Message from the Chairman

In 2008, the collapse suffered by the financial system in the most developed countries, unprecedented since the Great Depression of 1929, ended up by having a direct effect on the production economy, above all in the last four months of the year, leading to a sharp fall in spending and, therefore, production. In Spain, this global crisis was made worse by the slump in the property sector, which dragged companies down, generated significant unemployment, worsened the crisis in the financial sector and, in short, accentuated the deactivation of spending.

In this very convulsive, globalised scenario, the MONDRAGON Corporation’s turnover rose to €15,584m (+3.5%), with results noticeably down on 2007. On the positive side, it is worth highlighting the significant €1,324m in investment, in a clear, determined commitment to the future, and the fact that no market share or position was lost in relation to the competition.

In the Finance Area, a sector hit hard by the crisis, Caja Laboral managed to maintain a solid position with outstanding insolvency and liquidity ratios and above average business growth for the sector, increasing Balance Sheet sheet resources by almost 12% and the volume of credit by 10.2%

In the Industry Area, all went acceptably well until the summer, with everything changing radically in the last four months of the year when demand dropped very sharply, with praiseworthy exceptions in Vertical Transport, Machine Tools, Engineering and Services to Business. Annual sales fell by 5.7% in homogeneous terms compared to the previous year, affecting results and employment. At the international level, the fall was much less sharp, only 0.3%, with the setting up of a number of subsidiaries standing out, especially in the Kunshan Corporate Industrial Park in China, and work intensifying on opening a similar park in India. In the field of business development, it is worth highlighting the launch of two projects related to energy, aimed at manufacturing microgeneration systems and solar collectors.

The Distribution Area increased its turnover by 19%, in part due to the effect of Caprabo and continuing to open outlets at a fast rate, with 164 new stores. Moreover, two important infrastructures were inaugurated to strengthen its strategic position: the Geminis Data Processing at its headquarters in Elorrio and the MSO Fresh Produce Depot in Madrid, one of the biggest refrigerated warehouses in Spain. A very special mention should be made of the process approved at the Extraordinary Meeting of Eroski members to start to turn the company’s current subsidiaries into co-operatives, and to gradually turn its salaried workers into workermembers of a co-operative.

In the Knowledge Area, one of the main things that makes us stand out as a business group, our University adapted its degree courses to the requirements of the European Space –Bologna Project-, promoted its research work with increasing dedication from the teaching staff and started building work on the Centre of Innovation in Electronics in the Garaia Innovation Park and the new Business Studies Faculty in Oñati. The Garaia Innovation Park also gave its development a determined boost: with the official inauguration of Edertek; the setting up of Etic, as the result of an agreement with Microsoft, for applications based on embedded technologies and the start of the building work on the Ikerlan Centre-IK4 CIC Microgune, for research into nanotechnologies.

This constant effort we make as far as innovation and development is concerned, together with the intensification of our international presence and, above all the use of the mechanisms for flexibility and solidarity inherent to our co-operative system, mean that I feel optimistic and convinced of our ability to tackle the acute worldwide crisis that we are suffering. I am sure that our values of participation and business commitment will continue to be a major competitive advantage in this globalised market, helping us to turn the crisis into new business opportunities.