RPM also reported lower sales in Latin America: “Out of
$1.03 billion in global sales, Latin American sales were up 15
percent in the third quarter of 2014. Last year, sales were down
14 percent during the third quarter on similar sales,” the company annual report indicated.
Sherwin-Williams also suffered in the region last year because of “Unfavorable currency translation rate changes in the
year, (which) decreased net sales by 19. 3 percent for 2015…to
$631 million,” the 2015 annual Sherwin-Williams report said.
“Paint sales volume percentage decreased in the mid-single digits as compared to 2014.
In 2015, S-W’s Latin America Coatings Group opened
17 new stores and closed 2 locations for a net increase of 15
stores, increasing the total to 291 stores open in North and
South America at year-end,” the Sherwin-Williams report said.
“Sales in gallons from the Dedicated Dealer program grew 17.1
percent, as the program expanded by 86 new stores in 2015.
The Group now has a total of 866 dedicated outlets in Latin
America,” the report said.
Central America/Caribbean Growth
Leaders
Compared to the larger economies, a broad collection of smaller
country economies are doing relatively well in the region this
year, led by the expected 6.2 percent GDP growth in Panama,
due to open its rebuilt Panama Canal as soon as June. Similarly,
both the Dominican Republic and Dominica are demonstrat-ing 5.2 percent GDP growth, built out of strong tourism and
rebounding manufacturing.
“Over the last two decades, the Dominican Republic
has been standing out as one of the fastest economies in the
Americas, with an average real GDP growth rate of 5. 4 percent between 1992 and 2014,” Eclac reported. The Dominican
Republic has become the primary hot spot in Caribbean tourism, and continues to grow as an export assembly site, sparking new housing and infrastructure construction. Exports from
DR alone amounted to $9.6 billion last year. Foreign direct
investment (FDI), meanwhile, is expected to average 4 percent
of GDP this year, or close to $3 billion compared to the $67
billion economy.
To pursue the Central American/Caribbean market, PPG
acquired Consorcio Latinoamericano in 2015, which operates a network of 60 paint stores in Central America. “At
the end of 2015, architectural coatings-Americas…operated
about 100 company-owned stores in Central America,” the
annual report said. “The purchase enables PPG to leverage an extended stores network to grow the Glidden brand
in Panama and offer additional PPG products to customers throughout the Central America region,” says Silvey.
PPG operates company-owned paint stores across Belize, El
Salvador, Guatemala, Honduras, Costa Rica, Nicaragua and
Panama. The company also anticipates additional annual
revenue synergies via the Comex acquisition of between $60
and $70 million in Central America by 2019, PPG’s annual
report stated.
Axalta also is investing in the sub-region. “Axalta has also
increased its ownership in Axalta Coating Systems CA, a joint
venture, headquartered in Guatemala,” observed Winokur.
And Pintuco is expanding its 150-store base in Venezuela,
Ecuador, the Antilles, Curacao and the Central American
countries.
Argentina
In Argentina, the expectation for paint and coatings growth
beyond the predicted GDP increase of 0.8 percent this year
is low. However, HSBC predicts that potential growth in
GDP for 2017 could reach 3. 5 percent. “We expect slightly
positive growth in Argentina,” said Knavish. Others agreed:
“Despite macro-economic headwinds in the region, our performance was solid in…Argentina,” Akzo-Nobel’s 2015 annual report stated.
Majors are continuing investment in Argentina. “We are
nearing completion of a new manufacturing facility in Argentina
which will produce coatings for OEMs, refinish and industrial
customers,” says Winocur.
In November 2015, Fabián Gil, the new president of Dow
Latin America, suggested that Argentina’s Bahia Blanca complex
could become Dow’s third major polyethylene project, globally.
Growth in Argentina’s gas and oil industry led to the award
of a $55 million dollar contract for ShawCor, which expected
to complete work earlier this year on anti-corrosion pipeline
coatings for Tenaris, for its part in the Argentina Northeast Gas
Pipeline (GNEA) project.
Brazil
In contrast, in Brazil, the expectation for paint and coatings
growth is minimal, given the expected GDP decrease of -2.0 percent this year, at least until recovery from impeachment takes
place. Brazil’s paint and coatings industry is going through a
third very tough year, unprecedented in recent history, reckons
Dilson Ferreira, the executive president of the national manufacturer’s association Associacao das Fabricantes de Tintas, or
Abrafati, in Sao Paulo. “Building and construction expects no
recovery this year. The automotive industry anticipates that
sales will remain the same as in 2015, far below the average for
the past several years,” he reckoned.
The total volume of paint sold in Brazil was down 5. 6 percent in 2015, with associated net revenues of $3.05 billion, significantly lower than 2014 value, due in substantial part to the
depreciation of the Brazil’s currency, the real, which has plummeted 40 percent over the recent past.
Over the past year, AkzoNobel opened a new Expancel mi-crosphere production line within its paint and coatings complex
in Jundiaí, Sao Paulo State, with the aim of serving both the
Brazilian and regional market demand.
Similarly, “In 2015, PPG completed a $40 million plant for
on-site resin production at its Sumaré, São Paulo State, coatings
manufacturing facility, which will help PPG to meet the demand
of automotive and industrial customers with locally produced
material,” said Knavish.
