Relatorio de gestao_2010_INGLES.indd - Efacec

Economic and fi nancial situation
The activities carried out by the Efacec Group throughout 2010
allowed the company to exceed the EUR 1000 million in sales and
record a net profi t of nearly EUR 30 million. The international
market already represents over 2/3 of the total business volume of
the Efacec Group. These are evident signs of a solid and sustained
growth. The external market is becoming increasingly important
and is a result of the strategic investment in the development and
growth of Efacec.
In a comparative analysis with the year of 2009, the business
volume went from EUR 809 million to EUR 1034 million in 2010,
meaning an increase of 28%. This increase in sales is a result of the
external market, which increased 62% (from EUR 416 million to EUR
674 million in 2010).
Orders received in 2010 totalled EUR 852 million, inferior to
those from the year of 2009 in almost 15%. Above all, it should be
highlighted the signifi cant decrease in the domestic market, as the
external markets remained in general at the same level as in the
previous year. These are clear signs of the effects caused by the
current macroeconomic environment in Portugal.
Despite this adverse macroeconomic context, in 2010, the economic
results of the Efacec Group’s activities, in addition to meeting the
increase of sales, also improved in terms of profi tability when
compared with the year of 2009. EBITDA grew from EUR 60.3 million
to EUR 83.5 million, in other words, it increased around 38% in 2010.
As for operating profi ts, they recorded EUR 58.1 million this year,
which represents an increase of 44% in regard to the previous year.
In 2010, a heavy investment was made in fi xed assets, such as,
among fi nancial and corporate investments, the conclusion of the
new transformers factory in the USA. This situation, along with
the signifi cant development of the Efacec Group’s activities and
resulting needs of the working capital, contributed towards the
increase of net liabilities, which grew 44% (from EUR 227.7 million
in 2009 to EUR 310.9 million in 2010).
These investments demanded a fi nancial effort that was naturally
felt on fi nance costs, which reached EUR 18.6 million this year,
while in 2009 they were EUR 12.6 million.
Nonetheless, it should be mentioned that the item concerning
fi nance profi ts, in 2009, recorded a gain of nearly EUR 6 million
through the calculation of derivatives (in particular, copper), which
was not made in 2010.
For a global assessment of the Efacec Group’s debt, it should be
stressed the improvement regarding the Net/Debt/EBITDA ratio,
which decreased from 3.8 to 3.7.
Profi ts before tax and Net income also had a good performance and
amounted, respectively, to EUR 35.5 million and EUR 29.5 million.
This way, the net profi tability of sales was 2.8% and the profi tability
of the average Equity reached 25%.
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The capital accounts stated in the Efacec Group’s Balance Sheet
show that net assets nearly amounted to EUR 1 billion, mainly
as a result of tangible assets concerning manufacturing units
and equipment in both Portugal and other parts of the world.
One particular recent investment was the one made in the new
Transformers manufacturing unit in the USA. These investments
and the investments made in the innovation and development of
new products and technologies have been decisive to conquer new
markets and for the success of Efacec’s activities in Portugal and in
the rest of the world.
With the current international economic outlook and major fi nancial
and exchange rate instability, Efacec closely and carefully managed
aspects such as credit, exchange risks, interest rates and prices of
commodities.
The Group’s exchange rate exposure continues to receive special
attention and is hedged by several types of fi nancial instruments
available in the market, mainly currency options. The year of 2010
again witnessed signifi cant fl uctuations, namely in the Dollar (USA)
and Real (Brazil), which are important currencies for the Efacec
Group’s commercial transactions. On the 31st of December 2010, the
Efacec Group held exchange rate contracts for cash-fl ow hedging of
USD 22 million and GBP 500 thousand.
Commodities registered another year of profi ts, namely crude oil,
which ended 2010 closing in on USD 100 per barrel. As in 2009, the
price of copper also increased substantially in 2010. In the London Metal
Exchange (LME) the Cash rate ended the year of 2010 at USD 9 739.25
per tonne against the USD 7 345.50 per tonne recorded at the end of
2009. This represents an annual growth of nearly 33%, after witnessing
a growth rate close to 130% in the previous year. By the end of 2010,
Copper stocks in the LME were almost 25% lower than the volume
recorded at the end of 2009. The increase of demand, the ongoing
economic recovery and reduced stocks, explain to a large measure the
Copper’s performance during the year of 2010.
Regarding interest rates, reference rates maintained low levels
throughout 2010. However, spreads continued to increase in the
fi nancial market. Efacec, through fi nancial instruments at its
disposal, was able to minimize this market tendency. Regarding bank
funding, Efacec seeks to control its costs by acquiring structured
products and interest rate hedging. By the end of 2010, this type
of coverage reached EUR 106 million for loans in Euro and USD 114
million for funding in US dollars.
Debt maturity developed favourably. Through renegotiation with
banks, it was possible to obtain a short-term debt reduction of 15%.