Message from the Chairmanof the Board of DirectorsChapter PDF
Last year was a testing year for Mexichem. The tragic events of April 20th in the Petrochemical Pajaritos Complex in Veracruz, Mexico, challenged us as an organization and as individuals. I am incredibly proud to report that our Company, our management, and our people proved to be more resilient than anyone ever thought we would need to be.
From the moment of the accident, as Chairman of the Board, together with both Pemex’s CEO, Jose Antonio Gonzalez, and Mexichem’s CEO, Antonio Carrillo, we insisted that everything we did should put people first, both those directly affected by the tragedy as well as anyone else who comes into contact with our operations. We also insisted, once we moved beyond the triage stage of coping with the accident, that we focus on understanding what went wrong, why failures occurred, and what lessons should be learned to reduce the possibility of such a severe accident ever happening again.
I am pleased to report that I had the full backing of the Board and management in this compassionate and professional approach. But I am even more pleased that the entire Mexichem organization reacted with strength and solidarity. As a result, I am confident that we have emerged from this tragedy as a stronger, more unified, and more mature global company.
We confronted the tragedy head on:
- Focusing on those injured and on the families who lost loved ones.
- Mitigating any further risk, human or environmental.
- Engaging a recognized, independent, global expert to conduct a thorough investigation of the explosion.
- Performing a gap analysis focused on process safety in all our chemical plants.
- Developing a case study to share what we learned as widely as possible.
We did all of these while simultaneously ensuring the continuity of our operations.
There are many takeaways from this tragedy. Perhaps the most important is that the joint venture structure that split operational control between Mexichem and our partner was flawed. In the future, we will always insist on full operational control; that is the only way we can guarantee to our employees and the rest of our stakeholders that we are doing all we can to protect their lives and their interests.
Notwithstanding this very sad accident, during 2016 our leadership team delivered solid financial results and continued to execute our global strategies, as detailed in Antonio’s letter. In addition, we implemented transformational changes in Corporate Governance designed to make our Board more nimble, responsive and effective.
As the result of two years of planning, in April 2016, we reduced our Board from 16 members and 16 alternate Directors to 11 members, of which 5 are independent. We also added a new Finance Committee that will focus on providing guidance to management on capital allocation. In addition, we separated our Corporate Practices Committee from the Audit Committee with the mission of focusing on board succession, tracking the evolution of top management and overseeing risk management.
The result of a smaller Board working through three Committees—Audit, Corporate Practices and Finance—is a Board in which the members have become more engaged and closer to the business. I believe this aligns with the interest of all our stakeholders.
These Governance changes, along with the very important structural and organizational changes that Antonio describes below, have us well positioned for an increasingly complicated global scenario. We do not manage Mexichem based on political forecasts or economic scenarios; we manage the Company based on our fundamental values and business ethos. We know who we are. We know how we do business. We know that the health and safety of our people come first. We know that we aspire to operational excellence and that we are committed to be good citizens, both individually and collectively. And we know that, year in and year out, we stay focused on growth, profitability and sound financials.
Points of sale
in GHG emissions
2012 base year
Social shared value
projects at Mexichem
water is reused
Reduction of lost
2012 base year
natural gas consumption
and energy versus 2015
Of course, our strategy, structure and tactics—of which I have written in great detail in the past—must adapt to changing realities. However, they will always remain anchored to an immutable business ethos if we are to continue to prosper.
This approach to business is reflected in our continuous investment in organic and inorganic growth. We have shown our capacity to grow over the past decades while diversifying in terms of geographic footprint, product portfolio and industries. However, our focus is not growth for its own sake, but profitable and responsible growth with a solid balance sheet; taking into consideration our obligations to our stakeholders, the environment, and the communities where we operate.
Market Cap$ MXN thousand million
Net Debt / EBITDA
Note: *Adjusted EBITDA
I believe that what has worked for us in the past will work even better for us in the future. We have built a resilient, flexible, learning organization that is designed not just to weather storms, but to emerge strengthened. That is what happened last year; that is why we ended 2016 stronger, safer and profitable.
Mexichem is a great company, with a strong Board and resourceful people. I thank you, our stakeholders, for your continued support and look forward to continued shared success.
Juan Pablo del Valle
Chairman of the Board of Directors