28
2016 ANNUAL REPORT
Operating Expenses
Operating expenses as at December
2016 totaled $192 million (accounting
for 8.89% of sales), down by $19
million (-8.96%) in relation to 2015,
when expenses rose to $211 millions
and accounted for 9.10% of sales.
Operating expenses as at December 2016
were mainly composed of salaries and
wages (accounting for 43.69% of total
expenditures). Expenses went down by
4% ($3 million) in relation to December
2015, due to: base salary reductions;
replacement of personnel; annuities;
vacations; contributions made to the
employee’s savings fund; and internships;
(total expenditures: $2 million).
DECEMBER 2016 – 2015
IN MILLIONS OF DOLLARS
TYPE OF EXPENSES
DEC-16
DEC-15
VARIATION PERCENTAGE
Wages
84
87
-3
-4.0%
Non-professional services
39
44
-6
-12.5%
Materials and supplies
11
15
-4
-25.0%
Current transfers
9
33
-25
-74.2%
Depreciation and amortization
50
32
18
56.1%
Applied expenses
(1)
(1)
0
-2.9%
TOTAL
192
211
-19
-62.4%
In regard to wages, it is worth mentioning
that the Collective Labor Agreement
was renegotiated. Savings of upwards
to $9 million are expected during the
agreement’s 3-year term.
“Services”, which account for a sizeable
portion of total expenditures (20.22%),
went down by 12.5% ($6 million) due to
a decline in shipping delays and the cost
of port-related services in Moín. These
expenditures originate from a payment
agreement with JAPDEVA, municipal
licenses, maintenance and repair
services, and general services, which in
total amounted to $9 million.
Also included in the determination of total
expenditures are: materials and supplies
(which account for 5.78% of the total);
and current transfers (which account
for 4.50% of the total). Materials and
supplies dropped by 25% ($4 million)
from 2015 to 2016, mainly due to the
company’s decreasing demand for fuel,
other raw materials, metals, restaurant
services, other chemical products, spare
parts and accessories. Total: $4 million.
Current transfers dropped by 74.2%
from 2015 to 2016, mainly due to the fact
that the company had lower reserves for
legal expenses, indemnities, benefits,
and training of personnel. Total: $24
million.
Depreciation and amortization expenses
(which account for 26.30% of total
expenditures) increased by $18 million
(56.1%) as a result of the appraisal of
assets and the capitalization of project
costs.
This proved that, in 2016, RECOPE
showed greater austerity in terms of
operating expenses. In view of the
amount of gross sales recorded, and the
above-mentioned decline in operating
expenses, profits rose to $11 million
as at December 2016 in relation to the
previous year, in which the company
recorded a loss of - $0.21 million.
The company’s financial expenses rose
to $12 million in 2016, up by $11.19
million in relation to the previous year.
This variation is attributable to the
exchange-rate differential of short-,
mid-, and long-term loans, and to the
payment of interests thereof, which rose
to $4 million. Other earnings amounted
to $6 million in 2016, down by $3 million
in comparison to the previous year.
Investments accounted for $48 million
of the total assigned budget. This means
that, as at December 2016, 68.55%
of the budget was executed, and that
31.45% of the budget funds were still
available.
Rate of Return
The rate of return showed a slight
increase of 0.31 percent as at December
2016. The rate of return is the company’s
year-over-year decrease in the cost
of sales divided by total sales. The
operating margin rose to +0.51% (up by
0.52 percentage points) as at December
2016, due to a decline in operating
expenses.
As at March 2016, operating profits
accumulated as of January 2016 rose
to $21 million. This on account of
the fact that no extraordinary price-
setting measures had been carried
out during the months of November,
December and January, during which
the price of fuel dropped considerably
on account of an oversupply of oil in
the international market. Another factor
that influenced profits was the change
in pricing practices. This brought about
