ANNUAL REPORT
Original perspective

LETTER FROM THE CHAIRMAN


Dear shareholder,

It gives me great pleasure to present the annual report for 2015, a particularly significant year for Viscofan. 

First of all, 2015 was important because we celebrated our fortieth anniversary. Although here at Viscofan we always like to look to the future and set ourselves new challenges, this landmark has provided us all with a wonderful opportunity to take stock of everything we have achieved over a history which has seen us develop from a small business venture in northern Spain to a consolidated, globally recognized market leader, all thanks to the faith of our shareholders and the generosity and dedication of the team based in the 14 countries in which Viscofan now operates, producing and distributing casings to more than 100 countries worldwide.

The year was also special because it saw the completion of the Be MORE Strategic Plan and the successful accomplishment of the main objectives we set ourselves in 2011. 

Back then, the market offered a historic opportunity for growth and the way in which Viscofan tackled that challenge has transformed the profile of the industry. We drove the greatest investment in our history (€287 million in four years), but did so without demanding sacrifices from our shareholders, who now own a Group with a solid balance sheet, even after dealing out cash dividends worth more than €221 million over the period, another record for the company.

The period was one of intense activity. The new collagen plant in China, where we have quadrupled our market share to become the second leading producer, and construction in Uruguay of the only collagen extrusion plant in Latin America are a couple of the more visible results, while other less visible achievements include the improvements made to our collagen, cellulose and plastic casing technology in Europe. We also built a new plastic casing factory in Mexico in 2015 and bought a small plastics technology firm in Spain to upgrade our production portfolio. 

The fruits of all this activity are reflected in revenues of €741 million, accumulated growth over the strategic period of 31%, EBITDA of €214 million, rising by 39%, and a net profit of €120 million, 24% more than at the start of the plan.

A long-term approach not only means growing and seeking to optimize resources, but also striking a finer balance in the risks inherent to the business. In this regard, we sold the IAN Group, our vegetable food division, in 2015 in order to focus our efforts on the casing business, where our know-how sets us apart and our profitability is greater. We also externalized pensions in Germany and the United States. This is a risk which embeds itself in company balance sheets and, if not managed properly, may end up affecting a firm’s asset situation in the long term, causing even greater impact when interest rates are low, as is the case at present.

The Board of Directors continues to strive to meet one of its chief objectives: to create value in a sustainable manner for all our stakeholders. Not only profitable growth, but also safer work environments, greater personal and professional development, greater resource sustainability and greater protection of the environment, society and the communities we work in. One example of an initiative along these lines is the bioengineering project which aims to provide solutions to improve human health on the basis of our collagen technology. In order to facilitate a better understanding of this global objective, the Board of Directors passed the company’s Corporate Social Responsibility policy and led it to sign the United Nations Global Compact in 2015, a further reflection of our commitment to respect for human rights.

All this value creation has been recognized by the market over these years. Our share prices have risen by more than 90% on the €28.70 they were worth at the start of the BE MORE Plan and cash pay-outs to shareholders reached €1.35 per share in 2015, compared to the one euro per share paid in 2011. 

The Viscofan Group is now in a much better position to view the growth opportunities which the sector still makes available optimistically. The sense of responsibility and commitment which leadership of this market entails has led us to define a new Strategic Plan, which we have called “MORE TO BE” and clearly intends to forge ahead in the same direction as its predecessors: leader in service, leader in technology and leader in costs.

Firmly convinced that this market is set to grow and aware of its leading position within it, the Viscofan Group will be investing around €80 million in 2016 to cover, among other things, the new fibrous and plastic casing facilities in Spain, greater capacity in Uruguay and China, and technological improvements at practically all its centers. These investments will support the expected growth in revenue of between 2% and 4%, 4-6% growth in EBITDA and a 6-8% rise in net profit from ongoing operations to €127-130 million in 2016, while also anticipating opportunities for growth in the mid-to-long term.

These are ambitious objectives, but they can be achieved when you have a team like Viscofan’s. I sincerely believe that the results we have obtained are not simply because we were pioneers in greenfield operations, but rather the consequence of being able to make such greenfield operations, achieve greater efficiencies and secure lower costs because this team has an extraordinary will to succeed. It consists of people who rely on technology, but encourage innovation, believe in talent and crave new challenges, demonstrating an outstanding degree of commitment to and identification with the values of the company.

The transformation of the Viscofan Group is the result of the work of many: customers who place their trust in us, suppliers who help us and from whom we demand the highest levels of safety and traceability throughout the world, and all the communities we work in. But, above all, it is down to the 4,300 people who currently devote their day-to-day lives to making the Viscofan Group a better company and all those who came before them. In this regard, I would like to take this opportunity to remember Jaime Echevarría, a great businessman and one of the founders of the Viscofan Group 40 years ago, who passed away recently. It was thanks to his vision and under his leadership over the more-than-three decades which he dedicated to this company that the Viscofan Group became world leader in the casing market. 

On behalf of the Board of Directors, I would like to thank both you as long-term shareholders and all our people for believing in Viscofan. Your support and cooperative attitude provide, without doubt, the basis upon which we can confidently contemplate a further five years of growth like those presented in the “MORE TO BE” Plan, five years in which we shall face the difficult task of bettering the remarkable results described in this annual report. 


José Domingo De Ampuero y Osma

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