Letter from the President

José Luis Carillo. 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 advance its business, must test its resolve 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 rejuvenated. 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 the international recession forced a sales drop, we carefully poured over the foundation of our three-axis international rebound strategy - improved global diversification, innovation and technological development, and a solid and healthy financial status – but more than planning this strategy, we stand as one of the few businesses that enacted and benefited from such a plan.

We have converted the challenge of internationalizing the Mecalux group into specific opportunities. This means countries such as the United States will increase their role 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 all of the U.S. and Canada.

Through the company’s continued innovation and technological developments, the Mecalux group has positioned itself as a leading facilitator of cost-effective, high-performance storage solutions. Additionally, this positioning will allow the Mecalux group to reinforce its role as a single-source exclusive supplier for industrial projects all over the world.

An uneven crisis

World industrial trade has condensed and cut back, consequently, impairing sales. Fortunately the global economy has already seen an upturn in some areas. It is in these places that the Mecalux group has intensified its efforts towards geographic diversification.

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 in total than Spain. We consider the factory in Poland to be a strategic tool designed to shepherd 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 has improved.

The American Expansion

The Mecalux group considers the 2009 asset purchase of Interlake North America a key element of its future development. The company acquired Interlake’s production plants in Pontiac, Illinois, and Sumter, South Carolina, including, among other assets, the sales network and all industrial property rights. In addition, the procurement of all Interlake’s shares in the group’s Mexican affiliates 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.

The incorporation of Interlake assets proved to be immediately positive. In 2009, undeterred by the crisis, the combination of Mecalux and Interlake increased the Group’s turnover in the NAFTA region by 15 percent from 2008, rising from $122 million to $139 million. Of this total, $93 million 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 percent rise (from $101 million in 2008 to nearly $153 million in 2009). We project this economic rebound to be consistent with the recovery forecast for the region, especially as the synergy of the merged companies continues to flourish.

Launching New Products through R&D

As a premium storage system solutions provider, the company’s objective is to assist customers with streamlining their warehouse operations, and making 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 percent to $4 million. As a result, our product portfolio grew to include three new products that year: 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.

Downloaded from the Internet

A few years ago, it would have been unthinkable to download warehouse management software without technical assistance. Mecalux made it happen. A self-installable version of the EasyWMS® has been available for public download from this website for over a year.

EasyWMS® is an accessible warehouse solution for any company because it is designed to be simple 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 percent.

Created, developed and registered entirely by the Mecalux group, 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 the Mecalux group’s warehouse management software with the greatest guarantee in the industry in terms of technical quality standards.

The Strength of our Employees

Through 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 expertise.

José Luis Carrillo