FERREYROS Establishing MILESTONES
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FERREYROS estaBLISHING MILESTONES ANNUAL REPORT 2010 MILESTONE. Important EVENT THat SETS A MARK IN History 1. ONE BILLION DOLLARS, ONE THOUSAND MACHINES SOLD 1.000.000.000 FERREYROS ESTABLISHING MILESTONES 2010 will be remembered at the Ferreyros Organization trust placed by its clients, during the year Ferreyros by a milestone set by a team: Record sales of more than sold more than one thousand machines throughout the US$1 billion reached in Peru and Central America. Hand country, promising to offer first class post-sales support. in hand with this significant outcome and owing to the 2. THE FERREYROS ORGANIZATION EXPANDS ITS BORDERS FERREYROS ESTABLISHING MILESTONES The Ferreyros Organization achieved in 2010 a historic respective countries. Our internationalization already step: It reached beyond the borders of Peru with the began to yield results by contributing to the success acquisition of the companies of Gentrac Corporation, of the corporation and through the exchange of better representatives of Caterpillar in Guatemala, El Salvador practices. and Belize, leaders in the sales of machinery in their 3. THE LARGEST HAVE ALREADY ARRIVED IN PERU FERREYROS ESTABLISHING MILESTONES They can load 400 short tons, are close to eight meters they are operating at more than 4,000 m.a.s.l. tall – equivalent to a three-story building – and they Thus, Ferreyros and Caterpillar express their commitment have 4,000 HP power. In 2010, the Caterpillar 797F mining to offer solutions to take the efficiency of its clients’ trucks, the world’s largest, arrived in Peru, where operations to their highest level. 4. A FIRM RELATIONSHIP WITH A LEADING DISTRIBUTOR FERREYROS ESTABLISHING MILESTONES James Owens, CEO of Caterpillar, visited Ferreyros in in the country. Owens visited the company’s facilities June 2010. It was a meeting to be remembered, which and shared some moments with the clients, evidencing reflected the importance that Caterpillar places on its the close relationship between Caterpillar and Ferreyros, distributor in Peru and on the good business perspectives existing since 1942. 5. A BROADER PORTFOLIO, WITH FIRST CLASS BRANDS FERREYROS ESTABLISHING MILESTONES Ferreyros expanded its array of products for We also launched successfully the line of Metso grinders underground mining with two new representations: – a global company headquartered in Finland – for Paus, of Germany, with utility equipment, payloaders construction. The company completes its portfolio with and low profile trucks and Oldenburg, of the United these brands, contributing to the productivity and States, with underground drilling equipment. operational safety of its clients. 6. MORE CERTIFIED SHOPS THROUGHOUT THE COUNTry FERREYROS ESTABLISHING MILESTONES In 2010, several of the workshops of Ferreyros received them through recertifications – with the Five Stars in important Caterpillar certifications.T he Components Contamination Control, the highest in this field. Repair Centers (CRC) of Lima and Arequipa, the Today we have twelve workshops bearing this award. Machinery Workshop of Arequipa and the workshops In addition, the Lima CRC was certified, for the fourth of Trujillo and Tarapoto were distinguished – some of year in a row, as World Class Workshop. 7. RENTAFER: PROMOTING RENTAL AND SALES OF SEMI-NEW EQUIPMENT FERREYROS ESTABLISHING MILESTONES For more than 15 years, Ferreyros has been offering the business unit, which in 2010 inaugurated its 14,000 m2 market heavy equipment rental and used machinery operations facility at Avenida Argentina. Rentafer has sales alternatives. This offer was integrated in a single a rental fleet consisting of about 300 units and offers and efficient channel:T he strengthened Rentafer Caterpillar semi-new and used equipment units. 8. MORE THAN 8,000 HANDS CONTRIBUTED TO BUILDING ITS SUCCESS FERREYROS ESTABLISHING MILESTONES With more than 4,000 employees in Peru and Central its efforts to include more young people into its team, America, the human talent at the Ferreyros Organization, Ferreyros promoted for the ninth year its Think Big was responsible for weaving the threads in 2010. In program, a joint initiative with Caterpillar and Tecsup, this scenario, the technical teams – more than half of to train specialized technicians, which for the first time the personnel – continued playing a key role. Among reached the City of Arequipa. 9. WE KEEP ON GROWING TO OFFER BETTER SERVICE FERREYROS ESTABLISHING MILESTONES Ferreyros seeks to keep on growing always. Hence, in will supply spare parts and components to all Ferreyros 2010, we added a 20,000 m2 facility in El Callao, where warehouses countrywide. A great boost for the logistics we will establish the Repairs Distribution Center that area of our company. 10. GOOD CORPORATE GOVERNANCE RECOGNITION 2010 FERREYROS ESTABLISHING MILESTONES Ferreyros’ good practices in the corporate governance contest. Furthermore, its stock was included, for area were once again distinguished. For the third the third consecutive year, in the Good Corporate time, in 2010 the company won the “Best Shareholder Governance Index of the Lima Stock Exchange. Treatment” award in the Good Corporate Governance RESPONSIBILITY STATEMENT This document contains true and sufficient information on the operations of Ferreyros S.A.A. during the year 2010. Notwithstanding the issuer’s responsibility, the undersigned assume responsibility for its content in compliance with applicable legal provisions. Mariela García Figari de Fabbri Víctor Astete Palma General Manager Controller’s Division Manager Patricia Gastelumendi Lukis Bernardo Chauca Quispe Administration and Accounting Manager Finance Division Manager Lima, March 31, 2011 FERREYROS ESTABLISHING MILESTONES LETTER FROM THE CHAIRMAN OF THE BOARD 06 AUDITED FINANCIAL STATEMENTS 56 OF DIRECTORS TO THE SHAREHOLDERS AND MANAGEMENT ANALYSIS Report of independent auditors Balance sheet MANAGEMENT REPORT 2010 10 Statement of income Brief summary of the company Statement of changes Commercial management in stockholders’ equity Value proposal Statement of cash flows Post-sales support Notes to the financial statements Equipment leasing Technological tools Customer training SOCIAL RESPONSIBILITY 126 Geographical coverage Employees Logistics management Shareholders Financial services provided to customers Community Financial management Environment Organization and Human Resources Suppliers Subsidiary companies and economic group Customers Appendices to the report Government and society CORPORATE GOVERNANCE 156 Information on Compliance with Good Governance Principles Corresponding to the 2010 Period FERREYROS establishing MILESTONES CONTENTS EDUARDO MONTERO ARAMBURÚ Director ÓSCAR ESPINOSA BEDOYA Chairman and Executive President BOARD OF JUAN PRADO BUSTAMANTE Director CARLOS FERREYROS ASPÍLLAGA Vice president HERNÁN BARRETO BOGGIO Director JUAN MANUEL PEÑA ROCA Director DIRECTORS ANDREAS VON WEDEMEYER KNIGGE Director ALDO DEFILIPPI TRAVERSO Director implementation of a quota system, resulted in very low operating levels among the fleet LETTER FROM THE CHAIRMAN of fishing vessels, which are expected to rise in 2011 in line with the species protection OF THE BOARD OF DIRECTORS policy. On the other hand, fishing for direct human consumption continued to increase, providing growth opportunities for the smaller-scale fishing fleet. Agriculture continued to grow with the expansion of a portfolio of widely cultivated In the year 2010, Peru once again experienced remarkable growth, with a nearly 9% export products that complement traditional exports. increase in its gross domestic product (GDP), thereby consolidating a ten-year period of uninterrupted growth in which the GDP increased a cumulative 73%. In line with this As a result of this favorable development in nearly all of the country’s economic sectors, performance, business sector confidence rose to the high levels observed in the second there was greater demand for Ferreyros and its subsidiaries’ products and services quarter of 2008, which is reflected in the confidence index published by Peru’s central in 2010, which enabled them to surpass the US$ 1 billion sales mark for the first time. bank, Banco Central de Reserva. The performance of other macroeconomic variables, The organization’s consolidated sales comprised those made in Peru, amounting to such as cumulative inflation, which was only 2.1%; the 2.8% appreciation rate of the US$ 181 million, and those made by its subsidiaries abroad, amounting to US$ 91 million. nuevo sol against the United States dollar; and the fiscal deficit which was only 1% of The total amount of US$ 1.045 billion, represents an increase of 42% compared to GDP, contributed to the continuance of a scenario conducive to business activity. the preceding year and 208.4% for the five-year period from 2005 to 2010. In this context, private investment grew 22.1% over the year, while public investment Ferreyros continued adding new products and services to its portfolio in order to better rose 26.5%, driving the capital goods and services industry in which Ferreyros and serve its customers’ needs. In addition to the sale of new equipment, it continued its subsidiaries operate. Consequently, the year was marked by increased activity and offering used units, engines and machinery under leasing agreements, financing, training continuous execution of investments in all of the sectors that the organization serves. for customers’ operators and technicians, and repair and maintenance services, as well