MonteAdriano SGPS reformulated its Board of Directors in 2009. This was a necessary step for joint strategic management of the various companies comprising the Business Areas of Engineering & Construction and Agregates & Concretes. As the main subholding of the Monte Group, it has been chiefly responsible for the path toward Internationalization, while serving as support to other areas of the Group in new markets.
In the area of Engineering and Construction, we have expanded operations to three more markets (Oman, São Tomé and Príncipe and Brazil), for a current total of nine markets on four continents. The strong growth of the international sector has been a constant challenge that our employees, together with our suppliers, financial partners and local partners, have managed to overcome. In 2010, we seek to expand to two additional markets, so that, later on, we can focus on their consolidation, thereby enabling us to achieve our objectives for Sustainability and Profitability.
Although the improvement in terms of profitability can be seen in 2009, resulting from internationalization. Sustainability of the Business Area will be achieved only with risk management of the Group as a whole. Since the area of Public Works is of a cyclical nature and highly dependent on the expansion policies of each country, the MonteAdriano Group will need to obtain at least five markets which, given their dimension, will allow for these cycles to be mitigated or offset.
In Portugal, which still remains the Group´s main market, we expect this to be one of the Group´s chief operations in the next few years, after stumbling blocks regarding projects involving Road Concessions are clarified. Though there is still uncertainty with regard to projects for New Airport and the High-Speed Rail Network, we feel these will be projects which, over a more or less extended period (depending on their execution), will enable the sector to adjust its productive capability to what is expected to be a strong drop in the domestic market. The sharp decline that the sector will experience following these projects makes it vitally important for each player to plan its alliance strategy for the very long term, whether via a partnership, transfer, merger or purchase, and so, in 2010, we can expect the sector to formalize a few operations of this nature.
The sector experienced a huge decrease in liquidity, which was worsened by the international financial crisis, to a different extent depending on the market. Internally, as concerns investee companies in which MonteAdriano Engenharia e Construção holds a stake, and which rely more on the domestic market, we have planned several restructuring initiatives for 2010. Thus, we will bring about the merger of three companies: Habimarante, Betominho and GC. This will reduce atructural costs, and the resulting company is expected to be stronger and more efficient. As concerns the sector involving Geotechniques and Foundations, whose proliferation of small companies with greater structures and technical skills, there are certain adjustments in the companies Fundasol and Constrotúnel, and we may implement a plan involving greater international exposure of this area for the markets where MonteAdriano is already operating.
Of the markets where we have operations, perhaps the one most affected by the financial crisis was Angola, which will continue to be an important market for the Group, and I am certain that public investment will soon return to its normal level. Romania has shown signs of improvement in terms of profitability and increased production in 2009, as it may play an important role in the Group, in the future. However, it will be important to achieve political stability in that coutry, so that the various plans for expanding infrastructures can be properly carried out. This year, the Cape Verde branch office achieved a turnover of 19 million euros, with satisfactory rates of profitability. This situation is expected to repeat itself in the future.
In the business area of Aggregates and Concretes, projects involving road concessions in northern Portugal will increase business operations at facilities producing inerts. Overseas, the favorable operations in Cape Verde and Angola (the former throughout all of 2009, and the latter during the first half of the year), allowed both companies to achieve a high degree of international exposure. Also noteworthy is the case of Descavanor, a company with a light structure but comprising a highly specialized team, which managed to achieve good results, with a favorable outlook for 2010 and 2011.
I believe that the strategy we have outlined for the Group has been effective to get us out of this economic cycle, which has been so pernicious for most companies, but which has been more intense for company in this sector. Our values such as AMBITION, COMPETENCE and CREDIBILITY are ever present in every company and employee that is part of this family. These principles are part of a united Group, with employees who are ready to overcome new and increasingly loftier challenges.
Alípio Monte
Chairman of the Board of Directors