GRUPO INDUSTRIAL SALTILLO

2Q18 Conference Call

July 23, 2018

1

Forward Looking Statement

2

This presentation and discussion may contain forecasts or projections in accordance with the vision and

expectations of the Administration with respect to the performance of the Company, the businesses and future

events. These forecasts and projections are subject to risks, uncertainties and assumptions that are uncertain.

Several factors can cause actual results to differ materially from those forecasts, projections and plans of the

Administration, including, without limitation, business development and marketing of new products, the demand

for and acceptance of the Company’s products, economic conditions in the product markets and the different

regions, the cost of raw materials and energy and the fluctuation of the exchange rate.

FINANCIAL EXPECTATIONS

The financial expectations, forecasts and projections in this presentation reflect the current beliefs of the Company

and its Administration. The Company is not required and does not acquire duty to update this presentation or any

forecast, projection or expectation as a result of new information, events or circumstances subsequent to this date.

MAIN HIGHLIGHTS &STRATEGIC OVERVIEW

3

JOSÉ MANUEL ARANA - CEO

Double-Digit Growth in 2Q18

4

4,695 5,195

2017 2018

REVENUES 2Q

11%

621 686

2017 2018

EBITDA 2Q

10%

• Globalization Strategy backs up growth in Draxton

• Positive Sales growth trend

• Draxton and Housewares Businesses report significant EBITDA growth

• Positive results in a volatile market

In Millions of Pesos

YTD Positive Trend

5

9,919 10,438

2017 2018

REVENUES 6M

5%

1,466 1,465

2017 2018

EBITDA 6M

0%

• Draxton: main growth driver

• Double-digit revenue growth in Draxton Europe & Asia

• Positive EBITDA in Draxton, Calorex and Cinsa offset challenges in Vitromex

In Millions of Pesos

Diversified Sales and EbitdaLTM Jun-18

Revenues by Region Revenue by Currency

Europa

32%

Asia

4%

América

64%

MXN

30%32%

EUR

CNY

4%

34%

USD

EBITDA by Region

Europa

43%

Asia

5%

América

52%

EBITDA by Currency

MXN

42%40%

EUR

CNY

6%

12%

USD

• Reducing NAFTA exposure

• Improving currencies hedging

• 62% of revenues are in USD or EUR

• 82% of EBITDA is in USD or EUR

NAFTA Renegotiation Process

7

• Investments in Mexico's construction industry continue steady, despite uncertainty over the

country's relationship with the U.S.

• Senior U.S. and Mexico officials have agreed to step up negotiations to overhaul the North

American Free Trade Agreement with the aim of reaching a preliminary deal by late August.

• “It’s feasible from a technical perspective, but politically, you need flexibility from all parties,”

Ildefonso Guajardo, who serves as Mexico’s chief trade negotiator, said in a radio interview.

• Mr. Guajardo plans to meet with U.S. Trade Representative Robert Lighthizer in Washington

on July 26 to address Nafta sticking points such as content rules for the automotive sector and

mechanisms to solve commercial disputes. Canada will also join in negotiations, Mr. Guajardo

said, but he didn’t provide specific dates for a new round of talks among the three countries.

Source: Bloomberg Intelligence and The Wall Street Journal

Draxton

8

• Strategy is accelerating team integration and customer demand generation globally.

• Expanding our presence in global platform programs.

• We are developing a strong order book for the future and feel very strong on volume growth

for the next five years.

• Our focus for 2nd half of 2018:

‐ Maintain leadership in Mexican market

‐ Strengthen position in Europe

‐ Accelerate growth in China

Vitromex

9

• Focused on recovering profitability in Mexico by adapting production and inventories to

products with higher turnover and investing capex in productivity improvements; while in the

U.S., we relaunched an innovation process that will be deployed in the next 2 quarters.

• In the process of a turnaround. Progress will be slow, but steady.

• Vitromex’s strategy to enhance profitability:

‐ Streghthen revenue management

‐ Sales & operations: improve S&OP planning.

‐ Optimize working capital to focus on cash generation

‐ Continue to improve cost productivity

Vitromex

10

• We are aware that many of the setbacks in the past were completely related to internal

factors. Therefore, to drive the success of the strategy, we have created a Committee to

oversee the execution of the following three key goals:

‐ A cultural change

‐ An operating change to ceramic engineering and key performance managing systems

‐ Resource optimization related to manufacturing design, project management

improvement, and a cost efficiency program to improve competitiveness

• We expect to start seeing an EBITDA trend turnaround starting in 1Q19

Calorex

11

• The Federal Anti-Trust Commission (COFECE) decided not to authorize the sale of the

Company’s Water Heater business to Rheem Industries Co. due to antitrust concerns.

• GISSA announced on June 18, this step fully concludes the sale process following the

decision by the COFECE to not approve the transaction due to anti-trust concerns.

Cinsa

12

• Positive trend with strong EBITDA

growth.

• Strong EBITDA growth came from a

double-digit top line growth.

• We are planning to expand our US

presence, taking advantage of the

positive trends for enamel-on-steel

products.

MAIN HIGHLIGHTS & STRATEGIC OVERVIEW

13

JOSÉ MANUEL ARANA - CEO

FINANCIAL PERFORMANCE

14

JORGE MERCADO - CFO

Consolidated Perfomance 2Q18 vs 2Q17

15.

In Millions of Pesos

Sales

391

186

576

5962 2

125

4 12

96

684

326

358

EBIT

20

17

Dep

rec.

EBIT

DA

20

17

Dra

xto

n M

x

Dra

xto

n B

rake

s

Dra

xto

n P

&C

Vit

rom

ex

Cal

ore

x

Cin

sa

Co

rp´s

EBIT

DA

20

18

Dep

rec

EBIT

20

18

EBIT-EBITDA

4,695

122187

17994

53 44 10

5,195

201

7

Dra

xto

n M

éxic

o

Dra

xto

n B

rakes

Dra

xto

n P

C

Vitro

mex

Calo

rex

Cin

sa

Corp

201

8

11%

10%

• Strong Double Digit Revenue Growth

‐ Better Product Mix in Consumption Segment

‐ Higher Volume in Draxton Europe & Asia

• EBITDA Double-digit growth

‐ Margin Expansion in Draxton & Houseware

‐ Lower SG&A in Vitromex

• Margins in Consolidated level remain unchanged vs

2Q17

• Globalization Strategy contribute to move forward

on a better currency mix

Consolidated Perfomance 2Q18 vs 2Q17

16

In Millions of Pesos

• Net Income for 2Q18 include main items that influence comparability to 2Q17:

‐ Higher depreciation and amortization expense affecting 2Q18 EBIT comparisons versus

2017, related to the price paid for the acquisitions of Infun, now Draxton Powertrain

Europe. This process, known as Purchase Price Allocation, or PPA, which we will lap most

of the year, and

‐ In the Comprehensive Financial Result line in 2017 there was a benefit of $ 14 million

related to exchange rate fluctuation, while in 2Q18 this represented a charge of $ 138

million.

Strong Currency OperationsLTM Jun-18

Revenue by Currency

MXN

30%32%

EUR

CNY

4%

34%

USD

EBITDA by Currency

MXN

42%40%

EUR

CNY

6%

12%

USD

• 62% of revenues and 82% of EBITDA in USD or EUR

• In the path of a better align of cash flow to debt

• Globalization Strategy aim to reduce volatility of local operations

Proforma GIS including JVs

18

In Millions of Pesos

Second Quarter Six Months

2018 2017 Change 2018 2017 Change

Revenues 5,517 4,924 12% 11,107 10,321 8%

EBIT 404 409 (1%) 940 1,048 (10%)

Margin 7% 8% 8% 10%

EBITDA 778 669 14% 1,672 1,573 6%

Margin 14% 14% 15% 15%

Net Debt ² 7,806 7,699

Net Debt to EBITDA 3 2.3x 2.9x

• 2Q18 double-digit growth in revenues and EBITDA due to:

‐ A significant increase in iron foundry volumes, as well as to a higher

number of machined parts

‐ operating growth, which lead to improved fixed-cost absorption.

Draxton EBITDA 2Q18 vs 2Q17

19

• 12% sales growth

‐ North America supported by surcharge and

better price mix

‐ Europe/Asia driven by volume increase

• 19% EBITDA growth

‐ Higher & Profitable Volume

‐ FX contribution

‐ Better product mix and pricing

In Millions of Pesos

28

6 1

2

34

2Q

17

Re

ven

ue

CO

GS

SG

&A

& O

the

r

2Q

18

Vitromex EBITDA 2Q18 vs 2Q17

20

In Millions of Pesos

84

106

84

33

14 -41

2Q

17

Re

ven

ue

CO

GS

SG

&A

& O

the

r

2Q

18

• 10% sales decrease

‐ Drop in US volumes

‐ Lower average sale prices

‐ US Customer recovery campaign

• Negative EBITDA

‐ Lower income base

‐ SG&A relevant savings plan

Calorex EBITDA 2Q18 vs 2Q17

21

• 11% sales growth

‐ Instant water heaters category growth

‐ Double digit export growth

‐ Higher average price

• 26% EBITDA decrease

‐ Higher marketing expenses

‐ $9 million pesos in FX impact

In Millions of Pesos

18

4

7

16

13

2Q

17

Re

ven

ue

CO

GS

SG

&A

& O

the

r

2Q

18

Cinsa EBITDA 2Q18 vs 2Q17

22

• Revenues increased 12%

‐ Food processing product line

• EBITDA growth of 64%

‐ Favorable price effect

‐ Operating efficiencies

In Millions of Pesos

19

27

113

31

2Q

17

Re

ven

ue

CO

GS

SG

&A

& O

the

r

2Q

18

Consolidated Performance 6M18 vs 6M17

23

9,919

96 295258 246

55 47 14

10,438

20

17

Dra

xto

n M

éxic

o

Dra

xto

n B

rake

s

Dra

xto

n P

C

Vitro

mex

Ca

lore

x

Cin

sa

Co

rp/E

lim

20

18

Sales

5%

998467 1,466

26 59 22190

1321 86

1,464

639

826

Ebit

20

17

De

pre

c.

Ebit

da

20

17

Dra

xto

n M

x

Dra

xto

n B

rake

s

Dra

xto

n P

&C

Vit

rom

ex

Cal

ore

x

Cin

sa

Co

rp´s

Ebit

da

20

18

De

pre

c. F

C

Ebit

20

18

EBIT-EBITDA

0%

• 5% Revenue Growth

‐ Outstanding Draxton Performance

‐ Calorex & Cinsa – Continuous Growth Trend

• Flat EBITDA trend vs 2017

‐ Draxton, Calorex and Cinsa performance

compensate Vitromex challenges

In Millions of Pesos

Debt Profile

24

Debt - March 2018430 MUSD

Debt - June 2018415 MUSD

• Maturity 3.5 years• Syndicated Loan 276.5 MUSD: LIBOR + 3.50%• Infun Seller Note: EURIBOR + 3.00%• Covenant: 2018 Debt/EBITDA 3.25x

• Maturity 4.6 years• Current Syndicated Loan: LIBOR + 2.20%• Covenant: 2018 Debt/EBITDA 3.50x

Outlook

25

Short Term Mid-Long Term

Draxton + JVs

• Positive Top Line Trend in all regions

• No NAFTA Renegotiation impact

• Awarded programs for 34,500 tons/yr.

• Order Book to push incremental capacity

Vitromex• Turnaround execution• Limited recovery

• EBITDA trend turnaround• US volume recovery

Calorex • Optimistic Top Line Trend • US market share expansion

Cinsa• Stable Top Line• Profitable Growth vs 2017

• Higher margins• US market penetration

• 2018 Consolidated CAPEX estimated around $1.3 billion pesos

Q&A

26

GRUPO INDUSTRIAL SALTILLO

2Q18 Conference Call

July 23, 2018

27