International Coatings Scene
LATIN AMERICA
BY CHARLES W. THURSTON
LATIN AMERICAN CORRESPONDENT
THURSTONCW@RODPUB.COM
Venezuelan paint struggles
under economic weight
Despite the
bad economy,
Venezolana de
Pinturas
continues
to expand
its paint
operations.
Venezuela’s paint industry is suffering under
the weight of the country’s economic
growth halt, including difficulty in acquiring imported raw materials because of a government freeze on foreign exchange transactions.
Imports have been held up by an average of
four months this year because of a government freeze on foreign exchange transactions,
according to a report citing Danay Zoppi, the
president of the Asociacion Venezolana de la
Industria Quimica y Petroquimica (Asoquim),
in Caracas.
Still, one manufacturer, Venezolana de
Pinturas (VP), is seeking to broaden its high-end architectural base with a recent launch of
its water-based Environment line in both
latex and enamel satins.
VP, which is part of the Inversiones Mundial
group, has been in business for 50 years, since
it was originally formed as Sherwin Williams
Venezuela. The company manufactures at a
plant in Valencia, but also has commercial
offices in Barcelona, Caracas and Maracaibo.
It also produces automotive, industrial and
wood oriented products ranging from acrylic
stucco to joint compound.
Using its Colores VP mixing technology, the
company offers 700 interior paint hues. Among
older lines are Inovación, Kem, Domino and
Colonial; last year VP augmented its Kem line
with Expresión de Kem. The new Environment
line is being sold in Ferreteria EPA hardware
stores, the country’s largest big box chain,
owned by the Mendoza family and now comprised of 13 stores in six cities. Environment
also is being sold in the paint manufacturer’s
PintaCasa subsidiary paint stores.
Competition to VP comes primarily from
Corimon Pinturas, which markets architectural
brands including Montana and Pico brands.
Corimon, which has operated under financial
difficulty for years, in April announced plans to
raise approximately $11 million through debt or
other instruments.
Housing expansion is another factor that
could bump up architectural paint consumption. As much as a third of Venezuela’s population of 26 million lacks standard housing,
and a government program is underway to
spend $2.4 billion to build 200,000 new housing units, with a goal of 1.8 million new units
by 2016, according to Surrey Now.
Paint manufacturers may be trying to hold
the line against inflation, absorbing some of the
cost increases they face. Although the consumer
price index in Venezuela rose 31% last year,
architectural paint prices only increased by
25%, according to one local press report. The
cost of the lowest grade of paint in the country
is approximately $3.00 per gallon, while premium paint can be multiples of that price point.
An isolated up side to the inflation problem is
that cars sold in Venezuela are appreciating in
value because of the higher cost of replacement
parts and full imports. This phenomenon should
help after-market automotive paint sales.
Venezuela’s GDP has suffered this year, dropping to 0.4% growth, compared with 5.4% last
year; the outlook for growth is flat for 2010,
according to a consensus forecast compiled by
LatinFocus, which draws on more than a dozen
financial institution analysts. At the same time,
inflation has risen to 36% from 31% last year,
with expectations that in 2010 inflation may
drop by one percent.
Venezuela, a key Latin American oil producer,
has alarmed the international investment community with its nationalization program, which
included the take-over of dozens of oil service
companies a month ago. State oil company
Petroleos de Venezuela (PDVSA) is rumored to
owe service companies some $10 billion, and is
reportedly seeking to place $3 billion in U.S. dol-lar-linked bonds. The government has extended
its nationalization program to non-oil sectors, as
well, and now is planning a $1 billion buyout of
Banco Santander, one of Spain’s most important
banks in the region. CW
