In order to ensure organic growth, we have reconfigured our portfolio to emphasize solutions with more profitable services that have greater growth potential. This reconfiguration also enables us to establish higher recurring revenues, thus reducing the volatility of our financial results.
We concluded the integration of Sytesa and Talsar, acquired in 2016 and this year, we continued to make strategic acquisitions that strengthen our portfolio adding new platforms and favoring innovation, as in the case of the US e-commerce platform and Canadian innovation center Sanzfield, respectively.
In 2017, the reconfiguration of our portfolio and the successful integration of the acquisitions made last year had a positive impact on both sales and EBITDA, proving the strength of our brand and our leadership position in the markets where we participate, as well as our bet on more profitable solutions. Our net revenues totaled $6.660 billion Mexican pesos—a 24.4% increase from last year-mainly explained by the strong demand for our individual solutions in Mexico, Argentina, and Peru, and by the integration of the results of the acquisition of Sytesa and the e-commerce platform.
In 2017, we implemented a strict cost and expense control, keeping a base zero Budget, and we surveyed the quality of our revenues, thus achieving a positive impact on the profitability of our operations. The gross profit margin decreased by 270 basis points,
given a lower capacity to absorb fixed costs in some countries where we operate, as well as extraordinary expenses and higher resin costs towards yearend, due to the natural disasters that took place.
Operating expenses decreased by 280 basis points as a percentage of sales, given a greater absorption capacity and expense-control discipline, mitigating the effects of the decrease in gross margin and despite the effect of extraordinary donations resulting from the implementation of the Water for Affected Areas Program (PAZA for its Spanish acronym) following the earthquakes in Mexico; this kept operating margin in line with the previous year’s level. Along the same line, EBITDA margin grew by 130 basis points compared to the previous year.
Net profit increased by 18.7% year over year, with a 40 basis-point decrease as a result of the extraordinary expenses mentioned above.
| 2015 | 2016 | 2017 | Δ 17-16 (%) | |
|---|---|---|---|---|
| Net revenues | 5,700 | 5,353 | 6,660 | 24.4% |
| Costs | 3,397 | 3,097 | 4,032 | 30.2% |
| Gross Profit | 2,304 | 2,257 | 2,628 | 16.5% |
| Gross Profit margin (%) | 40.4% | 42.2% | 39.5% | (270)pb |
| Expenses | 1,641 | 1,677 | 1,899 | 13.2% |
| Operating Profit | 662 | 580 | 730 | 25.9% |
| Operating Profit margin | 11.6% | 10.8% | 11.0% | 20bp |
| EBITDA | 771 | 738 | 1,004 | 36.1% |
| EBITDA Margin (%) | 13.5% | 13.8% | 15.1% | 130bp |
| Net Profit | 402 | 449 | 533 | 18.7% |
| Net Profit margin (%) | 7.1% | 8.4% | 8.0% | (40)pb |
| Earnings per Share (in Mexican Pesos) | 0.83 | 0.93 | 1.10 | 19% |
| Number of shares outstanding (in millions) | 486 | 486 | 486 | 0% |
| 2015 | 2016 | 2017 | Δ 17-16 (%) | |
|---|---|---|---|---|
| Total Debt | 1,217 | 1,243 | 1,976 | 59.0% |
| Total Shareholders’ Equity | 6,054 | 7,325 | 7,295 | 1.0% |
| Total Capitalization | 7,270 | 8,568 | 9,271 | 9.5% |
in 2017, we strengthened our long-term financial structure with the issuance of the first Sustainable Bond in Latin America, for a total of $2 billion Mexican pesos. The placement was made in two tranches, the first with a variable rate and 3-year maturity, and the second, with a fixed rate and 10- year maturity, under a program worth $3 billion Mexican pesos.
In order to finance and refinance projects with environmental and social benefits, we destined the resources of the Bond mainly to existing and future projects that will foster an affordable basic water and sanitation infrastructure, mainly for marginalized populations, that will improve an efficient use of water in various categories, such as: drinking water, storage, sanitation & treatment, and purification solutions for water and wastewater. Likewise, it is in line with, and contributes to the achievement of various Sustainable Development Goals (SDG), particularly guaranteeing water availability and sustainable management, as well as sanitation for all (SDG N°6).
We should note that the Sustainable Bond adhered to international benchmarks, Green Bond Principles, and the Social Bond Guidance, and was assessed by a third party who acknowledged the clarity in our processes and the transparency in our resource management, and defined our Sustainable Bond as “sound, reliable, and transparent”.
The first Sustainable Bond in Latin America, for a total of $2 billion Mexican pesos. The clarity in our processes and the transparency in our resource management, defined our Sustainable Bond as “sound, reliable, and transparent”.
$6,660
BILLION MEXICAN PESOS IN
REVENUES
