Coatings World - JUNE 2013

Latin America is Major
Player in Coatings Market

Many of our readers will be attending the Latin America Coatings Show in Mexico this month. To complement the show, Latin America correspondent, Charles Thurston took an in depth look at this important market.

“Latin American Paint and Coatings Market Rebounds” (page 39) reports on the estimated $9.2 billion Latin American market for paint and coatings. According to Thurston, the Latin America market is in rebound mode, expanding again this year a few percentage points faster than overall economic growth. While growth rates differ among the four largest country markets – Brazil, Mexico, Argentina and Colombia – the outlook is strong for each of them. The growth of Latin America’s paint and coatings industry has been projected at six percent per year through 2016 by Englewood, Colorado-based IHS.

The largest recent acquisition in Mexico – and the most important in the region of late – was Sherwin-Williams’ $2.3 billion purchase of Comex, Mexico’s largest paint company. The deal made S-W the leading paint company in North America.

The Wall Street Journal recently reported that Fitch Ratings downgraded Sherwin-Williams by one notch based on expected high leverage in view of the company’s pending acquisition of Comex.

S-W agreed in November to pay $2.34 billion for Comex, whose paints and other coatings are sold in Latin America, the U.S. and Canada. The transaction is expected to close during the latter part of the second quarter.

Fitch said Sherwin-Williams will see high leverage following the acquisition and integration risks associated with such a large transaction. Fitch expects the company will reduce its debt levels in the next 24 months.

The article reported that the ratings also incorporate the company’s leading market position in the architectural coatings industry, a unique distribution platform, the breadth and depth of its product offerings, and strong management team, according to the firm. Risk factors include lead-based paint litigation cases against Sherwin-Williams, volatile raw materials costs and the company’s relatively aggressive growth strategy.

Last month, Sherwin-Williams reported its first-quarter earnings rose 16 percent as increased sales from paint stores and the global-finishes group helped improve margins.

For further information on the impact of this acquisition be sure to check out our “Top Companies Report” next month. This annual report is one of our most popular features. Our staff has been busy compiling the latest information on the top manufacturers of paints, coatings, adhesives and sealants worldwide.

kpianoforte@rodmanmedia.com

6 | Coatings World
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