Grupo IMSA to Invest 218 Million in 2000

Grupo IMSA (IMSA), announced that it expects to invest US$218 million in the year 2000. The company's plan of capital expenditure for this year will be financed through internally generated funds and taking advantage of attractive financing alternatives from the countries where the equipment is acquired. The plan mainly contemplates investments in the maintenance and modernization of the group's facilities, in the improvement of the processes and productivity as well as in projects to expand Grupo IMSA's installed capacity.

The plan is broken down as follows:
IMSA ACERO US$148
ENERMEX US$ 31
IMSALUM US$ 21
IMSATEC US$ 18

One of the main projects of this year is in IMSA ACERO, where hot rolled steel capacity will be expanded by one million tonnes to reach a total annual capacity of 2.2 million tonnes by the first quarter of 2002. Total investment for this project, which also includes a 240 thousand tonnes per year increase in cold rolled steel capacity to be operative in the first quarter of 2001, is US$142 million, of which US$66 million are to be invested this year. An important increase in installed capacity can be obtained through the elimination of bottlenecks, so that only a marginal investment will be required. In addition to a significant expansion of the installed capacity, this project will also result in quality improvements and a wider product range for IMSA ACERO.

Santiago Clariond, CEO of IMSA ACERO, said: "Currently we are operating at one-hundred percent of our capacity in our non-coated product lines. Our products are almost entirely sold in Mexico, where demand for steel is expected to continue to grow and we are the only company that can substantially increase installed capacity without having to invest in a new and costly product line. Because of this, we expect our position within the industry to be significantly strengthened upon completion of this project."

Furthermore, the company will install a new US$17 million galvanizing and painting production line in Guatemala, which will thus become the largest in Central America. This new facility will increase IMSA ACERO's installed capacity in the region by 74 thousand tonnes to a total capacity of 150 thousand tonnes per year. Through this project IMSA ACERO is expected to consolidate its leadership in the region.

Two additional projects, through which IMSA ACERO's position in the automotive and industrial markets will be further strengthened, are the installation of a facility to process non-coated steel products and a new service center to process coated steel products, both in the north of Mexico. With these facilities, the company will be able to offer improved service to its customers, while at the same time better complying with the high specifications and growing needs of the market.

One of the most important projects for the aluminum products segment is a new extrusion plant in Mexico City, for which construction started in 1999 and that is expected to become operative in the first months of 2000. The new facility will increase IMSALUM's aluminum extrusion capacity by 20 percent.

Arturo Mendez, CEO of IMSALUM, commented: "This year, we will make the necessary investments to expand, modernize and increase the installed capacity of the existing aluminum extrusion plant in Monterrey. The additional capacity will result in higher productivity and flexibility of our operations, which in turn will allow us to improve how we serve the market by reducing lead times, improving punctuality and delivering complete purchase orders, all elements that are key to success in this business."

This year, most of the plan of capital expenditure at ENERMEX will be in the modernization of the company's facilities. Felipe Muzquiz, CEO of ENERMEX, said: "In 1999 and 2000, most of our investments are directed at assuring that our plants are as competitive as the best plants in the world. We have implemented the best administrative and operational practices of our partners and adapted our operations to meet the specifications necessary to continue strengthening our leadership in Mexico, at the same time as we keep penetrating the North, Central and South American markets."

In order to strengthen its presence in the electricity transmission market, in 2000 FORMET will conclude the construction of a new electric transmission metallic pole plant, which requires a total investment of US$6 million. Benjamin Clariond, CEO of IMSATEC, affirmed: "As a result of the fast-paced development of the urban areas of Mexico, electric transmission lines are becoming shorter, so that the use of metallic poles is more efficient. While in rural areas transmission towers are more common, metallic poles are employed in urban areas because they occupy less space. Thus, the rationale for the construction of the new electric transmission metallic pole plant."

Marcelo Canales, Chief Financial Officer of Grupo IMSA, commented: "With this capital expenditure, we expect to continue our growth trend as we prepare for the positive developments of the markets in which we participate. Additionally, our investment plan for this year is earmarked to improve our distribution capabilities and the quality of our products so that we continue to be at the forefront of these industries."

GRUPO IMSA, a holding company, was founded in 1936 and is today one of Mexico's leading diversified industrial companies. The Group operates in four core businesses consisting of steel processing products; automotive batteries and autoparts; aluminum and other related products; and, construction and related products. With manufacturing and distribution facilities in Mexico, the U.S. and throughout Central and South America, Grupo IMSA currently exports to over 30 countries worldwide. In the last twelve months up to September 1999, the Group's revenues reached US$1.75 billion, of which 40 percent were generated outside Mexico.