GRUPO INDUSTRIAL SALTILLO

3Q18 Conference Call

October 24, 2018

1

Forward Looking Statement

2

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

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

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

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

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

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

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

FINANCIAL EXPECTATIONS

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

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

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

MAIN HIGHLIGHTS &STRATEGIC OVERVIEW

3

JOSÉ MANUEL ARANA - CEO

3Q18 Scenario

4

• Three countries concluded negotiations

• Supports GISSA’s strong position

• Growth potential for the auto industry

• Capturing more than half of the

population to vote

• Rejecting the status quo

• No setbacks

Draxton Industry Overview

5

USMCA

• Strong position

• Attractive supply option

• Highly integrated in new regional content (above 90%)

60%

Revenues

Europe

+ China

Accelerating Transformation Process

6

• Launching its long-term Technology Plan for Draxton

• Increase competitiveness and adapt production processes to the needs of our clients

• Draxton will invest heavily in technology, research and development worldwide

• To meet sector challenges and technological trends

US$ 7 million

1% of yearly sales

Could potentially

double our investment

Construction Industry Overview

7

• Construction Industry performing well

• New government seeking to boost the

construction sector

• We expect to highly benefit from these

initiatives

• US increasing tariffs to tile imported from China

• Mexican economy has decelerated

• Domestic ceramic tiles contracted

• Housewares’ Mexican market facing exchange

rate & raw material increases

4Q18 & 2019

8

• Continue to implement our Strategic Plan

• Focus on Vitromex turn around process

• Increase shareholder value

FINANCIAL PERFORMANCE

9

JORGE MERCADO - CFO

3Q18 Challenges … Energy increases

10Sources: FEAF (Spain), CAEF (Europa), BDGUSS (Alemania), My Steel (China) / EEX

Spain Ind. Energy Cost

Czech Republic Ind. Energy Cost

Italy Ind. Energy Cost

0.0000

0.5000

1.0000

1.5000

2.0000

2.5000

3.0000

3.5000en

e-1

7

mar

-17

may

-17

jul-

17

sep

-17

no

v-17

ene-

18

mar

-18

may

-18

jul-

18

sep

-18

no

v-18

Sin horario punta Con horario puntaWith-peak tariff Off-peak tariff

Mxp

/kW

h

Mexico Industrial Energy Cost

3Q18 Challenges … Scrap

11Sources: FEAF (Spain), CAEF (Europa), BDGUSS (Alemania), My Steel (China) / EEX

Main Scrap References

Spain Germany Europe China

Scrap Metal (Busheling)

Mxp

/kW

h33

4 36

5

37

1

34

1 37

3

37

6

37

8

38

7

38

9

39

7

40

7

40

0

38

3

100

200

300

400

500

1Q

17

2Q

17

3Q

17

4Q

17

en

e-1

8

feb-1

8

ma

r-1

8

ab

r-1

8

ma

y-1

8

jun-1

8

jul-18

ag

o-1

8

sep-1

8

US

D/T

on

Consolidated Results

12

13%

15%15%

5,195

4,796

4,000

4,200

4,400

4,600

4,800

5,000

5,200

5,400

Q1 Q2 Q3

Sales Evolution

2017 2018

Ps Million

718

760

660

680

700

720

740

760

780

800

820

840

Q1 Q2 Q3

Fixed Expenses Evolution

2017 2018

One time benefitPs.58 million

Q3 vs Q2~(400) Ps MillionDraxton Driven

28% to 25%

• Platform replacement• Diesel vehicles sales temporary slowdown• US OEM global downsizing

29%

25%

Percentage = % Gross Margin

16% 16%

Percentage = Fixed Expenses to Net Sales

29%28%

3Q18 vs 3Q17

13

13%

15%15%

Ps Million

181

30

-50

40 60

Draxton Mx Draxton E+A Vitromex Calorex Cinsa

Net Sales

-28 -32

-109

18 7

Draxton Mx Draxton E+A Vitromex Calorex Cinsa

Gross Margin

-18

-73

-142

30

-8

Draxton Mx Draxton E+A Vitromex Calorex Cinsa

EBITDA

3Q17 3Q18 Var %

4,535 4,796 6%

3Q17 3Q18 Var %

1,153 924 (20%)

3Q17 3Q18 Var %

657 465 (29%)

Draxton Performance 3Q18 vs 3Q17

14

3Q18 3Q17 Change 9M18 9M17 Change

EBITDA 22 29 (24%) 89 92 (2%)Margin 14% 19% 18% 20%

North America 10 12 (16%) 39 39 1%Margin 15% 20% 20% 21%

Europe / Asia 12 17 (32%) 50 52 (5%)Margin 14% 19% 17% 19%

JVs 5 5 1% 16 14 11%Margin JVs 21% 23% 21% 26%

• Higher volumes in Irapuato + Surcharge

• Cost increases:‐ Scrap metals

‐ Ferroalloys

‐ Energy

‐ Launching of new parts

• One time benefit in 3Q17

• Temporary slowdown Diesel market - Europe

• Higher raw material & energy costs

• Scrap metal cost in China 50% rise:

‐ Environmental regulations

‐ Steel and foundry industries competing

EBITDA Draxton

29

1.4 0.3 1.6 2.53.8

22

201

7 E

BIT

DA

Vo

lum

e

Pri

ce

/ M

ix

En

erg

y

Non

-recurr

ing 3

Q1

7

Raw

Ma

teria

ls

201

8 E

BIT

DA

USD Million

Highlights NAFTA

Highlights EUROPE + ASIA

Vitromex Performance 3Q18 vs 3Q17

15

• Gradual improvements on overall efficiency

equipment

• Recovering US customers

• Reduction of Inventory

• Domestic sales growth

• Strengthening relationships with key distributors

• US volume contraction

• Lower average price from inventory

reduction strategy

• Lower fixed cost absorption

* Volume includes deleveraging and absorption

Net Sales 3Q18 919.7

Gross Margin 3Q17 250.4 28.8%

Price (59.9) (6.9)%

Volume / Mix (39.4) (4.5)%

Deleveraging (9.0) (1.0)%

Fx (4.9) (0.6)%

Gross Margin 3Q18 137.2 15.8%

Var. (113.2) (13.0)%

Calorex Performance 3Q18 vs 3Q17

16

• Growing construction industry

• Gained market share

• Brand reliability

• Operating efficiencies

Doubled EBITDA levels

Historical Greater EBITDA achieved in 4Q due to cycle

Exceeded Expectations

27

93

57

136

Q3 YTD

EBITDA Evolution

2017 2018

Ps Million

Cinsa Performance Overview

17

• Market dynamics remained strong

• Double-digit top line growth

• Higher gas and raw materials costs

• Steady growth pace

16

58

8

71

Q3 YTD

EBITDA Evolution

2017 2018

Ps Million

GIS Debt Position

18

• Total Debt USD 405 million

58% - USD

19% - EUR

23% - MXP

• Total Debt to EBITDA 2.9x

• Net Debt to EBITDA 2.5x

• Interest Coverage 5.1x

In line with the covenants set by the financial

institutions.

YTD Capex over Ps 500 Million – expect to reach around Ps 800 Million by year end.

Q&A

19

GRUPO INDUSTRIAL SALTILLO

3Q18 Conference Call

October 24, 2018

20