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Letter to our Shareholders
2017 was an exceptional year in which we made significant progress on the path to achieving our vision. Date prisa y empieza a ganar con https://vogueplay.com/ar/cleopatra-tragamonedas/en nuestro casino. ¡Recursos limitados!
In the fourth quarter of the year, we announced the purchase of Vigor Alimentos, S.A. in Brazil, and with it took a transcendental step forward to becoming North and South America’s favorite dairy company.
Vigor is a Brazilian firm, founded in 1917, that leads that country’s dairy market with a focus on healthy, value-added products and growth through innovation. The company has nine plants located in central and southeastern Brazil where leading national brands are produced, like Vigor, Danubio and Faixa Azul, in addition to the Amélia brand for the institutional segment.
For Grupo Lala, bringing Vigor Alimentos into our family in the Americas is a unique opportunity to venture into the Brazilian market, which is not only Latin America’s largest economy but it also the region’s largest dairy market.
We are very pleased that Vigor is our to build a profitable dairy business with high added value.
We advanced steadily toward our vision, with confidence and results: from a presence in only 3 countries in 2013, we were operating in 7 countries at the close of 2017, with 696 million potential consumers.
In 2017, net sales totaled MXN62.54 billion, a 17% increase over 2016. Within this growth, sales by businesses that were part of the Group in 2016 grew 12.6%, and the Vigor acquisition in October contributed the remaining 4.4%.
Gross earnings grew 15.2% in 2017, to MXN23.38 billion pesos, equivalent to 37.4% of net sales. Operating expenses rose 18%, including expense relating to the purchase and integration of new businesses and the operating expense of business outside of Mexico that presently operate with less efficiency than our domestic operations. Operating income outpaced gross earnings with a 17.7% growth, ending the year at MX6.17 billion, spurred on by productivity initiatives in Mexico.
EBITDA for the year 2017 was MXN8.04 billion, a 17.3% growth over 2016. In comparable terms (excluding the benefits and costs of Vigor), EBITDA was MXN7.67 billion, which is 11.7% higher than the year before. Net income for the year 2017 totaled MXN3.34 billion, a 20.4% reduction, affected mainly the costs associated with the debt taken on with the Vigor acquisition, taxes paid on the sale of Itambé, and the net tax affect of monetary balance accounts.
As of December 31, 2017, total debt came to MXN30.97 billion, 92.42% of it short-term and the remainder long-term. This debt includes the bridge loan used to finance the Vigor acquisition, Brazilian debt acquired in local currency, and the refinancing of working capital instruments in Brazil.
We are a company recognized for our innovation. Thanks to the talent of our people and our in-house research and development, we were able to launch 26 new products in 2017, among them Delicias Yogurt; the Soy Vita line of food products and Chambourcy gourmet cheese, as well as the Lala “squeeze” and Nutrileche cream brands.
Four the fifth year in a row, Lala was rated the second most recognized brand in mass consumer products in the Brand Footprint Mexico 2017 ranking, measured by market penetration and purchase frequency. In Brazil, Food Ingredients rated Vigor’s Pedazos Greek Yogurt the most innovative product of the year for 2017.
USE OF CAPITAL
Between January and December 2017, the Company invested approximately MXN3.70 billion in properties, plant and equipment, and other capital expenditures.
These investments were devoted to optimizing, but above all to expanding our capacities. Among the highlights were the NutriDeli luncheon meat factory in Tizayuca, Hidalgo, Mexico, a world-class factory and one of the most modern in the industry in Mexico. Its premises incorporate a Technology and Innovation Center that will develop meat products with an unwavering focus on customer satisfaction and wellness.
Sustainability is the commitment we assume in making decisions and in pursuing our vision and purpose, according to a model that guides our actions in harmony with the environment. In 2017 we worked on lowering our consumption of water per kilogram of product produced, reducing emissions through greater fuel efficiency in our transportation fleet, reducing energy consumption and promoting an ambitious recycling plan.
For Lala, caring is the most important part of everything we are, do and share. That’s why we are committed to quality and excellence in our performance, and we do so in a sustainable, socially responsible manner: We are committed to caring for our origins, our people, and our planet earth.
Beyond our commitment to the environment, and through Lala Foundation, we increased our social investment by 35%, including a commitment to deliver one million liters of milk to those affected by the September 2017 earthquakes in Mexico. Throughout the year, 596,771 people benefited directly from our nutrition and educational programs in Mexico and Central America.
We are grateful to our employees for their talent, commitment and ownership attitude; to our clients, consumers, partners, board members and shareholders for their trust. 2017 posed a number of challenges, but we were able to face them confidently, focused on our vision of being North and South America’s favorite dairy company.
Eduardo Tricio Haro
Chairman of the Board of Directors
Chief Executive Officer