2023
ANNUAL REPORT
2023
ANNUAL REPORT
Address:
Tuset, 8-10, 7ª planta
08006 Barcelona
(Spain)
Tel.: (+34) 93 290 61 00
Fax: (+34) 93 290 61 28 www.miquelycostas.com accionista@miquelycostas.com
TRANSPARENT INFORMATION
FOR THE COMMITTED SHAREHOLDER
This Report has been drafted as a result of the Miquel y Costas Group's commitment to its shareholders in favour of transparency in the 2023 financial year. As with the previous year, the economic and financial data and the most relevant milestones and indicators in the different areas of activity, as well as their link to the Group's business purpose and in particular, its commitment to sustainability, are presented and detailed in a single document.
of the activity of Miquel y Costas. In this way, all of its products are developed with the maximum respect for the environment, which has allowed the Miquel y Costas Group to obtain ratings of maximum excellence from prestigious organisations of reference in 2023.
The Report includes the Group's advances in terms of sustainability in all its activities.
The activities carried out by the organisation during the financial year and included in this report are based on the consideration of sustainability as a transversal value spanning all operations. This is how it is reflected in the business purpose of Miquel y Costas, reworded in 2021 in response to the current needs and in order to serve the Group in the years to come.
Miquel y Costas' purpose is to "adapt manufacturing processes to offer society products that collaborate with the sustainability of the planet and improvement of the environment". On top of this goal of reducing its environmental impact is its commitment to society and good corporate governance. Thus, Miquel y Costas is taking on the definition of "sustainability" from the triple perspective of ESG (environmental, social and governance), aligning itself with the standards of the main international organisations, the United Nations Sustainable Development Goals (SDGs) and the reporting criteria of the Global Reporting Initiative (GRI).
The Report includes the advances made in terms of sustainability in all the Group's ac- tions, configuring this aspect, together with quality and innovation, as inseparable parts
In the social field, this Report details both actions aimed at guaranteeing a safe, healthy and egalitarian working environment for the whole workforce and other initiatives aimed at the creation of value in the local communities in which Miquel y Costas operates. Its commitment to the well-being and progress of both groups forms part of the organisation's purpose, mission and values.
In the area of management and good corporate governance, worth noting is the correct functioning of our Code of Ethics, updated in 2022, which reinforces the Group's commitment to conducting its activities in accordance with solid ethical values, compliance with current legislation, respect for the principles of the Universal Declaration of Human Rights and alignment with the United Nations 2030 Agenda.
As always, this Annual Report complements the information set out in the Non-Financial Information Statement. Both documents are anexampleofthecommitmenttotransparency and accuracy acquired by the Miquel y Costas Group in its Code of Ethics.
PRESENTATION | 3 |
CONTENTS
7
LETTER FROM THE CHAIRMAN
12
OUR ORIGINS
16
THE MIQUEL Y COSTAS GROUP
21
A QUICK RECAP OF THE YEAR
24
BUSINESS PURPOSE
32
LINES OF BUSINESS
38
QUALITY CONTROL
42
RESEARCH, DEVELOPMENT AND INNOVATION
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46
ENVIRONMENT
56
PEOPLE
66
CORPORATE GOVERNANCE
76
THE MIQUEL Y COSTAS & MIQUEL FOUNDATION
80
INVESTMENT
83
STOCK MARKET
86
FINANCIAL ECONOMIC DATA
5
LETTER FROM THE CHAIRMAN
LETTER FROM THE CHAIRMAN
Jorge
Mercader Barata
PRESIDENT
Dear investors:
It is with great pleasure that I write to you for the first time, as the president of the Miquel y Costas Group, in order to share our progress and results for the financial year 2023. Allow me, first of all, to thank the Board of Directors for the trust they have placed in me and to affirm my commitment to helping the Group reach new milestones in terms of success, growth, and value creation, thus continuing the work carried out by my predecessor.
This financial report comes at the end of a year characterised by an immense and ever-growing complexity within the broader global context: we saw a tightening of monetary policy, geopolitical uncertainty caused by the protracted wars in the Ukraine and Gaza, as well as the contained banking crises in Switzerland and the US. In spite of this, the major world stock markets saw significant gains during 2023, with low volatility which continued throughout the year. The main reasons for the positive performance of the markets are the 3% growth in global GDP and the good financial results obtained by large listed multinationals. The United States, Japan, and Latin America have been especially strong in this regard, while China and, in particular, the EU were weaker overall.
The Eurozone GDP experienced a sharp deceleration, with year-end growth ending at 0.4%. This growth was especially hindered by the evolution of the German
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economy, which saw its GDP drop by 0.3% compared to the previous year. This growing economic weakness, combined with the aggressive policy of the European Central Bank (ECB), has contributed to reducing inflation; however, this has come at the cost of a continued increase in reference interest rates, which reached 4.5%, the highest level since 2001.
As in 2022, Spain was once again one of the Eurozone economies with the most positive contribution to the area's growth, with a GDP increase of 2.5% in 2023, driven by tourism, the strength of the domestic demand, and the progressive effects of the NextGenerationEU funds. In this context, the Spanish stock market had a very positive annual result that placed it among the top performers in the world in terms of profitability.
During 2023, the industrial sectors in which the Group operates were affected by a 4.6% year-on-year decrease in domestic paper and cardboard production, while at the same time national pulp production grew by 4.3% compared to 2022. The European market, for its part, saw an even more dramatic drop in pulp production, with a 6.2% decrease in paper and cardboard production, at times as high as 12.8%. This drop in paper and cardboard production was replicated in most regions of the world, although its impact on the markets was less than in Europe.
In this financial context, the Miquel y Costas Group has continued to set a high value on quality and management, which has allowed it to achieve a 2023 result of ¤56.6 million in profit before taxes, exceeding the result obtained in 2022 by 37.7%. And this despite the fact that net business turnover decreased during the same period, standing at ¤309.3 million at year-end. This impact on sales was caused mainly by the need to adapt the Group's sales and marketing policy to the new cellulose and energy prices, to the lower demand in some markets due to certain customers' stock reduction policies and especially to the delays we experienced in trying to meet the minimum operating standards for the M2 machine. And while the tobacco industry has managed to recover, increasing its sales by 0.08% year on year, the Industrial Products line experienced a sales decrease of over 20%.
Despite these difficulties, the Group's consolidated net profit rose by 35%, reaching a total of ¤42.7 million at year-end. The resultant effective tax rate of 24.5% was slightly higher than the previous year and was due, above all, to the reduction of tax deductions applicable this year.
Throughout the year, the Group carried out investments for a total value of ¤18.4 million, which were aimed at continuous quality improvement, the development of new products, the reduction of production costs, the protection of the environment, as well as energy optimization.
In 2023, our commitment to Research, Development and Innovation emerged as one of the Group's core values and key long-term goals. We invested ¤3.3 million euros into R&D activities, including into research aimed at developing new products and applications, as well as into technological innovations related to production processes. The final phase in the upgrading process of the MB Papeles Especiales industrial paper machines is of crucial importance in this regard.
LETTER FROM THE CHAIRMAN | 9 |
Our commitment to environmental sustainability acquired even greater relevance during the past year, during which the Miquel y Costas Group invested ¤8.4 million in actions aimed at the development of the circular economy, the optimization of energy consumption, as well as the efficient use of raw materials and water, promoting waste reduction and minimizing the use of natural resources. The efforts we have made over the years in this respect, both in terms of investments as our company culture, have been recognized through the certification offered by CDP, a leading company in sustainability, which awarded us the highest possible score in Climate Change, Water Security and Forests. This certification makes us one of only 12 companies worldwide to have been awarded the triple A rating, and the only company in Spain and southern Europe to do so. The Group was received the Platinum rating in the evaluation carried out by EcoVadis, which is awarded to companies that have demonstrated a robust management system in regards to sustainability, responsible purchasing, supply chains, and CSR.
In addition, the Group formally delivered on its commitment to align its strategy and operations with the 10 universal Principles of the United Nations Global Compact in the areas of human rights, labour standards, the environment, and the fight against corruption, becoming an active participant in this Pact on October 16, 2023.
In this context, we continued to make all efforts to ensure a safe working environment, investing ¤2.4 million into H&S measures aimed at mitigating occupational risks pertaining to our area of activity.
Our commitment to our employees is demonstrated in the investment in the development and expansion of their knowledge and skills with the aim of improving their performance. In this regard, I would like to especially note our training activities, which not only returned to pre-pandemic levels, but which have been expanded to include areas such as talent development and compliance culture. These activities included specific, up-to-date training in the various applicable regulations; motivational, team management, and leadership courses; and programs aimed at communicating the principles of the Code of Ethics, guaranteeing our teams' compliance and ensuring their commitment to the community and human rights, which includes making sure employees are familiar with the reporting and complaints procedure, as well as the penalties in case of violations and breaches.
During 2023, the Board of Directors of the Parent Company, the highest decision- making body of the Group, met a total of 14 times, the Human Resources, Appointments and Remuneration Committee a total of four times, and the Audit Committee nine times; among other activities, the latter initiated a process for appointing a new auditor. It is worth highlighting here the creation, in line with the internal regulations of the Company, of the position of Honorary President, which has been taken up by Mr. Jorge Mercader Miró following his resignation as president of the Board of Directors, in recognition of his extraordinary dedication and excellent work during his 30+ years as the head of the Group.
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In line with the shareholder remuneration policy, in 2023 the Company distributed dividends on four occasions, amounting to a total of ¤17.2 million, compared to the ¤16.1 million distributed during the previous year. This represents a growth of 6.8% year on year, or 7.6% in unit terms after taking into account the effect of treasury shares. The total number of shares in the treasury stock as of December 31, 2023, i.e. at the end of the financial year, is 1,818,843 shares.
Regarding the evolution of the shares in the stock market during 2023, it should be noted that the shares were traded in 255 trading sessions, with the number of shares traded standing at 2,696,687, equalling a cash value of ¤72.4 million. The closing price was ¤13.10.
In this unstable macroeconomic scenario, in which the sector must evolve and adapt to the new reality and new market environment, our corporate purpose constitutes a declaration of principles that inspires and guides us. This purpose continues to drive us to keep strengthening a solvent industrial project with solid financial and technological foundations that ensure its continuity and independence, integrating the values of the world's most advanced societies into its corporate culture. Our business philosophy espouses healthy and sustained progress over time, while drawing lessons from the past and looking to the future, with the ultimate goal of providing a service to society.
During the financial year 2023, the Miquel y Costas & Miquel Foundation has continued to support socially vulnerable groups through its business activities, fostering innovative and transformation projects within primary and secondary education. The Foundation has pursued this goal by sponsoring various cultural and educational projects in the areas of research, talent development, and innovation.
Finally, I would like to acknowledge and express my gratitude for the support I have received from the Board of Directors, the work carried out by the management team, as well as the contributions of our entire team. I also want to extend my gratitude to our clients and suppliers for their support, and especially to you, Ladies and Gentlemen, our dear investors, for the trust you have placed in the Miquel y Costas Group. It is precisely this trust and support that ensures we will continue to make continuous progress towards achieving the objectives we have set ourselves and continue to create value for our shareholders and for society as a whole.
Mr. Jorge Mercader Barata
President
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