PPG Comex Bullish on Mexico, Central America

Despite sliding sales for paint and coatings in Latin America overall, PPG Comex is optimistic about sales in Mexico and Central America this year and for several years thereafter. In its third-quarter 2016 financial report, PPG’s notes on Latin America said, “Within the region, sales volumes continued to grow in Mexico and Central America, and declined in Brazil due to weak overall economic conditions. We expect above-market performance to continue in Mexico and Central America.” Net Latin American sales in Q3 dropped to $344 million from $367 million, or 6.3 percent, the company reported.

Regional Architectural Paint Sales Mixed

Along with strong architectural sales in Mexico, Comex has expanded its store network this year substantially. “Architectural sales volumes declined considerably in Brazil and China, with both countries declining more than 20 percent, reflecting regional end-use market weakness. Local currency architectural coatings sales growth in Mexico was more than double the country’s GDP growth due to continued market penetration and over 100 new store openings year-to-date,” the report noted. “Additionally, architectural coatings sales continued to expand in Central America, up a high-double digit percentage, as the company continues to leverage the Comex and Consorcio Latinoamericano acquisitions and is successfully establishing a presence in the region,” the report indicated. Comex has a total store network of some 4,000 locations.

Other Segments Buoyed in Mexico

“Protective coatings sales volumes grew versus the prior year, led by the U.S., Asia Pacific and Latin America, including benefits from expanded distribution through the Comex concessionaire network,” PPG reported. “Global industrial coatings and specialty coatings… sales volumes in Latin America were flat,” it added.

Near term sales will be aided by the August opening of a new Comex distribution center in Hermosillo, in Sonora state, Mexico. The facility can house about 3.5 million liters of paints and coatings, and location of the center will reduce shipping time in Mexico’s Northwest region – including growing cities like growing cities such as Mexicali, Chihuahua, Los Cabos and La Paz – from five days to one day or less, the company noted. Some 30 stores will be opened in this sub-region this year out of 170 country-wide, the company reported.

Regional Capacity Expansion Plans

Marcos Achar, the general director of Comex PPG and vice president of PPG’s Architectural Coatings Latinoamérica recently told Mexican business publication El Financiero that the company sees opportunities for new plants in Latin America, in countries including: Perú; Colombia; Panamá; El Salvador, Guatemala and Honduras, among others. “We have plans to expand production in Mexico, but also to put small plants in Central and South America where they may have a great impact on the local markets.”

Comex reckons that it controls half of Mexico’s paint and coatings market, which is growing at a double digit rate. Last year, paint volumes increased by six percent, while sales were at a double-digit rate for the company, Achar noted. In comparison, Mexico’s gross domestic product is running between two and three percent, as it has over the past two years.