Message from the
Executive President

Today, as for the past 35 years, we are focused on offering innovative and sustainable solutions in order to alleviate water problems caused by demographic growth, contamination, and climate change, such as water imbalance, availability, and quality. Furthermore, we take our solutions to urban and rural areas that lack centralized water supply and sanitation systems. To achieve this, we have a solid business model with which we address and solve these problems. We are convinced that a society’s economic development and people’s quality of life are related to the availability of water. As such, we have found a way of creating long-term value for all our stakeholders.

The year 2015 presented challenges and milestones. We completed a full year as a public company listed on the Mexican Stock Exchange (BMV, by its name in Spanish), which drives us to continue consolidating ourselves to offer a profitable and growing business to our investors.

In 2015, our net sales decreased 13.0% due to economic and political situation in Brazil, which delayed the consolidation of our integrated solutions. Faced with this adverse situation, at the start of the year we reduced our operation in Brazil closing four of the eight rotomolding plants we had there, but preserving the same production capacity by relocating the machinery in our four remaining operational plants. Based on this strategy, we ensured the capacity to meet the demand once the market recovers. Despite the decrease in sales in Brazil by 59.5% during the year, the timely execution of these actions resulted in EBITDA at breakeven during the last quarter of 2015; we expect that it will continue in this way until the political and economic conditions in the country return to normal.

Excluding Brazil, net sales grew by 20.7% compared to 2014. In Mexico, our main market, we grew 18.4% year over year, mainly due to of the demand of integrated solutions, which solve water scarcity and sanitation problems in various regions of the country, and to the solid demand for individual solutions in urban areas. Sales in Other Countries grew by 30.7%, driven by our strategy of achieving deeper penetration, through our solutions and products, in all the markets where we operate.

We completed a year of operations in the United States, during which we built three rotomolding plants to meet urgent water needs. These plants will enable us to serve 60% of the storage market in the country. As we advance in our strategy in the country, our results will become relevant to the Group’s results.

During the year, we were able to capitalize the fall of oil prices, which mitigated the rise in exchange rates, and therefore we were able to obtain better prices for raw materials. Furthermore, during 2015 we successfully adopted the Zero-Based Budget methodology in the whole organization, which enabled us to ensure better resource management practices.

We dealt with macroeconomic pressures by focusing on variables that we could control, thereby managing to grow the Group’s profitability from 13.1% in 2014 to 13.5% despite the adverse environment in Brazil. Thus, we confirmed the robustness of our Company, as we can trust in its structural resilience and in the flexibility of our operations.

Going forward, we see opportunities in the water industry with great potential for Rotoplas. We know that increasingly disruptive solutions are required to alleviate water scarcity and meet families’ basic water needs in a sustainable way, as well as to provide a solution to a lack of infrastructure for water sanitation. As such, we are focused on developing and complementing our portfolio of integrated solutions, which besides the installation require maintenance services to ensure their continued functioning and generate long-term value.

We will therefore continue working on strengthening our brand, complementing our product portfolio and its distribution in all regions where we operate. We will continue investing in innovation and development in order to offer better solutions to meet water needs. All of these aligned with our way to play that characterizes us, known as the Rotoplas Way. Such efforts are fundamental in achieving our long-term strategic objectives: duplicating the business with a product mix of 50% from integrated solutions and the rest from individual solutions, which will translate in margin expansion.

Our Company has achieved the success and growth that characterizes it due to the principles and guidelines established by our Corporate Governance during the last 20 years, to be financially, socially, and environmentally prosperous, affirming the permanence of the company in the long term.

We are grateful to our more than 2,200 employees for the passion and commitment they show in their daily activities; and on behalf of the entire Rotoplas’ team, we thank our clients, suppliers, shareholders, and communities for their trust and support. Together we will face the future water challenges. Our vision for sustained growth commits us to keep innovating in order to develop more water solutions and with it offer more and better water for everyone.

Sincerely,

Carlos Rojas Mota Velasco
Executive President and Chairman of the Board of Directors