Can you provide an update on Pochteca’s recent activities and how it serves the chemical industry in Mexico and Latin America?

Our distinguishing value-added services encompass a wide spectrum, including specialized logistics, sophisticated inventory management systems, efficient processing of small orders, technical support, product application development, training programs, customized product packaging and blending, waste management solutions, and other environmentally conscious offerings.

Furthermore, the ongoing digital transformation is a pivotal trend in our industry. We remain at the forefront of innovation, constantly refining our digital tools and platforms, enhancing existing software functionalities, optimizing our online storefronts and web interfaces to enhance user experiences, and implementing upgrades to our CRM, supplier portal, WMS, big data analytics, and process automation systems. These initiatives are all geared towards enhancing operational efficiency, meeting our clients' evolving needs, reducing environmental impact, and lowering the cost to serve.

Given the heightened focus on environmental stewardship, we are intensifying efforts to engage in circular economy initiatives. We are committed to investing in both personnel and infrastructure to deliver environmentally sustainable solutions, including advanced waste management practices and the integration of eco-friendly and health-conscious products into our product portfolio.

How did the distribution segment perform in 2023, and what are your expectations for 2024?

Throughout 2023 we observed a significant increase in the utilization of third-party chemical distributors worldwide, marking them as key components of the value chain. Alongside this trend, there is a heightened emphasis on performance standards, with offerings extending beyond cost management to include sustainability considerations.

Many chemical manufacturers foresee an increasing reliance on third-party distributors. They acknowledge the role distributors play in expanding their geographical reach and serving smaller customers, thereby allowing them to concentrate on their core operations.

While manufacturers are increasingly entrusting their distributor networks, they expect exceptional performance in return. Key performance expectations for distributors include meeting sales targets, addressing financial matters such as payment terms, delivering high-quality services and overcoming market challenges. Deficient performance is less tolerated, with the possibility of manufacturers readily switching distributors if expectations are not met. This trend of distributor swapping due to dissatisfaction is on the rise across all regions.

Moreover, sustainability considerations have emerged as a significant factor in chemical distribution, prompting distributors to adjust their portfolios to align with evolving environmental priorities.

In terms of supply sources, the importance of Asian imports to Western markets is on the rise.

What is Pochteca’s strategy for the next two years?

Our unwavering commitment lies in continually generating value to customers and suppliers, penetrating new sectors, acquiring new customers, expanding into untapped territories, replicating success across the various countries where we participate and capitalizing on emerging trends that manufacturers might overlook or struggle to grasp independently.

Drawing upon our extensive geographic reach in Latin America and the southern US, we serve hundreds of cities housing thousands of manufacturing enterprises. Our reach spans over 40 diverse business segments, including food processing, home and personal care, paints and coatings, mining, oil and gas, auto industry, and various other chemical-consuming industries. Servicing these segments directly would be prohibitively costly for manufacturers, considering the geographic dispersion and the complexity of cultural differences and local idiosyncrasies.

We are currently executing a comprehensive digital transformation strategy, code-named “Proyecto Cacao”, aimed at enhancing our existing operations and revolutionizing the experiences of our customers, employees and suppliers. This strategy encompasses a wide range of initiatives across our business landscape, ranging from process improvement, implementation of cutting-edge ERP, e-commerce solutions and inventory management systems.

Our commitment to digital transformation is rooted in the understanding that it is an ongoing journey characterized by continuous improvement and innovation. By leveraging increasingly intelligent and automated sales and operations planning tools, we are bolstering our capacity to forecast demand accurately and orchestrating inventory management with precision, thereby ensuring a consistently high fill rate to meet customer demands effectively.

Furthermore, within our IT ecosystem, we integrate a suite of essential tools, artificial intelligence, robotics, and software solutions, enabling us to streamline data processing, automate workflows, and drive down operational costs. This integrated approach translates into a more cost-efficient service model for our suppliers and a reduced total cost of ownership for our clients, reinforcing our commitment to delivering value at every touchpoint.

Executing our strategy with world class ESG standards is a key pillar and success factor going forward.