Latin America Reports

Eucatex grows with Brazilian market

By Charles W. Thurston | April 4, 2008

Paint sales for Eucatex, Brazil's seventh largest paint producer, grewing a whopping 44% in 2007.

Paint and coatings sales by Brazilian fiberboard producer Eucatex jumped by 52% to approximately $21 million (37 million reais) during fourth quarter 2007, compared with the prior-year quarter, the company has reported. Full-year 2007 paint sales were nearly as robust, with a 44% jump to approximately $67 million (R118 million or, from $R82 million in 2006). The exchange rate for the Brazilian real ended the year at 1.77 reais to one U.S. dollar. Overall, the company produced 10.8 million liters of paint at its Salto, state of Sao Paulo, production facility. With more than 2,300 employees, Eucatex exports fiberboard to more than 30 countries to strategic buyers including Home Depot, while paints and coatings are primarily sold within Brazil.

Eucatex is now the seventh largest paint producer in Brazil, with a three percent market share, following Suvinil, Coral, Sherwin-Williams, Renner, Lukscolor and Akzo, according to market analyst Lafis. Of these, Renner and Eucatex are the remaining majority domestically-owned companies. Eucatex has a short-term goal of raising its market share to five percent of the overall paint and coatings market.

Eucatex produces a full line of architectural coatings, including acrylics, varnishes, enamels and other wood and stucco coatings and finishes. The company also produces flooring, doors and partitions, supplying the domestic furniture and construction market.

Eucatex's paint segment accounted for 15% of sales in 2007, up from 12% the year before. Until 1995, when the Salto factory began production, Eucatex only produced paints and coatings for its own use in the production of fiberboards. Now the company has built a strong position in the architectural segment with the premium Eucatex brand, and with its economy brand Peg-Pint. Within its product portfolio of fiberboards, the company includes approximately 30 different color coatings.

The company recently announced plans to build a new R$130 million thin high-density and medium-density hardboard plant at Salto. While the company's primary sales are based on renewable forest products, it also is very active in environmental efforts. Eucatex has the capacity to process 20,000 metric tons of waste wood or wood fiber products per month, and has advanced equipment for separating paper, plastic, metal and non-ferrous materials.

For all manufacturers, sales in the Brazilian paint and coatings industry were up six percent to $2.75 billion in 2007 compared to 2006, according to preliminary figures recently released by the Sindicato da Industria de Tintas e Vernizes do Estado de So Paulo, or Sitivesp, the So Paulo State association of paint and varnish manufacturers. The association cited an increase in real estate credit and tax cuts as major factors in the increased sales, which amounted to 350 million gallons-approximately 1.3 billion liters-last year, compared with 330 million gallons in 2006. At the same time paint and coatings exports rose 14% last year to 56,000 metric tons, compared with 50,070 metric tons in 2006, Sitivesp data showed.

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