The construction and cement sectors in Mexico, during the fiscal year 2016, maintained the level of the previous year. The domestic market, consumption, and investment had a good performance; regardless of the 19.2% depreciation of the peso against the American dollar. For Corporacion Moctezuma®, it meant an important progress of its Continuous Sustainable Evolution.
National and international uncertainty prevailed in the economic environment of 2016. The American dollar appreciation with respect to most of the currencies, the international fall of oil during the first months and its further partial recovery, the Brexit referendum, the result of the elections in the United States, and several armed conflicts resulted in a high volatility that affected several countries, mainly emerging economies. In Mexico, the aforementioned adverse caused the Federal Government to cut public spending and, as a consequence, the cancellation of important infrastructure works that had already been announced.
After 2015, the combination of different factors made record results possible for our company, we had clear it would not be easy to exceed them in 2016, even more in such a complex environment. Nevertheless, strong investments from the private sector caused a great demand for cement and a recovery on its price, which was reflected in a 14.2% increase on 2016 sales, compared to the previous year.
During the first half of 2016, energy costs were kept low and on the second half of the year, they recovered a good part of its adjustment, for a 34.5% growth in the annual variation of the net profits. Its operation profit recorded an increase of 34.7% in 2016 compared with the previous year. The EBITDA increased 34.4% in 2016 with respect to the previous year. The previously described factors and keeping very low levels of debt with cost reflected a 41.7% growth on the 2016 net profit compared to what was reported in 2015.
We compensated our shareholders with two dividend payments that made up for $3,521.2 million or $4.00 pesos per share, promptly complying with the scheduled investments, keeping a solid economic position and the best margins of the sector.
In May 2014, the Board of Directors approved building a second cement production line in the Apazapan, Veracruz plant, project completely financed with their own resources.
As scheduled, at the end of 2016 the production of clinker started on this new line which capacity for producing approximately 1.4 million tons of cement will help them to lighten the load of other production lines that throughout 2016 basically worked at full capacity to satisfy the market needs.
The new cement production line has important advantages, among which: extremely efficient cost per ton, appropriate technical performance, strategic location that allows an easy access to the port of Veracruz for cement sea freight and exportation, besides having access to the railroad network, which allows an efficient shipping cost within the national territory.
We made important actions regarding work safety for raising awareness that every worker is responsible for the safety. In this year we implemented the program "Work Safety through Preventive Observation", in which every employee becomes a safety inspector to generate a work safety culture.
Our company works towards creating a safer environment, with the contribution of employees, they expect to make progress on this topic. Nevertheless, they will never be satisfied with work safety, and we are aware there will always be room for improvement.
During this year, we paid more attention to outstanding subjects for our Stakeholders, giving follow-up to materiality studies carried out and we opened the doors of their cement plants for neighboring communities, with a positive and rewarding response.
Regarding social responsibility, we continue and improved our actions in favor of health, education, and training for work in socially disadvantaged groups of communities near our main plants, contributing so the inhabitants can achieve a better quality of life.
The commitment of Corporacion Moctezuma®'s in environmental matters, reflected in our modern plants, was strengthened with programs for optimizing our processes and improving, even more, the use of clinker per ton of cement with all the environmental benefit this involves. We keep a low energy consumption, both thermal, as electric, we give appropriate maintenance to our transportation vehicles, and continued renovation of our mixing units. During the fiscal year, the Board of Directors approved new investments which will improve the environmental efficiency in the Tepetzingo cement plant for the next year.
We keep a solid commitment with our customers for establishing and maintaining long-lasting business relations with respect and strictly adhered to the values of Corporacion Moctezuma®.
In 2016 we approached our customers, and invested in technology that allowed us to provide real-time support, keeping a more direct communication and reducing the time of response. We work towards constantly improving the customer care level, keeping an eye on them so they feel a permanent support from our company.
In Corporacion Moctezuma® we made important investments that will last for decades and generations. We trust the future of Mexico and the markets they serve. It is our believe that every deal with our stakeholders must be crystal clear, adhered to our principles and values and always tending to a mutual benefit. Under these honest criteria, the continuity and transcendence of our company us granted for the acquiescence and advantage of shareholders, clients, suppliers, employees, communities, and authorities they interact every day.
Based on the latter, our Code of Ethical Conduct is and will continue to be the core idea that guides the actions of all the people that are part of Corporacion Moctezuma® and of those that have any type of relation with our company.
We ended the year 2016 with important achievements regarding the institutionalization of the Company, with outstanding financial results and with a more direct dialog with our audiences.
We started 2017 with unprecedented political and economic events, with an increasing trend of energy costs, and, predictably, changes in the current balance of offer and demand of cement and concrete.
At Corporacion Moctezuma® we will keep working on the continuous improvement of our operations, acting honestly, efficiently using our modern facilities, manufacturing high quality products, and taking them to consumers through our solid distributor network. To achieve this, we rely on a magnificent team of collaborators, who make the difference in a competitive market.
We reiterate our gratitude to our shareholders and to all those who made the results and achievements of 2016 possible, and to Corporacion Moctezuma®, a company in Sustainable Continuous Evolution.
Juan Molins Amat
Administration Counsel President