The Mecalux Group continues to grow thanks to its expansion in new markets and investment in automated storage for warehouses. The increase in sales was across the board in all markets and represented a rise of 82% from 292.5m euros in 2005 to 531.1m euros in 2006. It should be remembered that Mecalux consolidated the Esmena Group which entailed a contribution to the consolidated business results of 154.2m euros. The growth of sales of the Mecalux Group without Esmena was 29%, slightly above that achieved by Esmena which was 21%. Moreover, net profit increased by 56%, rising from 30.9m euros to 48.2m euros.
More profitability for the company
EBITDA (Earnings Before Interests, Tax, Depreciation and Amortization) was 70m euros representing a 66% increase over the previous year's result of 42.1m euros. Mecalux’s profitability improved by taking advantage of economies of scale, enabling the company to grow and expand, and by increasing the use of production facilities. EBIT (Earnings before interest and taxes) were 50.1m, with a rise of 61%.
Increase in the company’s presence in international markets
Mecalux’s sales continued to increase in all the markets in which operates and the company expanded its presence in the markets it has most recently moved into. In Southern Europe this increase was 22%, in other European markets 61%, in the NAFTA area 41% and in South America 35%.
Sales increased very significantly in Europe in general with a 22% rise in Southern Europe and 61% in the rest of European markets, in the latter above all thanks to the boost in sales in the Polish market. Also worth mentioning is the excellent growth of sales of automated warehouses after the buyout of the ThyssenKrupp Group subsidiary. The sales of automated warehouses, already consolidated in Spain, rose thanks to the orders from Central and South America along with different projects in France and the business activity of Eastern Europe. Here, the new production plant in Poland devoted exclusively to the manufacturing of components and devices for warehouse automation represented a new boost in sales and a closer service to new markets.
North American markets rose from 60.9m euros in sales in 2005 to 86.0m euros in 2006. This increase was 51% in the US and 28% in Mexico, in both cases in local currency.
In Argentina, the Mecalux Group is market leader and boosted its sales by 40%, while in Chile sales increased by 76%.
Distribution of sales by areas: increase in geographical diversification
In 2006 the distribution of sales was 61% in Southern Europe, 14% in other European markets, 17% in the NAFTA area and 8% in South America representing an increase in the geographical diversification of the group’s operations.
Mecalux group invests 36.5m euros in different projects
New production plant for automated warehouse equipment in Gliwice, Poland. In 2006 the Group reached the necessary critical mass in this area of business in order to justify the building of a dedicated production centre with 20,000 m2, which are added to the already existing surface area of 35,000 m2. Factors which have influenced the choice of this location are the possibility to receive fiscal aid from the Polish government, the improved production costs and the geographical proximity to the rapidly developing countries of Central and Eastern Europe. This will allow Mecalux to offer a better and closer service to these countries. The production plant is set to come into operation during the first half of this financial year.
Enlargement of Esmena’s factory in Gijón.The sharp increase in the sales of the Group and the good outlook for the future have made it necessary to increase production capacity in the markets of Southern Europe. As a result, the current production plant is to be enlarged by 15,000 m2, from the existing surface area of 32,000 m2. In addition, the Group aims to increase the integration of Esmena’s production in order to improve its margins and bring them up to the levels of Mecalux. Part of this investment, which is to be carried out over the next three years, is supported by a grant from the Asturian Government, which will reduce the investment burden of the Group.
Mecalux’s Chicago plant has been increased from the current 25,000 m2 by a further 10,000 m2. This is in response to the need to expand production given the growth of sales in this market.
Increase in net equity
The company’s net equity increased from 168.7m in 2005 to 202.2m in 2006. The net debt of the group increased slightly to 175.9m euros, due to the sharp increase in sales and its impact on working capital and also due to the investments noted above. However, the percentage of net debt over net equity fell from 0.89 to 0.87.
Purchase of a call option on the US company UFC Interlake Holding Co
Mecalux started the year with a strong commitment to internationalisation and to the American market when it announced on 11th January 2007 the purchase of a call option on UFC Interlake Holding, Co, a US holding company which is formed by the companies United Fixtures Company, Inc and Interlake Material Handling, Inc, one of the principal suppliers of storage systems in the United States. The purchase of the call option by Mecalux responds to a strategy aimed at strengthening its presence in the US market and consolidating its position as global supplier of automated storage systems at a world level. In the event that it decides to exercise this call option in 2008, the Mecalux group would have an estimated invoicing of more than 1,000 million euros, with an EBITDA of more than 140 million euros. It would become the second supplier of storage systems at a world level with a very advantageous position for the development of technology of automated storage and its implementation in all world markets. Mecalux paid 7.5 million dollars to exercise the call option.
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