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 regions 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 locations 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.