Mercadona

Mercadona ANNUAL REPORT 2010

• Annual Report 2010
  • See Annual Report.PDF
  • Accessible version of Annual Report

Mercadona Environmental Policy 2010

• Environmental Policy
  • PDF version
  • Accessible version of Environmental Policy

Mercadona ANNUAL REPORT 2009

• Annual Report 2009
  • See Annual Report.PDF
  • Accessible version of Annual Report

PRESS RELEASE

Index

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PRESS RELEASE

News index

MERCADONA'S TURNOVER ROSE BY 6%, TOTALING 16,485 MILLION EUROS IN 2010

After taking steps to enhance productivity and innovation and to streamline its product line to adapt to the needs of its customers

• The company created 1,500 new direct permanent jobs, increasing its total workforce to 63,500.
• The 4% drop in prices in 2010 resulted in savings of 980 euros per household per year, translating into savings of 2,200 million euros for its customers and for the country's economy following the 14% drop in prices since 2008.
• The net profit of 398 million euros, 2.6% of its sales, represents a return to the operating figures reported in 2008.

valencia, March 10, 2011

As a result of taking steps to enhance productivity and innovation and to streamline its product line to adapt to the needs of its customers, Mercadona posted a turnover of 16,485 million euros in 2010, representing a 6% increase over the previous year. Over these twelve months, the company sold over 8,532 million kilos and liters (kiliters), 7% more than in 2009. This sustained growth allowed for the creation of 1,500 new jobs, all of them permanent and direct, bringing the total number of employees to 63,500.

At the close of 2010, the net profit was 398 million euros, a figure that represents 2.6% of its turnover. A 47% increase over 2009, the profits attained are similar to those reported by Mercadona at the close of 2008. These figures reflect the efforts made by Mercadona's employees, suppliers and integrated suppliers to adapt to the needs of the over 4.4 million households that place their trust in the company.

2,200 million euros in savings for customers

As part of its pledge to optimize costs and processes so as to lower prices while maintaining food safety, product quality and its commitment to adopt those innovations that provide true value to its customers, Mercadona managed to reduce the cost of the "shoping cart menu" by 4% in 2010, a figure that climbs to 14% if we consider the drop in prices from the previous year. This reduction translated into savings in a family's food budget of 980 euros a year compared to 2008, and amounts to savings of 2,200 million euros for Mercadona's customers and, consequently, for the country's economy.

The employees' commitment also resulted in a 5% increase in productivity with respect to 2009 which, added to the accomplishment of the individual and collective goals set out by the company, led to the distribution of a variable bonus of 210 million euros among the staff as part of the company's policy of profit-sharing.

Mercadona President Juan Roig stated that "we are very pleased with the results obtained by Mercadona in 2010. These results show that in order to ensure the company's future, we must make bold decisions, even if they are unpopular and cumbersome. As a result of this, of working better and more, and of reintroducing the Culture of Endeavor, we managed to increase our customer base and our turnover, in addition to returning to the profit levels of 2008." Roig added that "the crisis is not over yet" and that "it is possible to advance and grow, generating wealth and creating jobs even in these difficult times. The 2008 fiscal year marked a turning point in the company's history and the beginning of a strategy whose outcome we now see in a positive light."

Juan Roig, presidente de Mercadona, ha subrayado que "estamos muy satisfechos de los resultados alcanzados por Mercadona en 2010. Estos resultados demuestran que, para asegurar el futuro de la compañía, es necesario tomar decisiones arriesgadas, aunque sean impopulares y molestas. Y, como consecuencia de ello, de trabajar mejor y más, y de reintroducir la 'Cultura del Esfuerzo', hemos logrado incrementar el número de clientes y la facturación, además de recuperar la cifra de beneficios que alcanzamos en 2008". Juan Roig ha añadido que "la crisis aún no ha acabado" y que "es posible avanzar y crecer, generando riqueza y creando empleo a pesar de los difíciles momentos. El ejercicio 2008 supuso un punto de inflexión en la trayectoria de la compañía y el inicio de la estrategia cuyo balance hoy valoramos positivamente".

Innovate: develop initiatives that offer customers added value

In 2010, Mercadona worked jointly with its suppliers and integrated suppliers to renew its selection, implementing only those innovations that the customer is willing to pay for while ceasing all that which does not add value. Among the examples of this innovation and collaboration are the initiatives carried out with the Bonnysa Agroalimentaria, Lacasa, Bodegas Ontañón, L'Oréal, RNB Cosméticos, Pescanova, Ubesol-Maverick, Chocolates Valor and Embutidos Monter suppliers and integrated suppliers. The measures adopted by all of these companies, which included launching new products, optimizing packaging and streamlining their selections, led to sales of these products that were above the market average.

These twelve months also saw Mercadona report on the measures it is taking to comply with the Integrated National Plan for Waste to reduce the consumption of single-use plastic bags by educating customers, introducing reusable bags and charging for them.

Investments 2010

In 2010 Mercadona continued investing at a pace that matched that of previous years, earmarking 575 million euros for various projects. Specifically, the company closed out the year with 1,310 supermarkets, 46 net stores more than in 2009, resulting from the opening of 60 supermarkets and the closing of 14. A significant portion of the money invested was devoted to outfitting and refurbishing 32 supermarkets to bring them up to the company's current standards, as well as construction work on the Villadangos del Páramo (León), Guadix (Granada), and Pla-za (Zaragoza) logistics blocks.

Forecast for 2011: "Culture of Endeavor" and Leadership as growth factors

For 2011, Mercadona plans to invest almost 600 million euros, primarily to open 60 new stores, to refurbish its supermarkets, to finish the Villadangos del Páramo (León) logistics block and to construct the Guadix (Granada) and Abrera (Barcelona) logistics blocks.

For its president, Juan Roig, "2011 poses a new challenge for Mercadona. The crisis continues and we are going to strive to fulfill our commitments, which include conveying to Society that the way out of this crisis is to engage in a 'Culture of Endeavor.' Likewise, we are going to keep promoting leadership in decisionmaking among our employees, as this is the only way to improve constantly in our daily jobs and to become a highly efficient company."

Mercadona Project

Category	2009	2010	Remarks
Stores	1,264	1,310	46 net stores (60 openings and 14 closings)
Sales units (kiliters*)	8,000	8,532	+7%
Sales w/ VAT**	15,505	16,485	+6%
Net profits**	270	398	Represents 2.6% of sales
EBITDA**	725	1,000	+38%
Investment**	573	575	=
Equity capital**	1,885	2,255	+20%
Productivity	+3%	+5%	+2 percentage pt. increase
Employee bonuses**	200	210	+5%
Workforce	62,000	63,500	1,500 new employees
% permanent	100%	100%	100%
Market share in m2	12,8%	13,1%	+0.3 percentage pt. increase

• * In millions of kilos/liters.
• **In millions of euros.

• Juan Roig during the presentation of Mercadona's results for 2010.

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ANNOUNCING THE NEW KING JAIME I PRIZE FOR ENTREPRENEURSHIP

• In an effort to recognize entrepreneurial initiative, this new prize category will be included as part of the King Jaime I Prizes.
• This seventh prize category is sponsored by Mercadona, EDEM and AVE.

valencia, 20 april, 2010

The new "King Jaime I for Entrepreneurship Prize" was officially announced today in Valencia, hosted by the King Jaime I Prizes Foundation. This seventh prize category was created out of a firm commitment to recognize and award the efforts of young businesspeople who stand out for their pursuit of entrepreneurial ventures, contributing with their innovative ideas to the creation of companies that drive the development of the Spanish economy, generating employment and wealth. The prize is granted with the understanding that it will be reinvested in order to promote and uphold the values it represents.

This new prize, sponsored by Mercadona, the Escuela de Empresarios (School of Businesspeople), or EDEM, and the Asociación Valenciana de Empresarios (Valencian Association of Businesspeople), or AVE, will be annual in nature, featuring prize money in the amount of 100,000 euros, a sum equal to that distributed in the other six categories. The jury will be made up of distinguished figures from the country's business and financial sphere, and will be governed by the same terms, formalities and procedures applying to the Jaime I Prizes annually organized by the Foundation and the Royal House.

Santiago Grisolía, Executive President for the Jaime I Prizes, responded very positively to the fact that, during these times of economic crisis, a prominent series of Valencian businesspeople have opted to support a new prize designed to incentivize and recognize the value of new business projects undertaken with enthusiasm. Grisolía, on behalf of the President of the King Jaime I Prizes, Francisco Campos, acknowledged that, through this prize, the King Jaime I Prizes take on special relevance in Spain, establishing in the science and research world, both in Spain and internationally, a recognition of the merits of those individuals whose ideas, energy and decisiveness serve to bolster the Spanish economy. In addition, the Valencian scientist noted that "having 20 Nobel Prizes on the juries of the King Jaime I Prize contributes even further, if that is possible, to the internationalization of these prizes."

According to Juan Roig, President of Mercadona and sponsor of this prize, "initiatives like this one are essential given the situation today, in which increasing productivity must be considered one of the keys to overcoming the recession. The creation of wealth depends more than ever on the dreams of our entrepreneurs. With their innovative ideas they help to build a better future and generate employment through efforts in which they are risking their own finances. The fact that they are pursuing and realizing their business dreams should be recognized by our society. It is in this spirit that Mercadona, as part of society, is committed to promoting and aiding those entrepreneurs who spot opportunities where others do not, take on the challenge of putting their ideas into practice, and serve as engines driving our country's economic growth and progress."

Meanwhile, EDEM President Manuel Palma underscored that "it is satisfying to have the opportunity to sponsor this entrepreneurial initiative, in cooperation with the King Jaime I Prizes Foundation, as the encouragement of the entrepreneurial spirit forms part of the EDEM's mission. Our foundation strives to foment entrepreneurship, and we believe that this prize is a good tool to this end. To launch and lead projects, working more and better each day to carry them out, is the way to generate business and growth."

AVE President Francisco Pons stated that: "we consider participation in a prize of these characteristics to be totally in line with the AVE's mission, especially as it relates to the celebration of the businessperson as a figure. Businesspeople and entrepreneurs form the base of our organization, and it is precisely during these trying times of economic crisis that it is more necessary than ever to recognize the day-to-day work of entrepreneurs, whose efforts mean jobs and wealth for Spanish society."

The Jaime I Prizes Foundation, through the creation of this award for entrepreneurs, will now boast a total of seven different categories, joining the six already established which are dedicated to: Basic Research, Economics, Medical Research, Environmental Protection, New Technologies and Urban Design, Land Use and Sustainability.

• Official Announcement of the Jaime I Prize for Entrepreneurship.

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MERCADONA SOLD 8 BILLION KILOS/LITERS IN 2009, 8 % up from 2008

The initiatives adopted by the company in 2009 allowed it to cut prices by 10%, saving Spaniards and the country's economy some 1.5 billion euros

• The company invoiced 15.5 billion euros, 1% more than in 2008, and in the same period achieved a net profit of 270 million euros, down 16% .
• In 2009 Mercadona not only maintained its jobs, but actually created 500 new positions, expanding its total workforce to 62,000 people.
• Mercadona distributed 200 million euros in bonuses among its workers, and increased productivity by 3%.

VALENCIA, 4 MARCH, 2010

As part of the strategy which Mercadona decided to put into practice in October of 2008, which involved measuring performance by customers and sales units in terms of kilos/litres (kilitres), rather than in euros, in 2009 the company attracted 100,000 more customers each day across all of its supermarkets, and sold over 8 billion kilitres, 8% more than in 2008. These figures illustrate the soundness of the measures taken by the company in order to drop prices without damaging food safety or quality. Thanks to this, and our return to simplicity and management of an efficient selection, the company is able to offer the best values on the market to the over 4.3 million households which place their trust in it.

As a result of these actions Mercadona invoiced 15.5 billion euros in 2009, 1% more than in 2008. The after-tax profits posted by the company were down 16% to 270 million euros, though this outcome was better than that forecast by the company, thanks to the loyalty of our customers and an increase in the number of their purchases.

Over these twelve months, Mercadona has worked on the commitments it adopted to take its focus off of just profits, return to simplicity, have an efficient selection, exploit reductions in raw material costs in order to lower prices, and to put into practice only those initiatives which add value for customers, and those for which they are willing to pay. All of this has allowed us to pass on savings to family budgets of some 720 euros per household during the year (a 10% drop in grocery shopping costs), which has added up to overall savings of 1.5 billion euros for customers across the country. As Juan Roig has stated: "our responsibility as a company is to look at every last cent, because with savings of only cents on something, we can ultimately save millions of euros in our entire process."

In 2010 Mercadona is going to continue to apply strategies to return to simplicity, feature an efficient selection, and get drops in raw material costs to yield price reductions, as we continue to "innovate in pricing" - pinching every last penny in order to lower prices.

Job Creation

Over the course of these last twelve months, Mercadona has respected its commitment to stable employment by not only maintaining the size of its workforce, but actually expanding it by 500. All workers have permanent contracts, and our total staff now totals 62,000 workers. In addition, in line with our policy of promoting quality positions and helping our employees to balance their work and family lives, worthy of note are the 3,900 female employees who in 2009 enjoyed the possibility of expanding their maternity leave by one month.

Moreover, on last March 1st Mercadona distributed over 200 million euros in goal-based bonuses among its workers, up 5% from 2008. The company would like to recognize the effort and involvement of all of its workers in pursuit of its objectives, which allowed Mercadona to increase its productivity by 3% relative to the preceding business year.

In 2009 Mercadona maintained its investment levels, with figures similar to those from previous years. 573 million euros was plowed into a series of different categories, such as the opening of new supermarkets. Specifically, the company finalized the business year with 1,264 stores, with a net increase of 54 from 2008 as the chain opened 74 locations while closing only 20. Another significant portion of investment funds was dedicated to equipping and refurbishing supermarkets to bring them up to the company's current quality standards, as well as into work being done on the Villadangos del Páramo (León) logistics block.

2010 Forecasts

In 2010, Mercadona intends to make an investment of close to 600 million euros, to be spent mainly on the opening of 60 new stores, the refurbishment of supermarkets, the completion of the Villadangos del Páramo (León) logistics block, and the initiation of work on the Guadix (Granada) logistics block as well. Also, the company plans to boost its sales by 6%, up to 8.5 billion kilitres. This objective involves, according to John Roig, "continuing to work better and more, because it is the way that we have chosen at Mercadona to overcome the economic crisis, striving to continue doing only what adds value to our customers, and pinching pennies to continue lowering prices, all without touching the food safety and quality of our products, to boast overall grocery shopping with the best quality and lowest prices on market: Customized Shopping. This is what our customers are asking us for, and it is our responsibility as a company at a time when we all must speak more about our obligations and less about our rights. The crisis will end when all of us together manage to get our productivity levels in line with our country's standard of living."

Mercadona Project

Category	2008	2009	Observations
Stores	1210	1264	Net: 54 add. stores
Sales in kilitres*	7400	8000	+8%
Sales w VAT**	15379	15505	+1%
Net profit**	320	270	-16%( Represents 1.9% of sales)
EBITDA**	838	725	-13%
Investment**	572	573	=
Own funds**	1641	1885	+15%
Distribution to workers	190	200	+5%
Workforce	61500	62000	500 new workers
% of Permanent Employees	100%	100%	100%
Market share in m²	12,6%	12,8%	+0.2 point increase

• *In millions of kilos/litres.
• **In millions of euros.

• Juan Roig showing examples improvements made to different products to save money and cut prices.

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MERCADONA PRESIDENT JUAN ROIG RECEIVES THE PRINCE PHILIP PRIZE FOR BUSINESS EXCELLENCE IN RECOGNITION OF HIS PROFESSIONAL CAREER

• Juan Roig stresses that these prizes serve as "recognition for all Spanish businessmen who have decided to be entrepreneurs."

MADRID, February 3, 2010

Mercadona President Juan Roig received the Prince Felipe Prize for Business Excellence from Her Royal Highness the Princess of Asturias, in recognition of his professional career, an award officially granted by the Ministry of Industry, Trade and Tourism which aims to recognize Roig's "enterprising and innovative character, which has turned Mercadona into a pioneering company distinguished by its sound human resources practices and its corporate social responsibility, in addition to its support for policies based on environmental sustainability.

The prize's jury, chaired by Jose Angel Sanchez Asiaín, sought to underscore that the company's selection by the Ministry of Industry, Tourism and Trade, was a result of Mercadona serving as "a model of good personal and professional behaviour for other business people, and a reference point for young people and entrepreneurs". It also stressed that Roig "managed for Mercadona to serve as a business model known today for its innovation and its constant pursuit of competitiveness", as the President has "built an organization that lives off and for its competitiveness".

Juan Roig expressed his deepest thanks to the jury of the Prince Philip Prize, and to the Ministry of Industry, Tourism and Trade on behalf of all the winners, for the various awards that were granted. Mr. Roig also voiced his "satisfaction and pride, receiving this award on behalf of the 62,000 people making up Mercadona today, and also of the company's integrated suppliers and manufacturers - great innovators whose efforts have contributed to the business model that we embrace today, as well as on behalf of all the customers who frequent our establishments each day."

The President of Mercadona also added that "this award will help us to continue transmitting to society the fact that in order to overcome the economic crisis we have to work better and more and increase productivity, doing things that deliver more added value to our customers, and at the lowest cost". Juan Roig pointed out that these awards were also an expression of appreciation "of all those Spanish business people who have chosen to be entrepreneurs, and who, along with the workers at our businesses, contribute to the welfare of our society through the creation of wealth and employment". The president of Mercadona also had words of gratitude for his wife Hortensia Herrero, with whom, he said, "I want to share this prize because she helped me, first, to be a good student, to improve Mercadona day after day with her many tips and opinions, and also because she gave me the best gift a person could ever receive: four marvellous daughters".

At present, as was recognized by the jury, Mercadona heads the national customer satisfaction ranking in the food distribution sector, thanks to the introduction of a management model based on overall quality and a focus on Siempre Precios Bajos (Always Low Prices). The company's business model embraces permanent prices, permanent workers and permanent suppliers - all designed to attract permanent customers.

Mercadona, a Spanish chain of supermarkets with entirely domestic capital, posted a turnover of 15.379 billion euros in 2008. Currently the staff is composed of 62,000 people, all of them with permanent contracts.

• Mercadona President Juan Roig accepts the Prince Philip Prize for Business Excellence from Her Royal Highness the Princess of Asturias, in recognition of his professional career.

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MERCADONA AND UNION REPRESENTATIVES SIGN THE EQUALITY PLAN AND NEW BUSINESS-LABOUR AGREEMENT

• The company's management and Intercenter Business Committee sign the equality plan and business-labour plan for the next four years.
• The drive to maintain and even create new and stable jobs, along with the other steps taken, were designed to involve all parties in improving the company's productivity and efficiency.

VALENCIA, December 17, 2009

Mercadona signed its new business-labour plan and Equality Plan with representatives of the General Workers Union (U.G.T. ), Comisiones Obreras (CC.OO) and the Independent Union (S. I.). Both agreements come into force on January 1, 2010 and are to have a duration of 4 years.

With the signing of this new Collective Bargaining Agreement, Mercadona, which currently has a staff of 62,000 workers, maintains its commitment to stable employment, even committing to create a minimum of 1,000 new jobs, all of them with permanent contracts, during the life of the Agreement .

Another of the commitments made by the company through the signing of the new Agreement was the improvement of all its staff's purchasing power, as employees were guaranteed pay raises adjusted to the CPI, in addition to a plus over it, depending on the professional group to which workers belong. Pluses will range from 0.5 percent to 2.4 per cent.

Along this line, the director of the Mercadona's Labour Division, Francisco Aparicio, stated that "at times like this, when the current economic situation is difficult, we are satisfied with the commitments made by our staff representatives". Similarly, with regard to what was agreed, Aparicio wished to emphasize a company principle that has been present throughout the negotiations: "first comes the company, which has to give its workers - among other things - stability and profit-sharing from the capital generated by the company, and in turn has to receive from them their dedication to continue to perform their work better every day, and to pursue improvements in the company's productivity and the efficiency of its processes. Only in this way can we have a company that is sustainable over time, and on this we all agree."

In addition, the Equality Plan signed today makes coherent, gives form to, and drives a line of action in favor of, equal opportunity, a direction followed by Mercadona since the year 1993 when the company started to implement its Total Quality Model. Mercadona's policies have historically been based on a series of positions embracing equality between men and women, both with regards to access to employment, as well as the possibility of ascending to management positions, and including measures designed to help workers balance their work and family lives, a continuing tradition which the Equality Commission was able to ratify in its diagnosis of the company's situation. In order to continue to promote and improve true equality between men and women, the Plan calls for an Equality Official, who is to advise the organization in this area. The Company will also launch information and awareness campaigns aimed at its staff, stressing the importance of tasks being distributed with equal obligations.

The President of the Intercentres Committee, Inma Curciel of the U. G. T. (General Workers Union), stated that "a satisfactory agreement was reached for all workers, renewing the dedication and commitment to the maintenance and the creation of stable employment, which undoubtedly will serve to bolster the company's productivity". CC.OO. union rep Yolanda Carmona stressed that "the wage and productivity improvements included, along with the dedication to measures for the promotion of effective equality between the company's male and female workers, are a clear indication of the important responsibility that Mercadona continues to embrace over the next four years with its staff".

Sindicato Independiente's (Independent Union) union representative Pepe Pintado also wished to stress that "managing to include initiatives to continue promoting a balance between work and family life is beneficial and productive for all."

The commitments made are in accord with the company's policy and its implantation of its Total Quality Model, which Mercadona has based itself around since 1993. This approach includes an insistence that all the company's workers have fixed contracts, as well as a series of pioneering measures to help employees balance their work and family lives.

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MERCADONA AND SCA, EXAMPLES OF SUSTAINABILITY AT THE COPENHAGEN CLIMATE CHANGE SUMMIT

• Through this initiative, carried out in cooperation with integrated supplier SCA, CO2 emissions were reduced by 2,400 tons.

COPENHAGEN, December 14, 2009

Mercadona, thanks to the initiative it launched in 2005 along with its integrated supplier of cellulose products, SCA, will be one of the examples of sustainability cited at the Climate Change Summit in Copenhagen. This conference will highlight how the companies' efforts since May 2005 to compact cellulose products through the extraction of excess air represents an important step to respect the environment and save resources.

"Thanks to the effort and the joint work between these companies to reduce emissions and increase efficiency through innovation and investment in measures aimed at saving natural resources, they have helped to streamline and rationalize the supply chain". The effort made by both companies, according to Margarita Muñoz, Mercadona's Environmental Director, "has shown that the environment and efficiency are not exclusive factors, and we must be responsible with the environment in order to improve competitiveness and be able to reduce costs. This is the path we have chosen, even while we recognize that we still have much to do in this area".

The implementation of this improvement, a pioneering effort in the sector, has led to an 11,000-ton reduction in cardboard use and a 700-ton cut in plastic. In addition, thanks to the introduction of this measure, since May 2005 CO2 emissions released into the atmosphere dropped by 2,400 tons, as the equivalent of 16,000 truck runs were avoided, all thanks to improvements in product storage.

In line with Mercadona and SCA's commitment to sustainability, it's also noteworthy that these cellulose products, manufactured under the Green Forest brand, feature the WWF/Adena logo – a mark certifying that both companies use timber from sustainable forests.

The investment of more than 120 million euros made by SCA Spain in order to produce more compact toilet paper rolls, kitchen towels, napkins and tissue has meant significant savings for Mercadona customers, as all the improvements were targeted at reducing product prices while maintaining quality throughout.

SCA Spain (Puigpelat-Tarragona) belongs to the Swedish group SCA, the world leader in paper goods and consumer goods. The company develops, manufactures and markets personal hygiene products, tissues, napkins and toilet paper, packaging, printing paper and solid wood products. SCA appears on the most prestigious sustainability indexes, such as the Dow Jones STOXX Sustainability Index and the Dow Jones Sustainability WORLD Index. In addition, SCA was recognized in 2009, for the fifth consecutive year, as one of the world's 100 most sustainable companies, appearing as such on Canada's list of Corporate Knights, Inc.

In 2008, adding to the company's historic achievements in the areas of the environment and sustainability, it was also recognized by the U.S.'s Ethisphere Institute as one of the most ethical companies in the world. In 2007 it was recognized by Ethical Research Services (Eiris) and the British newspaper The Independent, which designated it the world's second most environmentally-friendly company.

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MERCADONA DROPS ITS PRICES BY AN AVERAGE OF 10%

• On a typical average monthly shop of 600 euros, the saving passed on to the end customer is 60 euros.
• This effort represents an injection of some 100 million euros a month into the Spanish economy.
• This reduction has been made possible thanks to a range of measures taken by the company, whose savings have been passed totally onto the price of the end product.

Valencia, 18 February 2009

In the past four months, Mercadona has managed to significantly reduce its product prices with the result that on a typical average monthly shop of 600 euros customers are now saving some 60 euros over the same period.

This reduction, of an average of 10%, has been made possible thanks the decision made by the company last October to adapt to the current situation and reduce the total expenditure on shopping that its customers were calling for. Thanks to this action, Mercadona has not only saved money for more than four million households who shop at its supermarkets, but is also injecting more than 100 million euros per month into the Spanish economy which in turn helps to stimulate consumer spending.

To put this into action, over the last few months Mercadona has undertaken an in-depth review of the more than 9,000 products in its range, eliminating anything that represented an unnecessary additional cost to products. During this product optimization task, around 800 products were withdrawn, 400 of the company's own brands (Bosque Verde, Deliplus, Hacendado and Compy) and 400 from other brands. In every case these products were either not meeting sales turnover criteria, or they duplicated other products, or, far from offering customers added value, they did not address genuine needs but increased the final cost of the average supermarket shop. Also, loose fruit and vegetable sales have been implemented in around half the supermarkets, making it possible to reduce the price-per-kilo of these products.

In every case, the savings achieved as a result of these decisions have been passed on 100% to the customer as they have only been used to reduce the end price of the products. Thanks to the excellent response achieved thus far, Mercadona will continue to review its product range on a permanent basis with the aim of offering its customers the highest quality products at the lowest prices on the market.

Mercadona, the Spanish supermarket chain backed by 100% Spanish capital, currently operates 1,210 supermarkets across Spain and employs more than 60,000 staff on permanent contracts. In a clear commitment to the Spanish agrifood industry, in 2008 Mercadona spent 14,000 million euros on products and services from more than 2,000 Spanish suppliers. This figure represents 1.4% of the Spanish GDP.

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PAULINO RIVERO OPENS MERCADONA'S NEW LOGISTICS CENTRE IN INGENIO

• The company has invested 42 million euros in this new logistics centre, directly creating 200 permanent jobs.
• The new logistics centre, the company's eighth, has been designed to maximise use of sunlight, enabling an energy saving of 40%.

Ingenio (Gran Canaria), 18th June 2008

The president of the regional government of the Canary Islands, accompanied by the Chairman of Mercadona, Juan Roig, the President of the Inter-Island Council and representatives of the local authorities have officially opened the company's logistics centre in Ingenio, which will supply the companies supermarkets on the island.

With the start-up of this new centre, which represents an investment of 42 million euros, Mercadona reinforces its commitment to the Canary Islands, a region from whose suppliers Mercadona made 291 million euros worth of purchases in 2007. The start-up also creates 200 direct permanent jobs, increasing the number of staff the company employs in the Canary Islands to 3300.

In order to save energy and enhance the welfare of our staff, the new logistics centre has been designed to take maximum advantage of natural light, using translucent panel which allow sunlight to flood in, enabling an energy saving to the tune of 40%. The very latest machinery has also been installed which allow 280 tonnes of material (plastics, cardboard and polystyrene, amongst others) to be recycled every year. This will allow Mercadona to continue making advances in waste management.

Located in the Las Majoreras industrial park, the logistics centre comprises some 90,000 square metres, 41,000 of which are covered by buildings such as warehouses for meat products, fish, fruit and vegetables, frozen goods, refrigerated gods, non-perishable goods and packaging. The centre has 50 loading bays, and apart from using radio-frequency systems, it has also has automatic strapping machines, which helps to reduce the risk of over-exertion by our staff when packing and securing pallets.

The Ingenio centre in Gran Canaria is Mercadona's second in the Canary Islands and the company's eighth overall, currently having other logistics centres in Riba-Roja de Túria (Valencia), Antequera (Málaga), Sant Sadurní de Anoia (Barcelona), San Isidro (Alicante), Huévar (Sevilla), Granadilla de Abona (Tenerife) and Ciempozuelos (Madrid). They make up a logistics network comprising more than 525,000 square metres, with which Mercadona can guarantee the efficiency of the supply chain. The company also has three other centres being built or at the planning stage, located in Villadangos del Páramo (León), Guadix (Granada) and Pla-Za (Zaragoza).

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MERCADONA'S TURNOVER REACHES 13.986 BILLION EUROS, A 15% INCREASE

• With a net profit of 336 million euros, 2.6% of the sales figures, 160 million euros have been shared with employees.
• In 2007, 3000 new permanent posts were created which increases the number of staff to 60,000.
• Company productivity has increased by 20% over the last two years.

Valencia, 6th March, 2008

Mercadona has attained a turnover of 13.986 billion euros in 2007, which represents 15% growth compared with the previous year and which has been achieved through the opening of new stores throughout the year and an increase in like-for-like sales. This year the company has achieved after-tax profits of 336 million euros, 2.6% of the total sales figures. As targets have been hit, the company has shared 160 million euros with its workers in the form of target-driven bonuses. This figure means that for every four euros of profit made by Mercadona in 2007, one euro has been shared with staff (table 1).

During these twelve months, the company has maintained its commitment to promoting stable employment, with 3000 new staff being hired, all of them on permanent contracts, increasing the number of staff to 60,000. In the same way, as part of the company's policy of creating quality positions and of striking a better work-life balance, it is important to note that the more than 3700 employees have taken advantage of the opportunity to extend their maternity leave by an extra month. This figure demonstrates the success of an employment model based on stability and on initiatives which seek to reconcile family and work responsibilities, reflected by the fact that, at Mercadona, the percentage of women employees who decide to have a child is 9.5%, double Spain's birth rate which stands at 4.2%.

The success of our employment policy, along with the moves made in recent years to improve company processes has caused productivity to increase by 20% over the last two years, a ratio which is in large part responsible for the company's sustained growth.

During this twelve-month period, Mercadona has made investments to the tune of 602 million euros in various areas, such as the opening of new supermarkets. In fact, the company ended the year with 1137 stores, 87 more than in 2006, as a consequence of the opening of 100 supermarkets and the closure of 13. Another important element of this investment programme has been the refurbishment of 60 supermarkets in order to bring them up to current company standards, as well as the completion of the first phase of the logistics centre at Ciempozuelos (Madrid) and the start of work on the logistics centre at Villadangos del Páramo (León).

Plans for 2008
In 2008, Mercadona plans to invest 600 million euros which will mainly be put towards the opening of 100 new stores, the refurbishment of 40 supermarkets, the completion of the work on the logistics centre at Ciempozuelos (Madrid) and the construction of the logistics centre at Villadangos del Páramo (León).

During this same time period, the company will allot significant resources to develop its model of selling pre-packaged fresh goods at manned counters, with new cold meat counters being put in place in more than 800 stores. With this move towards the sale of pre-packaged goods exclusively, rather than taking on-the-spot orders, which will be completed in 2009, the company will continue in its aim to eliminate excess effort and workplace injuries, as well as constantly improving food hygiene and guaranteeing the traceability of point of origin of the products. The total investment made by Mercadona and its suppliers for this project will be of the order of more than 180 million euros.

In order to encourage innovation amongst our suppliers, the third edition of the Premios Sorolla Innovación Mercadona (Mercadona Sorolla Innovation Prize) took place recently. All of the companies suppliers cast their votes and Panificadora de Alcalá took the prize, awarded for the development of bread which stays soft and fresh for 7 days and which is also a natural flour-based product made without preservatives.

Social Productivity

In 2007 the company has continued to develop is model of sustainable transport, using a complementary combination of rail, water and road transport. This has contributed to a 120,000 tonne reduction in CO2 emissions. At the same time, the efficiency and competitiveness of the company has also improved, as these measures have provided a savings of 3 million euros, which reaffirms our conviction that being environmentally responsible improves competitiveness and helps to reduce costs.

Table 1. SHARE OF PROFITS GENERATED BY MERCADONA IN 2007

Item	In millions of euros
TAXES	153
EMPLOYEE BONUSES	160
NET PROFIT	336
TOTAL	649

Table 2. PROJECT MERCADONA

Item	2006	2007	Notes
Stores	1050	1137	87 new stores in total
Sales w/VAT*	12158	13986	+15%
Investments	565	602	+7%
Net Profit	242	336	2,6% of sales
EBITDA*	655	850	+30%
Capital and reserves*	1035	1350	+30%
Staff	57000	60000	3000 new employees
% permanent	100%	100%	100%
Market share in m² **	11,5%	12,1%	0,6 increase %

• * In millions of euros.
• ** In terms of total area 2005/06.

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Index news

ESPERANZA AGUIRRE VISITS THE NEW MERCADONA LOGISTICS CENTRE AT CIEMPOZUELOS

• Mercadona has invested €300 million in R&D&I to create the first intelligent warehouse that eliminates overexertion and risks associated with workplace accidents.

Ciempozuelos (Madrid), December 14, 2007

The President of the Madrid Regional Government, Esperanza Aguirre, along with the Mayoress of Ciempozuelos Mª Ángeles Herrera, and Mercadona President Juan Roig visited Mercadona's new logistics centre located at Ciempozuelos, which will serve all central region Mercadona supermarkets.

Located at Ciempozuelos in the La Sendilla Industrial Park, the new logistics centre comprises an area of 200,000 m2 and includes a dry goods and a cold storage warehouse, both accounting for more than 80,000 m2 of constructed area and with a height of over 20 m.

With the startup of this new logistics centre, which represents an investment of €300 million, Mercadona reinforces its commitment to this region by providing a logistics centre that will supply more than 400 supermarkets. This project involves the creation of 500 permanent jobs, increasing the company's staff in the Madrid Region to more than 4,700 employees, all working at the 75 supermarkets that the company operates here.

This platform includes the most innovative technological advances and represents a new logistics concept. The transport of goods through the warehouse and the pallet preparation are carried out automatically or semi-automatically, with mechanical systems that limit employee exertion, creating ergonomic and high-quality job positions. This high degree of automation of the entire process permits the preparation of 20,000 pallets daily, completely eliminating manual handling and overexertion for the employees, which reduces the risk of workplace accidents.

For this project, Mercadona has designed a specific training plan of two to nine months in duration, depending on the position. Not only has this training plan been carried out in Spain, but also in Germany and the United States, accounting for a total of 160,000 training hours.

To reinforce its commitment to balancing its workers' family and professional lives, the logistics centre also houses a free creche for workers, with capacity for 82 children and its opening times adapted to the work shifts of the centre.

This logistics centre at Ciempozuelos is the seventh for the company. The other six that Mercadona currently has in operation are located at Riba-Toja de Túria (Valencia), Antequera (Málaga), Sant Sadurní d'Anoia (Barcelona), San Isidro (Alicante), Huévar (Sevilla) and Granadilla de Abona (Tenerife). All of these centres make up a logistic network that guarantees the efficiency of Mercadona's supply chain.

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News index

MERCADONA SHARES 167 MILLION EUROS AMONG ITS EMPLOYEES, ITS PROFIT UP 32%

• The company increases its productivity by 12 % and creates 3,400 new permanent jobs in 2006.
• Turnover up to 12,158 million euros, 18% more than in 2005.

Valencia, MARCH 6 2007

In 2006, Mercadona shared 167 million euros among its employees in bonuses for objectives reached, 60% more than in 2005. This figure, which means that for every 3 euros in profits generated by Mercadona in 2006, 1 euro was shared among employees (figure 1). The Administrative Board of the company, under proposal from the Board of Directors, agreed to this decision as a consequence of the excellent results obtained in 2006. For this reason, on this particular occasion, in addition to the 124 million euros originally allotted to bonuses for objectives reached, another 43 million euros have been given out to employees, bringing the figure to 167 million euros. Specifically, on March 1, staff members received a minimum net bonus of between 1,300 and 2,900 euros, according to seniority.

With regards to the profits, the company results after tax in 2006 have been 242 million euros, 32% more than in 2005.

During these 12 months that make up 2006, Mercadona's turnover reached 12,158 million euros, 18% more than in the previous year. This figure was achieved through store openings by the company throughout 2006 and an excellent sales growth with respect to comparable sales surface area, namely, 8% more than in 2006.

Additionally, within its policy of furthering quality employment and conciliation of working life and family life, oustanding is the company's decision in 2006 to launch in all its stores a Store Staff Standard, which has led to a milestone in the conciliation of employees' working life and family life and productivity during this year. Mercadona has managed to provide its employees with a continuous shift, either mornings or evenings, and are given their timetables one month in advance, working out the time necessary for each of their tasks. This fact, along with the constant innovation in processes and technology, has made possible the 12% increase in the company's productivity. At the same time, the company has held its commitment to the creation of stable and quality employment, by taking on 3,400 people, all under permanent contract, bringing the total staff number up to 57,000.

It is also worth mentioning that in 2006 more than 3,600 working mothers, that is, one out of every ten female employees at Mercadona, have been able to extend their maternity leave by one month, a fact which shows that the policy has been quite well-received within the company.

During these 12 months Mercadona has made investments of 565 million euros, allotted to different areas such as the implementation in all the stores of a wireless network that uses radio frequency technology. Investment has also been made in the opening of new supermarkets, the year-end figure being 1,050 stores, 90 more than in 2006, distributed among 46 provinces in 15 Autonomous Regions; and the refurbishment of 54 supermarkets in order to adapt them to the current standards of the company. At the same time, the company has made important advances in the construction of the logistic block in Ciempozuelos (Madrid) and has started construction work at the logistic block in de Ingenio (Gran Canaria).

With the aim to offer incentives to innovation among its suppliers, the holding of the second edition of the Premios Sorolla Innovación Mercadona (Mercadona Sorolla Innovation Awards), awarded to Conserva Escurís, after the joint vote by the company's intersuppliers, for their tuna tin easy-open system (solapin). This great improvement allows the tin to be opened in the same manner as a yoghurt tub, easily and risk-free, this innovation also having an effect on the rest of the tinned food intersuppliers, which are planning to study how this can be implemented in their own products.

Social Productivity

The company has coined the term Social Productivity, which will direct the lines of action in the future in order to "produce more with less natural resources". To this end, and among other measures, in 2006 the company carried out initiatives for the defense of the environment, such as the implementation in the Huévar (Sevilla) logistic block of a water saving system, which will, upon completion, permit water savings of more than 150 million litres of water, an amount equivalent to the annual water consumption of a town of 3,000 inhabitants. Similarly, in 2006, an investment of more than 6 million euros was made with an aim to save electricity, for which a heat recuperation system has been installed in 210 supermarkets, this system permitting the heating of the stores, taking advantage of the warm air that comes from the machines. This initiative has meant the savings of more than 16 million Kwh, equivalent to the annual consumption of a city of more than 11,000 inhabitants.

In 2007, Mercadona has planned to make an investment of almost 550 million euros, which will mainly be allotted to the opening of 100 new stores; the refurbishment of 60 supermarkets and the construction of the logistic blocks in Ingenio (Gran Canaria), Ciempozuelos (Madrid) and Villadangos del Páramo (León).

Figure 1. SHARING PROFITS GENRATED BY MERCADONA IN 2006

Items	In millions of euros
TAXES	120
EMPLOYEE BONUSES	167
NET PROFIT	242
Total	529

FIGURE 2. THE MERCADONA PROJECT

Concepto	2005	2006	Increase over 2005
Stores	960	1050	90
Sales w/iva*	10338	12158	18%
Gross Profit*	249	340	36%
Net Profit*	183	242	32%
Investment	519	565	9%
EBITDA*	521	655	26%
R. Propios*	811	1035	28%
Staff	53600	57000	3400
% under permanent contract	100%	100%	100%

• * In millions of euros.