Letter from the President
Reinventing Storage
Once again, I have the opportunity to share with you our company’s balance sheet from the past fiscal year. In times such as these, a company must put to the test its capacity to strengthen itself and trace new paths which continue furthering its business. These are moments when one has to assimilate the lessons and take advantage of the challenges set before us by the current economic circumstances in order to emerge unscathed, strengthened, and with renewed spirit. In this line of thought, it has become ever more worthwhile to bolster the global position of Mecalux by expanding both the catalog of products and services we offer our customers and the territory where we operate. In the future, only companies at the forefront will still be able to profitably and sustainably do business in the market.
It cannot be denied that 2009’s figures reveal a drop in sales due to the international recession, but it is now when we must prepare the bases over which we will be establishing our international rebound strategy. For Mecalux, these bases revolve around three main axes: better internationalization and geographic diversification, meaning countries such as the United States will be weighing more heavily in our business; innovation and technological development, whose purpose lies in streamlining our customers’ warehouse at the smallest level of investment possible; and finally, a solid and healthy financial status that allows us to overcome this deceleration and best take advantage of future opportunities.
The internationalization of our group has always constituted a strategic challenge for us, and it is now when we must consolidate it. This is especially true of the United States, by taking advantage of the opportunity given to us through our 2009 acquisition of Interlake. The continuation of all our innovation projects and technological developments will allow Mecalux to participate more often as a single-source exclusive supplier for industrial projects all over the world. A healthy balance sheet will help us face the difficult year ahead from a financial standpoint, while maintaining our investment in new solutions available in our products portfolio.
An uneven crisis
World industrial trade has contracted or actively been cut back. As a consequence, we have witnessed how, inevitably, the sales of our equipment have suffered from the crisis, whose end has already begun to unfold in certain areas around the globe. It is in these circumstances that we have been doubling down on Mecalux’s geographic diversification, a challenge undertaken for many years. Despite its global nature, the scope of the crisis has not been the same in all countries, which in turn means the economic recovery bound to occur will also not be the same. Unfortunately, Spain has been one of the hardest hit markets.
Europe as well has been immersed in this international stagnation, although to a much lesser degree than our own country. In this sense, we consider our factory in Poland to be a strategic tool which will attend to the needs of Central European markets and those of Eastern Europe when the economy starts to recover. Another market which has seen its revenue waver is Mercosur, despite good expectations of recovery in Argentina and Brazil for 2010, particularly the latter.
The American experience, our first wager on expansion
In 2009, Mecalux purchased the assets of Interlake in the United States and Mexico, which it considered the key towards its future development. As a consequence of this acquisition, our company took control over Interlake’s production plants in Pontiac and Sumter, sales network, and the industrial property rights, among other assets, plus all the company’s shares in the group’s Mexican affiliates, owners of the Mexicali and Matamoros factories. All these additional resources have signified a sizeable consolidation of Mecalux’s sales and industry in the NAFTA region, leading the company to greater development potential in this area.
We are convinced, which is why we are devoting a great deal of our efforts, that the United States will lead the recovery of our revenue in the next few years, not only due to the volume and potential of such a vast active market, but fundamentally as a result of the excellent opportunity that the integration of Interlake’s human resources, production and sales network to the Mecalux Group.
This positive incorporation of Interlake assets has already been confirmed in 2009, as despite the crisis, the combination of Mecalux and Interlake managed to increase the Group’s turnover in the NAFTA area from 2008 by 15%, rising from 88 million to 100 million euros. Of this total, 67 million corresponds to the United States and the rest to Mexico. Likewise, the increased number of orders underscores this wellfounded confidence in the area, which recorded a 51% rise (from 73 million euros in 2008 to nearly 110 million in 2009). This significant rebound in 2009 should continue in 2010, reaping the benefits of the expected recovery forecast for the region and the synergy of resources due to the merger of both businesses.
R+D: launching new products
Our objective as a company offering storage solutions is to streamline as much as possible the area our customers devote to warehousing to make them as productive as possible. This is why we have concentrated on developing the best warehouse software available, relying on R+D, a pillar of our company strategy.
In 2009, despite the decline in business, the group has continued investing in R+D, which increased by 21% to reach 2.9 million euros. Thus investment has allowed our company to bolster our product portfolio even further. The great sensation is EasyWMS®, fast becoming an industry standard, which features several versions from the simplest to the most complex and customized. Some of the other products developed in 2009 include the remarkable Clasimat®, an automated vertical storage system, and the Movirack®, a compact automated warehouse which slides over moving bases.
Warehousing software, downloaded from the Internet
A few years ago, it would have been unthinkable that software used for storage purposes, something that seemed so complicated, could be downloaded from the web without any help from technical support. Mecalux has made it happen. Since March our company has provided the opportunity to download from our website a self-installable version of our warehouse management software, EasyWMS®. This new version has been designed to be an even more accessible warehouse solution for any company, thanks to its easy installation process and reduced cost. Companies who install it find the software ostensibly improves their warehousing tasks by streamlining a warehouse’s overall efficiency by at least 50%. Created, developed and registered entirely by Mecalux, this software drive has been led by our technology centre in Gijón and R+D department in Barcelona. The software’s quality, guarantee and technical standards have been backed by top-ranking companies. Mecalux is a Gold Partner of both Oracle and Microsoft, a Certified Partner of SAP, and the software has been certified for Windows 7. These references situate EasyWMS® as the warehouse management software with the greatest guarantee in the industry in terms of technical quality standards.
Tender offer to delist the company
Given that the shareholder structure of the company is organized around institutional shareholders, the floating capital that does not belong to these shareholders is limited to 7.6% of the total capital. As a consequence, the share has seen reduced trading, and thus limited liquidity.
With the purpose of not having these circumstances damage the reputation of the corporation in the stock market, the Board of Directors decided to propose at the Shareholder’s Meeting an offer to withdraw the company from the stock markets of Barcelona and Madrid. Nevertheless, shareholders who wish to continue their confidence in the Mecalux project can retain the company’s corporate capital. On the contrary, those who wish to withdraw will approve launching a tender offer to delist the company at a price of 15 euros per share.
The strength our employees
With much dedication and effort, we have become an integrated supplier of global storage solutions, providing our customers the services they need 365 days a year. In an ever-more connected world, it is essential to count on companies capable of converting storage logistics into a company’s strategic advantage. To persevere in this goal, we must rely on a professional staff as implicated as we are, capable of providing a response to these new needs. From here I wish to extend my gratitude for the efforts made by our staff and my confidence in their work and technical expertise.
José Luis Carrillo
President