt to become payable immediately.
During 2023, 2022 and 2021, the financial ratios were calculated according to the formulas set forth in the loan
agreements. As of December 31, 2023 and the date of issuance of these consolidated financial statements, the
Company complied satisfactorily with such covenants and restrictions.
Adjustment to liability balance
Interest expense from lease liability
Lease payments
Exchange (loss) gain
Ending balance
(1) Includes lease liabilities assumed in business acquisitions.
2023
2022
2021
$
3,624
$
3,608
$
1,409
(251)
51
231
(1,170)
(438)
1,147
(8)
(23)
206
(1,109)
(197)
3,010
1,435
(32)
9
178
(1,049)
57
$
3,456
$
3,624
$
3,608
112
The total of future minimum payments of leases that include non-accrued interest is analyzed as follows:
Less than a year
Over 1 year and less than 5 years
Over 5 years
Total
18. PROVISIONS
Dismantling, demolition
and environmental
Legal
As of December 31,
2023
2022
2021
$
701
$
821
$
1,579
1,176
1,669
1,134
733
1,681
1,194
$
3,456
$
3,624
$
3,608
As of December 31, 2023, 2022 and 2021, the provisions shown in the table above mainly include $103, (US$6),
$215 (US$11), and $48 (US$2), respectively, related to the obligation to give back to Petrobras certain tax credits,
in case they are recovered by Alpek Polyester Pernambuco and Alpek Polyester Brasil, as well as $673, (US$40),
$595 (US$31), and $605 (US$29) for labor, civil and tax contingencies also derived from the acquisition of Alpek
Polyester Pernambuco and Alpek Polyester Brasil, for which the Company holds an account receivable, includ-
ed in other non-current assets, for $684, (US$40), $616 (US$32), and $614 (US$30) as of December 31, 2023, 2022
and 2021, respectively.
As of December 31, 2021, $153 (US$7.5) were related to the contingent liability for the earn-out payment related
to the acquisition of Selenis. As of December 31, 2022 and 2023 there is no balance for this concept.
Additionally, as of December 31, 2023 and 2022, $308 (US$18.3) and $904 (US$46.7) were mainly related to the
contingent consideration for the payment of future benefits (earn-out) related to the acquisition of Octal.
remediation
contingencies
Warranties
Other(1)
Total
19. EMPLOYEE BENEFITS
The valuation of retirement plan employee benefits includes formal plans and constructive obligations that
covers all employees and is based primarily on their years of service, current age, and estimated salary at
retirement date.
The subsidiaries of the Company have established irrevocable trust funds for payment of pensions and senior-
ity premiums and health-care expenses.
Below is a summary of the main financial data of such employee benefits:
As of January 1, 2021
$
Increases
Payments
Write-offs
Translation effect
As of December 31, 2021
Increases
Payments
Write-offs
Translation effect
As of December 31, 2022
Increases
Payments
Write-offs
Translation effect
As of December 31, 2023
$
187
131
(2)
(193)
11
134
-
(74)
-
(4)
56
379
(112)
(1)
(28)
294
$
574
342
(3)
(10)
(25)
878
78
(145)
(214)
8
605
138
-
(40)
(29)
$
$
38
-
(38)
371
152
-
(154)
-
369
1,166
(235)
(76)
(31)
1,193
241
(745)
(35)
(134)
$
1,170
625
(43)
(357)
(14)
1,381
1,244
(454)
(290)
(27)
1,854
758
(857)
(76)
(191)
-
-
-
-
-
-
-
-
-
-
-
-
-
Employee benefit obligations:
Pension benefits
Post-employment medical benefits
Defined contribution plans
$
674
$
$
520
$
1,488
Employee benefits in the consolidated statement
of financial position
(1) As of December 31, 2023 and 2022, the increases in "others" are mainly made up of the contingent consideration for the ac-
Charge to the consolidated statement of income for:
quisition of Octal businesses for $904 (see Note 2), as well as reimbursement for taxes to be recovered from Petrobras $215.
Short-term provisions
Long-term provisions
As of December 31
2023
2022
2021
$
749
739
$
794
$
1,060
546
835
$
1,488
$
1,854
$
1,381
Pension benefits
Post-employment medical benefits
Remeasurements of employee benefit obligations
recognized in other comprehensive income of the year
Remeasurements of accrued employee benefit
obligations recognized in other comprehensive income
As of December 31,
2023
2022
2021
$
$
$
$
$
$
$
439
61
500
380
$
612
64
676
349
598
99
697
332
880
$
1,025
$
1,029
(271)
(4)
(275)
(5)
285
$
$
$
$
(76)
(3)
(79)
(39)
290
$
$
$
$
(79)
(4)
(83)
453
329
113
Pension and post-employment medical benefits
The Company operates defined benefit pension plans based on employees’ pensionable remuneration and
length of service. Most plans are externally funded. Plan assets are held in trusts, foundations or similar entities,
governed by local regulations and practice in each country, as is the nature of the relationship between the
Company and the respective trustees (or equivalent) and their composition. The Company operates post-em-
ployment medical benefit schemes mainly in its subsidiary Alpek Polyester USA. The method of accounting,
assumptions and the frequency of valuations are similar to those used for defined benefit pension schemes.
Most of these plans are not being funded.
Amounts recognized in the consolidated statement of financial position are determined as follows:
As of December 31,
2023
2022
2021
The movement in the fair value of plan assets for the year is as follows:
As of January 1
Interest income
Remeasurements – return on plan assets,
excluding interest income
Translation effect
Contributions
Benefits paid
As of December 31
2023
2022
2021
$
(2,431)
$
(3,632)
$
(3,394)
(104)
(83)
257
(6)
332
(87)
754
183
-
351
(73)
(299)
(96)
(14)
244
$
(2,035)
$
(2,431)
$
(3,632)
Present value of defined benefit obligations
$
2,535
$
3,107
$
4,329
Fair value of plan assets
(2,035)
(2,431)
(3,632)
The amounts recorded in the consolidated statement of income for the years ended December 31 are the
following:
Liability in the statement of financial position
$
500
$
676
$
697
The movements of defined benefit obligations are as follows:
Service cost
Interest cost, net
2023
2022
2021
Effect of plan curtailments and/or settlements
2023
2022
2021
$
(43)
$
(69)
$
(251)
19
(10)
-
As of January l,
Service cost
Interest cost
Contributions from plan participants
Remeasurements:
(Gains) losses from changes in financial assumptions
Losses (gains) from changes in demographic
assumptions and experience adjustments
Translation effect
Benefits paid
Liability acquired in business combination
Transfer of personnel
Plan curtailments
As of December 31,
$
3,107
$
4,329
$
4,455
Total included in personnel cost
$
(275)
$
(79)
$
44
147
3
78
(323)
(501)
-
-
(20)
69
98
4
(715)
1
(219)
(461)
-
2
(1)
69
100
6
(154)
-
148
(299)
-
18
(14)
$
2,535
$
3,107
$
4,329
The principal actuarial assumptions are as follows:
Discount rate Mexico
Discount rate United States
Inflation rate
Wage increase rate
Medical inflation rate Mexico
As of December 31,
2023
2022
2021
9.75%
4.83%
3.50%
5.50%
7.00%
9.25%
7.75%
4.96%-5.06%
2.42%-2.64%
3.50%
5.00%
7.00%
3.50%
4.50%
7.00%
(69)
(28)
14
(83)
114
The sensitivity analysis of the discount rate for defined benefit obligations is as follows:
a.
Income taxes recognized in the consolidated statement of income are as follows:
Effect in defined benefit obligations
Change in
assumption
Increase in
assumption
Decrease in
assumption
Discount rate
MX 1%
Decrease by $61
Increase by $65
Sensibility analyses are based on a change in assumptions, while all the other assumptions remain constant.
In practice, this is slightly probable, and the changes in some assumptions may be correlated. In calculating
the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present
value of calculated defined benefit obligation with the projected unit credit method at reporting period) has
been applied as in the calculation of liabilities for pensions recognized within the consolidated statement of
financial position.
Current income tax
Deferred income taxes
Income taxes expenses
2023
2022
2021
$
(2,358)
$
(5,345)
$
(4,304)
1,631
(164)
189
$
(727)
$
(5,509)
$
(4,115)
b.
The reconciliation between the statutory and effective income tax rates is as follows:
2023
2022
2021
(Loss) income before income taxes
$
(9,306)
$
21,475
$
Defined benefit plan assets
Plan assets are comprised as follows:
As of December 31,
Income tax rate
Statutory income tax rate expense
(Less) add income tax effect on:
Annual adjustment for inflation
2023
2022
2021
Cancellation of tax losses
Equity instruments
Fixed income
$
1,590
$
1,899
$
445
532
1,341
2,291
Fair value of plan assets
$
2,035
$
2,431
$
3,632
20. INCOME TAXES
The Company is subject to income tax, whose rate is 30% in México. The statutory income tax rates applicable
to the main foreign subsidiaries were as follows:
Non-deductible expenses
Non-taxable income
Effect of different tax rates of other countries
other than Mexico
True up with respect to prior years’ current
income tax
Translation effect from the functional currency
Investments in associates and joint ventures
30%
2,792
(253)
-
(2,941)
164
(128)
88
(388)
(61)
30%
(6,443)
(896)
-
22
1,493
200
(52)
147
20
14,311
30%
(4,293)
(189)
(805)
(18)
934
179
101
(36)
12
2023
2022
2021
Total income taxes
Effective tax rate
$
(727)
$
(5,509)
$
(4,115)
8%
26%
29%
United States
Brazil
Argentina
Chile
Canada
Spain
United Kingdom
Omán (1)
21%
34%
35%
27%
21%
34%
35%
27%
26.5%
26.5%
25%
25%
15%
25%
19%
15%
21%
34%
30%
27%
26%
25%
19%
-
(1) Octal's production facility (Octal SAOC FZC) is registered in the Salalah Free Zone; therefore, it is exempt from corporate tax for a
period of 30 years from November 25, 2006, the date it began activities.
c. The breakdown of the deferred tax asset and deferred tax liability is as follows:
Asset (liability)
December 31,
Deferred income tax assets are recognized on tax loss carryforwards to the extent the realization of the re-
lated tax benefit through future tax income is probable. Tax losses amount to $24,034, $25,062, and $26,843
in 2023, 2022 and 2021, respectively.
2023
2022
2021
Tax losses as of December 31, 2023 expire in the following years:
115
Property, plant and equipment
$
(708)
$
(80)
$
Intangible assets
Debt issuance costs
Provisions
Derivative financial instruments
Tax loss carryforwards
Tax credits, impairment allowance and other
Effect of tax rates of other countries and changes
in tax rates
Deferred tax asset
Inventories
Property, plant and equipment, net
Intangible assets
Tax loss carryforwards
Non-deductible interest, provision allowance and others
Effect of tax rates of other countries and changes
in tax rates
$
$
(128)
(1)
237
2
413
1,604
(85)
(131)
(11)
174
286
652
828
(9)
1,334
$
1,709
$
1,630
40
$
(22)
$
(5,753)
(143)
250
1,498
(3,557)
(148)
693
808
140
325
236
9
(94)
(20)
306
46
601
805
(23)
(72)
(6,601)
(282)
780
1,815
Deferred tax liability
$
(2,024)
$
(3,845)
$
(4,124)
Loss for the year
incurred
Tax-loss
carryforwards
Expiration
year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Other
$
$
1
15
14
62
28
18
20
25
481
3,023
20,347
24,034
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033 and thereafter
No maturity
As of December 31, 2023, the Company holds tax losses to be amortized in Brazil, through Suape and Citepe,
for an amount of $20,347, which have no expiration date. The Company has decided to reserve the total
amount of the tax losses, according to management's estimate of future reversals of temporary differenc-
es; thus, as of December 31, 2023, they do not generate deferred tax assets.
d.
Income tax related to other comprehensive income is as follows:
2023
2022
2021
Before
taxes
Tax
charged
After
taxes
Before
taxes
Tax
charged
After
taxes
Before
taxes
Tax
charged
After
taxes
116
-
-
(109)
161
52
$
(1)
110
344
(431)
$
22
Equity in other comprehensive income of associates
and joint ventures recognized through the equity method
$
(1)
$
Foreign currency translation effect
Remeasurement of employee benefit obligations
Effect of derivative financial instruments designated
as cash flow hedges
(5,923)
5
-
-
-
$
(1)
$
1
$
(5,923)
(2,652)
(39)
-
-
20
$
1
$
(1)
$
(2,652)
(19)
110
453
1,056
(291)
(1,182)
327
(855)
(592)
5
765
Other comprehensive income
$
(4,863)
$
(291)
$
(5,154)
$
(3,872)
$
347
$
(3,525)
$
(30)
$
e.
Income tax payable consists of the following:
Current portion
Non-current portion (1)
Total income tax payable
As of December 31,
2023
2022
2021
$
$
390
$
1,410
$
1,630
-
-
390
$
1,410
$
241
1,871
(1)
During the year ended December 31, 2022, Alfa made the decision to voluntarily and spontaneously abandon this regime for a group
of companies in México (Incorporation Regime), which will remain the obligation to pay full taxes. The profit that has been deferred
for the years 2019 and 2021 for $372, which will have to be paid during 2023.
21. OTHER NON-CURRENT LIABILITIES
Advances from customers (1)
Other (2)
Total other non-current liabilities
As of December 31,
2023
2022
2021
$
$
62
431
$
128
$
432
493
$
560 $
196
50
246
(1) This item corresponds to revenues charged in advance and relates to the future delivery of goods.
(2) As of December 31, 2023 and 2022, is mainly related to the amount pending of payment for the acquisition of Octal (see Note 2e).
117
22. STOCKHOLDERS' EQUITY
As of December 31, 2023, capital stock is variable, with a fixed minimum of $6,052 represented by 2,118,163,635
outstanding, ordinary, nominative shares, "Class I" Series "A", with no par value, fully subscribed and paid in.
The variable capital entitled to withdrawal will be represented, if issued, by registered "Class II" Series "A" shares
without par value.
As of December 31, 2023, Alpek SAB had 11,455,648 treasury shares, coming from the own share repurchase
program. As of such date, the market value per share was $12.64 Mexican pesos.
From February to December 2023, the Company purchased 13,259,517 shares in the amount of $222 and sold
12,720,936 shares in the amount of $212 with a repurchase program that was approved by the Company's stock-
holders and exercised discretionally by Management. From February to December 2022, the Company pur-
chased 9,095,421 shares in the amount of $246 and sold 6,560,342 shares in the amount of $180 in connection to
the same program. From March to December 2021, the Company purchased 12,879,634 shares in the amount of
$292 and sold 10,363,950 shares in the amount of $236 in connection to the same repurchase program.
The net income of the year is subject to decisions made by the General Stockholders' Meeting, the Company's
by-laws and the General Law of Mercantile Corporations. In accordance with the General Law of Mercantile
Corporations, the legal reserve should be increased annually by 5% of the net annual income until it reaches
20% of the fully paid in capital stock. As of December 31, 2023, 2022 and 2021, the legal reserve amounts to $1,210.
On March 7, 2023, the Company held an Ordinary General Meeting of stockholders, at which the payment of a
cash dividend per share of US$0.0755, equivalent to approximately US$2,866 (US$159), was approved in a single
instalment, which was paid in a single instalment on March 16, 2023.
On October 31, 2022, the Company’s Board of Director, through the powers delegated at the Ordinary General
Meeting of stockholders held on March 3, 2022, approved the payment of a cash dividend per share of $0.093
US dollars, equivalent to the aggregate amount of $3,887(US$196), approximately, which were paid on November
9, 2022.
The Income Tax Law establishes a tax rate of 10% to the dividends paid to foreign residents and Mexican indi-
viduals derived from the profits generated since 2014, also provides that for the years 2001-2013, the net taxable
profit will be determined in terms of the Income Tax Law in force in the fiscal year concerned.
Dividends paid are not subject to income tax if they derived from the Net Tax Profit Account (“CUFIN”, for its acro-
nym in Spanish). Any dividends paid in excess of this account will cause an income tax charge based on the tax
rate valid in the period in which they are paid. This tax is payable by the Company and may be credited against
its income tax in the same year or the following two years. Dividends paid from profits which have previously
paid income tax are not subject to tax withholding or to any additional tax payment. As of December 31, 2023,
the value of the Capital Contribution Account (“CUCA”, for its acronym in Spanish) amounted to $25,847. The tax
value of the CUFIN amounted to $5,274.
23. SHARED-BASED PAYMENTS
Alpek has a stock-based compensation scheme referred to at 50% of the value of stock of Alfa and the other
50% of the value of the shares of Alpek SAB for directors of the Company and its subsidiaries. In accordance
with the terms of the plan, the eligible directors will obtain a cash payment contingent upon achieving both
quantitative and qualitative metrics derived from the following financial measures:
• Improved share price
• Improvement in net income
• Permanence of the executives in the Company
The program consists in determining a number of shares which the executives will have a right to, that will be
paid in cash over the next five years; i.e., 20% every year and will be paid with reference at the average price
of the shares during the year. These payments are measured at the fair value of the consideration, therefore,
because they are based on the price of Alfa and Alpek shares, the measurement is considered to be within
level 1 of the fair value hierarchy.
The average price of the shares in pesos considered for the measurement of the executive incentive is:
On March 3, 2022, the Company held an Ordinary General Meeting of stockholders, at which the payment of a
cash dividend per share of US$0.0820, equivalent to approximately US$3,628 (US$173), was approved in a single
instalment, which was paid in a single instalment on March 14, 2022.
Alfa, S. A. B. de C. V.
Alpek, S. A. B. de C. V.
2023
15.68
12.89
2022
2021
15.80
27.64
15.26
22.25
On October 26, 2021, the Company’s Board of Director, through the powers delegated at the Ordinary General
Meeting of stockholders held on March 9, 2021, approved the payment of a cash dividend per share of $0.0265
US dollars, equivalent to the aggregate amount of $1,129(US$56), approximately, which were paid on November
10, 2021.
The short-term and long-term liabilities are comprised as follows:
On March 9, 2021, the Company held an Ordinary General Meeting of stockholders, at which the payment of a
cash dividend per share of US$0.0596, equivalent to approximately US$2,677 (US$126), was approved in a single
instalment, which was paid in a single instalment on April 6, 2021.
Short term
Long term
Total carrying amount
As of December 31,
2023
2022
2021
$
$
$
9
27
36
$
11
28
39
$
$
12
25
37
24. EXPENSES CLASSIFIED BY THEIR NATURE
26. FINANCE INCOME AND COSTS
The total cost of sales and selling and administrative expenses, classified by the nature of the expense, for the
years ended December 31, are comprised as follows:
Financial result, net for the years ended December 31, are comprised as follows:
2023
2022
2021
2023
2022
2021
118
Raw material and other
Employee benefit expenses (Note 27)
Human resources
Maintenance
Depreciation and amortization
Advertising expenses
Freight expenses
Consumption of energy and fuel (gas, electricity, etc.)
Travel expenses
Lease expenses
Technical assistance, professional fees and
administrative service
Other (insurance and bonds, water, containers
and packing, etc.)
Total
$
(101,752)
$
(150,143)
$
(105,257)
Financial income:
(6,976)
(193)
(2,514)
(4,619)
(12)
(8,487)
(4,400)
(180)
(583)
(7,538)
(69)
(2,833)
(4,639)
(2)
(9,993)
(6,628)
(188)
(780)
(7,348)
(51)
(2,301)
(4,280)
Interest income on short-term bank deposits
Interest income on loans from related parties
Other financial income
Total financial income
(1)
Financial expenses:
(6,931)
(5,264)
(66)
(722)
Interest expense on bank loans
Non-bank interest expense
Lease interest expense
Interest cost on employee benefits, net
(1,727)
(2,216)
(1,839)
(2,270)
(3,315)
(3,513)
$
(133,713)
$
(188,344)
$
(137,573)
Other financial expenses
Total financial expense
Loss in exchange fluctuation, net
Foreign exchange gain
Foreign exchange loss
Loss in exchange fluctuation, net
Financial result, net
$
$
$
$
724
25
568
1,317
$
$
271
26
625
922
$
140
26
424
$ 590
(1,009)
(1,116)
(231)
(46)
(1,580)
(3,982)
23,168
(23,171)
(3)
(2,668)
(392)
(1,422)
(206)
(16)
(1,188)
(3,224)
8,585
(9,280)
(86)
(2,284)
(178)
(59)
(475)
(3,082)
1,614
(2,266)
$
$
(695)
$
(652)
(2,997)
$
(3,144)
25. OTHER INCOME (EXPENSES), NET
Other income (expense) for the years ended December 31, are comprised as follows:
Gain on business combination (1)
Other income, net (2)
Impairment long-lived assets (3)
Total
2023
2022
2021
$
-
$
195
(11,078)
$
425
269
(246)
29
274
(1,460)
$
(10,883)
$
448
$
(1,157)
(1) For the year ended December 31, 2022, corresponds to the gain on the acquisition of Octal (see Note 2e).
(2) For the year ended December 31, 2021, includes $8.7 from the cancellation of ContourGlobal joint venture.
(3)
For the year ended December 31, 2023, it primarily includes impairment expense on investment in CPP's joint venture, and long-
lived assets from the closure of the filament plant and the closure of the PET resin production operation at the Cooper River site.
27. EMPLOYEE BENEFIT EXPENSES
Employee benefits expenses for the years ended December 31, are as follows:
Salaries, wages and benefits
$
(5,566)
$
(5,660)
$
(5,766)
2023
2022
2021
Social security fees
Employee benefits
Other fees
Total
(604)
(73)
(733)
(608)
(95)
(1,175)
(426)
(53)
(1,103)
$
(6,976)
$
(7,538)
$
(7,348)
Labor Reform Related to Vacations
On December 27, 2022, a decree was published by means of which articles 76 and 78 of the Federal Labor Law
(“LFT” for its acronym in Spanish) for México were reformed, which will be effective on January 1, 2023. The main
change resulting from this labor reform considers the increase in the minimum annual vacation period for
workers with more than one year of service.
119
2023
2022
2021
Costs / expenses
Purchase of finished goods and raw materials:
Stockholders with significant influence over subsidiaries
(647)
(764)
(2,120)
Expenses from services:
The Company evaluated the accounting impacts generated by this labor reform and determined that the
increases in the vacation and vacation premium provision, as a result of the increase in vacation days, were
not significant as of December 31, 2022.
Alfa
Affiliates
28. RELATED PARTY TRANSACTIONS
Stockholders with significant influence over subsidiaries
Affiliates outside Alfa (Nemak)
Transactions with related parties during the years ended December 31, 2023, 2022 and 2021 were as follows:
Other expenses:
2023
2022
2021
Associates and joint ventures
Affiliates
(348)
(146)
(13)
-
(49)
(71)
1
-
(338)
(86)
(14)
(4)
(28)
(59)
-
(43)
(16)
(252)
(14)
(6)
(30)
(77)
-
-
(2,447)
(6,138)
(3,055)
(1,474)
(2,404)
(1,826)
Stockholders with significant influence over subsidiaries
Affiliates outside Alfa
Dividends paid to Alfa
Dividends of subsidiaries to shareholders with significant
influence
For the year ended December 31, 2023, the remunerations and benefits received by the top officers of the
Company amounted to $410 ($424 in 2022 and $409 in 2021), comprising of base salary and social security
benefits, and supplemented by a variable consideration program based on the Company’s results and the
market value of the shares thereof and of its holding company.
Income
Income from sale of goods:
Stockholders with significant influence over subsidiaries
$
1,522
$
1,903
$
1,576
Income from services:
Affiliates
Stockholders with significant influence over subsidiaries
Income from financial interest:
Alfa
Affiliates
Income from leases:
Stockholders with significant influence over subsidiaries
Income from sale of energetic:
Affiliates
Stockholders with significant influence over subsidiaries
Affiliates outside Alfa (Nemak)
Other income:
Affiliates
Stockholders with significant influence over subsidiaries
12
171
23
3
34
95
34
-
1
2
12
207
26
-
38
156
31
-
2
2
13
198
26
-
38
121
29
288
-
-
As of December 31, balances with related parties are as follows:
Nature of the
transaction
As of December 31,
2023
2022
2021
Nature of the
transaction
As of December 31,
2023
2022
2021
120
Short-term accounts receivable:
Holding company
Alfa, S. A. B. de C. V.
Affiliates
Innovación y Desarrollo de Energía
Administrative services
$
87
$
140
$
174
Alfa Sustentable, S. A. de C. V.
Administrative services
115
115
115
Newpek, LLC
Terza, S. A. de C. V.
Administrative services
Sale of goods
Sigma Alimentos Lácteos, S. A. de C. V.
Sigma Alimentos Centro, S. A. de C. V.
Sigma Alimentos Noreste, S. A. de C. V.
Alimentos Finos Occidente, S. A. de C. V
Carnes el Tangamanga S.A. de C.V.
Affiliates outside Alfa
Nemak México, S. A. de C. V.
Associates
Energetics
Energetics
Energetics
Energetics
Energetics
Energetics
-
-
3
4
-
1
1
-
Clear Path Recycling, LLC
Financing and interest
63
Stockholders with significant influence
on subsidiaries
1
1
3
5
1
1
-
-
-
1
1
4
6
1
1
-
1
-
BASF
Basell
Basell
Sale of goods
Sale of goods
Energetics
120
60
-
184
40
6
286
26
6
$
454
$
497
$
622
Long-term accounts receivable:
Holding company
Alfa, S. A. B. de C. V. (1)
Short-term accounts payable:
Holding Company
Alfa, S. A. B. de C. V.
Affiliates
Alliax, S. A. de C. V.
Axtel, S. A. B. de C. V.
Financing and interest
$
$
763
763
$
$
849
849
$
$
876
876
Administrative services
$
37
$
65
$
19
Administrative services
Administrative services
Servicios Eficientes de R.H., S. A. de C. V.
Administrative services
Transportación Aérea del Norte, S. A. de C. V.
Administrative services
Newpek, S. A. de C. V.
Administrative services
Servicios Empresariales del Norte, S. A. de C. V.
Administrative services
Affiliates outside Alfa
Nemak Exterior, LTD
Associates
Tepeal
Stockholders with significant influence
over subsidiaries
BASF
BASF
Basell
Administrative services
Administrative services
Purchase of raw materials
Purchase of products
Energetics
5
4
-
-
-
2
-
6
87
-
12
4
6
-
-
8
2
-
1
138
-
-
2
8
2
1
-
-
1
-
202
26
-
$
153
$
224
$
261
(1) As of December 31, 2023, 2022 and 2021, the loans granted bore interest at average fixed interest rate of 5.34%, 5.34%, and 5.34%,
respectively.
121
29. SEGMENT REPORTING
For the year ended December 31, 2022:
Segment reporting is presented consistently with the financial information provided to the Chief Executive
Officer, who is the highest authority in operational decision making, allocation of resources and performance
assessment of operating segments.
An operating segment is defined as a component of an entity on which separate financial information is
regularly evaluated.
Statement of income:
Income by segment
Inter-segment income
Polyester
Plastics and
Chemicals
Other
Total
$ 140,837
$ 46,878
$ 24,720
$ 212,435
(120)
(74)
194
-
Management controls and assesses its operations through two business segments: the Polyester business and
the Plastics and Chemicals business. These segments are managed separately since its products vary and
targeted markets are different. Their activities are performed through various subsidiaries.
Income from external customers
$
140,717
$ 46,804
$ 24,914
$ 212,435
Operating income
$
13,966
$
10,464
$
109
$ 24,539
The operations between operating segments are performed at market value and the accounting policies with
which the financial information by segments is prepared, are consistent with those described in Note 3.
Depreciation and amortization
Impairment of long-lived assets
Adjusted EBITDA
3,713
244
$
17,923
The Company has defined Adjusted EBITDA as the calculation of adding operating income, depreciation,
amortization, and impairment of long-lived assets.
Investments in fixed and intangible assets
$
2,487
925
2
11,391
497
$
$
1
-
4,639
246
$
$
110
$ 29,424
3
$
2,987
The Company evaluates the performance of each of the operating segments based on Adjusted EBITDA, con-
sidering that this indicator is a good metric to evaluate operating performance and the ability to meet prin-
cipal and interest obligations with respect to indebtedness, and the ability to fund capital expenditures and
working capital requirements. Nevertheless, Adjusted EBITDA is not a measure of financial performance under
IFRS and should not be considered as an alternative to net income as a measure of operating performance or
cash flows as a measure of liquidity.
Following is the condensed financial information of the Company’s operating segments:
For the year ended December 31, 2023:
Polyester
Plastics and
Chemicals
Other
Total
For the year ended December 31, 2021:
Statement of income:
Income by segment
Inter-segment income
Polyester
Plastics and
Chemicals
Other
Total
$ 98,103
$ 47,533
$
10,588
$ 156,224
(103)
(63)
166
-
Income from external customers
$ 98,000
$ 47,470
Operating income
$
8,801
$
8,192
Depreciation and amortization
Impairment of long-lived assets
3,235
524
$
12,560
$
3,774
$
$
1,045
936
10,173
653
$
$
$
$
10,754
$ 156,224
501
$
17,494
-
-
4,280
1,460
501
$ 23,234
4
$
4,431
Statement of income:
Income by segment
Inter-segment income
Income from external customers
Operating (loss) income
Depreciation and amortization
Impairment of long-lived assets
Adjusted EBITDA
Investments in fixed and intangible assets
$ 102,230
$ 27,729
$ 8,200
$ 138,159
Adjusted EBITDA
(77)
(20)
97
-
Investments in fixed and intangible assets
$
102,153
$ 27,709
$
(9,740)
$
3,220
3,725
11,077
$ 5,062
$
2,149
$
$
886
1
4,107
376
$
$
$
$
8,297
$ 138,159
83
$
(6,437)
8
-
91
3
4,619
11,078
$ 9,260
$ 2,528
The reconciliation between adjusted EBITDA and income before taxes for the years ended December 31, is as
follows:
The following table shows the intangible assets and property, plant and equipment by country:
122
Adjusted EBITDA
Depreciation and amortization
Impairment of long-lived assets
Operating (loss) income
Financial result, net
Equity in loss of associates and joint ventures
2023
2022
2021
$
9,260
$
29,424
$
23,234
México
(4,619)
(11,078)
(6,437)
(2,668)
(201)
(4,639)
(246)
24,539
(2,997)
(67)
(4,280)
(1,460)
17,494
(3,144)
(39)
United States
Canada
Brazil
Oman
Income before income taxes
$
(9,306)
$
21,475
$
14,311
The Company's main customer generated revenues amounting to $10,009, $9,230, and $11,403 for the years
ended December 31, 2023, 2022 and 2021. These revenues are resulted from the polyester reporting segment
and represent 7.2%, 4.0%, and 7.3% of the consolidated revenues with external costumers for the years ended
December 31, 2023, 2022 and 2021.
Following is a summary of revenues per country of origin for the years ended December 31:
México
United States
Argentina
Brazil
Chile
Canada
United Kingdom
Oman
Saudi Arabia
Total revenues
2023
2022
2021
$
52,443
$
88,922
$
44,991
4,894
13,681
941
2,317
3,393
15,098
401
64,383
8,867
23,303
1,325
3,627
5,648
16,086
274
71,646
49,710
7,255
18,090
1,413
3,143
4,967
-
-
$
138,159
$
212,435
$
156,224
As of December 31,
2023
2022
2021
$
$
1,083
1,028
3
194
1,186
$
1,312
1,375
4
214
1,520
1,575
1,521
20
232
-
Total intangible assets
$
3,494
$
4,425
$
3,348
México
United States
Canada
Argentina
Chile
Brazil
United Kingdom
Oman
Saudi Arabia
As of December 31,
2023
2022
2021
$
17,831
$
21,285
$
23,157
7,684
497
281
237
4,699
624
8,830
269
9,769
471
128
276
4,926
667
10,598
331
9,821
775
163
267
4,356
866
-
-
Total property, plant and equipment
$
40,952
$
48,451
$
39,405
123
30. COMMITMENTS AND CONTINGENCIES
As of December 31, 2023, the Company has the following commitments:
a.
As of December 31, 2023, 2022 and 2021, the Company’s subsidiaries had entered into various agreements
with suppliers and customers for purchases of raw materials used for production and the sale of finished
goods, respectively. These agreements are effective between one and five years and generally contain
price adjustment clauses.
b.
A subsidiary of the Company entered into agreements to cover the supply of propylene, which establish the
obligation to purchase the product at a priced referenced to market values for a specific period.
Company, due to differences in the criteria for the calculation and crediting of such tax. Considering all the
circumstances and precedents of jurisprudence available at that date, management and its advisors have
determined that it is probable that the Superior Court of Justice of Brazil will issue a judgment in favor of the
Company for the amount related to differences in the calculation, which would exempt it from paying $471
in taxes, fines and interest that the SFSP demands; therefore, as of December 31, 2023, the Company has not
recognized any provision related to this concept.
On the other hand, for the concept of ICMS crediting, the demanded amount is $93, and management and
its advisors consider that it is not probable that the authorities will issue an unfavorable resolution for the
Company; thus, it has not recognized any provision related to this concept as of December 31, 2023.
As of December 31, 2023, the Company has the following contingencies:
d. Anti-Dumping of PET Resin
a.
b.
During the normal course of the business, the Company is involved in disputes and litigations. While the
results of these may not be predicted, the Company does not believe that there are actions pending to
apply, claims or legal proceedings against or affecting the Company which, if it were to result in an adverse
resolution to the Company, would negatively impact the results of its operations or its financial position.
Some of the Company’s subsidiaries use hazardous materials to manufacture polyester filaments and
staple fibers, polyethylene terephthalate (PET) and terephthalic acid (PTA) resin, polypropylene (PP) resin,
expandable polystyrene (EPS), chemical specialties and they generate and dispose of waste, such as cata-
lysts and glycols. These and other activities of the subsidiaries are subject to various federal, state and lo-
cal laws and regulations governing the generation, handling, storage, treatment and disposal of hazardous
substances and wastes. According to such laws, the owner or lessor of real estate property may be liable
for, among other things, (i) the costs of removal or remediation of certain hazardous or toxic substances
located on, in, or emanating from, such property, as well as the related cost of investigation and property
damage and substantial penalties for violations of such law, and (ii) environmental contamination of facil-
ities where its waste is or has been disposed of. Such laws impose such liability without regard to whether
the owner or lessee knew of, or was responsible for, the presence of such hazardous or toxic substances.
In March 2015, in response to petitions made by PET resin manufacturers in the United States of America
(“USA”), the International Trade Commission (“ITC”) and the Department of Commerce of The United States
(“USDOC”) initiated an Anti-Dumping investigation on imports of PET resin from China, India, Oman and
Canada, resulting in the imposition of an antidumping duty (percentage of export sales of PET Resin to the
USA). The duty has been reviewed annually during the month of May at the request of either Octal or the USA
manufacturers, the rate has fluctuated based on the annual reviews and is currently 3.96%.
e. Anti-Dumping of PET Sheet
In July 2019, in response to petitions made by PET Sheet manufacturers in the USA, the ITC and the USDOC
initiated an Anti-Dumping investigation on imports of PET Sheet from Oman, Korea and Mexico, resulting in
the imposition of an antidumping countervailing duty (percentage of PET sheet export sales from Oman
to the USA) of 4.74%. In October 2022, the DOC, in the first administrative review, preliminarily determined
a new margin equivalent to 4.16%, which was in the process of being confirmed in a final determination;
however, effective February 1, 2023, the USDOC concluded a change of circumstances review and thereby
revoked the Anti-Dumping order applicable to PET sheet originating in Oman. Because the antidumping
order was revoked, the Department of Commerce also rescinded the antidumping administrative reviews
for the 2020-2021 and 2021-2022 periods.
Although the subsidiaries estimate that there are no existing material liabilities relating to noncompliance
with environmental laws and regulations, there can be no assurance that there are no undiscovered poten-
tial liabilities related to historic or current operations that will require investigation and/or remediation un-
der environmental laws, or that future uses or conditions will not result in the imposition of an environmental
liability or expose them to third-party or related parties actions, such as tort suits. Furthermore, there can
be no assurance that changes in environmental regulations in the future will not require the subsidiaries to
make significant capital expenditures to change methods of disposal of hazardous materials or otherwise
alter aspects of their operations.
31. SUBSEQUENT SIGNIFICANT EVENTS
In preparing the financial statements the Company has evaluated the events and transactions for their rec-
ognition or disclosure subsequent to December 31, 2023, and through January 31, 2024 (date of issuance of the
consolidated financial statements), and no significant subsequent events have been identified.
32. AUTHORIZATION TO ISSUE THE CONSOLIDATED FINANCIAL STATEMENTS
On January 31, 2024, the issuance of the accompanying consolidated financial statements was authorized by
Jorge Pedro Young Cerecedo, General Director and José Carlos Pons de la Garza, Administration and Finance
Director.
c.
As of December 31, 2023, the Company is in a process of fiscal litigation in one of its subsidiaries in Brazil,
in relation to the demand for payment of the Tax on the Circulation of Goods and Services ("ICMS") that
the Ministry of Finance of the State of Sao Paulo ("SFSP", for its initials in Portuguese) has raised against the
These consolidated financial statements are subject to the approval of the Company’s ordinary shareholders’
meeting.
CONTACT
Alpek, S.A.B. de C.V.
Av. Gómez Morín 1111 Sur
Col. Carrizalejo, San Pedro
Garza García Nuevo León,
CP. 66254, Mexico
www.alpek.com
Investor
Relations
Bárbara Amaya
Alejandra Bustamante
IR@alpek.com