Nut Resa

Equity Research
BTG Pactual Global Research
Latin America
Food & Beverages
Company Note
21 February 2017
Nutresa
New long-term diet: profitability Rating Neutral
Initiating coverage with a Neutral rating and COP27,500/share target price 12m Price Target COP27,500.00/US$9.48
We initiate coverage on Nutresa, a stock offering exposure to consumer staples and Price COP24,280.00/US$8.37
discretionary goods all over Latin America, with a Neutral, reflecting its defensive RIC: NUTRESA.SA, BBG: NUTRESA CB
nature, and secular growth story, but also below peers profitability, lack of earnings
Trading Data and Return Forecasts
momentum and rich valuation multiples.
52-wk range COP26300.00-22820.00/US$9.12-7.20
A resilient business model with room to lose some extra pounds Market cap. COP11,172bn/US$3,850m
Shares o/s (m) 460.1
Nutresa has proven to be a resilient business model with one of the highest and more Free float 44%
stable gross margins across its peers (42.4% in 2016e), but not immune to reality (Fx Avg. daily volume('000 Shares) 108
Avg. daily value (COP m) 2,613.8
fluctuations) and with room to enhance bottom line profitability. We expect 2017e
Forecast price appreciation +13.3%
EBITDA margin (12.0% vs. 13.1% average for LatAm peers) and ROIC (7.4%, Forecast dividend yield 2.2%
680bps below peers) to bottom in 2017 amid a challenging economic backdrop in Forecast stock return +15.4%
Colombia and the (recently approved) tax reform's one-time impacts on consumption.
Stock Performance (COP)
Growth story is cooling off high leverage keeps M&A in standby mode 35,000.0 150
Nutresa has been a bona-fide emerging market growth story in the last 10 years, with 30,000.0
120
25,000.0
EBITDA CAGR05-15 of 10.7% (1/3 inorganic). Looking forward, we expect this 20,000.0
90
growth story to decelerate to a CAGR16-20 of 7.8% (fully organic), reflecting i) a 15,000.0

60
weak economic backdrop; ii) limited M&A firepower (high leverage 2.9x); iii) a more 10,000.0
30
5,000.0
price-sensitive product portfolio as the company broadens out into consumer
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discretionary segments; and iv) the Venezuelan effect.
How profitable has the cross-holding relationship with GEA been? Price Target (COP) Stock Price (COP) Rel. IGBC
In the last 10 years, the IRR of the portfolio (market prices) has yielded an annualized
Daniel Guardiola
6.80% (>CPI). But in our view, capital allocation has not been optimal, as it could Colombia - BTG Pactual
have been used to i) invest in the food unit, where profitability is 2.7x the portfolios Daniel.Guardiola@btgpactual.com
ROE; and/or ii) pay down debt (L10Y average cost of debt of 9.5%/7.1% after taxes). + 57 (1) 307 73 56
Valuation: The Food unit weights 69% of total valuation the remaining is GEA Alonso Aramburu
New York BTG Pactual US Capital LLC
Nutresa is trading at a cross-holding adjusted P/E 17 of 20x (27.0x w/o adjustments)
alonso.aramburu@btgpactual.com
EV/EBITDA 17 of 9.3x (13.0x for the group) implying 17.6%, and 2.2%, premiums +1 646 924 2471
versus regional peers. Against its history, it is trading at 2SD below its 10-year mean.
Thiago Duarte
Brazil Banco BTG Pactual S.A.
Valuation 12/2014 12/2015 12/2016E 12/2017E 12/2018E thiago.duarte@btgpactual.com
RoIC (EBIT) % 7.4 7.7 7.8 7.4 8.2
EV/EBITDA 17.9 13.6 13.7 13.0 11.3 +55 11 3383 2366
P/E 15.1 16.7 27.1 27.0 20.9
Net dividend yield % 1.5 2.0 2.0 2.2 2.4
Financials (COPmn) 12/2014 12/2015 12/2016E 12/2017E 12/2018E

Revenues 6,481,813 7,945,417 8,677,812 8,988,280 9,615,818
EBITDA 835,701 975,554 1,059,543 1,078,478 1,225,201
Net Income 599,240 434,487 422,635 413,626 533,883
EPS (COP) 1,302.35 944.28 918.52 898.95 1,160.30
Net DPS (COP) 432.00 462.00 498.00 541.94 585.69
Net (debt) / cash (1,752,414) (2,808,200) (3,043,866) (2,801,659) (2,644,946)
Source: Company reports, Bovespa, BTG Pactual S.A. estimates. / Valuations: based on the last share price
of the year; (E) based on a share price of COP24,280.00, on 21 February 2017.
ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 42
Banco BTG Pactual S.A. does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the
objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Any U.S. person receiving this report and wishing to effect any transaction in a security
discussed in this report should do so with BTG Pactual US Capital, LLC at 212-293-4600, 601 Lexington Avenue. 57th Floor, New York NY 10022.
Nutresa
21 February 2017 page 2
Table of Contents
Resilient business model with room to lose some extra pounds 4

As defensive as it getsbut no-one is immune to reality! 4
Weak economic backdrop and tax reform mean that the start of Nutresas margin recovery is still a year away 5
Targeting ROIC of 13% by 2020: wishful thinking? 8
Growth story is cooling offhigh leverage keeps M&A in standby mode 11

M&A is in Nutresas DNA but leverage could set the ceiling or trigger creativity 12
Portfolio is tilting towards discretionary products: more risks but more rewards! 16
For better or worse, Venezuelan turmoil is out of the picture 17
How profitable has the cross-holding relationship with GEA been? 18

Portfolio has yielded IRR of 6.5% in last 10 years, above CPI and deposit rates 18
US$1.1bn in earnings for shareholders have been left on the table due to the GEA structure 18
Valuation 22
Grupo Nutresas blueprint 27
Risks 35
Annex 1: Shareholder structure and corporate governance 36
Annex 2: Commodity Index and price trends of main raw materials 38
Annex 3: GEA- Grupo Empresarial Antioqueo 40

Nutresa
Nutresa New long term diet: profitability

Colombias economy has spent the last two years in slowdown mode, as its natural
rate of expansion and fiscal/external accounts adjusted to the oil price shock. As we
enter into 2017, we expect the recently approved tax reform, weak economic activity
(GDP growth of 2.2% in 2017) and still high interest rates (7.5% / 2% real rates) to
keep consumption under pressure, though we flag that the Central Bank has already
started an easing cycle (we expect 150bps cuts in 2017).
As we see it, Nutresa has proven to be a resilient business model (despite COP
devaluation hitting margins hard in recent years), with room to enhance profitability
(management included a new variable remuneration component depending on ROIC)
and strongly positioned (average market share of 61% in Colombia and 31% in
Mexico and Chile together) to continue tapping the expected nominal GDP growth of
6-7% in the region over the next 5 years. However, a challenging 2017 in terms of
earnings, pending profitability improvements and a rich valuation ultimately leave us
in wait-and-see mode.
Although most regional peers are expected to start recovering margins in 2017, we
believe Nutresas margins will remain under pressure for another year (fourth year in
a row), on the back of a challenging economic backdrop in Colombia and the effects
on consumption of the recently approved tax reform (affecting 58% of Nutresas
products sold in Colombia and 36.5% of products sold worldwide). With respect to
ROIC, we are forecasting a recovery starting in 2018e and reaching 10% in 2020
(below management guidance of 13% and LatAm peers average ROIC of 15.5%).
We welcome managements commitment to aligning profitability with WACC levels
and regional peers. In that sense, managements variable remuneration is 10-20%
dependent on meeting profitability indicators (including ROIC 10%).
As we look into 2017 and beyond, we expect the company to embark on a gradual
deleveraging process of 0.3x per year (2020 net debt-to-Ebitda of 1.6x), driven by
forecasted annual CFO generation of US$200mn (5.7% yield). Indeed, by 2020, we
expect Nutresas debt headroom to reach US$638mn. Based on Nutresas track
record (19 acquisitions in last 10 years), we believe acquisitions are likely before
2020 and could boost revenues growth from an expected CAGR16-20 of 6.0% to high
single digits.
We are valuing Grupo Nutresa using a DCF approach and including the value of the
GEA portfolio (Grupo Sura @ market price and Grupo Argos @ BTGs Target Price
19,900), resulting in a 12-month target price of COP27,500/share, which implies
upside of 13.3% (15.4% including dividends). Grupo Nutresa is trading at a cross-
holding adjusted P/E of 20.0x and EV/EBITDA of 9.3x based on our estimated figures
for 2017e. Average industry multiples at the regional level are 17.0x P/E and 9.1x
EV/EBITDA, implying 17.6% (58% for the Group) and 2.2% (41.7% w/o adjustments)
premiums, respectively.
Nutresa
Table 1: Grupo Nutresa at a glance

Operating Forecast
Period 2015 2016e 2017e 2018e 2019e 2020e
Volumes
Volumes - tons per year
Colombia 591,637 594,214 606,556 621,263 639,266 657,868
International 346,333 333,652 333,595 346,239 358,640 371,536
Total 937,970 927,866 940,151 967,501 997,906 1,029,404
Volumes - YoY Growth
Colombia 3.0% 0.4% 2.1% 2.4% 2.9% 2.9%
International 2.1% -3.7% 0.0% 3.8% 3.6% 3.6%
Total 2.6% -1.1% 1.3% 2.9% 3.1% 3.2%
Prices
Prices - COP 000 / Kg
Colombia 8.31 9.08 9.55 9.97 10.38 10.79
International 8.75 9.84 9.58 9.89 10.09 10.35
Total 8.47 9.35 9.56 9.94 10.28 10.63
Prices - YoY Growth
Colombia 14.0% 9.2% 5.2% 4.4% 4.2% 3.9%
International 29.3% 12.5% -2.7% 3.3% 2.1% 2.6%
Total 19.4% 10.4% 2.2% 4.0% 3.4% 3.4%
Revenues
Volume driven growth 2.6% -1.1% 1.3% 2.9% 3.1% 3.2%
Price driven growth 19.9% 10.3% 2.3% 4.1% 3.5% 3.6%
Total Sales growth 22.6% 9.2% 3.6% 7.0% 6.7% 6.7%
EBITDA Growth
Cold cuts 4.2% 3.3% -1.7% 16.0% 9.1% 9.3%
Biscuits 10.1% 19.3% 6.9% 15.2% 9.3% 8.9%
Chocolates -7.9% 28.0% 3.1% 13.6% 8.3% 8.1%
Coffee 6.9% 5.7% 0.4% 10.3% 5.9% 5.8%
TMLUC 14.5% -0.5% -5.6% 10.0% 5.2% 5.1%
Ice cream -13.6% -15.4% 2.8% 11.1% 6.3% 6.1%
Pasta 3.2% 4.3% 7.5% 15.3% 9.9% 9.7%
Retail Food n.a -3.3% 4.2% 12.7% 7.4% 7.3%
Others -8.1% -208.9% -2.4% 35.6% 19.9% 19.1%
Total 14.2% 8.6% 1.8% 13.6% 8.0% 7.9%
EBITDA Margin
Cold cuts 12.2% 12.0% 11.8% 12.5% 12.7% 12.8%
Biscuits 11.9% 12.6% 12.4% 13.1% 13.3% 13.5%
Chocolates 9.8% 11.3% 11.1% 11.8% 11.9% 12.1%
Coffee 17.4% 17.5% 17.1% 18.2% 18.4% 18.6%
TMLUC 10.5% 9.8% 9.6% 10.2% 10.3% 10.5%
Ice cream 15.6% 12.8% 12.5% 13.3% 13.5% 13.6%
Pasta 10.0% 9.4% 9.2% 9.8% 10.0% 10.1%
Retail Food 17.2% 13.9% 13.7% 14.5% 14.7% 14.9%
Others -2.8% 2.4% 2.2% 2.8% 3.1% 3.5%
Total 12.3% 12.2% 12.0% 12.7% 12.9% 13.0%
Source: Company reports and BTG Pactual
Nutresa
Table 2: Valuation Metrics of Food and Retail Food companies

Valuation Metrics
Company Market Cap ADTV EV/EBITDA Price to Earnings
FOOD COMPANIES (US$ mn) (USD mn) 2016e 2017e 2018e 2016 2017e 2018e
Latin America
Bimbo 10,949 4.6 10.8x 9.8x 9.0x 28.2x 23.8x 19.8x
Herdez 785 1.1 10.6x 9.9x 9.2x 18.6x 15.4x 14.4x
Gruma 5,989 11.3 12.3x 10.7x 9.9x 21.7x 18.9x 17.2x
Alicorp 2,051 0.9 10.0x 9.3x 8.7x 20.1x 17.1x 15.7x
Nutresa 3,825 1.1 13.7x 12.9x 11.2x 27.1x 26.7x 20.7x
Nutresa - Food Unit 2,481 1.1 10.1x 9.3x 8.0x 20.6x 20.0x 15.0x
JBS 10,614 29.2 6.7x 5.3x 5.0x 65.8x 8.0x 6.6x
Marfrig 1,404 7.3 6.5x 5.8x 5.5x n.a n.a 14.9x
Brasil Foods 11,238 35.1 12.0x 8.6x 7.3x 93.2x 17.2x 13.0x
M. Dias Branco 4,973 6.9 16.0x 13.6x 12.0x 19.6x 16.4x 14.6x
LatAm Average 5,431 9.9 10.6x 9.1x 8.3x 38.2x 16.7x 14.5x
Grupo Nutresa Premium / Discount 29.4% 41.2% 34.5% -29.0% 59.9% 42.4%
Nutresa Food Unit Premium / Discount -4.5% 1.6% -3.6% -46.2% 19.8% 3.1%
Global
General Mills Inc 34,354 153.8 12.8x 12.6x 12.0x 20.6x 19.2x 17.7x
Mondelez international inc-a 65,637 357.4 16.9x 15.8x 14.7x 21.9x 20.2x 18.2x
Kraft heinz co/the 117,649 266.8 18.6x 17.4x 16.4x 29.2x 25.5x 23.4x
Campbell soup co 17,956 87.8 11.2x 10.9x 10.7x 19.7x 18.9x 18.0x
JM smucker co/the 15,829 164.4 12.4x 12.1x 11.7x 23.5x 17.7x 16.9x
Danone 42,474 99.8 12.5x 11.0x 10.2x 20.0x 18.1x 16.3x
Parmalat SPA 5,826 2.6 11.9x 10.9x 10.0x 37.0x 30.8x 32.9x
Nestle 230,431 398.0 14.2x 13.8x 13.0x 21.6x 20.8x 19.5x
Reckit Benckiser 61,695 11,628.8 17.6x 15.4x 14.2x 24.1x 21.2x 19.3x
Unilever 142,037 9,634.7 15.7x 14.6x 13.6x 23.9x 22.1x 20.4x
Developed World Average 73,389 2,279 14.4x 13.4x 12.6x 24.1x 21.4x 20.3x
Grupo Nutresa Premium / Discount -4.7% -4.2% -11.3% 12.3% 24.5% 2.1%
Nutresa Food Unit Premium / Discount -29.7% -31.0% -36.5% -14.9% -6.7% -26.1%
RETAIL FOOD COMPANIES (US$ mn) 2016e 2017e 2018e 2016 2017e 2018e
Latin America
Arcos Dorados 1,349 3.6 8.1 7.4 7.0 16.1 24.3 21.8
Alsea 2,375 8.9 12.0 10.5 9.2 50.5 32.8 25.8
Global
Wendys 3,632 46.2 14.8 14.6 13.6 34.6 30.9 25.4
Yum! Brands 25,103 158.6 17.3 16.3 15.9 27.9 25.1 21.9
McDonalds 106,131 440.2 13.7 13.4 13.1 22.5 20.7 19.3
Popeyes 1,370 18.8 17.5 16.0 15.0 31.4 27.0 23.5
Starbucks 83,582 684.6 16.4 14.8 13.1 30.3 26.9 23.4
Papa Johns 3,173 36.8 17.8 16.5 15.0 34.1 30.4 26.8
Domino's Pizza 9,035 127.6 23.3 20.7 18.3 44.6 37.1 31.3
Developed World Average 33,147 216.1 17.3x 16.0x 14.9x 32.2x 28.3x 24.5x
Source: Bloomberg, company reports and BTG Pactual
Nutresa
Resilient business model with room to lose some weight

As defensive as it getsbut no-one is immune to reality!
Margins and profitability have been under the pump in the past three years (EBITDA
margin -190bps and ROE -420bps in 2013-16e) in a scenario of high inflation, 64%
COP depreciation against the USD and a turbulent commodity price environment
(15% standard deviation), resulting in a 5.9% average hike in USD prices.
Despite this adverse scenario, Nutresa has proven to be a resilient business model
with one of the highest and most stable gross margins in the region (42.4% in 2016e
vs. LatAm industry average of 33.7%). In order to measure the companys pass-
through capacity, we calculated the coefficient of correlation between the price
variations (in COP) in raw materials and the price increases of Nutresas finished
goods. The result was 0.73x. Between Dec/14 and Sep/16, the company was able to
increase prices by 29.8% (2.6x above inflation), partly offsetting margin compression
caused by USD/COP depreciation.
It should be flagged that at the P&L level, the group is negatively exposed to
COP/USD depreciation and vice versa. While 8.2% of revenues are directly
generated in the US (21.8% considering USD-linked currencies and imports), COGS
(in USD) represents 40-45% of revenues, resulting in an annual mismatch of
US$300-350mn (20-25% of this mismatch is hedged). At the balance sheet level (as
of 3Q16), Nutresa had 1.2% of its total debt (0.3% of total assets) in USD. That said,
since the collapse of oil prices (and until 3Q16), gross and EBTIDA margins fell 4.1%
(-180bps) and -6.8% (-74bps), respectively.
Chart 1: Nutresa Commodity Index GNCI evolution in COP and in US$ Chart 2: Stable gross margins despite volatile landscape
50.0% 44.7% 44.2% 43.3% 42.4%
165.00 42.0% 40.1% 42.2% 41.7% 41.7%
38.6%
155.00 40.0%
Grupo Nutresa Commodity Index
145.00 30.0%
135.00
Gross Margin %
20.0%
125.00
10.0%
115.00
0.0%
105.00
-10.0%
95.00
85.00 -20.0%
75.00 -30.0%
Dec 07
Aug 08
Apr 09
Dec 09
Aug 10
Apr 11
Dec 11
Aug 12
Apr 13
Dec 13
Aug 14
Apr 15
Dec 15
Aug 16
Apr 17
Dec 17
Aug 18
Apr 19
Dec 19
Aug 20
2009 2010 2011 2012 2013 2014 2015 2016e 2017e 2018e
Raw materials COP price variation % Revenues - COP Price variation %
GNCI COP BTG IN COP GNCI USD BTG in USD USDCOP variation % Gross Margin
Source: Bloomberg, Company reports and BTG Pactual Source: Company reports and BTG Pactual
Nutresa
Chart 3: Gross margins of LatAm food and retail food companies

70.0
60.0
50.0
Gross Margin %
40.0
30.0
20.0
10.0
0.0
Bimbo Herdez Gruma Alicorp Nutresa - Food JBS Marfrig Brasil Foods M. Dias Branco Arcos Dorados Alsea
Unit
Packaged Food Retail Food
2014 2015 2016e 2017e LATAM 2017 Average
Weak economic backdrop and tax reform mean that the start of
Nutresas margin recovery is still a year away
Although most regional peers are expected to start recovering margins in 2017, we
believe Nutresas margins will remain under pressure for another year, on the back of
a challenging economic backdrop in Colombia and the effects on consumption of the
recently approved tax reform. Indeed, Nutresas management has mentioned that it
may need to find 100bps of margin through costs efficiencies in order to maintain
EBITDA Mg above water (>12%) in 2017e. It should be flagged that although
Nutresas margins have dropped during the last 3 years in a row, they have over
performed Colombinas EBITDA Margin by 100 bps on average.
Chart 4: EBITDA Mg evolution across LatAm food packagers Chart 5: EBITDA Mg YoY variations in pp
20.0 2.0
1.5
1.5
15.0
EBITDA Mg YoY variation pp
1.0 0.7 0.8

EBITDA Mg
0.6
10.0 0.5 0.4 0.3 0.3
0.0
5.0 -0.1 -0.2 -0.1
-0.5
-0.6
0.0 -1.0
2012 2013 2014 2015 2016e 2017e
Bimbo Herdez Gruma -1.5 -1.2
Alicorp Nutresa - Food Unit JBS Grupo Nutresa LATAM Food Packagers
Marfrig Brasil Foods M. Dias Branco
Colombina 2013 2014 2015 2016e 2017e 2018e
Source: Bloomberg, company reports and BTG Pactual Source: Bloomberg, company reports and BTG Pactual
Colombias economy has spent the last two years adjusting to the sharp fall in oil
prices. Real economic activity and domestic demand continued slowing in 9M16,
growing 1.9% y/y and 0.4% y/y, respectively. For 2017, we expect the economy to
bottom and GDP growth to reach 2.2% while domestic demand should expand by
2.0%. The external imbalance has also corrected faster than expected, to the tune of
Nutresa
-4.78% of GDP in 9M16 and -4.77% in 3Q16. Inflation peaked in July-16 and started
its convergence path in August-16, closing FY16 at 5.75% and is expected to end
FY17e at 4.2%. In this landscape, the Central Bank has already started an easing
cycle that should cut the reference rate by 150bps by Dec/17.
But the fiscal front remains the weak spot, with a deficit of 4.0% in 2016. In this
context, the Colombian government recently approved a tax reform (see our recent
report Colombia: Structural tax reform was finally approved) aimed at increasing
total tax collection by 1.8% of GDP by 2020 (2.3% of GDP including anti-evasion
enforcement measures). The two main changes in the reform are a 3p.p. increase in
VAT, from 16% to 19%, to be implemented in 2017, and a gradual reduction in
corporate taxes starting in 2017 to 40% and bottoming at 33% in 2019, one
percentage point higher than the initial proposal. The reform also eliminates wealth
tax and makes the tax on financial transactions permanent.
Chart 6: Corporate Income taxes are set to drop to 33% by 2019 Chart 7: Wealth tax evolution: reaching an end by 2018
50% 7.0%
45% 42% 43%
39% 40% 40% 6.0%
40% 37% 6.0%
Corporate income tax rate
33% 33% 33% 34% 34% 6% 1.5%

35% 4% 33% 5.0%
30%
% Equity Tax
4.0%
25% 1.5%
20% 3.0%
15% 1.5% 0.4% 2.6%
2.0%
10% 1.0%
5% 1.0% 1.5%
1.2%
0%
2011 2012 2013 2014 2015 2016 2017e2018e2019e 2017e2018e2019e 0.0%
2011 2012 2013 2014 Total 2015 2016 2017 2018 Total
2014 Tax Reform 2016 Tax Reform 10-14 14-18
Corporate tax Tax for Equality Surcharge on CREE 2016 tax surcharge Previous Equity Tax 2014 Reform - Equity Tax
Source: Ministry of Finance and BTG Pactual Source: Ministry of Finance and BTG Pactual
All-in, we expect the tax reform to improve Colombias fiscal competitiveness but also
to negatively affect the disposable income of individuals. The first read-across of the
tax reform should be slightly negative for domestic demand-related companies such
as Nutresa, mainly in the form of lower expected volumes, amid an already weak
consumer environment. Consumer confidence is already in the red and retail sales
remain weak.
Note that according to Nutresas management 58% of total products sold in Colombia
(36.5% of total products sold worldwide) are subject to the VAT increase from 16% to
19%. With respect to pricing strategy, in the last two years Nutresa has increased
prices by 29.8%, which should limit consumers capacity to absorb the additional VAT
all at once. Looking at the bigger picture, Nutresa needs to increase global prices by
1.1% to offset the VAT impact on margins, and we expect this repricing to take place
in 1H17.
Nutresa
Chart 8: 2016 Tax reform should affect 58% of products sold in Colombia Chart 9: 2017 should be the third year in a row of repricing
25.0%
58% 19.9%
VAT @ 19% 20.0% 18.7%
15.0%
10.4%
YoY Price change %

VAT @ 16% 10.0%
58%
4.8%
5.0% 3.3% 3.8% 2.6% 1.1%
25%
VAT @ 5%
25% 0.0%
-1.2%
-5.0% -3.9%
17%
No VAT
17% -10.0% -7.1%
-10.9%
0% 10% 20% 30% 40% 50% 60% 70% -15.0%
% of total products sold in Colombia 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016e 2017e
Pricing Strategy VAT effect on total finished products
Tax Reform 2016 Tax Reform 2014
Source: Company reports and BTG Pactual Source: Company reports and BTG Pactual
Nevertheless, in our view, the reform is net positive for Nutresa, in the form of EPS
expansion and, thus, higher valuations. The earnings impact from the lower corporate
tax rate is not significant in 2017, as the change is gradual. But by 2019, the
difference could be material as corporate tax will be 7p.p. lower than in 2016 and
10p.p. lower than what it would have been in 2019. We estimate a 10.4% earnings
boost from lower corporate income tax in 2019. Valuation-wise, lower taxes boost our
TP 12.6% to COP3,000 (already incorporated in our target price). As per Nutresas
accounting policies, equity tax was not affecting earnings but only equity reserves. In
terms of cashflow, once this tax ends in 2018, Nutresa should save US$7.2mn per
year in cash (9.4% of cash as of 3Q16 / +0.2% in FCF yield).
Chart 10: Colombia: Retail sales YoY growth Chart 11: Consumer confidence index and Retail Sales
40 25
25
30 20
20
15
15 20
10
10 10
5
5 4.9
0
0
0 -10
-5
-5
-20 -10
-10
-30 -15
Nov-06 Nov-08 Nov-10 Nov-12 Nov-14 Nov-16 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16
Retail sales Retail sales sa Consumer Confidence Index Average Retail Sales (RHS)
Source: DANE and BTG Pactual Source: DANE and BTG Pactual
Nutresa
Targeting ROIC of 13% by 2020: wishful thinking?
In the last 4 years, Nutresas ROIC (BTG Pactual estimates) fell 400bps (from 12.8%
in 2012 to 7.8% in 3Q16), mainly reflecting the adoption of IFRS (-200bps) and the
acquisitions of TMLUC and EL Corral. The company has set a target of 13% ROIC by
2020 (revised down from 20%), above WACC (10%), 440bps above Nutresas
reported 3Q16 figures and 520bps above our estimates. Although the company
hasnt disclosed any concrete efficiency plans to reach this goal, management
expects to reduce Capex as a % of revenues to a range of 3%-3.5%, 27%-38% below
the last 5-year average of 4.8%, on the back of less aggressive distribution network
expansion in Colombia and more discipline in new projects. However, these
measures may prove not to be enough and in our view the company would need to
improve net margins while enhancing the asset turnover ratio.
Chart 12: EBITDA Mg evolution constantly within the 12%-14% range Chart 13: EVA drivers ROIC guidance seems too high to be reached
16.00%
20.0%
15.00%
15.0%
14.00% 16% 16%
13.00% 10.0% 12% 12% 13%

11%
EBITDA Mg
EVA
11% 10% 10%

12.00% 6% 6% 9% 9% 9%
5.0% 3% 7% 8% 8%
2% 2%
11.00% 1% 1% 1%
0.0%
10.00%
-1% 0%
-2% -3% -3% -3% -1%
9.00% -5.0%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016e
2017e
2018e
2019e
2020e
8.00%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016e
2017e
2018e
2019e
2020e
COLGAAP IFRS
EBITDA Margin EBITDA Mg Low range EBITDA Mg High range EVA WACC Adjusted ROIC Nutresa ROIC Target
We are forecasting a recovery in Adj. ROIC, starting in 2018e and reaching 10% in
2020, below guidance, implying 210bps expansion on the back of: i) 2020 EBITDA
margin of 13.0% (mid-point of guidance); ii) capex falling to 4% of revenues; and iii)
cash conversion cycle expected to decline 10 days to 48 days. In terms of ROE,
although leverage increased by 75% in the last 10 years, this ratio has declined by
64%, revealing a lower net margin (-260bps) and less efficient use of assets. Looking
forward, the main factor that could move ROE to above cost of equity is asset
productivity, which is currently 89%, 10p.p. below regional peers (98%). If asset
turnover returns to 2013 levels of 130% (pre-TMLUC and El Corral acquisitions),
ROE could soar to 12% in 2017.
Nutresa
Chart 14: How much must improve the asset efficiency for ROEs to be Chart 15: Nutresas Food Unit ROEs evolution vs leverage
above water?
20.0% 20.0%
18.0% 220.0%
18.0%
Residual earnings - ROE-KE
16.0% 16.0% 200.0%
Leverage - Equity multiplier

14.0%
14.0%
180.0%
ROE - Food Unit

12.0%
12.0%
10.0% 160.0%
8.0% 10.0%
6.0% 8.0% 140.0%
4.0% 6.0%
120.0%
2.0% 4.0%
0.0% 100.0%
2.0%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016e
2017e
2018e
2019e
2020e 0.0% 80.0%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016e
2017e
2018e
2019e
2020e
KE ROE / Assets turnover @ 100%
ROE / Assets turnover @ 110% ROE / Assets turnover @ 130%
BTG Pactual - Base case Adjusted Financial leverage ROE - Nutresa Food unit KE
Chart 16: Adjusted assets turnover evolution Chart 17: ROE sensitivity analysis vs Assets turnover
25.0% ROE Sensitivity Analysis
150.0% Cost of Equity A.T 2017 ROE A.T 2018 ROE
Assets Turnover - Asset use eficiency
9.9% 11.7%
20.0%
130% 11.5% 70% 6.5% 70% 7.9%
130.0%
11.5% 75% 6.9% 75% 8.5%
ROE- Food Unit
15.0% 11.5% 80% 7.4% 80% 9.0%

110.0% 11.5% 85% 7.9% 85% 9.6%
11.5% 90% 8.3% 90% 10.2%
10.0% 11.5% 95% 8.8% 95% 10.7%
83% 90.0% Adjusted Assets
Turnover 11.5% 100% 9.3% 100% 11.3%
5.0% 11.5% 105% 9.7% 105% 11.9%
70.0%
11.5% 110% 10.2% 110% 12.4%
11.5% 115% 10.6% 115% 13.0%
0.0% 50.0% 11.5% 120% 11.1% 120% 13.6%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016e
2017e
2018e
2019e
2020e
11.5% 125% 11.6% 125% 14.1%

11.5% 130% 12.0% 130% 14.7%
Adjusted Assets Turnover ROE - Nutresa Food unit 11.5% 135% 12.5% 135% 15.3%
In addition, we believe Nutresa has room to improve operating margins by

streamlining its SG&A expenses. As of 3Q16, SG&A excluding production expenses
represented 31.5% of total revenues, up 510bps versus 2005. The regional average
of SG&A as a % of revenues is 23%, 850bps below Nutresas consolidated figures.
Although we believe ROIC guidance is tough to achieve, we welcome managements

commitment to aligning profitability with WACC levels and regional peers.
Managements variable remuneration is 10-20% dependent on meeting profitability
indicators (including ROIC 10%). Note that, one third of the variable compensation
of the c-level is paid in Nutresas shares (5 years of lock up period). Although
management has some skin in the game, the variable component has an annual
maximum of 58% of the fixed wage, which is not very aggressive and in our view,
doesnt guarantee full alignment with shareholders. It should be flagged that starting
in 2017 and on Nutresa is planning on setting ROIC target for its business units.
Nutresa
Chart 18: LatAm food packagers: SG&A as a % of total revenues

50.0%
45.0%
40.0%
SG&a as a % of revenues
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
Bimbo Herdez Gruma Alicorp Nutresa - Food Unit JBS Marfrig Brasil Foods M. Dias Branco
2014 2015 2016e 2017e LATAM 2017 Average
As shown in charts 19 and 20, the expected average ROIC and ROE for Latin
American food packagers is 15.5% and 14.7%, respectively. Note that, Nutresas
main Colombian competitor, Colombina, posted an ROE of 16.6% and 19.9% in FY15
and 9M16, 7.2pp and 10.5pp above Nutresas figures, despite having a lower
EBITDA Mg (Colombinas leverage is 3.95x as of 9M16). In terms of a peer analysis,
we think it is fair to analyze ROIC without goodwill, as this measures the companys
underlying operating performance and is not distorted by the premiums paid for M&A.
That said, Nutresas food division ROIC without goodwill for 2017e and 2018e is
expected to reach 10.3% and 11.7%, still 276bps and 243bps below its peer group.
Chart 19: Latin American Food packagers ROE estimates Chart 20: Latin American Food packagers ROIC estimates
30.0 35.0
25.0 30.0
20.0 25.0
15.0 20.0
ROIC
10.9
9.4
ROE
10.0 15.0
6.2
5.1
5.0 10.0 7.7 8.6
5.8
5.0 5.2
0.0
Bimbo Herdez Gruma Alicorp Grupo Nutresa JBS Marfrig Brasil M. Dias
-5.0 Nutresa - Food Foods Branco 0.0
Unit Bimbo Herdez Gruma Alicorp Grupo Nutresa JBS Marfrig Brasil M. Dias
-10.0 Nutresa - Food Foods Branco
Unit
2016e 2017e 2018e LATAM 2018 Average ex Gruma 2016e 2017e 2018e LATAM 2018 Average ex Gruma
Nutresa
Growth story is cooling offhigh leverage keeps M&A in

standby mode
Grupo Nutresa has been a true emerging market growth story in the last 10 years,
posting Revenues, EBITDA and earnings CAGR05-15 of 11.9%/10.7%/8.0%,
respectively, which implies an elasticity of 1.35x/1.22/0.9x to nominal Colombian GDP
growth. As shown in chart 21, from 2007 to 2015 total revenue growth was 76.1%,
driven by volumes (the remaining 23.9% by prices), though in recent years this trend
has tilted towards prices, which have been responsible for 96% of the last two years
growth amid a challenging economic backdrop. M&A has also played a major role.
Indeed, an intense M&A campaign of US$1.7bn in acquisitions (mostly accretive) in
the last 10 years explained 38% of the observed revenues growth.
Note that looking forward we are expecting this revenues growth story to decelerate
by 17%/50% to a CAGR 16-20 of 9.9%/6.0% (with and without considering M&A) on
the back of i) a still weak economic backdrop combined with the expected one-off
effects of the tax reform in terms of volume growth; ii) limited M&A firepower due to
high leverage metrics; iii) a more price sensitive portfolio of products as the firm
increases its footprint into discretionary business units; and iv) the Venezuelan effect.
Chart 21: Nutresa revenue growth - drivers Chart 22: Breakdown of revenue growth drivers
25.0% 23% 200.0%
20.0%
16% 150.0%
14% 14% 13%
15.0%
11%
9% 100.0%
Growth breakdown
Sales growth %
10.0% 10% 172%

7% 7% 7% 63% 58% 53% 53%
5% 110% 88% 112%
4% 50.0%
5.0%
37% 42% 47% 47%
0.0% 0.0% -10% 12%
-3% -12%
-5.0% -72%
-50.0%
-10.0%
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016e
2017e
2018e
2019e
2020e
-100.0%
2013 2014 2015 2016e 2017e 2018e 2019e 2020e
% Volume Growth % Price Growth % Sales Growth Volume driven chg. Price driven chg
Chart 23: Inorganic growth has been responsible for 38% of L10Y growth Chart 24: Growth is expected to decelerate from teens to single digits
4,500 15.00% 14.2%
4,000 13.00% 12.2%
3,500 11.00% 10.4% 9.9%
1,284
US$ Mll - Revenues
3,000 9.00% 9.6% 8.0%

7.7%
Growth
2,500 7.00% 6.9% 6.0% 6.8%

2,000 1,046 4.9%
3,932 5.00% 2.9%
1,500 3.00%
645 2,648
1,000 1.00%
500 957 -1.00% 2005-2010 2010-2015 2013-2020 Needed BTG Pactual BTG Pactual
- Revenues Revenues Revenues CAGR 2016 - estimates estimates
2005 Inorganic Organic 2015 Needed 2020 growth growth growth 2020 CAGR 2016- CAGR 2016-
Revenues growth Growth Revenues growth to guidance CAGR CAGR CAGR 2020 2020 +
accomplish inorganic
2020
guidance Colombian CPI Real Growth
Source: Company reports and BTG Pactual. *Fixed USDCOP @ 3,000 Source: Company reports and BTG Pactual
Nutresa
M&A is in Nutresas DNA but leverage could set the ceiling or trigger
creativity
Since inception, M&A has been part of Nutresas DNA, with 19 acquisitions (no
turnarounds) in the last 15 years, 5 mergers and 3 JVs across both the Americas and
different business units. Overall, this campaign has transformed the company at
accretive prices from a Colombian oriented packaged food company into a more
diversified firm in the Americas (with direct access to the final consumer) where
foreign sales weight 37.8% (23.3% in 2006), and no single business unit weights
more than 23% (cold cuts 31% in 2006).
Solid track record executing accretive M&A transactions, but as tickets grow it
becomes increasingly difficult not to overpay
Chart 25: Nutresas M&A campaign: Paid tickets and implicit valuations
800 740 16.0x
700 14.0x
Nutresa's Acquisitions - EV US$ Mn
600 12.0x
EV/Ebitda trailing x
500 10.0x
400 361 8.0x
300 6.0x
200 4.0x
119 110
95 83
100 39 2.0x
36 16
13 9
0
Dec-05 Aug-06 Feb-07 Jan-08 Mar-09 Sep-10 Oct-10 Feb-11 Dec-12 Aug-13 Nov-14
Setas Pozuelo Good Foods Ernesto Berard Nutresa Aliadas Fehr Helados Bon AFC TMLUC El Corral
EV USD Mll M&A EV / EBITDA trailing Nutresa Food Unit EV/Ebitda trailing Peers EV/Ebitda trailing
Source: Bloomberg, Company reports and BTG Pactual
Note that, this intense M&A strategy has totaled US$ 1.7 Bn (25% of current
Nutresas market cap / on average each ticket has represented 2.9% of Nutresas
Market Cap), in exchange for US$973mn in additional revenues and US$150mn in
fresh EBITDA. In recent years, Nutresas M&A strategy switched from an SM&E
focus approach where Nutresa had a significant bargaining power (2005-2012
average ticker of US57.7mn) into transformational purchases involving large tickets
(on average US$550mn / TMLUC and El Corral) and consequently greater leverage.
On average, the company has paid an EV/EBITDA multiple of 9.5x, which compares
favorably against both Nutresa (Food Unit 12.8x, excluding the value of the
investment portfolio / Group 18.3x) and its peers (9.8x), even considering some
adjustments in goodwill; but as the company targets whales instead of little fishes, in
our view it becomes increasingly difficult to continue executing a fully accretive
strategy before synergies.
Nutresa
Table 3: Summary of Grupo Nutresa acquisitions impressive record of 90% of accretive acquisitions
Grupo Nutresa - Acquisitions
Nutresa
Sales EBITDA M&A EV / Nutresa F&B Peers
EV USD % EBITDA EV/Ebitda Accretive /
Company Date Country Product USD USD EBITDA EV/Ebitda EV/EBITDA
Mll Interest Margin Food Unit - Dilutive
(Mll) (Mll) trailing Group - trailing Trailing
trailing
Setas Dec-05 Colombia Mushrooms 13 96% 11 2 16.0% 7.5x 11.3x 17.3x 7.0x accretive
Pozuelo Aug-06 Costa Rica Biscuits 119 100% 62 12 20.0% 9.6x 14.8x 19.8x 7.4x accretive
Good Foods Feb-07 Peru Chocolate 36 100% 40 6 15.1% 6.0x 14.3x 19.5x 10.1x accretive
Ernesto Berard Jan-08 Panama Cold Cuts 16 100% 28 2 5.7% 9.9x 10.8x 14.6x 11.8x accretive
Nutresa Mar-09 Mexico Chocolate 95 100% 49 10 19.3% 10.0x 10.0x 12.8x 6.9x accretive
Aliadas Sep-10 Colombia Coffee 9 42% 35 5 13.3% 4.6x 14.9x 22.2x 9.9x accretive
Fehr Oct-10 US Biscuits 83 100% 63 8 13.0% 10.1x 14.5x 21.9x 9.3x accretive
Helados Bon Feb-11 DR Ice Cream - Retail Food 39 73% 23 5 23.2% 10.0x 14.8x 21.5x 9.1x accretive
AFC Dec-12 Panama Ice Cream 110 100% 32 8 24.7% 13.9x 14.8x 21.1x 11.2x accretive
TMLUC Aug-13 Chile Consumer Staples 740 100% 440 60 13.7% 12.3x 9.9x 14.6x 13.0x dilutive
El Corral Nov-14 Colombia Retail Food 361 100% 182 33 18.0% 11.0x 11.4x 16.1x 12.0x accretive
Total / Average 1620 965 150 16.7% 9.5x 12.8x 18.3x 9.8x
Source: Company reports and BTG Pactual. Nutresas peer group include: Bimbo, Herdez, Gruma, Grupo Lala, Alicorp, Brasil Foods, JBS, Marfrig, M Dias Branco.
In this landscape, goodwill has increased rapidly in the last four years, and as of
3Q16 already totaled US$ 670mn, equivalent to 17.5% of Nutresas market cap and
14.3% of total assets. Since the acquisition of TMLUC in 2013, market share has
risen 1pp across sectors, but margins have eroded by 300bps to 9%. In the case of El
Corral, margins of the retail food unit have fallen by 365bps since its integration from
18% to 14.3%. In this environment, we would not discard a potential goodwill
impairment in 4Q16 results.
Chart 26: Nutresas goodwill breakdown Chart 27: Goodwill weights 17.5% of Nutresas total Mkt cap
2500000 3,000,000 20.0%
17.5%
18.0%
Goodwill as a % of Assets and Mkt cap

2,033,403 2,500,000
2000000 14.3% 16.0%
14.0%
Goodwill in COP Mll
2,000,000
1500000 1,373,072 12.0%
COP Mll
1,500,000 10.0%
8.0%
1000000 1,000,000
6.0%
4.0%
500000 500,000
2.0%
- 0.0%
2016e
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
0
2014 2015
TMLUC El Corral Others Total Goodwill COP As a % of total Assets As a % of Mkt cap
High leverage metrics are limiting further M&A in the STbut there are some
ways to turn this around
Historically, Nutresa has been an underleveraged company with an average 2006-

2012 ND/Ebitda ratio of 1.2x. But after the acquisitions of TMLUC and El Corral,
leverage edged up and should peak in 2016e at 2.89x (vs. LatAm peers average of
2.5x), getting closer to the 3x threshold established by management (the company
doesnt have any covenants in place), and thus limiting its M&A firepower. According
to the latest annual report (Dec/2015), Nutresa had pledged 26 million shares of
Nutresa
Grupo Sura (US$331mn), equivalent to 35.4% of total net debt, to back up existing
financial debt with Colombian banks. As we look into 2017 and beyond, we expect
the company to embark on a gradual deleveraging process of 0.3x per year (2020 net
debt-to-Ebitda of 1.6x), driven by forecasted annual CFO generation of US$200mn
(5.7% yield). We expect Nutresas debt headroom to reach US$638mn by 2020.
Past acquisitions were mostly funded by debt and cash, but we believe Nutresa could
use other mechanisms if an opportunity arises. We would not discard i) the usage of
the business units as currency (divesting excess control, IPOing, share swaps, etc);
ii) a temporary transfer of GEA stocks, where money could be delivered as a back-up
for the operation (GEA portfolio is valued at US$1.25bn and US$919mn free of
pledges); and iii) an equity issuance of preferred shares (room to issue up to
US$3.8bn before reaching the regulatory limit of 50% of total ownership), allowing
GEA to retain control of Nutresa (we think issuing non-voting preferred shares would
not be the best practice from a corporate governance standpoint - we note that
Nutresa and Celsia are the only companies in the group that have one class of
shares). Although we would welcome a sale of the GEA portfolio, management has
repeated to us on several occasions that this is not part of their plans and that they
would only tap the portfolio in an extreme liquidity scenario.
Chart 28: Nutresas debt headroom is about to increase

800.0 3.50
691
700.0
Additional room in Debt - USD Mn
3.00
Leverage - Net debt to EBITDA

600.0 538
505 2.50
500.0
406 2.00
400.0 336 342 344
306 1.50
300.0 264 252
196 207
1.00
200.0 145
100.0 45 0.50
39
0.0 0.00
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016e
2017e
2018e
2019e
2020e
COLGAAP COLGAAP IFRS

Additional room in debt before reaching ND/EBITDA 3x USD Mn Net Debt to EBITDA Management Leverage limit
Although our valuation model doesnt consider growth coming from M&A, based on
Nutresas track record we believe acquisitions are highly likely before 2020. That
said, assuming the expected headroom for 2020 and valuations in line with Nutresa
food unit multiples (EV/EBITDA 10x), we estimate M&A could boost revenues growth
by 65% to CAGR 2016-20 9.9% (6.0% organic).
Nutresa
Chart 29: Nutresas organic and potential inorganic growth Chart 30: Leverage across LatAm F&B companies
40% 5.00
35% 4.50
30% 4.00
25% 23% 24% 3.50
EBITDA Growth %
Net Debt to EBITDA

20%
20% 3.00
8%
2.50
15% 11% 15%
10% 2.00
6%
5% 1.50
4%
0% 1.00
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016e
2017e
2018e
2019e
2020e
-5% 0.50
-10% 0.00
COLGAAP IFRS -0.50 Bimbo Herdez Gruma Alicorp Grupo Nutresa JBS Marfrig Brasil M. Dias
Nutresa - Food Foods Branco
Proforma EBITDA growth Unit
EBITDA additional potential inorganic growth%
BTGP Organic EBITDA growth 2014 2015 2016e LATAM 2017 Average
Source: Company reports and BTG Pactual Source: Company reports, Bloomberg, BTG Pactual
Where is Nutresa interested in growing its footprint?
Management has stated that future M&A campaigns will likely focus on horizontal
integrations rather than vertical ones, and with a special focus on the following
geographies: Colombia, Mexico, Chile and Peru. Although Colombia isnt subject to
anti-trust regulation, the market is actively monitored (Kimberly Clark, Famila and
Tecnoquimicas were recently fined US$70mn for price rigging), and in our view a
transformational acquisition in Colombia (Colombina, Quala) is unlikely. We
believe the company will likely focus on consolidating its high market share via
complementary products and by increasing its footprint in retail food. In Mexico, Chile
and Peru, we believe that Nutresa, via the TMLUC hub, has room to further
improve its scale by consolidating regional premium brands.
Figure 1: Grupo Nutresa M&A strategy

Geographies Existing Food Rational for M&A M&A Strategy
of interest + categories
*Complementary products of
existing food units (e.g sauce,
cereals, snacks) SMEs
*Retail Food: SMEs / Large caps
Full portfolio of 7 *Consolidate market share *Vertical integration: Coffee and
Colombia categories business *Increase exposure to retail cocoa fields
Units food
*Competition is high in Cold cuts,
chocolates, biscuits, ice cream
and Retail food
Chocolates, ICB, *Gain scale *M&A should focus on regionally
Mexico
Pasta *Improve distribution network consolidating small premium
brands. (SMEs)
Chocolates, ICB, *Productivity efficiencies *Through the TMLUC hub,

Chile Pasta, Coffee, Snacks Nutresa could consolidate small
*Gain scale
food packagers (SMEs)
*increase footprint in an
Peru Chocolates *Multi categories
underpenetrated market
*SMEs / Large caps
*Gain scale
*Could be the entry point to
dairy
Source: BTG Pactual

Nutresa
Portfolio is tilting towards discretionary products: more risks but,

potentially, also more rewards
Recent acquisitions in the Caribbean (Helados Bon) and in Colombia (El Corral),
along with the Starbucks JV (Alsea-Nutresa 20-year contract) have given Nutresa a
portfolio of over 780 retail food stores (450 Bon+Pops / 330 Grupo El Corral). As
seen in figure 2, we expect the portfolio breakdown to tilt towards discretionary
products (51% of total weight) starting in 2016e, which should slightly increase the
companys exposure to more asset price-sensitive products, with higher but more
volatile margins (Ebitda margin in Dec/15 of 17.2%, +500bps above consolidated
margin / Sep/16 of 14.3%, 230bps above the groups margin). Looking forward, we
expect the discretionary portfolio to grow at a CAGR16-20 of 7.5%, +32% above the
forecasted growth rate of the consumer staples division (CAGR16-20 5.7%).
According to management, the creation of the retail food unit is the companys
channel to meet its objective of gaining direct contact with consumers, and not just
with shoppers and middlemen (distribution channels). Out-of-home eating is a
mega worldwide trend, and although Colombians still have a preference for
homemade food, the latest Nielsen global analysis (61 countries, 7 in LatAm) of
consumer trends shows that 38% of Colombians eat out of home at least once a
week. Comparing this figure to regional peers, Colombia is still lagging neighbors
such as Brazil (51%), Peru (42%), and Mexico (40%), which should secure above-
GDP growth for the upcoming years. Digging deeper into Colombians consumer
behavior, the Nielsen study show that the preferred meal to eat out of home is
lunch (as per 72% of respondents) and the favorite format is fast food (51%). Thus,
it seems the El Corral format is ticking all the right boxes.
Figure 2: Consumer staples vs Consumer discretionary

Nutresa
For better or worse, Venezuelan turmoil is out of the picture
After three years of volatility and increasing political uncertainty, Nutresa

announced that it will stop recording the P&L results of its subsidiary in Venezuela
unless it pays dividends. In January 2014, the Venezuelan government modified its
exchange and remittance controls system, devalued its official exchange rates
(CADIVI1 2013 USD/VEF 6.29 SICAD I USD/VEF 10 and SICAD II USD/VEF 50) by
59%-681% and further restricted capital repatriation in USD. During 2015, the
exchange system continued evolving, with the creation of the SIMADI (USD/VEF 199
in 1Q15 and 674 in Dec/16) and DIPRO rate (USD/VEF 10). Looking at the black
market, the USD/VEF is currently trading at 2,400, which implies a 3-year
depreciation of 380x and a total loss in value (in USD terms) of -99.7%. At the same
time, inflation is out of control and already in triple digits. Indeed, according to the
IMF, inflation should reach record highs of 720% and 2,200% for 2016 and 2017,
respectively.
In this environment, Grupo Nutresa announced that starting in 4Q16, they will stop
recording results from its subsidiary in Venezuela in the consolidated P&L, unless
the holding company receives dividends. Nutresa was using the SIMADI rate for
recording its Venezuelan operations. In our view, this measure should hit Nutresas
consolidated revenues and net income growth by -2.9% (Venezuela used to have a
8.3% weighting before this turmoil) and -0.9%, respectively, with the cold cut units
suffering the most, with an expected negative effect on revenues of -12.5%.
However, it also brings a clearer and more predictable picture in terms of the
bottom line, as it erases the volatility created by VEF instability (FX losses in 2015 of
USD -19mn / USD -80mn in 2014).
Chart 31: USD/VEF Black Market 2,200% depreciation Chart 32: Nutresas exposure to Venezuela: From 8.3% to 0%
5000 9.0% 8.3%
Revenues from Venezuela as a % of total
4500 8.0%
4000
USD/VEF - Black Market
7.0%
3500
3000 6.0%
2500 5.0%
2,481
2000 4.0% 3.4% 3.4%
1500 3.1% 3.1% 3.3% 3.1% 2.9% 2.9%
3.0% 2.6% 2.6% 2.8% 2.9% 2.9%
1000
500 2.0%
18
0 1.0%
0.0%
1-1-2013
4-25-2013
6-19-2013
8-13-2013
10-7-2013
12-1-2013
1-26-2014
3-23-2014
5-17-2014
7-11-2014
9-4-2014
10-29-2014
12-23-2014
2-18-2015
4-14-2015
6-8-2015
8-3-2015
9-28-2015
11-23-2015
1-17-2016
3-12-2016
5-6-2016
7-7-2016
8-31-2016
10-25-2016
0.0%
2013
Q1-14
Q2-14
Q3-14
Q4-14
2014
Q1-15
Q2-15
Q3-15
Q4-15
2015
Q1-16
Q2-16
Q3-16
Q4-16
USD/VEF Black Market Venezuelan revenues as a % of total
Source: Dolartoday.com and BTG Pactual Source: Company reports and BTG Pactual
Nutresa
How profitable has the cross-holding relationship with GEA

been?
Grupo Nutresa holds in its balance sheet a US$1.2bn equity investment in Grupo
Sura (12.7% equity stake) and Grupo Argos (12.4% interest), representing 33.5%
and 26.5% of Nutresas total market cap and total assets, respectively. The dividend
stream from this portfolio represented 11.0% of Nutresas total earnings in 2015. In
addition to its footprint in the packaged food business, these non-controlling stakes
expose Nutresa to the following sectors across the Americas: insurance, asset
management, banking, cement, energy, road/airport concessions, real estate and
ports.
Portfolio has yielded IRR of 6.8% in last 10 years, above CPI and
deposit rates
In the last 10 years, the IRR of this investment portfolio (at market prices) has
yielded an annualized rate of 6.8% (market cap gains and dividends paid), which
compares favorably to both the average rate for deposits in Colombia and to
inflation. Capital gains have been responsible for 81% of this performance, as Grupo
Suras share price doubled and Grupo Argos expanded by 63% between Dec/05
and Dec/16. As shown in chart 33, the dividend yield of this portfolio has averaged
1.2% per year in the last 10 years (450bps below DTF).
Chart 33: GEA dividend yield vs average deposit rate in Colombia and Nutresas cost of Debt
12.00%
10.00%
8.00%
6.00%
4.00%
Performance
1.8% 1.3% 1.4%

2.00% 0.8% 0.9% 1.3%
0.00%
-2.00%
-4.00% -3% -3% -3% -3% -3% -4% -4% -4%
-6.00% -5% -4% -5%
-5% -5%
-8.00% -7%
-8%
-10.00%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016e
2017e
2018e
2019e
2020e
Spread GEA Div Yield vs DTF GEA Dividend Yields vs Market Cap DTF Nutresa's Cost of Debt after tax
Source: Company reports, Central Bank and BTG Pactual
US$1.1bn in earnings for shareholders have been left on the table due
to the GEA structure
Clearly, this portfolio has generated a positive yield for Nutresa, but in our view it
was not the optimal capital allocation decision for shareholders given that it could
have been used to i) invest in Nutresas food business, where profitability is 2.7x
greater than the portfolios ROE; or ii) pay down existing debt and thus avoid
covering the cost of debt (L10Y average of 9.5% / 7.1% after taxes).
Profitability varies by GEA member. Grupo Nutresa, and more specifically its food
unit, is the most profitable business with a last 10-year average ROE of 14%. This
Nutresa
figure compares favorably to Grupo Sura and Argos, which have averaged ROEs of
4% and 2.9%, respectively, for the same period. If Nutresa had allocated the money
invested in GEAs portfolio into its food unit (assuming there are enough
opportunities, organic and inorganic, to allocate this money into this segment), we
estimate that its earnings would have been twice the actual size (see chart 37).
Indeed, we estimate that earnings left on the table during the last 10 years totaled
US$1.1bn, equivalent to 32.4% of Nutresas current market cap.
Chart 34: Profitability across GEA The food unit is the king Chart 35: 2005 2016 performance of Nutresas IRR, GEAs IRR,
Nutresas cost of debt and DTF
20.0%
18.0% Average DTF 2005-2016 5.82%
16.0%
14.0%
12.0% Nutresa's GEA Portfolio IRR 20015-2016 6.80%
ROE
10.0%
8.0% Nutresa IRR 2005-2016 8.17%
6.0%
4.0%
Nutresa's average cost of debt After tax
2.0% 6.94%
2005-2016
0.0%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016e
Nutresa's average cost of debt 2005-2016 9.52%

ROE - Grupo Nutresa ROE - Nutresa Food unit
ROE Grupo Argos ROE Grupo Sura* 0% 2% 4% 6% 8% 10%
Chart 36: Estimate of potential earnings left on the table totaled US$ Chart 37: Earnings could have been 104% greater if the portfolio would
1.1Bn in L10Y have yielded the Food-Unit ROE
1,200 1,117 160% 1,200,000
US$ Mll - Portfolio @ Nutresa's Food ROE vs
1,051
Growth Proforma vs Actual earnings
140% 1,000,000
1,000
883 120%
800,000
800 756 100%
COP Mll
611 80% 600,000
GEA's
600 515 60% 400,000

400 373 40%
316 200,000
231 20%
200 124 0% -
54
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016e
2017e
2018e
2019e
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Nutresa's earnings
Porforma Nutresa's earnings with Portfolio invested in Food
Earnings left on the table - annual basis* Cummulative - earnings left on the table
Growth Proforma vs Actual
Source: Company reports and BTG Pactual. *Value of portfolio invested at Nutresas Source: Company reports and BTG Pactual
food unit ROE minus Value of Portfolio invested at GEAs ROE
On the other hand, although historically Grupo Nutresa has been underleveraged
(L10Y average Net Debt/Ebitda of 1.4x), the acquisitions of TMLUC and Grupo El
Corral, mainly debt-funded, brought leverage to record highs of 2.9x Net Debt to
EBITDA. In our view, debt was not the optimal decision, bearing in mind that the
average cost of debt of the L4Y has been 8.7% (6% after tax), above the respective
IRR of the portfolio (0.6%) for the same period of time. Looking at the bigger
Nutresa
picture, during the last 10 years the cost of debt (after tax) has been, on average, in
line with the yield generated by GEAs portfolio. Note that, as of 3Q16, 28.2% of
Grupo Nutresas total financial obligations are with Bancolombia (Grupo Sura owns
46% of this bank).
Chart 38: Last 10 years performance of different investment strategies
10.00%
2.73% 3.30%
8.00%
0.14% 1.37%
6.00% 0.97%
9.52% 10.10%
4.00% 8.17%
6.80% 6.94% 6.80% 6.80% 6.80% 6.80% 6.80%
5.82%
2.00%
0.00%
Cost of Spread GEA After tax Spread GEA Nutresa's Spread GEA WACC Spread GEA DTF Spread GEA
Debt Portfolio cost of Portfolio IRR Portfolio Portfolio Portfolio
IRR Debt IRR IRR IRR IRR
Cost of Debt vs Portfolio IRR 2005- After tax Cost of Debt vs Portfolio IRR Nutresa IRR vs Portfolio 2005-2016 Nutresa's WACC DTF vs Portfolio IRR 2005-
2016 2005-2016 2016
Source: Company reports and BTG Pactual. *GEA portfolio IRR and Nutresas IRR consider dividend payments and total market cap gains. **DTF is average deposite rate in
Colombia
On the positive side, having GEAs portfolio offers Nutresa a liquid source of cash
given that both vehicles are listed on the Colombian stock exchange and have a
combined ADTV of US$4.4mn. To fully liquidate Grupo Nutresas positions in Grupo
Sura and Grupo Argos, it will require 250 and 335 days, respectively. The total
portfolio is also used to collateralize existing debt. Indeed, loan to value (LTV) is 88%,
but the LTV ratio of the divestable assets (non-GEA stakes) is nil. We believe the
high leverage metrics of both Grupo Argos (5.2x net debt-to-dividends received for
2016e) and Grupo Sura (4.1x net debt-to-dividends received for 2016e) may sooner
or later demand fresh equity, which could in turn push Nutresa to commit additional
cash to GEA to avoid dilution and secure the cross-holding structure. Nevertheless,
we believe this scenario is highly unlikely as both companies have enough room to
issue preferred shares (US$7.3bn before reaching 50%) before reaching the statutory
limit of 50% of total shares (Grupo Sura and Grupo Argos preferred shares represent
18% and 21% of total shares, respectively).
Nutresa
Chart 39: Grupo Nutresa Loan to Value of Portfolio Chart 40: How important is the Portfolio for Nutresa?
120.0% 3.00 48% 47% 50.0%
44%
Portfolio as a % of total Assets & Market cap

43%
40% 40% 45.0%
100.0% 2.50 38%
40.0%
91% 34% 34% 28%
35.0%
2.00 29%
80.0% 88% 82% 26% 30.0%
69%
USD Bn
79%
75% 1.50 1.3 1.3 1.3 1.3 25.0%
60.0% 53% 1.2 1.1
1.0 1.1 20.0%
43% 1.00
39% 15.0%
40.0% 0.6 0.7 0.7
27% 26% 28% 25% 0.5 10.0%
0.50
17% 14% 5.0%
20.0%
2% - 0.0%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016e
0.0%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016e
2017e
2018e
2019e
2020e
Total Portfolio Value in USD Bn @ Fix USDCOP
as a % of Nutresa's Assets
LTV - Loan to Nutresa's portfolio Value 100% coverage as a % of Nutresa's Mkt Cap
Table 4: Grupo Nutresa Related parties transactions

Company - Figures in Million COP / Purchases of goods Sales of goods Dividends
Receivables Payables
as of Dec/2015 and services and services received
Associated and Joint businesses 599 666 43 38,780 -

Bimbo de Colombia 543 658 2 39,130 -
Dan Kaffe 56 8 17 (350) -
Oriental Coffee - - 24 - -
Estrella Andina - - - - -
Companies with high influence over Nutresa 13,799 7,896 60,283 26,489 25,062
Grupo Sura 13,799 7,896 60,283 26,489 25,062
Other related parties 6,187 892,006 56,627 3,286 21,388
Bancolombia 535 891,982 48,492 2,202 -
Grupo Argos 5,448 - - 1,084 21,388
Fundacin Nutresa 40 - 5,400 - -
Corporacin Vidarium 164 24 2,735 - -
Board Members - 103 459 - -
Board Members - 103 459 - -
Total 20,585 900,671 117,412 68,555 46,450
as a % of Nutresa's total Assets 0.16% 6.83% 0.89% 0.52% 0.35%

Nutresa
Valuation
We are initiating coverage of Grupo Nutresa with a Neutral rating and a target price of
COP27,500/share. We are valuing Grupo Nutresa using a DCF approach. Our
discounted cash flow points to a value for the food unit of COP19,000 share,
considering projected cash flows until 2026 with a CAGR2017-27 of 3.4%, an
average rolling WACC of 10.1%, and a nominal perpetuity growth rate of 4%. In
addition, we are including the value of the GEA portfolio (Grupo Sura @ market price
and Grupo Argos @ BTGs Target Price 19,900), resulting in a 12-month target price
of COP27,500/share, which implies upside of 13.3% (15.4% including dividends). In
terms of value breakdown, our model shows that Grupo Nutresas food unit has a
69% weighting in the groups total valuation. The cross-holding adjusted exit multiples
of our target price imply an EV/EBITDA of 10.8x, P/E of 24.3x for 2017e.
Table 5: Calculation of WACC and growth in perpetuity Table 6: Sensitivity analysis: Perpetual growth rate vs Price COP/Share
WACC Sensitivity analysis
Risk free rate 30 year T-Bonds 3.00% Perpetual growth COP/Share Investment potential
Sovereign risk premium Premium Revenues 3Q16 27,507
Colombia Risk 3.30% 62.00% 2.50% 24,561 2.3%
Peru Risk 2.80% 2.09%
2.75% 24,966 4.0%
Chile Risk 2% 7.18%
Central America Risk 11.80% 9.17% 3.00% 25,401 5.8%
Mexico Risk 3.70% 3.69% 3.25% 25,868 7.8%
US Risk 0% 7.51% 3.50% 26,372 9.9%
(=) Nutresa home markets Risk-free Rate 3.47% 3.75% 26,916 12.2%
Equity Risk Premium 5.75% 4.00% 27,507 14.6%
BETA 0.95 4.25% 28,150 17.3%
Unlevered Beta 0.72
4.50% 28,853 20.2%
CAPM (Ke) 11.7%
Cost of Debt 8.8% 4.75% 29,624 23.4%
Tax 23.3% 5.00% 30,473 27.0%
Cost of Debt After Tax 6.8% 5.25% 31,414 30.9%
Average WACC 10.1% 5.50% 32,462 35.3%
Source: BTG Pactual Source: BTG Pactual
Table 7: DCF methodology: Exit multiples Table 8: Nutresas Food Unit as a % of total market cap
Exit Multiples 100.0%
Nutresa Food unit as a % of total Mkt Cap
Grupo Nutresa Multiples Food Multiples

90.0%
EV/EBITDA 2016 14.63x Adj EV/EBITDA 2016 10.96x
EV/EBITDA 2017 14.37x Adj EV/EBITDA 2017 10.77x 80.0%
EV/EBITDA 2018 12.65x Adj EV/EBITDA 2018 9.48x
70.0%
P/E 2016 29.69x Adj P/E 2016 23.33x

60.0%
P/E 2017 30.35x Adj P/E 2017 24.28x
P/E 2018 23.54x Adj P/E 2018 18.21x 50.0%
40.0%
P/B 2016 1.51x Adj P/B 2016 1.95x
1/07
8/07
3/08
10/08
5/09
12/09
7/10
2/11
9/11
4/12
11/12
6/13
1/14
8/14
3/15
10/15
5/16
12/16
P/B 2017 1.48x Adj P/B 2017 1.88x

P/B 2018 1.44x Adj P/B 2018 1.78x Food Unit - as a % of total Market Cap
Source: BTG Pactual Source: Bloomberg and BTG Pactual

Nutresa
Given the nature of Grupo Nutresa, we believe some adjustments to valuation

multiples are needed to get a clear picture of the food unit. That said, since the
portfolio does not contribute to EBITDA, the EV should be adjusted by the value of
the portfolio. In the case of P/E, both parts of the equation must be adjusted: i) in the
numerator (market cap), the portfolio value should be removed; and ii) in the
denominator (earnings), dividends received from the portfolio should be removed.
Grupo Nutresa is trading at a cross-holding adjusted P/E of 20.0x (26.7x without

adjustments) and EV/EBITDA of 9.3x (12.9x for the Group) based on our estimated
figures for 2017e. Average industry multiples at the regional level are 17.0x P/E and
9.1x EV/EBITDA, implying 17.6% (58% for the Group) and 2.2% (41.7% w/o
adjustments) premiums, respectively. On an EV/EBITDA basis, Nutresas food unit
has historically traded at a 22% premium to its peers in LatAm. With respect to its
history, Grupo Nutresa is trading at two standard deviations below its 10-year mean.
Chart 41: LatAm food companies: EV to EBITDA trailing Chart 42: LatAm food companies: Price to Earnings trailing
18.0 30.0
16.0 25.0
14.0
20.0
12.0
EV to EBITDA x
15.0
10.0
8.0 10.0
P/E x
6.0 5.0
4.0
0.0
2.0 Bimbo Herdez Gruma Alicorp Grupo Nutresa JBS Marfrig Brasil M. Dias
-5.0 Nutresa - Food Foods Branco
0.0
Unit
Bimbo Herdez Gruma Alicorp Grupo Nutresa JBS Marfrig Brasil M. Dias -10.0
Nutresa - Food Foods Branco
Unit -15.0
2016e 2017e 2018e LATAM 2018 Average 2016e 2017e 2018e LATAM 2018 Average
Source: Bloomberg and BTG Pactual Source: Bloomberg and BTG Pactual
Chart 43: Nutresa Food Unit - P/E trailing and Forward Chart 44: Grupo Nutresa - P/E trailing and Forward
45.0x 60.0x
40.0x
50.0x
35.0x
P/E - Grupo Nutresa
30.0x 40.0x
P/E - Food Unit
25.0x
30.0x
20.0x
15.0x 20.0x
10.0x
10.0x
5.0x
- -
1/07
7/07
1/08
7/08
1/09
7/09
1/10
7/10
1/11
7/11
1/12
7/12
1/13
7/13
1/14
7/14
1/15
7/15
1/16
7/16
1/17
1/07
7/07
1/08
7/08
1/09
7/09
1/10
7/10
1/11
7/11
1/12
7/12
1/13
7/13
1/14
7/14
1/15
7/15
1/16
7/16
1/17
P/E Food - trailing P/E Food - forward Fwd Average P/E Group - trailing P/E Group - forward Fwd Average
Fwd STDV + 1 Fwd STDV - 1 Fwd STDV + 1 Fwd STDV - 1
Nutresa
Chart 45: Nutresa Food Unit EV/EBITDA trailing and Forward Chart 46: Grupo Nutresa EV/EBITDA trailing and Forward
30.0x
19.0x
EV/EBITDA - Grupo Nutresa

17.0x 25.0x
EV/EBITDA - Food Unit
15.0x
20.0x
13.0x
11.0x 15.0x
9.0x
10.0x
7.0x
5.0x 5.0x
1/07
7/07
1/08
7/08
1/09
7/09
1/10
7/10
1/11
7/11
1/12
7/12
1/13
7/13
1/14
7/14
1/15
7/15
1/16
7/16
1/17
1/07
7/07
1/08
7/08
1/09
7/09
1/10
7/10
1/11
7/11
1/12
7/12
1/13
7/13
1/14
7/14
1/15
7/15
1/16
7/16
1/17
EV/Ebitda Food Unit - trailing EV/Ebitda Food Unit - forward EV/Ebitda Group - trailing EV/Ebitda Group - forward
Average Fwd STDV +1 Average Fwd STDV +1
STDV -1 STDV -1
Chart 47: Nutresa Food unit: Premium/Discount vs regional peers Chart 48: Last 10 years performance of GEA stocks
100.0% 600.0
Nutresa Food unit - Premium/Discount vs peers
80.0% 500.0
60.0% 400.0
Performance
40.0%
300.0
20.0%
200.0
0.0%
100.0
-20.0%
0.0
-40.0%
1/05
7/05
1/06
7/06
1/07
7/07
1/08
7/08
1/09
7/09
1/10
7/10
1/11
7/11
1/12
7/12
1/13
7/13
1/14
7/14
1/15
7/15
1/16
7/16
1/17
1/07
8/07
3/08
10/08
5/09
12/09
7/10
2/11
9/11
4/12
11/12
6/13
1/14
8/14
3/15
10/15
5/16
12/16
Grupo Argos ORD Grupo Sura ORD MSCI EM

Discount/Premium EV/Ebitda trailing Nutresa Colcap
Nutresa
Table 9: Valuation Metrics of Food and Retail Food companies

Valuation Metrics
Company Market Cap ADTV EV/EBITDA Price to Earnings
FOOD COMPANIES (US$ mn) (USD mn) 2016e 2017e 2018e 2016 2017e 2018e
Latin America
Bimbo 10,949 4.6 10.8x 9.8x 9.0x 28.2x 23.8x 19.8x
Herdez 785 1.1 10.6x 9.9x 9.2x 18.6x 15.4x 14.4x
Gruma 5,989 11.3 12.3x 10.7x 9.9x 21.7x 18.9x 17.2x
Alicorp 2,051 0.9 10.0x 9.3x 8.7x 20.1x 17.1x 15.7x
Nutresa 3,825 1.1 13.7x 12.9x 11.2x 27.1x 26.7x 20.7x
Nutresa - Food Unit 2,481 1.1 10.1x 9.3x 8.0x 20.6x 20.0x 15.0x
JBS 10,614 29.2 6.7x 5.3x 5.0x 65.8x 8.0x 6.6x
Marfrig 1,404 7.3 6.5x 5.8x 5.5x n.a n.a 14.9x
Brasil Foods 11,238 35.1 12.0x 8.6x 7.3x 93.2x 17.2x 13.0x
M. Dias Branco 4,973 6.9 16.0x 13.6x 12.0x 19.6x 16.4x 14.6x
Grupo Nutresa Premium / Discount 29.4% 41.2% 34.5% -29.0% 59.9% 42.4%
Nutresa Food Unit Premium / Discount -4.5% 1.6% -3.6% -46.2% 19.8% 3.1%
Global
General Mills Inc 34,354 153.8 12.8x 12.6x 12.0x 20.6x 19.2x 17.7x
Mondelez international inc-a 65,637 357.4 16.9x 15.8x 14.7x 21.9x 20.2x 18.2x
Kraft heinz co/the 117,649 266.8 18.6x 17.4x 16.4x 29.2x 25.5x 23.4x
Campbell soup co 17,956 87.8 11.2x 10.9x 10.7x 19.7x 18.9x 18.0x
JM smucker co/the 15,829 164.4 12.4x 12.1x 11.7x 23.5x 17.7x 16.9x
Danone 42,474 99.8 12.5x 11.0x 10.2x 20.0x 18.1x 16.3x
Parmalat SPA 5,826 2.6 11.9x 10.9x 10.0x 37.0x 30.8x 32.9x
Nestle 230,431 398.0 14.2x 13.8x 13.0x 21.6x 20.8x 19.5x
Reckit Benckiser 61,695 11,628.8 17.6x 15.4x 14.2x 24.1x 21.2x 19.3x
Unilever 142,037 9,634.7 15.7x 14.6x 13.6x 23.9x 22.1x 20.4x
Developed World Average 73,389 2,279 14.4x 13.4x 12.6x 24.1x 21.4x 20.3x
Grupo Nutresa Premium / Discount -4.7% -4.2% -11.3% 12.3% 24.5% 2.1%
Nutresa Food Unit Premium / Discount -29.7% -31.0% -36.5% -14.9% -6.7% -26.1%
RETAIL FOOD COMPANIES (US$ mn) 2016e 2017e 2018e 2016 2017e 2018e
Latin America
Arcos Dorados 1,349 3.6 8.1 7.4 7.0 16.1 24.3 21.8
Alsea 2,375 8.9 12.0 10.5 9.2 50.5 32.8 25.8
Global
Wendys 3,632 46.2 14.8 14.6 13.6 34.6 30.9 25.4
Yum! Brands 25,103 158.6 17.3 16.3 15.9 27.9 25.1 21.9
McDonalds 106,131 440.2 13.7 13.4 13.1 22.5 20.7 19.3
Popeyes 1,370 18.8 17.5 16.0 15.0 31.4 27.0 23.5
Starbucks 83,582 684.6 16.4 14.8 13.1 30.3 26.9 23.4
Papa Johns 3,173 36.8 17.8 16.5 15.0 34.1 30.4 26.8
Domino's Pizza 9,035 127.6 23.3 20.7 18.3 44.6 37.1 31.3
Developed World Average 33,147 216.1 17.3x 16.0x 14.9x 32.2x 28.3x 24.5x
Source: Bloomberg, Company Reports and BTG Pactual
Nutresa
Table 10: Operating Metrics of Food and Retail food companies across the Globe
Operational Metrics
Company ROE % Dividend Yield FCFYield EBITDA Mg EBITDA Growth Earnings Growth
FOOD COMPANIES 2017e 2017e 2017e 2017e 2017e 2018e 2017e 2018e
Latin America
Bimbo 12.8 0.7 3.1 11.0 9.8 9.7 18.5 19.8
Herdez 13.2 2.7 8.0 15.7 8.0 7.6 48.1 9.2
Gruma 24.3 1.1 2.9 16.5 15.0 7.7 14.3 9.9
Alicorp 14.1 1.8 10.2 12.4 7.1 6.7 18.1 12.0
Nutresa 4.8 2.4 6.1 12.0 1.8 13.6 -2.1 29.1
Nutresa - Food Unit 8.9 2.4 9.4 12.0 1.8 13.6 -3.9 33.6
JBS 13.8 2.1 -10.9 8.6 27.9 4.5 n.a 18.0
Marfrig 2.0 0.5 33.7 8.9 11.3 6.3 n.a n.a
Brasil Foods 13.0 2.4 -0.6 14.1 38.9 17.2 n.a 34.1
M. Dias Branco 19.7 1.4 3.2 19.7 17.7 13.1 19.4 14.2
LatAm Average 12.7 1.8 6.5 13.1 13.9 10.0 16.1 20.0
Grupo Nutresa Premium / Discount -61.7% 38.6% -6.5% -8.4% -87.2% 36.1% -113.0% 45.4%
Nutresa Food Unit Premium / Discount -29.8% 38.6% 44.4% -8.4% -87.2% 36.1% -124.3% 68.2%
Global
General Mills Inc 35.4 3.2 4.8 22.0 1.9 4.6 4.9 6.0
Mondelez international inc-a 12.2 1.8 2.5 19.8 6.8 7.1 5.3 8.5
Kraft heinz co/the 8.0 2.6 n.a 31.3 7.0 6.1 14.2 8.5
Campbell soup co 59.6 2.4 6.1 22.9 3.6 1.7 3.1 3.6
JM smucker co/the 12.9 2.2 6.0 23.0 2.8 3.5 28.3 1.1
Danone 15.3 3.0 4.6 17.7 14.1 8.6 12.4 12.3
Parmalat SPA 5.3 0.6 n.a 7.5 8.7 9.1 18.7 21.9
Nestle 16.4 3.3 5.1 19.3 4.3 6.0 4.1 7.4
Reckit Benckiser 28.1 2.4 4.5 29.9 13.9 8.8 13.3 8.6
Unilever 31.6 3.0 4.2 18.3 7.0 7.2 6.2 8.6
Developed World Average 22.5 2.4 4.7 21.2 7.0 6.3 11.0 8.6
Grupo Nutresa Premium / Discount -78.5% 0.2% 29.3% -43.4% -74.6% 116.5% -118.9% 236.2%
Nutresa Food Unit Premium / Discount -60.5% 0.2% 99.6% -43.4% -74.6% 116.5% -135.3% 288.9%
RETAIL FOOD COMPANIES 2017e 2017e 2017e 2016e 2017e 2018e 2017e 2018e
Latin America
Arcos Dorados 12.0 0.0 3.5 7.9 10.1 4.8 -33.6 11.1
Alsea 14.8 1.2 1.8 13.9 14.1 14.8 49.6 29.0
LatAm Average 13 0.6 2.7 10.9 12.1 9.8 8.0 20.1
Global
Wendys 18.5 2.0 1.4 33.5 0.8 7.2 2.7 17.5
Yum! Brands -28.9 2.3 3.6 36.6 6.2 2.2 -0.2 7.5
McDonalds 124.8 3.0 4.4 44.2 2.3 2.2 1.6 3.2
Popeyes -1.5 n.a 3.9 35.5 10.0 6.3 9.4 9.7
Starbucks 45.9 1.7 3.6 24.9 10.6 12.9 10.6 13.8
Papa Johns #N/A N/A 1.0 3.2 11.7 8.4 9.7 8.1 10.1
Domino's Pizza -15.2 0.9 2.3 20.5 12.9 12.6 15.6 15.6
Developed World Average 24 1.8 3.2 29.6 7.3 7.6 6.8 11.0
Source: Bloomberg, Company Reports and BTG Pactual
Nutresa
Grupo Nutresas blueprint

Business strategy
Grupo Nutresa, created in 1920, is a Colombian company from the packaged food
sector. It processes, distributes and markets food products, mainly in the Americas,
and is the fifth largest publicly traded food company in Latin America, with a market
cap of US$3.7bn, LTM revenues of US$2.9bn (3Q16) and LTM EBITDA of
US$348mn (3Q16). The group has direct operations (plants and distribution centers)
in 14 countries, including: Colombia (62% of total revenues), the US, Central
America, Chile, Mexico, the Caribbean, Ecuador, Venezuela and Peru. It is mainly
owned by Grupo Sura and Grupo Argos, which together control 44.7% (49.1%
including Suras pension fund), it has a 43.5% free float (US$1.612bn), and its
common stock is listed on the Colombian stock exchange.
Chart 49: Revenues breakdown per geography Chart 50: EBITDA Breakdown per business unit Chart 51: Distribution Network as of Dec/15
as of 3Q16 as of 3Q16
Colombia
Cold cuts Traditional (mom
1.8% USA 0.46% 3.80% & pops)
2.1% Biscuits
1.4% 2.71% Retailers
7.2% Dominican 8.72% 6.40% 5%
2.9% 5.79% Chocolates
Republic 17.32%
Mexico
Coffee Alternative
9.2% Central America 8.60% (catalog sales)
8.23% TMLUC
Venezuela Retail food
3.7% 52.40%
22.47% Ice cream
62.0% Ecuador 14.20%
8.2% Pasta 23.80% Industrial
1.6% Peru
Retail Food
Chile 20.10% Institutional
Others
Source: Company reports and BTG Pactual Source: Company reports and BTG Pactual Source: Company reports and BTG Pactual
Nutresa operates via 8 business units and 45 production plants: i) cold cuts, ii)
biscuits, iii) chocolates, iv) coffee, v) TMLUC (Tres Montes Lucchetti), vi) ice cream,
vii) pasta, and viii) retail food. It is a pure brand manager with a portfolio of over 120
brands (reaching 72 countries), of which 17 have annual sales above US$50mn. The
company has the largest distribution network (Nutresa is in charge of the logistics but
does not own the trucks) in Colombia, reaching 1.2mn POS (points of sale / 52.4%
mom and pops and 23.8% retailers), with a diversified offer of 3,240 SKUs.
This structure allows the company to set up strong entry barriers (economies of scale
/ high penetration of traditional channels / brand strength), and to diversify its
revenues (in terms of geographies and business unit) and COGS structure (no single
commodity represents over 10% of total costs) and thus generate sustainable
EBITDA growth (CAGR 05-15 13.2%; of which approximately 2/3 came organically).
Looking forward, the company wants to double its revenues by 2020 while
maintaining EBITDA margin within the 12-14% range and improving ROIC from the
current 7.6% (BTG Pactual estimates) to 13%. This goal implies a CAGR 16-20 of
7.96%, which we believe is achievable since it implies a 40% slowdown versus the
growth posted in the last decade.
Nutresa
With a consolidated market share of 61% in Colombia and an average of 31% in both
Mexico and Chile, only considering the categories where the group competes, the
company is conveniently poised to continue tapping the expected nominal GDP
growth of 7-9% in the region over the next 10 years.
Chart 52: Market Share across categories and countries as of 31Q6

80.00% 73.3%
70.00% 67.4%
62.9% 64.5%
60.00% 55.4% 56.1%
53.2% 51.5%
50.00%
41.6%
40.00% 32.4%
28.3%
30.00% 24.4%
20.00% 16.7%
13.5%
10.00%
0.00%
Cold cuts Biscuits Chocolate Hot Milk Nuts Roast Coffee Soluble Pasta ICB Pastas Coffee Potato Chips Mexico ICB
confectionery Chocolate Modifiers Coffee
Chocolates Coffee TMLUC
Colombia Chile Mexico
Market Share 50% M.S
Source: Company reports and BTG Pactual. *ICB: Instant cold beverages
Figure 3: GEA Cross-Holding Structure as of 3Q16

29.0% T.S 9.8% C.S/T.S
35.1% C.S
34.8% C.S/T.S
7.5% T.S
2.8% C.S
Grupo Argos & Grupo Nutresa &
Grupo Sura
Subsidiaries Subsidiaries
9.7% T.S 12.3%

C.S 2.6% T.S 10.3% T.S
29.2% T.S 35.8%
3.1% C.S 12.7% C.S
C.S
46.8% T.S 24.2% T.S

55.3% C.S 45.7% C.S
Cemargos 2.1% T.S Bancolombia
4.0% C.S
6.3% T.S 20.6% C.S/T.S 7.8% T.S 4.5% T.S
52.9% 4.5%C.S
4.9% C.S
C.S/T.S
AFP Proteccion
Celsia 49.4% C.S/T.S
9.8% C.S/ T.S
Source: Superintendencia Financiera de Colombia, data as of 3Q16 (including only common shares). C.S = Common shares / T.S = Total Shares
Nutresa
Cold cuts: Prioritizing market share at the expense of EBITDA growth
Historically, this business unit has been the most important for Nutresa in terms of
sales (23.7% L12M) and EBITDA (24.9% L12M), although it was surpassed by
biscuits in 3Q16. Sales for this segment totaled COP2.060bn (US$710mn) in the
L12M, and came from Colombia (81.7%), Venezuela (12.5%), and Central America
(5.8%). Since 2011, this business unit strategy has focused on gaining market share,
up 5.5% to an unquestionable leadership position with 73.3% market share, via
pricing (+2.5% in L5Y). During the last 5 years, EBITDA has expanded by a
CAGR11-16e of 1% and EBITDA margin has contracted 200bps.
Chart 53: Cold Cuts EBITDA Mg and YoY growth Chart 54: Cold Cuts - Market Share evolution
14.5% 20.0% 100%
14.0% 90%
15.0%
13.5% 80%
10.0% Market Share - Colombia 70%
EBITDA YoY Growth
13.0%
EBITDA Mg
5.0% 60%
12.5%
50%
12.0% 0.0%
40%
74.3
73.7
73.7
73.7
73.5
73.5
73.3
73.3
73.3
73.4
73.3
73.2
72.9
72.9
72.9
72.4
72.3
71.9
71.3
68.8
73
73
67.8
11.5%
-5.0% 30%
11.0% 20%
-10.0%
10.5% 10%
10.0% -15.0% 0%
Mar 11
Jun 11
Sep 11
Dec 11
Mar 12
Jun 12
Sep 12
Dec 12
Mar 13
Jun 13
Sep 13
Dec 13
Mar 14
Jun 14
Sep 14
Dec 14
Mar 15
Jun 15
Sep 15
Dec 15
Mar 16
Jun 16
Sep 16
2011 2012 2013 2014 2015 2016e 2017e 2018e 2019e2020e
COLGAAP IFRS
Cold Cuts Mg Growth YoY Nutresa Private Labels other
Biscuits: Nutresas crown jewel on every front
In 3Q16, the biscuit unit ranked #1 for Nutresa in sales and EBITDA, representing
20.3% and 22.5%, respectively, of the groups figures. Sales in this segment totaled
COP1.720bn (US$593mn) in the L12M, and mainly originated in Colombia (50.8%),
Central America (24.3%) and the US (17.1%). The biscuit unit has been one of the
most resilient in terms of growth and profitability, with an EBITDA CAGR11-16e of
16.02%, L5Y EBITDA margin expansion of 230bps and 260bps market share growth.
Chart 55: Biscuits EBITDA Mg and YoY growth Chart 56: Biscuits - Market Share evolution
16.0% 35.0% 100%
14.0% 90%
30.0%
80%
12.0%
Market Share - Colombia
25.0% 70%
EBITDA YoY Growth
14.5
11.3
11.3
11.4
11.5
12.2
12.1
11.7
12.5
11.7
11.3
12.4
14.4
12.3
10.0%
13.3
13.8
15
12
EBITDA Mg
13
20.0% 60%
8.0% 50%
15.0% 40%
6.0%
56.1
55.9
30%
55.7
55.4
55.3
55.2
55.1
55.1
54.7
54.6
54.6
54.3
53.9
53.7
53.5
53.6
10.0%
53.1
53.1
53.1
52.8
52.4
56
55
4.0%
20%
2.0% 5.0%
10%
0.0% 0.0% 0%
Mar 11
Jun 11
Sep 11
Dec 11
Mar 12
Jun 12
Sep 12
Dec 12
Mar 13
Jun 13
Sep 13
Dec 13
Mar 14
Jun 14
Sep 14
Dec 14
Mar 15
Jun 15
Sep 15
Dec 15
Mar 16
Jun 16
Sep 16
2011 2012 2013 2014 2015 2016e 2017e 2018e 2019e 2020e
COLGAAP IFRS
Biscuits Mg Growth YoY NUTRESA NESTL MONDELEZ COLOMBINA KRAFT OTHERS
Nutresa
Chocolates: Nutresas #3 business
Sales in the chocolate segment totaled COP1.403bn (US$484mn) in the L12M,

accounting for 16.2% of the Groups L12M total revenues (EBITDA margin of 10.4%),
and came mainly from Colombia (61.9%), Peru (11.9%), Mexico (9.3%), and Central
America (6.3%). During the last 5 years, EBITDA posted a CAGR11-16e of 8.25%,
while EBITDA margin remained flattish at 11.2%. The company has leading market
share in table chocolates (62.9% M.S / -160bps in L5Y) and chocolate candies
(67.4% M.S / + 550bps in L5Y), and is number two in milk modifiers (24.4% M.S / -
200bps in L5Y).
Chart 57: Chocolates EBITDA Mg and YoY growth Chart 58: Chocolate candies - Market Share evolution
18.0% 40.0% 100%
24.748
21.4
21.5
23.6
24.2
90%
24.3
24.5
24.8
24.9
25.1
25.2
25.2
25.1
25.4
25.4
25.6
25.8
26.1
26.1
16.0%
30.7
32.9
35.1
30.0%
38.1
14.0% 80%
70%
EBITDA YoY Growth
12.0% 20.0%
EBITDA Mg
60%
10.0%
10.0% 50%
8.0%
40%
69.3
67.8
67.7
67.7
67.5
67.4
67.2
67.1
67.1
66.8
66.9
66.9
66.8
66.6
66.5
66.3
66.3
65.9
64.9
63.7
6.0% 0.0%
61.9
64
61
30%
4.0% 20%
-10.0%
2.0% 10%
0.0% -20.0% 0%
Mar 11
Jun 11
Sep 11
Dec 11
Mar 12
Jun 12
Sep 12
Dec 12
Mar 13
Jun 13
Sep 13
Dec 13
Mar 14
Jun 14
Sep 14
Dec 14
Mar 15
Jun 15
Sep 15
Dec 15
Mar 16
Jun 16
Sep 16
2011 2012 2013 2014 2015 2016e 2017e 2018e2019e 2020e
COLGAAP IFRS
Chocolates Mg Growth YoY NUTRESA COLOMBINA FERRERO MARS OTHERS
Coffee: Nutresa is breathing down Nestls neck
Sales for this unit totaled COP945bn (US$326mn) in the L12M, accounting for 10.9%
of the Groups L12M total revenues (EBITDA margin of 16.6%). As of 3Q16, sales
generated in Colombia accounted for 63.9% and the remainder from over 12 different
countries. During the last 5 years, EBITDA posted a CAGR11-16e of 19.4%, and
margins doubled to 17.4%. In roasted coffee, the company is leader in Colombia with
53.2% market share (-390bps in L5Y), while in soluble coffee (Colombia) Nutresa is
in a strong second place, only 140bps behind Nestl. In the last 5 years, the market
share difference between Nescafe and Colcafe narrowed by 380bps.
Nutresa
Chart 59: Coffee EBITDA Mg and YoY growth Chart 60: Soluble Coffee - Market Share evolution
20.0% 60.0% 100%
18.0% 90%
50.0%
16.0% 80%

14.0% 40.0% 70%
EBITDA YoY Growth
44.7
46.6
46.6
45.6
45.4
45.5
44.4
45.1
44.4
45.8
44.1
43.3
42.9
43.6
45.3
45
44
43
43
EBITDA Mg
12.0% 30.0% 60%

10.0% 50%
8.0% 20.0% 40%
6.0% 10.0% 30%
42.7
42.7
42.1
42.1
41.7
41.7
41.6
41.6
41.6
41.6
41.4
41.3
41.4
41.3
41.2
41.2
40.9
40.7
40.8
40.6
40.6
44
42
4.0% 20%
0.0%
2.0% 10%
0.0% -10.0% 0%
Dec 11
Dec 12
Dec 13
Dec 14
Dec 15
Mar 11
Jun 11
Sep 11
Mar 12
Jun 12
Sep 12
Mar 13
Jun 13
Sep 13
Mar 14
Jun 14
Sep 14
Mar 15
Jun 15
Sep 15
Mar 16
Jun 16
Sep 16
2011 2012 2013 2014 2015 2016e 2017e 2018e 2019e2020e
COLGAAP IFRS
Coffee Mg Growth YoY NUTRESA NESTL OTHERS
TMLUC: Still some homework to do
In August 2013, Nutresa acquired TMLUC, a Latin American food packager with a
presence in Chile and Mexico. The company mainly produces instant cold beverages
(ICB), pasta, coffee and snacks, and distributes them via a network of retailers (58%)
and mom & pops (36%). Sales for this unit totaled COP963bn (US$332mn) in the
L12M, representing 11.1% of the Groups L12M total revenues (EBITDA margin of
9.9% vs. 16.2% when acquired) coming from Chile (64.2%) and Mexico (18.8%).
Since the acquisition, EBITDA has grown by a CAGR14-16e of 6.57%, while margins
have collapsed by 650bps amid an environment where prices rose 47%.
Chart 61: TMLUC EBITDA Mg and YoY growth Chart 62: TMLUC - Market Share evolution
18.0% 16.0% 70.00%
TMLUC Market Share - Chile & Mexico
16.0% 14.0%
60.00%
14.0% 12.0%
50.00%
EBITDA YoY Growth
12.0% 10.0%
EBITDA Mg
10.0% 8.0% 40.00%
8.0% 6.0% 30.00%

6.0% 4.0%
20.00%
4.0% 2.0%
2.0% 0.0% 10.00%
0.0% -2.0% 0.00%

Dec 14
Feb 15
Apr 15
Jun 15
Aug 15
Oct 15
Dec 15
Feb 16
Apr 16
Jun 16
Aug 16
2011 2012 2013 2014 2015 2016e 2017e 2018e 2019e 2020e
COLGAAP IFRS
TMLUC Mg Growth YoY Chile ICB Coffee Snacks Mexico ICB Pastas
Ice Cream: EBITDA CAGR11-16e of 6.8%
Sales for this unit come exclusively from Colombia, and in the last twelve months
reached COP452bn (US$156mn), accounting for 5.2% of the Groups L12M total
revenues (EBITDA margin of 12.9%). In the last 5 years, EBITDA has increased by a
CAGR11-16e of 6.8%, and margins have fallen 210bps to a record low 12.7% in
FY16e.
Nutresa
Retail Food: Latest member of Grupo Nutresa
Recent acquisitions in the Caribbean (Helados Bon) and Colombia (El Corral) along
with the Starbucks JV (Alsea-Nutresa 20-year contract) have given Nutresa a
portfolio of over 780 retail food stores. Total sales reached COP653bn (US$225mn)
in the last twelve months, accounting for 7.5% of Nutresas total sales (EBITDA
margin of 14.5%). For 2016, we expect EBITDA to decline 3.7% YoY, and margins to
shrink 340bps. Most Colombian sales come from El Corral brand (approximately
80%), Leos (10%), and Papa Johns (8%). Nutresa hired a consultant coming from
Yum Brands to advise the company in the corporate strategy.
Chart 63: Ice cream EBITDA Mg and YoY growth Chart 64: Retail food EBITDA Mg and YoY growth
25.0% 50.0% 20.0% 14.0%
18.0% 12.0%
40.0%
20.0% 16.0% 10.0%
30.0% 14.0% 8.0%
EBITDA YoY Growth
EBITDA YoY Growth

EBITDA Mg
EBITDA Mg
15.0% 20.0% 12.0% 6.0%
10.0% 4.0%
10.0% 10.0% 8.0% 2.0%
0.0% 6.0% 0.0%
5.0% 4.0% -2.0%
-10.0%
2.0% -4.0%
0.0% -20.0% 0.0% -6.0%
2011 2012 2013 2014 2015 2016e 2017e 2018e 2019e 2020e 2011 2012 2013 2014 2015 2016e 2017e 2018e 2019e 2020e
COLGAAP IFRS COLGAAP IFRS
Ice cream Mg Growth YoY Retail Food Mg Growth YoY
Pasta: Sales have been stagnant in the last four years
Sales in the pasta segment, exclusively from Colombia, totaled COP280bn

(US$97mn) in the L12M, accounting for 3.2% of the Groups L12M total revenues
(EBITDA margin of 8.9%). During the last 5 years, EBITDA has increased by a
CAGR11-16e of 8.05%, but in the last four years growth declined by 8.7%. Margins,
on the other hand, remained flattish in L5Y at 9.4%. Nutresa is leader in this segment
with 51.5% (-220bps in L5Y) market share, 21pp above its closest competitor.
Chart 65: Pasta EBITDA Mg and YoY growth Chart 66: Pasta - Market Share evolution
16.0% 80.0% 100%
14.0% 90%
60.0%
80%
12.0%
40.0% 70%
EBITDA YoY Growth
30.2
30.1
30.1
30.1
30.2
30.1
30.1
30.5
29.7
30.7
29.5
29.1
29.7
28.4
29.4
28.9
30
29.8
28.9
10.0%
EBITDA Mg
20.0% 60%
8.0% 50%
0.0% 40%
6.0%
30%
53.7
-20.0%
52.6
52.6
52.3
52.2
52.2
52.1
51.9
51.9
51.9
51.6
51.5
51.4
51.5
51.1
50.8
50.5
50.5
50.6
50.6
50.2
51
51
4.0%
20%
2.0% -40.0%
10%
0.0% -60.0% 0%
Mar 11
Jun 11
Sep 11
Dec 11
Mar 12
Jun 12
Sep 12
Dec 12
Mar 13
Jun 13
Sep 13
Dec 13
Mar 14
Jun 14
Sep 14
Dec 14
Mar 15
Jun 15
Sep 15
Dec 15
Mar 16
Jun 16
Sep 16
2011 2012 2013 2014 2015 2016e 2017e 2018e 2019e 2020e
COLGAAP IFRS
Pasta Mg Growth YoY NUTRESA LA MUECA OTHERS
Nutresa
Risks
Competitive environment
Although Nutresa is the leader in most segments where it operates, we cannot

discard a more competitive pricing environment after two years of price increases.
International competitors like Nestl, Mondelez, Kraft, Mars and Ferrero tend to
compete rationally, but local and family-owned companies are more likely to engage
in price wars with the aim of increasing market share if they have enough financial
clout. In the case of Colombia, we consider that Colombina, Quala, Popsy (ice
creams) and La Mueca (pasta) could represent a threat to Nutresas market share.
FX depreciation
The company is negatively exposed to COP/USD depreciation and vice versa at the
P&L level, as 21.8% of revenues are generated in USD-linked currencies and total
COGS in USD account for 40-45%, resulting in an annual mismatch of US$300-
350mn (20-25% of this mismatch is hedged).
Commodity volatility
Although no single commodity accounts for more than 10% of total costs, volatility
may affect the companys margins. Due to weather conditions and/or geopolitical
risks, on some occasions Nutresas commodities have moved in tandem.
Macroeconomic backdrop
We expect the economy to bottom in around 1Q17, before it starts growing again. But
as is common with forecasts, recoveries tend to take longer than expected and this
could also be the case in Colombia, hampering sentiment.
Nutresa
Annex 1: Shareholder structure and corporate governance

Shareholder structure
Grupo Sura is the companys main shareholder, holding 34.8% of common shares,
followed by Grupo Argos with 9.8% and pension funds, which have 12.9% of common
shares. An indirect stake held by Suras pension fund takes GEAs total equity
interest to 49.1%. We believe this semi-controlling structure partly limits agency
costs, although ROEs and ROICs have been below Ke and WACC.
Do pension funds have room to increase their stakes in Grupo Nutresa?
It is no secret that local pension funds (PFs) have some restrictions to invest in
equities. One of them is that they cannot own more than 10% of the equity of any
company. In this sense, it is a relevant variable to track, and as of 3Q16, all four
pension funds are pretty comfortable in terms of allocation limits. If at some point
there is an equity offer, pension funds can participate in order to avoid any dilution.
Chart 67: Nutresas main shareholders as of 3Q16 Chart 68: How much additional room do the pension funds have?
12.00%
Other < 1% 10.00%

33.9% Grupo Sura
34.8%
Ownerhip of Nutresa
8.00%
6.02%
6.00%
4.45%
4.00%
Other > 1% 8.6% 1.72%

2.00%
0.67%
0.00%
Pension funds AFP 1 AFP 2 AFP 3 AFP 4
Grupo Argos 12.9%
9.8% Nutresa's Ownership % Maximum limit
Source: Superintendencia Financiera de Colombia and BTG Pactual Source: Superintendencia Financiera de Colombia and BTG Pactual
Equity flows: Who is buying and selling?
Over the past 30 months, the most active investors in Nutresa shares have been local
pension funds and corporates, with net buying positions of US$+85mn and net sales
of US$-66mn. For their part, foreign funds and brokers have posted similar net buying
positions in the US$40-50mn range, while retail investors, mutual funds and
insurance companies have now spent the last three years reducing their exposure to
Nutresa.
Nutresa
Chart 69: Grupo Nutresas equity flows

50 50
50
30 30
30 24 25 24
Nutresa total flows US$ Mn
10
10
(10)
(7)
(15) (12)
(30)
(30) (30)
(50)
(70)
(74) (74)
(90)
2014 2015 2016
Pension Funds Foreigners Retail Brokers Others
Source: BVC, BTG Pactual. *Fixed USDCOP @3,000
Corporate Governance
By Colombian law (Law #964 of 2005), the Boards of Directors of companies listed on
the Stock Exchange must be composed of between 5 and 10 members, of whom at
least 25% must be independent (>50% NYSE and >20% Bovespa Novo Mercado),
and the legal representative cannot be the Chairman of the Board of Directors. In
practice, the Board of Directors is independent at 60% of Colombian issuers on the
COLCAP 20, and at 71% in the GEA group (with the exception of Cementos Argos
and Odinsa) in accordance with local regulations. Nutresas Board of Directors (57%
independent members) and the Chairman are independent, and there is equitable
treatment for shareholders since the company only has voting shares.
Chart 70: Portion of independent members of the board of directors

100%
89%
90%
80%
BOD Independent members
80% 71% 71%

70% 67% 67%
57% 57% 57% 56% 55% 54%
60%
50% 44% 43% 40%
40% 33% 33%
29% 29% 29%
30%
20%
10%
0%
Canacol Energy
Grupo Argos
Cementos Argos
Banco de Bogot
Isagen
Celsia
Bancolombia
Nutresa
Avianca
xito
Grupo Aval
Davivienda
Corficolombiana
ISA
EEB
CLH
Ecopetrol
Grupo Sura
Odinsa
BVC
BOD Independent members Colombia by Law > 25% Brazil Novo Mercado>20% NYSE > 50%
Source: Company reports, BTG Pactual.

Nutresa
Chart 71: Who has non-voting shares in BVC?

100%
Common Shares vs Preferred Shares
90%
80%
70%
60%
47%
50%
40% 34% 31%
30% 23% 25%
18% 15%
20%
10% 6%
0%
Bancolombia
Banco de Bogot
Isagen
xito
ISA
CLH
Avianca Holdings
Grupo Argos
Cementos Argos
Canacol Energy
Grupo Aval
Ecopetrol
Banco Davivienda
Grupo Sura
Corficolombiana
Celsia
Grupo Nutresa
EEB
BVC
Non-voting Shares as a % of total shares Common shares as a % of total shares Max Amount of Non-voting Shares by Law
Source: Company reports, BTG Pactual.
Annex 2: Commodity Index and price trends of main raw

materials
Nutresas Index is a basket of commodities designed to track Nutresas raw materials
price evolutions. As of January 17 the commodity index futures contracts shows the
future curve is trending upward, reaching levels as high as 109 in 2020 (Jan/17 base
100), implying an expected annualized CAGR 16-20 of 2.2%. It is worth mentioning
that from the listed commodities 6 out of 11 are in uptrend and represent 45.34 % of
the composite. This basket is mainly composed of global references and it should
flagged that continental prices may differ.
Chart 72: Nutresa Commodity Index GNCI evolution in COP and in US$ Chart 73: GNCI Futures curve
165.00 110
155.00 109
Grupo Nutresa Commodity Index
145.00 108
135.00 107
GNCI Futures Curve
125.00 106
115.00 105
105.00 104
95.00 103
85.00 102
75.00 101
Dec 07
Aug 08
Apr 09
Dec 09
Aug 10
Apr 11
Dec 11
Aug 12
Apr 13
Dec 13
Aug 14
Apr 15
Dec 15
Aug 16
Apr 17
Dec 17
Aug 18
Apr 19
Dec 19
Aug 20
100
Jan 17
Apr 17
Jul 17
Oct 17
Jan 18
Apr 18
Jul 18
Oct 18
Jan 19
Apr 19
Jul 19
Oct 19
Jan 20
Apr 20
Jul 20
Oct 20
GNCI COP BTG IN COP GNCI USD BTG in USD

Source: Company Reports, Bloomberg, BTG Pactual Source: Bloomberg, BTG Pactual
Nutresa
Table 11: Gurpo Nutresa Commodity Index - Basket

Grupo Nutresa Commodity Index - Basket
Securities Weights Unit
Medellin Cattle Fair 11.37% $/Kilo
Yellow Sheet Pork Carcass (Urner Barry) 7.14% USD CENTS/P
Colombian Pork Farmers Association 13.25% $/Kilo
UB MSP, Mech. Sep. Chicken-Frozen-15-20% Fat, With Skin - USDA 5.86% USd/P
Soybean Meal Chicago 1.08% USD/S.Ton
Corn Chicago 1.08% USD/Bu
Soft Wheat Chicago 6.95% USD/Bu
Hard Wheat Kansas 8.11% USD/Bu
Bean Oil Chicago 0.60% USd/p
FOB Malasia Oil 5.88% USD/MTon
Sugar NY 7.84% USd/P
Sugar Londres 1.65% USD/mTon
Cocoa NY 8.54% USD/MT
Coffee NY 19.83% USd/P
Coffee London 0.82% USD/MT
Table 12: Global balance (supply/demand) of Nutresas commodities

WHEAT (Thousand Metric Tons) SOYBEAN (Thousand Metric Tons)
2013 2014 2015 2016 2017 Est. 2013 2014 2015 2016 2017 Est.
Total Supply 1002428 1051397 1082102 1122848 1166140 Total Supply 418910 450853 505968 524892 552566
Change %(y/y) -4.2% 4.9% 2.9% 3.8% 3.9% Change %(y/y) 3.3% 7.6% 12.2% 3.7% 5.3%
Total Consumption 824611 856468 864822 882361 912854 Total Consumption 363636 389026 427923 447705 470242
Change %(y/y) -2.8% 3.9% 1.0% 2.0% 3.5% Change %(y/y) 3.2% 7.0% 10.0% 4.6% 5.0%
Endig Stocks 177817 194929 217280 240487 253286 Endig Stocks 55274 61827 78045 77187 82324
Change %(y/y) -10.40% 9.62% 11.47% 10.68% 5.32% Change %(y/y) 3.81% 11.86% 26.23% -1.10% 6.66%
Stock/Usage Ratio 21.6% 22.8% 25.1% 27.3% 27.7% Stock/Usage Ratio 15.2% 15.9% 18.2% 17.2% 17.5%
Change In Price (y/y) -22.20% -2.56% -20.31% -13.19% Change In Price (y/y) -7.49% -22.34% -14.52% 14.38%
CORN (Thousand Metric Tons) PALM OIL (Thousand Metric Tons)
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Est.
Change %(y/y) -1.4% 13.8% 5.3% -0.4% 5.6% Change %(y/y) 8.6% 2.2% 5.0% -3.3% 5.7%
Change %(y/y) -2.1% 11.4% 3.0% -0.5% 5.7% Change %(y/y) 10.0% 2.0% 4.9% -1.5% 6.2%
Change %(y/y) 4.0% 31.3% 19.8% 0.3% 5.2% Change %(y/y) -4.6% 4.2% 5.6% -22.6% -0.7%
Change In Price (y/y) -39.6% -5.9% -9.6% -1.9% Change In Price (y/y) 5.73% -18.32% -14.77% 28.42%
SUGAR (Thousand Metric Tons) COFFEE (60-Kilogram Bags)
2013 2014 2015 2016 2017 Est. 2013 2014 2015 2016 2017 Est.
Total Supply 215,213 222,634 226,109 225,796 230,181 Total Supply 300,206 312,419 312,423 319,929 314,367
Change %(y/y) 2.5% 3.4% 1.6% -0.1% 1.9% Change %(y/y) 5.4% 4.1% 0.0% 2.4% -1.7%
Total Consumption 180,294 182,344 180,103 188,976 199,386 Total Consumption 264,986 271,410 269,394 285,138 281,060
Change %(y/y) -0.1% 1.1% -1.2% 4.9% 5.5% Change %(y/y) 2.3% 2.4% -0.7% 5.8% -1.4%
Change %(y/y) 18.41% 15.38% 14.19% -19.97% -16.36% Change %(y/y) 37.19% 16.44% 4.93% -19.15% -4.27%
Change In Price (y/y) -15.89% -11.52% 5.00% 28.02% Change In Price (y/y) -23.02% 50.50% -23.95% 8.17%
BEEF AND VEAL (Thousand Metric Tons (Carcass Weight Equivalent)) PORK AND SWINE (Thousand Metric Tons (Carcass Weight Equivalent))
2013 2014 2015 2016 2017 Est. 2013 2014 2015 2016 2017 Est.
Change %(y/y) 2.7% 1.1% -1.9% 0.7% 1.3% Change %(y/y) 1.5% 1.3% 0.2% -0.5% 2.4%
Change %(y/y) 2.8% 1.1% -1.9% 0.7% 1.4% Change %(y/y) 1.6% 1.2% 0.2% -0.5% 2.4%
Change %(y/y) -1.57% -6.08% -4.93% -2.43% -2.66% Change %(y/y) -2.51% 6.21% -4.14% -2.83% -0.15%
Source: United States department of Argriculture and BTG Pactual
Nutresa
Annex 3: GEA- Grupo Empresarial Antioqueo

GEA Grupo Empresarial Antioqueo
Brief history
In the 1970s, Colombian businessmen Santo Domingo, Ardila Lule and Michelsen
embarked on the largest acquisition spree ever seen in the country. As smaller
companies were absorbed into their empires and minority investors were driven
away, the CEOs of some of Antioquias largest regional corporations began
discussing the possibility of joining forces to defend their positions.
The decision to move forward with what was later termed enroque (castling in
chess) was likely fueled by Ardila Lulles purchase of Coltejer, another emblematic
Antioquia company, and Santo Domingos and Michelsens progressive accumulation
of stakes in Chocolates (now Nutresa). As such, the CEOs of Chocolates,
Suramericana and Cemargos began the push to create a crossholding structure that
would later incorporate several other emblematic companies in their region.
The process culminated in an asset swap in which Michelsen handed over his 35%
stake in chocolates in exchange for a package of GEAs non-core assets. GEA thus
managed to retain its independence and is now Colombias largest publicly-traded
conglomerate.
Chart 74: Cemargos ownership structure Chart 75: Grupo Argos ownership structure Chart 76: Celsias ownership structure
Other < Other Other
1% common Grupo 21.3%
25.6% 34.7% Sura
35.51%
Grupo
Grupo
Amalfi Argos
Argos Amalfi 52.9%
5.4% 55.3% 5.6% Pension
Pension Pension Nutresa funds
funds funds 12.4% 25.7%
13.6% 11.8%
Source: Superintendencia Financiera de Colombia, data Source: Superintendencia Financiera de Colombia, data Source: Superintendencia Financiera de Colombia, data
as of 3Q16 including only common shares as of 3Q16 including only common shares as of 3Q16 including only common shares
Chart 77: Grupo Suras ownership structure Chart 78: Bancolombias ownership structure Chart 79: Odinsas ownership structure
Others Others
Grupo
25.9% 1.5%
Other < 1% Argos
34.6% 29.9%
Cementos Grupo Sura
Argos 4.0% 45.7%
Cemargos Emmery Grupo

5.9% 4.8% Argos
Pension Pension 98.5%
Nutresa funds funds
12.7% 16.8% 19.6%
Source: Superintendencia Financiera de Colombia, data Source: Superintendencia Financiera de Colombia, data Source: Data as of 4Q16 including only common shares
as of 3Q16 including only common shares as of 3Q16 including only common shares
Nutresa
Nutresa 21 February 2017 page 41
Nutr esa
Income Statement (COPmn) 12/2011 12/2012 12/2013 12/2014 12/2015 12/2016E 12/2017E 12/2018E
Revenue 5,057,383 5,305,782 5,898,466 6,481,813 7,945,417 8,677,812 8,988,280 9,615,818
Operating expenses (ex depn) (4,489,251) (4,634,687) (5,065,639) (5,646,112) (6,969,863) (7,618,269) (7,909,802) (8,390,616)
EBITDA (BTG Pactual) 568,131 671,095 832,827 835,701 975,554 1,059,543 1,078,478 1,225,201
Depreciation (135,636) (149,983) (182,600) (159,598) (192,869) (208,117) (257,684) (310,711)
Operating income (EBIT, BTG Pactual) 432,495 521,112 650,227 676,103 782,685 851,426 820,794 914,490
Other income & associates 14,147 23,434 (6,185) 59,350 46,677 48,202 36,573 44,891
Net Interest (77,074) (58,426) (88,904) (158,776) (225,068) (313,702) (289,210) (248,185)
Abnormal items (pre-tax) 0 0 0 0 0 0 0 0
Profit before tax 369,568 486,120 555,138 576,677 604,294 585,926 568,157 711,196
Tax (113,919) (138,457) (174,487) 24,853 (167,140) (159,386) (151,087) (173,627)
Profit after tax 255,649 347,663 380,651 601,530 437,154 426,539 417,070 537,568
Abnormal items (post-tax) 0 0 0 (12,014) (6,335) (192) 0 0
Minorities / pref dividends (2,138) (2,156) (416) (2,290) (2,667) (3,905) (3,445) (3,685)
Net Income (local GAAP) 253,511 345,507 380,235 587,226 428,152 422,443 413,626 533,883
Adjusted Net Income 253,511 345,507 380,235 599,240 434,487 422,635 413,626 533,883
Tax rate (%) 31 28 31 0 28 27 27 24
Per Share 12/2011 12/2012 12/2013 12/2014 12/2015 12/2016E 12/2017E 12/2018E
EPS (local GAAP) 550.96 750.90 826.38 1,276.24 930.51 918.11 898.95 1,160.30
EPS (BTG Pactual) 550.96 750.90 826.38 1,302.35 944.28 918.52 898.95 1,160.30
Net DPS 342.00 360.00 396.00 432.00 462.00 498.00 541.94 585.69
BVPS 14,071.50 16,102.10 16,106.20 17,390.50 17,405.10 18,032.20 18,573.90 19,156.50
Cash Flow (COPmn) 12/2011 12/2012 12/2013 12/2014 12/2015 12/2016E 12/2017E 12/2018E
Net Income 253,511 345,507 380,235 599,240 434,487 422,635 413,626 533,883
Depreciation 135,636 149,983 182,600 159,598 192,869 208,117 257,684 310,711
Net change in working capital (32,432) 78,300 (60,738) (216,841) (258,862) (82,703) 172,899 (41,131)
Other (operating) 0 0 0 0 0 0 0 0
Net cash from operations 356,715 573,790 502,097 529,983 362,159 547,857 844,208 803,464
Cash from investing activities 0 0 (1,360,874) (349,090) (1,145,871) (374,322) (359,531) (384,633)
Cash from financing activities (59,090) (154,888) 1,124,174 (51,233) 737,410 91,724 (472,959) (398,630)
Bal sheet chge in cash & equivalents 59,698 98,725 123,666 (23,615) (105,799) 85,199 18,607 27,571
Balance Sheet (COPmn) 12/2011 12/2012 12/2013 12/2014 12/2015 12/2016E 12/2017E 12/2018E
Cash and equivalents 193,087 291,812 415,478 391,863 286,064 371,263 389,870 417,441
Other current assets 1,252,497 1,237,656 1,582,622 1,768,782 2,256,809 2,527,918 2,460,154 2,606,853
Total current assets 1,445,584 1,529,468 1,998,100 2,160,645 2,542,873 2,899,181 2,850,024 3,024,294
Net tangible fixed assets 1,009,855 1,135,785 1,456,074 2,963,335 3,383,722 3,442,072 3,543,919 3,617,841
Net intangible fixed assets 4,997,935 5,891,856 6,650,769 6,156,363 6,631,509 6,966,192 7,047,741 7,047,741
Investments / other assets 477,795 394,455 475,555 537,043 619,948 676,643 676,643 676,643
Total assets 7,931,169 8,951,564 10,580,498 11,817,386 13,178,052 13,984,088 14,118,327 14,366,518
Trade payables & other ST liabilities 643,271 706,730 990,958 960,277 1,189,442 1,377,847 1,482,983 1,588,551
Short term debt 0 0 407,588 455,480 1,059,660 862,925 806,426 773,795
Total current liabilities 643,271 706,730 1,398,546 1,415,757 2,249,102 2,240,772 2,289,409 2,362,346
Long term debt 679,598 690,354 1,589,149 1,688,797 2,034,604 2,552,204 2,385,102 2,288,592
Other long term liabilities 117,461 129,228 162,732 681,159 851,502 856,744 856,744 856,744
Total liabilities 1,440,330 1,526,312 3,150,427 3,785,713 5,135,208 5,649,720 5,531,255 5,507,682
Equity & minority interests 6,490,839 7,425,252 7,430,071 8,031,673 8,042,844 8,334,367 8,587,072 8,858,836
Total liabilities & equities 7,931,169 8,951,564 10,580,498 11,817,386 13,178,052 13,984,088 14,118,327 14,366,518
Company Profile: Financial ratios 12/2014 12/2015 12/2016E 12/2017E 12/2018E

EBITDA margin 12.9% 12.3% 12.2% 12.0% 12.7%
Operating margin 10.4% 9.9% 9.8% 9.1% 9.5%
Grupo Nutresa (created in 1920) is a Colombian company
involved in the packaged food sector that process, distributes Net margin 9.2% 5.5% 4.9% 4.6% 5.6%
and market food products mainly in the Americas. It is the fifth RoE 7.8% 5.4% 5.2% 4.9% 6.2%
largest publicly traded food company in Latin America, with a RoIC 7.4% 7.7% 7.8% 7.4% 8.2%
market cap of US$ 3.7 Bn, LTM revenues of US$ 2.9 Bn (3Q16) EBITDA / net interest 5.3x 4.3x 3.4x 3.7x 4.9x
and LTM EBITDA of US$ 348mn (3Q16). The Group has direct Net debt / EBITDA 2.1x 2.9x 2.9x 2.6x 2.2x
operations (plants and distribution centers) in 14 Total debt / EBITDA 2.6x 3.2x 3.2x 3.0x 2.5x
countries.Nutresa operates through eight business units and 45
Net debt / (net debt + equity) 17.9% 25.9% 26.8% 24.6% 23.0%
production plants: i) cold cuts, ii) biscuits, iii) chocolates, iv)
coffee, v) TMLUC (Tres Montes Lucchetti), vi) ice cream, vii) Source: Company reports and BTG Pactual estimates. Valuations: based on the last share price of that year(E)
pasta, and viii) retail food. based on share price as of 20 February 2017
Nutresa
Required Disclosures
This report has been prepared by BTG Pactual US Capital LLC.

The figures contained in performance charts refer to the past; past performance is not a reliable indicator of future results.
BTG Pactual Definition Coverage *1 IB Services *2

Rating
Buy Expected total return 10% above the companys sector 50% 50%
average.
Neutral Expected total return between +10% and -10% the 45% 40%
companys sector average.
Sell Expected total return 10% below the companys sector 5% 40%
average.
1: Percentage of companies under coverage globally within the 12-month rating category.
2: Percentage of companies within the 12-month rating category for which investment banking (IB) services were provided within the past 12 months.
Absolute return requirements
Besides the abovementioned relative return requirements, the listed absolute return requirements must be followed:
a) a Buy rated stock must have an expected total return above 15%
b) a Neutral rated stock can not have an expected total return below -5%
c) a stock with expected total return above 50% must be rated Buy
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Each research analyst primarily responsible for the content of this investment research report, in whole or in part, certifies that:
(i) all of the views expressed accurately reflect his or her personal views about those securities or issuers, and such recommendations were elaborated independently, including in relation to BTG
Pactual US or its affiliates, as the case may be;
(ii) no part of his or her compensation was, is, or will be, directly or indirectly, related to any specific recommendations or views contained herein or linked to the price of any of the securities
discussed herein.
The research analyst responsible for this report is registered/qualified as a research analysts by FINRA.
It is possible that research analysts contributing to this report are employed by a non-US broker-dealer. In this case the analysts will not be registered/qualified as research analysts under FINRA
rules and therefore will not be subject to the restrictions contained in the FINRA rules regarding communications with a subject company, public appearances, and financial interest in the securities
of the subject company.
Part of the analyst compensation comes from the profits of BTG Pactual US or its affiliates as a whole and/or its affiliates and, consequently, revenues arisen from transactions held by BTG Pactual
US or its affiliates.
Statement of Risk
Grupo Nutresa [CONUTRE] (Primary) - We believe the key risks are commodities volatility, USD/COP fluctuation, an already announced inorganic growth strategy and the competitive environment.
In addition, risks inherent to investing in emerging market countries. Potential emerging market related risks include, but are not limited to, the volatile nature of the currency, regulatory and
sociopolitical risk, and abrupt potential changes in the cost of capital and economic growth outlook. Valuations can also be affected by "contagion" from developments in other emerging markets.
Valuation Methodology
Grupo Nutresa [CONUTRE] (Primary) - Our target price for Nutresa is based on a discounted cash flow methodology which uses an equity risk premium of 5.75% and a perpetuity rate of 4%. We
use further support from a comparables analysis.
Company Disclosures
Company Name Reuters 12-mo rating Price Price date

Nutresa 1, 2, 4, 6, 18, 19, 20, 22 NUTRESA.SA Neutral COP24,280.00 21-2-2017
1. Within the past 12 months, BTG Pactual US or its affiliates has received compensation for investment banking services from this company/entity.
2. BTG Pactual US or its affiliates expect to receive or intend to seek compensation for investment banking services and/or products and services other than investment services from this
company/entity within the next three months.
4. This company/entity is, or within the past 12 months has been, a client of BTG Pactual US or its affiliates, and investment banking services are being, or have been, provided.
6. BTG Pactual US and/or its affiliates receive compensation for any services rendered or presents any commercial relationships with this company, entity or person, entities or funds which
represents the same interest of this company/entity.
18. As of the end of the month immediately preceding the date of publication of this report, neither BTG Pactual US nor its affiliates or subsidiaries beneficially owned 1% or more of a class of this
company`s common equity securities.
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20. Neither BTG Pactual US nor its affiliates or subsidiaries engaged in market making activities in the subject companys securities at the time this research was report was published.
22. BTG Pactual US or its affiliates or subsidiaries do not expect to receive or intends to seek compensation for investment banking services from the companies within the next 3 months.
Nutresa
Nutresa
Stock Price (COP) Price Target (COP)
35000.0
30000.0
25000.0
20000.0
15000.0
10000.0
5000.0
0.0
21-Feb-14
21-May-14
21-Aug-14
21-Nov-14
21-Feb-15
21-May-15
21-Aug-15
21-Nov-15
21-Feb-16
21-May-16
21-Aug-16
21-Nov-16
21-Feb-17
Buy
Neutral
Sell
No Rating
Source: BTG Pactual and Economatica. Prices as of 21 February 2017

Nutresa
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growth story to decelerate to a CAGR16-20 of 7.8% (fully organic), reflecting i) a 15,000.0

Financials (COPmn) 12/2014 12/2015 12/2016E 12/2017E 12/2018E

Resilient business model with room to lose some extra pounds 4

Growth story is cooling offhigh leverage keeps M&A in standby mode 11

How profitable has the cross-holding relationship with GEA been? 18

Grupo Nutresas blueprint 27

Annex 1: Shareholder structure and corporate governance 36

Annex 2: Commodity Index and price trends of main raw materials 38

Annex 3: GEA- Grupo Empresarial Antioqueo 40

Nutresa New long term diet: profitability

Table 1: Grupo Nutresa at a glance

Period 2015 2016e 2017e 2018e 2019e 2020e

Table 2: Valuation Metrics of Food and Retail Food companies

Resilient business model with room to lose some weight

Chart 3: Gross margins of LatAm food and retail food companies

Source: Bloomberg, company reports and BTG Pactual

1.0 0.7 0.8

33% 33% 33% 34% 34% 6% 1.5%

YoY Price change %

Targeting ROIC of 13% by 2020: wishful thinking?

13.00% 10.0% 12% 12% 13%

11% 10% 10%

16.0% 16.0% 200.0%

Leverage - Equity multiplier

ROE - Food Unit

15.0% 11.5% 80% 7.4% 80% 9.0%

11.5% 125% 11.6% 125% 14.1%

In addition, we believe Nutresa has room to improve operating margins by

Although we believe ROIC guidance is tough to achieve, we welcome managements

Chart 18: LatAm food packagers: SG&A as a % of total revenues

2014 2015 2016e 2017e LATAM 2017 Average

Source: Bloomberg, company reports and BTG Pactual

Growth story is cooling offhigh leverage keeps M&A in

10.0% 10% 172%

3,000 9.00% 9.6% 8.0%

2,500 7.00% 6.9% 6.0% 6.8%

400 361 8.0x

Source: Bloomberg, Company reports and BTG Pactual

Goodwill as a % of Assets and Mkt cap

Historically, Nutresa has been an underleveraged company with an average 2006-

Chart 28: Nutresas debt headroom is about to increase

Leverage - Net debt to EBITDA

COLGAAP COLGAAP IFRS

Source: Company reports and BTG Pactual

Net Debt to EBITDA

Where is Nutresa interested in growing its footprint?

Figure 1: Grupo Nutresa M&A strategy

Chocolates, ICB, *Productivity efficiencies *Through the TMLUC hub,

Source: BTG Pactual

Portfolio is tilting towards discretionary products: more risks but,

Figure 2: Consumer staples vs Consumer discretionary

Source: Company reports and BTG Pactual

For better or worse, Venezuelan turmoil is out of the picture

After three years of volatility and increasing political uncertainty, Nutresa

USD/VEF Black Market Venezuelan revenues as a % of total

How profitable has the cross-holding relationship with GEA

1.8% 1.3% 1.4%

Source: Company reports, Central Bank and BTG Pactual

Nutresa's average cost of debt 2005-2016 9.52%

600 515 60% 400,000

Chart 38: Last 10 years performance of different investment strategies

Portfolio as a % of total Assets & Market cap

Chocolates, ICB, Productivity efficiencies Through the TMLUC hub,

BTG Pactual Definition Coverage 1 IB Services 2