Has Covid had any impact on Pochteca's operations and strategy?

Pochteca started preparing since January 2020, identifying risks, training our people and devising plans for the various stages of a potential pandemic in Mexico. Since early March, all high-risk employees were sent home with full salary and benefits. Those whose functions could be performed from home continued to work almost seamlessly, our IT team did a great job keeping people connected. As we are considered an essential industry, our operations continued in all of our facilities. Digitization, ecommerce and salesforce mobility contributed a lot during the critical months and we expect to continue investing in these areas.

Our product and segment diversification strategy was also key in getting through the crisis in good shape because, while some segments suffered significantly, others did well, generating positive overall results.

What are the pillars of Pochteca’s strategy?

We provide solutions to thousands of customers in over 500 cities in Latin America. Our strategy fundamentals are value added selling, risk diversification, world class HSSE standards and conservative financial metrics. These have helped us to successfully overcome a challenging environment with negative GDP growth in the countries where we operate as a result of Covid-19, compounded by decreasing commodity prices and a complicated oil and gas market. We have focused on products with higher added value such as specialties, blends, dilutions and services. Approximately 40% of our product line undergoes some value-adding process. As an example, in the oil and gas sector, we are developing new products and applications including chemical blends to aid with drilling, processing and other stages. This is also the case in the meat, beverages, sauces, personal care, housing and coatings industries.

Our logistics services are also an important part of our business. We have 300,000 square meters of warehousing capacity and provide other solutions such as tanks and railway terminals. Our new state of the art terminal in Guadalajara (inaugurated in November 2019) is fully operational and generating the expected results. Having low-cost operations improves our sustainability and is part of our strategy going forward.

What role does sustainability play in Pochteca’s operations?

Sustainability is a core value in Pochteca, and we are very proud to have received the 2019 Excellence Award in Responsible Care from ANIQ. Aside from operating with a reduced environmental impact, our products and services allow companies to improve their efficiencies and savings. A few months ago, we launched a new division offering integrated environmental solutions to our customers, including recycling, co-processing, zero waste to landfill programs and responsible confinement/disposal of industrial waste. We go as far as contributing our own personnel working in-plant at our customers´ operations. In the case of solvent recycling, we are developing a new solvent treatment facility and continue working towards improving and expanding the existing one.

How do you view the Mexican economic outlook and what effects do you forecast on the chemical industry?

At one point, Mexico´s chemical industry accounted for as much as 4% of its GDP; now it only represents 1.7%. Of the approximately US$45 billion chemical consumption, more than 60% is imported. Our commercial deficit in the area shows that we rely on supply from abroad. The shortage of gas, ethane and methane negatively impacts the competitiveness of our chemical industry and many downstream industrial segments. There is strong competition from foreign manufacturers. This situation, together with negative or slow economic growth, represents a challenging environment for the coming years.

How do you view the market for distribution services in the region and do you see opportunities for M&A activity?

Latin America continues to have a very fragmented chemical distribution industry, with hundreds of small regional players. The challenging economic environment, open borders, government regulations, economy of scale requirements in order to be competitive, ecommerce and digitization and low commodity prices will certainly result in more mergers and acquisitions in our region. As we have always done, we will evaluate any attractive growth opportunity that we come across.