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. It is in times such as these that a company, in order to further its business, must put to the test its capacity to strengthen itself and trace new paths. In this economic climate, one has to assimilate the lessons and take advantage of the challenges presented in order to emerge strengthened and with renewed spirit. It has become ever more worthwhile for the Mecalux group to bolster our global position by expanding not only the catalog of products and services we offer, but also the territories in which we operate. In the future, only established industry leaders will be able to sustain profitable business in the market.
Since 2009, when we experienced a drop in sales due to the international recession, we have been preparing the foundation of our international rebound strategy. For Mecalux, this foundation revolves around three main axes: improved global diversification, innovation and technological development, and a solid and healthy financial status.
We have converted the strategic challenge of internationalizing the Mecalux group into specific opportunities. This means countries such as the United States will be weighing more heavily in our business. For example, in March 2009, Mecalux formalized the asset acquisition of the US companies UFC Interlake Holding Company, United Fixtures Company Inc, and Interlake Material Handling Inc. North American operations expanded to six production plants allowing the unified company, now known as Interlake Mecalux Inc., to effectively cover the entire US and Canadian territories.
We persevere in all innovation projects and technological developments with the ultimate goal of facilitating strategies that will not only be cost effective, but also provide robust storage centers always providing optimal performance. This will allow the Mecalux group to participate more often as a single-source exclusive supplier for industrial projects all over the world.
Maintaining a solid financial status will allow us to overcome this deceleration and best take advantage of future opportunities. A healthy balance sheet provides the financial support we need to face the difficult year ahead. It also permits the continuation of our investments in new product solutions available in our portfolio.
An uneven crisis
World industrial trade has contracted or actively cut back, and consequently, sales have suffered. Fortunately for all, the end of the economic decline has already begun in certain areas around the globe. In these circumstances the Mecalux group has been intensifying our efforts towards 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. Europe has been immersed in international stagnation, although to a much lesser degree than our own country, Spain. We consider our factory in Poland to be a strategic tool which will tend to the needs of the Central and Eastern European markets upon economic revitalization. Mercosur, the Southern Common Market, has experienced wavering revenue although financial recovery in Argentina and Brazil is anticipated in 2010.
The American Experience,
Our First Wager on Expansion
The Mecalux group considers the 2009 asset purchase of Interlake North America a key element of our future development. Our company acquired Interlake’s production plants in Pontiac (Illinois) and Sumter (South Carolina), the sales network and all industrial property rights among other assets. In addition, the procurement of all Interlake’s shares in the group’s Mexican affiliates, for control of the Mexicali and Matamoros factories, was completed. These additional resources represent a sizeable consolidation of the group’s sales and industry in the NAFTA region, providing the company greater development potential in this area.
We are convinced the United States will lead the recovery of our revenue in the next few years, which is why we are devoting a great deal of effort to this market. The US territory is vast, active and has enormous potential for the Mecalux group. Most attractive, however, is the fundamental value of the opportunity to integrate Interlake’s personnel, production and sales network.
The incorporation of Interlake assets has already proven to be positive in 2009. Undeterred by the crisis, the combination of Mecalux and Interlake increased the Group’s turnover in the NAFTA region by 15% from 2008, rising from 88 million euros to 100 million. Of this total, 67 million euros corresponded to the United States and the rest to Mexico. Likewise, the increased number of orders underscored our confidence in the region, which recorded a 51% rise (from 73 million euros in 2008 to nearly 110 million in 2009). We project this economic rebound to be consistent with the recovery forecast of 2010 for the region, especially as the synergy of the merged companies continues to flourish.
Research and Development:
Launching New Products through R&D
As a provider of premium storage system solutions, our objective is to assist our customers with streamlining their warehouse operations to make them as productive as possible. We stood true to our business goal and developed the best warehouse management system software available by relying on R&D, a pillar of our company strategy.
In 2009, the group increased investment in R&D by 21% to 2.9 million euros. As a result, our product portfolio has grown to include three new products in 2009: Clasimat®, an automated vertical lift module; Movirack®, a rack system which slides on mobile bases; and EasyWMS®, our own warehouse management software that is fast becoming the industry standard.
Warehouse Management Software,
Downloaded from the Internet
A few years ago, it would have been unthinkable that software used for warehouse management could be downloaded from the web without any technical assistance. Mecalux made it happen. A self-installable version of our EasyWMS® has been available for public download from our website since March 2010.
EasyWMS® is an accessible warehouse solution for any company because it is designed to be easy to install and affordable. Companies who have installed it see clear improvements in their operational tasks. This is due to EasyWMS® streamlining their warehouse’s overall efficiency by at least 50%.
Created, developed and registered entirely by Mecalux, the initiative to create a software solution was led by our technology center in Gijón and R&D department in Barcelona. Mecalux is a Gold Partner of Oracle and Microsoft, a Certified Partner of SAP, and EasyWMS® has been certified for Windows 7. These references provide our warehouse management software with the greatest guarantee in the industry in terms of technical quality standards.
Tender Offer to Delist
Since Mecalux is primarily supported by institutional shareholders, floating capital that does not belong to these shareholders is limited to 7.6% of total capital. As a result, shares have seen reduced trading, and thus limited liquidity.
In the best interest of the company, the Board of Directors proposed at the Shareholder’s Meeting to withdraw the company from the stock markets of Barcelona and Madrid. Those who wish to withdraw will approve a tender offer to delist the company at 15 euros per share. However, shareholders who wish to continue their confidence in Mecalux can retain the company’s corporate capital.
The Strength of our Employees
With much dedication and effort, the Mecalux group has become a global supplier of integrated storage solutions. Our customers count on us to convert their storage logistics into a strategic advantage and provide the service they need 365 days a year. As such, we have become an integral part of their business.
To persevere in this goal, we rely on our professional staff who remain dedicated to our customers and are capable of providing solutions for these new needs. Therefore, I wish to extend my gratitude for the accomplishments made by our staff and express my confidence in their work and technical expertise.
José Luis Carrillo
President