“Brenntag’s operations in Brazil and Argentina are by far the most profitable and fast growing in the Latin America South division. Political instability creates volatility in all market segments, but if you are as well prepared as Brenntag, you will still be able to generate profits and growth.”
How extensive is Brenntag’s footprint in Latin America, and which products have been driving growth?
Brenntag is the global market leader in chemical distribution, generating US$15 billion , and as such has a central role in the chemical industry’s value chain. The company is also the market leader in Latin America, with a strong presence in the entire region. Brenntag employs over staff members in Brazil, Mexico, Colombia, Argentina, Chile, Peru, Bolivia, Ecuador, Central America and the Caribbean. Brenntag’s distribution covers a diverse range of industries including coatings, animal feed, food and nutrition, personal care and industrial care, to name a few. We offer a full scope of products and represent a large amount of the most important producers in the world.
The importance of each business unit varies from region to region, but in Latin America the mining, energy and oil and gas sectors are most prominent. Brenntag Latin America also a strong franchise in ACES (adhesives, coatings, elastomers, sealants) and has seen significant growth in the personal care and food business units in recent years.
The last two years have been volatile in South America’s two biggest markets – Brazil and Argentina. Considering this context, how has Brenntag’s Latin America South division performed?
Despite the challenging circumstances, 2018 was a record year for Brenntag in Argentina in terms of profitability. For the biggest players in the market, which have the structure and liquidity to face market volatility, adverse conditions can create opportunity. As such, Brenntag’s operations in Brazil and Argentina are by far the most profitable and fast growing in the Latin America South division. Political instability creates volatility in all market segments, but if you are as well prepared as Brenntag, you will still be able to generate profits and growth. Brenntag is able to offer clients the products that they need during difficult times, which other companies will struggle to provide. Diversity is also important – operating in different market segments gives Brenntag the ability to mitigate challenges caused by instability.
Is Brenntag considering acquisitions in the region to reinforce the company’s position?
Brenntag has organic growth, but is also open to opportunities for growth through acquisitions, if the right opportunity appears. In Brazil and Argentina there is significant dispersion and unconsolidated industries, so consolidation in strategic areas is definitely a big consideration.
What would you say is the biggest challenge currently facing chemical distributors in Latin America?
The logistics deficit in Latin America is a significant disadvantage for the industry and makes the entire region less cost effective and less competitive on an international scale. I believe that investment into the logistics sector will come, especially in larger economies such as Brazil and Argentina, but it might take awhile. Brazilian politicians have shown promising signals that this is a priority, but infrastructural investments take time to bear fruit.
Which business opportunities in Latin America present reasons for optimism moving forward?
Vaca Muerta is attracting significant interest, and Brenntag is also considering investing. The importance of the unconventional resources in the Neuquén Basin is profound, and there seems to be an alignment between different governments, regardless of their political persuasions. Vaca Muerta could be fundamental in changing the feedstock playing field in Latin America with regard to imports and exports.
Having worked for producers Dow Chemicals and Rohm and Haas, how do Brenntag’s sustainability policies compare?
From first-hand experience, I can say that all three companies have world-class policies when it comes to safety, environmental responsibility and care in the management of chemicals. The largest distributors, such as Brenntag, have to take extra care as we handle, store and transport a vast array of chemical products, sometimes in close proximity. Producers have their own challenges, but rarely have such a large portfolio of chemical products in the same building.
As a global organization, sustainability and safety is a core focus for Brenntag, and ingrained in the culture of the company. Brenntag has established corresponding standards and processes in its international corporate structures and continuously encourages a sense of awareness among its employees. Sustainability as a strategy is paramount for growth.
What are the principal objectives for Brenntag’s Latin America in the next 12 months?
Brenntag is on a journey of excellence, focusing on connecting the best suppliers with customers around the world, and this mission is constant in all of the company’s global operations. When dealing with thousands of clients, human resources are fundamental and the basis of Brenntag’s success. We will continue to invest heavily in attracting, developing and retaining talent. Today more than ever, growth is required to stay ahead of the competition, and as such Brenntag will continue improving its operations to remain the preferred partner in the industries it operates in.