Monterrey-based Grupo Alfa to sell energy assets amid uncertainty

Monterrey-based Grupo Alfa to sell energy assets amid uncertainty

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Monterrey-based conglomerate Grupo Industrial Alfa SAB plans to sell a number of energy assets, including its share of the Eagle Ford Shale project in Texas, as it puts its energy industry expansion on hold due to global economic uncertainty and a less attractive outlook for the oil industry.

"At Alfa, we're focusing on our core businesses, and putting on hold our investments in energy," Chief Financial Officer Ramon Leal said in a conference with reporters after Alfa reported fourth-quarter results.

Aside from the Eagle Ford stake, the company plans to sell an exploration and production project in Peru, and is considering divesting two oil service contracts in Mexico. Meanwhile, its petrochemicals unit Alpek SAB weighs the sale of its two electricity cogeneration projects in Mexico, one of which is in the construction stage and the other already operating.

"Today, we have less resources to invest in energy," Leal said. "Oil price levels remain low for us to have attractive returns."

Alfa's main operations are petrochemicals, processed food, and auto parts, and it also has a telecommunications business. The company had 2016 revenue of US$ 15.8 billion, generating earnings before interest, taxes, depreciation and amortization, or Ebitda, of US$ 2.3 billion.

Sales at energy unit Newpek last year fell 23% to US$ 107 million, with Ebitda down 86% from 2015 at US$ 9 million.

MexicoNow

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