OPERATING

Once again we managed to grow our gross margin. Operating profit grew 14%, a double-digit performance achieved on the strength of effective cost controls and our increased focus on higher margin products such as blends, packaged products and chemicals for the food industry. As a result, EBITDA grew 13% above that of 2014.

Net income totaled Ps 34 million in 2015, six times more than in 2014 on the strength of growth in operating income and EBITDA, and by lowering interest expense. Our increased net profit was achieved despite our Ps 94 million foreign exchange loss for the year.

Some significant product lines experienced deflation in 2015 such as dairy and corn derivatives, whose prices fell between 30% and 55%, in the case of the former, and 26% to 40%, in the case of the latter. The current sales prices of both lines of products are the lowest in four years. Moreover, the prices of mining inputs fell by close to 30%.

Lastly, we ended the year with net debt to EBITDA of 1.6 times, down from 2 times at the end of 2014. This level remains in line with our internal policy of assuring that it does not surpass 2 times.

At Pochteca we remain focused on cashflow generation through a proper management of working capital, as well as cost and expense controls in order to grow EBITDA.

In Brazil, we have begun to successfully penetrate sectors such as oil exploration and drilling as well as chemicals used in the production of food, markets in which Coremal did not participate prior to the arrival of Pochteca. We regard this as a slow process, but one that will eventually pay off.

These results demonstrate the resilience and efficacy of our “one-stop-shop” model and our broad product and client diversification.