The Business Year

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Antonio Carrillo RULE

CEO, Mexichem

The company has grown tremendously; 13 years ago, our revenue was USD200 million and is now USD5.4 billion; we were in two countries and now are in 37. We have been creating a global company, process-, talent-, and cultural-wise, while also creating a single company from a group of companies that we acquired. A second highlight is the transformation of our product line; we have focused on growing what we call the downstream. People know Mexichem as a chemical company; over 50% of our revenues are products that are sold downstream in hardware stores and construction companies. Finally, as a chemical producer, we want to be the most cost efficient. We have also been building a plant in Texas, the largest investment in our history. After four years of construction it recently began operations, making Mexichem one of the most cost efficient PVC producers in the world. Abroad, the response to our being a Mexican company has been mixed. This was a cultural encounter that forced us to be better than other companies. We have worked a great deal on the way we do business; we publish our code of ethics on our website; we publish our results in dollars; we report to the Mexican Stock Exchange in dollars, and we manage it like any other multinational firm. We base our results on three pillars: financial, environmental, and social.

Armando Santacruz

Director General, Pochteca

We started this company in 1998 as a paper merchant. As the years went by, paper was still a good business; however, we started to see its demise coming and began looking for new opportunities where we could use the skills that we had acquired selling paper. The chemical distribution business has a lot of overlap in terms of how to handle working capital, provide credit, and deal with large overseas suppliers. At the end of 2005, we partnered with Mexichem and bought Dermet, a publicly traded chemicals distributor that was in financial distress. We spent a couple of years turning it around and then ended the partnership with Mexichem. Since then, we have continued growing through acquisitions to cover different segments and countries. Our most recent acquisition was Conjunto LAR, a home care and personal care products supplier. Before that we acquired Coremal, a Brazilian distribution company. Our strategy has always been to diversify. Our five largest customers represent less than 6% of our sales, and our five largest products represent less than 10% of sales. That has really allowed us to survive peaks and ebbs in the market. Among the challenges we face, exchange rates have been the hardest. You start to deal with a whole new risk, particularly with Brazil. Another is the ability to navigate strange environments.

Héctor Mario Gómez Galvarriato

Director General, Héctor Mario Gómez Galvarriato

Our chief characteristic as a company is our ability to innovate the most and develops auxiliary products for construction, our business line. We have three specialized labs with skilled people and have 240 products that are diversified. The idea is that a construction project can find all chemical and related products with us. We produce paint, texturized finishing, polyurethane glue for floors, and elastic sealers; we also have paints especially designed to prevent fires from causing buildings to collapse, for example. We are the only ones in the field that have this much innovation; this is the spinal cord of our company. We have patents for some of these products, especially for those that can be copied easily. In terms of competitive advantages, we have come out with new technologies and products that have been well received all over the world, such as the elastic sealants with a latex base. We are in contact with construction firms, installers, and distributors and have a training center in which we teach people who are going to do the construction how to obtain better results in their projects, whatever type of construction it is. This gives us prestige. We have 20 distribution centers, each of which has 100-200 distributors or installers, so our customers can access products easily and rapidly.



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