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Peru’s CPPQ acquires Teknoquímica
An analysis
of recent
consolidation
in Peru’s
paint market.
Peru’s paint and coatings producer
Corporacion Peruana de Productos
Quimicos (CPPQ) recently acquired 100%
control of Teknoquímica in an estimated $27.7
million stock purchase on the Lima Stock
Exchange. Lima-based CPPQ plans to maintain
the Tekno brand paint, which should boost company sales after the acquisition to $120 million
for 2008. Teknoquímica, which is one of Peru’s
largest paint producers, expected its sales would
be approximately $50 million this year.
While each of the two manufacturers
exported only about five percent of all sales,
CPPQ plans to double that percentage in
the near future. Thus far, CPPQ has focused
export efforts on Bolivia, Colombia, Ecuador
and Venezuela, but it plans to broaden its
export footprint.
Just prior to the acquisition, Teknoquímica
reached an agreement to distribute Danish
paint producer Hempel’s products in South
America, expanding that company’s export
penetration beyond Argentina, Bolivia,
Brazil, Chile, Ecuador, Paraguay and
Uruguay.
Now that there are three production
units—including CPPQ units at Brena and
Nana—between the two merging companies,
one new facility may be planned to rationalize capacity, according to a statement by
Bruno Schenone, the general director of
CPPQ, at the announcement of the acquisition. Last year, Teknoquímica suffered a
major fire at its El Agustino production
facility.
CPPQ has enjoyed growth in the 20-30%
percent range over the past few years, with
approximately 12% of all sales tied to new
brands, Schenone told the local press. Peru’s
booming economy—which expanded by more
than ten percent during the first half of
2008—has helped construction companies
increase revenues rapidly as the demand for
housing and for office space increases.
CPPQ architectural brands include
American Colors, Latex Pato (which translates as Duck), Everest Latex and
Duralatex, distributed through home
improvement chains including Elektra.
Automotive brands include Zenacryl, with
OEM clients including Volvo of Peru. In the
industrial and marine segments, CPPQ has
long represented and produced Ameron
International Protective Coatings in Peru
including Amercoat, Amerlock and
Amershield.
Among other marketing channels, CPPQ
operates a Specialized Painting Center for
theoretical-to-application training of automotive, industrial and maritime painters.
At the same time CPPQ is consolidating
its acquisition, another leading Peruvian
paint producer, Pinturas Anypsa, is investing $4 million to augment its production
capacity at Carabayllo, the company reported. The company estimates that despite
lower profit margins designed to hold market share this year, it will have to increase
prices by 35% to compensate for higher
material and oil costs.
Peru negotiated a free trade agreement
with the U.S. in 2006, and Congress
approved it in December 2007, but it has not
yet been fully implemented, pending stick
points that include Peru’s need to strengthen its intellectual protection regulations.
However recent modifications to the bylaws
of the regional Andean community should
enable Peru to remain in that regional trade
pact yet overhaul its IP laws, potentially
permitting full enactment of the U.S. bilateral trade pact by 2009. CW
