Coatings World - March 2013

Brazilian Paint Can Maker Invests

by Charles W. Thurston Latin America Correspondent thurstoncw@rodmanmedia.com

Brazil’s Metalgrafica Trivisan S.A. is investing an estimated $25 mil- lion, including $9 million worth of German technology, to double its annual metal can production capacity to 900 tons per year, according to market reports. The investment will go into the company’s São José dos Pinhais, Parana state factory. Among new processes the company will add are UV curing and plastic lid liners.

With 2011 sales of about $25 million, Trivisan in May of last year predicted a 30 percent increase in sales for 2012, from its focus on the middle market of small and large paint and coatings producers. Trivisan launched a stock sale program to cover the cost of the new investment, and also plans to divest non-core assets.

Trivisan produces a range of cans in sizes from 125 ml, or approximately 1/32nd of a U.S. gallon, to 18 liters, or approximately five U.S. gallons. Among customers in Brazil are Tintas Farben and BASF, Trivisan noted.

Among an estimated universe of 40 metal can producers in Brazil, close Trivisan competitors include Brasilata, of Sao Paulo. Brasilata, which claims a 45 percent market share of industrial metal cans in Brazil, has invested more than $10 million over the past few years to bring its capacity up to 70 million tons, with the newest of four plants in Recife, in Pernambuco state. The company last year was voted as “Packaging Supplier of the Year” by the São Paulo State Paint and Varnish Industry Syndicate, or SITIVESP. Brasilata executives have speculated on the possibility of off-shore investments in either the United States or China.

Crown Holdings, of Philadelphia, is a more formidable multinational competitor. In a fourth-quarter 2012 conference

call transcribed by Seeking Alpha, Crown Holdings’ chief financial officer Timothy Donahue said, “Volume in Brazil, Colombia and Mexico continued to be strong, up more than 16% for the year, offsetting a 1.5% decline in North America. The overall Brazilian market was up 7% in 2012, with our share of the market growing to almost 26% on the back of investments made in 2009 and 2011. We expect another year of high utilization rates in each region across the entire segment, with improving productivity in 2013.” The company is investing primarily in beverage lines in Brazil now.

Competition in Brazil and elsewhere in
Latin American may heat up for paint and
coatings packagers in general. In a broad
review of packaging materials, including
metal cans, Deloitte Corporate Finance
said in its second-quarter 2012 review, “It
is likely that the packaging industry will
see increased M&A activity in the near
future involving acquisitions of companies
with strong presence and operations in re-
gions such as Asia Pacific and South and
Central America. These foreign targets
are expected to provide a quick entry into
these economies rather than developing
greenfield operations and will also bring
knowledge of local markets. Acquirers
may be willing to expand to these loca-
tions in an attempt to become more global
and diversify their revenues streams.”
A key factor in the Brazilian metal
can market is the price of steel, which
has been increasingly affected by Chinese
imports, a Trivisan executive pointed out.
About 60 percent of the company’s cost
of manufacturing is steel, he noted. CW