José María Arroyo, CEOSA’s Chief Executive, bids on diversification in emerging industries without overlooking security, reliability, and social commitment.

“We can be sure that our balance for CEOSA’s Integrated Economic Plan 2004-2007 will certainly be positive, although this financial year has not finished yet. Financially speaking, the ONCE Business Corporation has accomplished its general goals; in some respects, I would say we have even gone beyond expectations.” This is José María Arroyo, CEOSA’s Chief Executive, taking stock of the Corporation’s four-year plan ending in December. Going into the companies and groups that are part of the Corporation, Mr Arroyo explains, “Some, like the property company ONCISA, have had outstanding performances, while others, such as CONFORTEL HOTELES, have found it more difficult to accomplish their goals. However, our hotel chain is acting on its feasibility plan, launched after the strategic plan, so we believe it can still strike economic balance for the period. These can be taken as extreme examples of the plan’s evolution within the Corporation. Then there are intermediate cases, like GRUPO ALENTIS, which have fulfilled goals step by step, more successfully in some aspects (sales) than in others (profits). Besides these three companies, the most important ones in the Corporation given their business turnover, the other CEOSA members have all grown in these four years.”

Q: −What about corporate social responsibility?
JMA: −CEOSA is committed to have 30 pct of its central staff made up by ONCE affiliates. Currently, about 25 pct of our employees are ONCE members, so we’re still below the benchmark. However, in our staff selection processes we have always prioritised the evaluation of ONCE candidates. In fact, this is what we’ve always done. The problem is that the number of affiliates applying for jobs in the Corporation has unfortunately become increasingly smaller. In my view, this is food for thought. On the other hand, we’ve made headway in these employees’ internal promotion prospects in both technical and executive jobs. We’ve taken huge steps in this direction and, with our current training and career plans, we’ll probably be able to offer this social group improved quality training options. This is very important, as it’s the result of the joint efforts of the Corporation and the ONCE affiliates involved.
 
Q: −Looking into the future, what would you say are the top goals of the 2008-2011 Plan? Will there be quantitative or qualitative differences with this one? Are you thinking of new lines of business, new economic sectors, and the like?

JMA: −I’d say that the most important news in the plan for the 2008-2011 period is diversification. The idea is to minimise dependence on the Corporation’s big companies by having various sources of income. The Strategic Plan for Diversification has been approved, so now it’s time to act on it. We’ve taken the first steps already, investing in Advancell, a biotechnology company that is doing really well. We’re interested in the industrial and retail sectors, as well as in industries such as energy, healthcare, the environment, or technology. However, in our case investment in new sectors depends on resource availability.

Q: −What would be the approach to this investment? Gradual and depending on a company’s positive results?

JMA: −Our guiding principle is that, no matter how attractive investment can sound, we have to be sure we can get out of business if we need to. In addition, wherever possible, we’re interested in companies offering job opportunities to disabled workers. And, of course, there’s also profitability. Even this plan that is now coming to an end made a point of the Corporation’s contribution to its stockholder, ONCE.

Q: −By the way, is ONCE satisfied with the evolution of CEOSA’s companies?

JMA: −I don’t want to go into an assessment that it’s definitely not for me to make, but I can say that, from 2002 to 2007, the evolution has been positive. The stockholder’s equity has increased by 25 pct and ONCE has recovered the heavy investment losses of previous years. Now, CEOSA’s value is higher than the investment made by ONCE, and this is really important. After all, the Corporation was created to supplement ONCE’s game-related income. It was conceived of as a sort of “piggy bank,” making assets readily available if necessary and introducing us into the world of business while we diversified our source of income. As we always say, CEOSA is an attempt at making profits both economically and socially. In this context, ONCE’s management appreciate what’s been accomplished and the efforts involved in achieving this. Personally, I’d like affiliates to get involved and learn more about their Corporation. I believe many of them don’t know much about CEOSA and, in any case, they don’t tend to have a high opinion of it, after all the losses of the past.

Q: −After 15 years operating in the domestic market, what is the perception of the Spanish society, and the business sector in particular, of ONCE’s business activity?

JMA: −Right now, the perception of the ONCE Corporation is excellent. When I attend special or business events, or when I talk to customers, suppliers or other businessmen, I get the impression that CEOSA is a highly respected group. Banks, for instance, consider us to be very reliable, and you can’t convince the banking sector that you’re reliable if you’re not. We’re determined to stick to this line of action, always trying to do better with the aim of being leaders among the corporations that are similar to us. We’ll make every effort to increase sales and keep profits on a roll, ensuring stability for our companies.
With regard to diversification, it’s a long, long way. The Corporation’s resources are basically fuelled into its own business, so there’s not much left to invest in other ventures. What we do have is patience, so I think that, in the long term, CEOSA will be less dependent on its big companies for success. In this sense, we’d like to work on alliance policies, although sometimes it’s difficult to find the right partners, as most corporations seek direct profits. At present, CEOSA’s debt is low and, therefore, we can make sure, if not high, profits. Most of our potential allies, on the other hand, prefer higher debts for higher profits.
J.M.V.

Efficiency in the property market
José María Arroyo underscores CEOSA’s reliability against an increasingly uncertain economic background after a period of expansion. He refers to all the companies in the Corporation, including that which could be worst affected by fears in the construction sector. “ONCISA, our property company,” he remarks, has very little property for sale, and only a few homes remain. Given market circumstances, we’ve decided to slow down development projects to follow the market’s pace, building only what we know we can sell. Meanwhile, we’ll focus on increasing our asset holdings so that the company can still make a valuable contribution to the Corporation. Even though profits are bound to smaller, they’ll still be there.”