We Build Value 2012

“We build value”, that is the central message of our 2012 Corporacion Moctezuma^® Annual Report because it adequately describes the accomplishments we reached this year; as well as our ongoing commitment to create added value to our everyday relationship with our customers, suppliers, team of employees, communities with which they interact, and of course our shareholders.

The year 2012 presented certain peculiarities: in the international arena, the crisis that began in 2008 left negative effects, proof of which are the difficult conditions suffered by some countries in Europe with high unemployment levels, a high fiscal deficit and the need to apply resources to capitalize the Eurozone financial systems.

In the United States even though there were stressful moments regarding the approval of the 2013th budget, the main economic indicators showed signs of moderate growth with stability.

In Mexico, the year was characterized by a first semester with dynamism in economic activity resulting from the favorable performance of Mexico´s main trading partner and increases in the activity and availability of public resources related to the federal elections process that took place in July. As it was foreseen, during the second semester of the year, the economic activity registered a deceleration so, at the end of the year, a total of 4.0% growth was reported in the gross domestic product of Mexico. For its part, the share of the construction sector in the GDP recorded an annual growth of 3.3%.

Financial Results

At Corporacion Moctezuma^® we have the satisfaction to report the compliance of important goals grounded on growth that exceeded what was registered by both the national economy, as a whole, as well as in the construction industry; as in the year 2012 their sales grew 10.6% compared to the previous year.

Contrary to the trend of the last few years, in 2012 the price of the petcoke, fuel of great importance in the cement industry decreased its prices at the international level which helped improving the production costs and their margins.

We worked towards strictly controlling all of our operating expenses of both management as well as sales, which resulted in the increase of the annual operating income, to 23.4% in comparison with the year 2011.

Once again we generated significant cash flow; proof of this is the EBITDA at the end of the year 2012 grew by 15.6% in comparison with the previous year. For its part, our net profit presented a growth of 25.7%, which shows the surplus work of those who comprise the Moctezuma family, again reporting the highest margins of the sector.

Outstanding projects

The quality of our products and the services we provide, are the best introduction, which has opened us doors to participate in the most important construction works at the national level, and some of the ones that stand out are:

• Second Floor of Mexico´s City “Periferico” (expressway)
• Sewage treatment plant in Atotonilco
• TBBVA Bancomer Tower in Mexico City
• West Expressway of Mexico City
• Sea Port of Altamira, Tamaulipas

A special mention needs to be made about our involvement in a bid that awarded us the right to provide the placement of concrete on the Southern Beltway of Guadalajara, construction of significant importance with an extension of 111 km and an approximate duration of eighteen months. This new business concept will begin in the year 2013 and it is of great transcendence because not only are we providing new products, but we are also entering into the road sector, opening interesting opportunities for creating value for our clients.

Human Resources

The human capital of Corporacion Moctezuma^® is the fundamental structure that explains and maintains the success of the company. To look after such an important asset, we implemented the "Health and Wellbeing Program", which aims to establish control and preventive measures for high-risk alterations of the health of our collaborators: by using electronic and printed media, we carried out campaigns focused on the prevention of chronic-degenerative diseases and at the end of the year, their average in the core indicator of general health index was 83.75 of an ideal of 100 units.

Also, we continue strengthening and instilling a culture of safety at work and we were able to reduce the number of accidents between 50% and 75% in the past two years, confirming our commitment with the wellbeing of workers and employees.

Social Responsibility

In the field of social responsibility, we carried out important activities for the benefit of the communities close to our plants. This way, we made the now traditional Health Fair, through which we provided medical consultations of certain specialties for the inhabitants of the neighboring communities of our three cement plants. We supported education with the delivery of over 85,000 packages of school supplies; in addition we provided 181 scholarships to outstanding students and collaborated in the improvement of educational institutions.

On the other hand, we keep a strong commitment with environment care, we maintain full compliance with environmental legislation and keep our plants and vehicles in optimal conditions; additionally, we preserve the energy consumption levels of both, electricity and fuel, below those observed in the industry thanks to the technology used in our three cement plants.

We provided 600 trees for the reforestation of areas affected by the fire that consumed part of the Sierra de Montenegro in the state of Morelos; for the municipality of Apazapan, Veracruz we donated 1,000 trees for a reforestation program, and in Cerritos, S.L.P. we finished building a greenhouse in our plant that has its own laboratory.

Derived from the change of federal government at the end of 2012, we are expecting that the year 2013 will start with a moderate economic activity and as the year passes, there will be an increase in the economic activity. We are optimistic that by the start of the second half of the year, a significant economic recovery will begin and it will be sustained in the following years. The construction industry is a major engine that drives the economy and in Corporacion Moctezuma^® we are ready to continue with the history of success, building value for all Mexicans, with the support of investments made in world-class technology, our solid and professional team of collaborators, with our customers that have given them their preference; and with the support of our shareholders that gave us their trust and confidence.

To all of them we offer our commitment and gratitude.

Juan Molins
President of the Board of Directors

Pedro Carranza
General Director