The year 2006 was a year of growth and consolidation for Masisa. After the successful merger process carried out in 2005 that established the base for our long-term growth, in 2006 we focused on reviewing our competitive strategy for becoming the leading wood board company for furniture and interior architechture in Latin America with a long-term vision assuring the sustainable profitability of the business. Based on this review process, in October 2006 we determined our core business to be the production and marketing of wood boards for furniture and interior architecture in Latin America. This strategic decision provides a focus for operations, enabling us to prioritize our activities and align our efforts and those of our business partners, creating innovative products and services that meet the needs of our customers and generate value for all our shareholders.
Starting in 2007, Masisa was structured into four business units: boards (our core business); forestry; solid wood; and retail. The three complimentary business units focus their respective strategies and future investments to enhance the core board business, while continuing to generate value for our shareholders.
The following are the key aspects of our competitive strategy:
Focus on innovation and customer needs: In the markets in which we operate, we have developed into a wood products manufacturer whom customers seek out because of our focus on meeting and exceeding our customers’ needs. For example, in Mexico our particle board plant has been certified as “Green Partner,” which will allow us to target customers, such as Asian electronics manufacturers, who would otherwise have to purchase such certified particle board from Asian producers. Providing offerings such as this and continually delivering innovative products and services to our customers has lead to greater customer loyalty and interest and increased consumption of Masisa’s products. On the other hand, we are working to further develop a channel strategy which aims to develop new sales points (Placacentros), which will enable us to develop the markets in which we participate, diversify sales and generate the loyalty of a larger number of customers.
- Leverage growth opportunities in Latin America: We believe the increasing use of wood boards in the Latin American furniture industry, along with the unmet housing demand in countries in the region, will be sources of future growth for us. Based on this growth outlook, we are evaluating the possible construction of new industrial plants and/or entering into associations with existing market participants, mainly in Brazil.
- Expand and enhance the Placacentro distribution network: We plan to maintain a strong customer-focused approach throughout the production and distribution chain and continue to build upon our strong distribution network. We aim to focus upon our well-established Placacentro distribution network. We intend to continue with Masisa’s Placacentro network development program in Chile, Brazil, Argentina, Peru, Mexico, Ecuador, Paraguay, Colombia, Venezuela and Uruguay and to extend the Placacentro concept to new countries in the medium term as well. We plan to reach approximately 360 Placacentros branded stores in the region by the end of 2008. We aim to leverage our Placacentro network by offering a broader product mix, including more of our own products as well as third party products such as accessories and complementary products. We intend to develop the best store format in the best locations and offer a complete range of products and services targeted to carpenters and small and medium size furniture producers in order to become their preferred supplier through a “one stop shopping” concept. We will work closely with our customers to offer specific solutions to problems they face and to better satisfy their needs. We believe that the expansion of the Placacentro distribution network program will further enhance Masisa’s brand name and the distribution of its products.
- Continue to focus on sustainable development: Environmentally we seek to find more efficient uses of raw materials and by-products, and to continuously improve the environmental impact of our affiliates. In respect of social responsibility, our goal is that our operations and businesses have a positive impact on the surrounding communities and on our business partners. The aim of this strategic initiative is to reduce environmental risk and allow us to meet customer demand for products manufactured and marketed pursuant to international environmental standards.
A key component to our commitment towards sustainable development is our recent membership in the CCX, the first carbon bond stock market in the world. Our entrance into the CCX provides business and shareholder value generation opportunities for us. As examples of these opportunities, we have aligned our forestry expansion plans with our efforts to develop sustainable forests from which we can source our wood fiber needs and we are able to focus on improving our energy efficiency, as approximately 12% of our total consolidated production costs correspond to energy costs. Additionally, our membership in the CCX has strengthened the Masisa® brand as a leading company committed to addressing the effects of global warming, as we have committed to reduce our greenhouse gas emissions by 6% by the year 2010.