2013 was a complicated year, characterized by a decidedly unfavorable business climate in the construction industry in Mexico.

In light of the growth achieved in 2012 and the expectations for further expansion in 2013, at the beginning of the year Grupo Lamosa prepared to respond to increased activity in the domestic market, adapting its product offer to market needs and growing production capacity in some businesses.

However, as the year went by, expectations for economic growth began to decline, affecting the construction sector, as well as consumer spending.

Although results were pressured by the contraction in home building in Mexico, activity in the remodeling segment significantly mitigated the impact, since remodeling generates a great demand for Grupo Lamosa’s products.

Total annual sales as of yearend 2013 were $9,545 million pesos, similar to those of the previous year. Operating income for 2013 totaled $1,366 million pesos and EBITDA $1,795 million pesos, representing 14% and 19% of sales respectively. The absence of revenue growth and increase in the cost of natural gas were two of the main factors affecting the company’s results for the year.

One of the outstanding achievements of 2013 was the successful launch of the “Verve” brand, designed to satisfy the needs of the U.S. market, a natural and attractive target for the company’s growth strategy. The initiative implied the creation of an organization characterized by differentiated skills and a cultural compatibility with the demands of this particular market.

Because of Grupo Lamosa’s next-generation technology and team of professionals expressly dedicated to developing new products, during 2013 the company was able to make its product line more robust and aligned with the latest international trends, and to consolidate high value lines with leading-edge products specially designed for the particular tastes of the Mexican market.

Total sales as of yearend 2013 were $9,545 million pesos, similar to those of the previous year.

During 2013, significant progress was made in the specification market, with the consolidation of the infrastructure and know-how necessary to serve this segment. Offering integrated solutions and leveraging the synergies between the different business units drove the company’s participation in major projects, such as the construction of airports, hospitals, hotels and commercial buildings, and underscored Lamosa’s position as an attractive business option.

In order to support the company’s growth vision for the coming years, in 2013 Grupo Lamosa began implementing a SAP Project. This initiative will migrate its processes to a new technological platform, strengthening its business administration and enhancing the integration of operations.

Expectations for the future are encouraging and, thanks to the actions that have already been taken, the company is favorably positioned to continue growing.

Grupo Lamosa is grateful for the ongoing trust of its stockholders, the commitment of its people, and the support of creditors, distributors, customers and friends.

Federico Toussaint Elosúa
Chairman of the Board of Directors and Chief Executive Officer