Alfa SAB’s Sigma Delivers Record Revenue Amid Cost Pressures

Alfa SAB de CV Class A ((MX:SIGMAFA)) has held its Q4 earnings call. Read on for the main highlights of the call.

Alfa SAB de CV’s food unit Sigma delivered a mixed but generally upbeat earnings call, combining record sales and a second straight $1 billion comparable EBITDA year with acknowledged pressure from raw materials, FX and taxes. Management framed 2025 as a year of operational resilience and heavy investment that sets up moderate, profitable growth into 2026.

Record Annual Revenue Milestone

Sigma crossed a key threshold in 2025 as revenue reached $9.3 billion, its first time above $9 billion and a 4% increase year-on-year. Management credited favorable FX translation, selective price hikes and stable volumes, underscoring that growth was not just inflation-driven but supported by resilient demand.

Fourth Quarter Top Line Acceleration

The year ended on a strong note as Q4 revenue climbed to $2.5 billion, up 12% from the prior year and 2% sequentially, showing broad-based momentum. Mexico led the charge with 21% growth in U.S. dollars and 10% in pesos, while Europe rose 11%, the U.S. inched up 1% and Latin America added 2%.

EBITDA Strength and Margin Discipline

Comparable EBITDA held at $1.0 billion for the full year, in line with guidance and marking the second consecutive year at that level despite sharp cost pressures. In Q4, comparable EBITDA jumped 34% year-on-year to $284 million, signaling improving profitability trends and tight cost discipline as pricing caught up with inflation.

European Profitability Back on Track

Europe emerged as a bright spot with a clear recovery in underlying earnings, as comparable EBITDA there topped $100 million for the first time since 2021. Branded volume growth and agile production reallocation following flooding at the Torrente plant helped restore margins and demonstrate operational flexibility.

Volume Resilience Amid Pricing Actions

Sigma managed to keep 2025 volumes at record highs even as it pushed through substantial price increases to offset raw material inflation. Management argued that stable volumes across regions and channels showed the strength of the company’s brands and categories, and limited evidence of demand destruction.

Solid Liquidity and Leverage at Target

On the balance sheet, net debt rose to $2.7 billion, up 9% year-on-year, but leverage held at 2.5 times net debt-to-EBITDA, consistent with Sigma’s long-term target. The company closed the year with $643 million in cash and about $1.5 billion in total liquidity including committed credit lines, providing flexibility to fund investment plans.

Capital Allocation and Shareholder Returns

Sigma remained active on capital returns, distributing $35 million in dividends in Q4 and $119 million over 2025, and the board plans to propose $150 million in cash dividends for 2026. At the same time, CapEx surged 47% to $362 million last year and is set to rise further, signaling a priority on growth and modernization alongside steady payouts.

U.S. Business Builds Momentum

The U.S. segment posted its second-highest EBITDA on record and delivered a record fourth quarter, underscoring ongoing momentum in that market. Management highlighted deeper penetration of Hispanic brands into mainstream national accounts and ongoing efforts to revitalize the broader category as key drivers.

Persistent Raw Material and Cost Pressures

A central theme of the call was inflation, with Sigma absorbing more than $400 million in additional costs in 2025 and using pricing to recover much of the pressure. Management warned that raw material volatility, including swings in turkey prices, remains a key risk to margins even as recent trends show some easing.

Higher Net Debt from Investment and Working Capital

The increase in net debt was tied mainly to higher working capital needs and the sharp step-up in CapEx, rather than underlying weakness in the business. While leverage stayed at target levels, management acknowledged that a larger debt load increases sensitivity to earnings swings and reinforces the need for disciplined execution.

Tax Rate and FX-Driven Earnings Volatility

Investors were reminded of another source of noise as the fourth quarter tax rate spiked to around 45%, mainly driven by FX gains and losses linked to the appreciation of the Mexican peso. This dynamic introduced extra volatility in reported earnings, even though it does not reflect deterioration in operating performance.

Latin America Still a Drag

Latin America was the laggard region in 2025, hampered by supply chain issues and demand planning missteps that weighed on volumes and profitability. Although management reported sequential EBITDA improvement, they were clear that a fuller recovery is only expected in 2026, with mid-single-digit volume growth targeted.

European Capacity Constraints and Restructuring

Flooding at the Torrente facility forced Sigma to relocate production and operate under temporary capacity constraints, though service levels were largely maintained. In Spain, the company is restructuring its Fresh Meat business and pursuing a divestment that will reduce volumes but is expected to lift margins once completed.

FX and Commodity Market Volatility

Management repeatedly stressed that both guidance and actual results remain sensitive to currency moves and commodity swings, particularly in protein markets. With the peso and key inputs like turkey showing recent volatility, Sigma framed its outlook using multiple FX scenarios and cautious assumptions on raw material normalization.

CapEx Step-Up and Cash Flow Trade-Off

The sharp rise in CapEx to $362 million in 2025, and the planned increase to $460 million in 2026, underscores Sigma’s commitment to capacity expansion and modernization. However, executives acknowledged that this investment wave weighs on short-term cash flow and contributes to the buildup in net debt, even as it aims to unlock future growth and efficiency.

Forward-Looking Guidance and 2026 Outlook

For 2026, Sigma guided to a modest but constructive growth profile, targeting around 2% volume growth, 4% revenue expansion and a 5% rise in EBITDA, with Europe expected to post double-digit EBITDA gains. The plan assumes higher CapEx for capacity in the Americas and recovery in Torrente, stable leverage near 2.5 times, multiple FX scenarios and a gradual easing in protein costs alongside mid-single-digit volume improvement in Latin America.

Sigma’s earnings call painted the picture of a company balancing strong commercial performance with external headwinds and heavy investment. Record revenue, resilient volumes and improving European profitability offset concerns about cost inflation, FX and Latin America, leaving investors with a cautiously optimistic view of the path into 2026.