New Materials

What are the most important highlights of the past five years for Mexichem?

The company has grown tremendously; 13 years ago our revenue was USD200 million and now it is USD5.4 billion; we were in two countries and now we 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. Five years ago, this was a much smaller portion of our revenue and we have been growing in this area. Finally, as a chemical producer, we want to be the most cost efficient and have 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.

What has the transition from being a Mexican company to a global company been?

That is a difficult process. Today, 85% of our employees speak English, but when I joined the company the majority could not. We have had to do a significant upgrade on the management team, and we now have a great and global team. It was not an easy transition because people have a way of anchoring themselves to their own culture and not being open enough to understand other cultures. 50% of Mexichem is owned by a family and the DNA of that family is disciplined growth; we all believe disciplined growth has to be a part of the equation for a successful company. A company that only looks at Mexico as its key market is limiting its growth. Our products are made predominantly for developing countries, for places where the infrastructure and water management is not there, where housing is missing, and those places are normally far away and are not Mexico.

What response has Mexichem received abroad as a Mexican company?

The response has been mixed. The first large company we bought in Europe was a public company in the Netherlands in 2012. There was a cultural encounter which 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 have moved a great deal on the government side of the company, we publish our results in dollars, we report to the Mexican Stock Exchange in dollars, and we manage the company like any other multinational company. We base our results on three pillars: financial, environmental, and social. We have a significant sustainability program, we are in the Mexican Stock Exchange Sustainability Index, and we were just listed on the London Emerging Market Sustainability Index. This is a way of changing the perception of Mexican companies doing business abroad.

Are you concerned with relations between Mexico and the US?

Mexico has operated with the one assumption over the last 30 years that the integration in North America would only get stronger and that we have complementary economies. Now, with the current situation, that single assumption might not be right or will change depending on who runs the respective countries. However, at the end of the day, common sense will prevail; we will come out of it and things will improve in NAFTA. We are more interested in tax reforms because we have a large presence in the US, larger than in Mexico.

What are the most interesting growth areas in terms of your actual product portfolio and how do those fit geographically?

The US is an important country in which we want to continue to grow; even though we are large, we are still underrepresented in certain product lines. Asia and India are also interesting locations. Latin America will always be key for us and we have to expand our product line there. Mexichem has platforms for growth: I see the 37 countries as platforms and am excited to grow in those countries where we already have a presence and infrastructure and they use that infrastructure to leverage the rest of the product lines.

What are the values of Mexichem?

We want to do what we do the right way. In the past years we have strengthen our Corporate Governance. The orientation toward results is another one that is in the DNA of the company. We are by far one of the most aggressive companies in terms of results and performance orientated to compensation. Our investors demand and require a management team that is focused on results. In addition, our commitment to our employees and communities are important values for us.

How important are environmental issues in your operations?

The environment is part of the code of ethics. We have to take care of the environment and we working every day to measure and reduce our carbon footprint. We have to do a standardized measure and are now implementing a system globally to measure it. There is zero flexibility for that. Chemical plants have bad reputations on these matters; however, the reality is that chemical plants have become environmental friendly. We are one the largest recyclers of pipes in Europe and one of the largest users of recycled PVC in Europe; in Latin America and the US it is not as popular yet but we are moving in that direction. We have a team of people focused on the environment and sustainability globally.

What are your goals for 2017 and 2018?

We expect our cash flow to increase this year and our results to be positive this year. We told the market we would grow in terms of reported EBITDA between 10% and 20% in USD in 2017. Our big goals are to grow our profitability and increase our returns. Finally, I want to continue this integration of the company, finish out the creation of a single culture, and also grow through acquisitions.

Why is Mexichem a good company to invest in?

We have a first-class family that controls the company and the company is managed by professional people who are accountable for results and responsible for operations. Our global footprint allows us to have a strong network around the world and our strong company values.