A Bold New Breed of Companies Based in Latin America Are Reshaping the Competitive Landscape, According to a Report by The Boston Consulting Group
A Group of 100 Multilatinas Are Internationalizing Their Operations Across the Region and Beyond -- and Outperforming Both Their Peers and Multinational Incumbents
| Source: The Boston Consulting Group
SAO PAULO, BRAZIL--(Marketwire - September 3, 2009) - One hundred high-performing Latin
American companies, the 2009 BCG Multilatinas, are expanding their
operations internationally with impressive speed, ingenuity, and
sophistication, adopting approaches that may offer valuable lessons to
others, according to a report published today by The Boston Consulting
Group (BCG).
Based in eight Latin American countries, the 100 BCG multilatinas represent
all industry sectors. Although they constitute only 21 percent of the 471
companies in the overall study group, they nonetheless generate an
impressive 34 percent of the group's revenues, according to the new report,
"The 2009 BCG Multilatinas: A Fresh Look at Latin America and How a New
Breed of Competitors Are Reshaping the Business Landscape" (Please see the
section "Methodology for Selecting the 2009 BCG Multilatinas.").
Notably, the total shareholder return (TSR) of the 68 publicly traded
multilatinas over the past ten years was much higher than the TSR of the
S&P 500 index, the MSCI Emerging Markets Index, or regional country
indexes. A $100 investment made in June 1999 in a hypothetical multilatinas
index would have grown at a compound annual growth rate of 19 percent, to
be worth more than $560 in 2009.
While the multilatinas have focused their international moves primarily on
relatively nearby markets in Latin America, many -- such as global
contenders Cemex, Embraer, and Vale -- have also gone farther afield,
conducting operations in the United States, Europe, and Asia.
Part of the reason for their success has been the recent revitalization of
economies across Latin America. Today Latin America is a massive, diverse,
and vibrant region with GDP ($4.2 trillion in 2008) equivalent to China's;
a very large population (562 million) that is young, growing, and
increasingly educated; market capitalization ($1.6 trillion as of June
2009) greater than that of Eastern Europe and Russia combined; and GDP
growth of 3.9 to 4.8 percent per year for the past five years.
And although the region is home to 20 countries, it is more coherent
culturally and linguistically than is Africa, Asia, or Europe, and barriers
to regional trade are low, facilitating regional strategies for both local
companies and outside investors.
While some Latin American countries' business and political environments
still present risks, major countries across the region have reduced their
debt levels, strengthened their currency reserves, and applied discipline
to their fiscal deficits. The region is now home to five investment-grade
economies: Brazil, Chile, Colombia, Mexico, and Peru, which together are
responsible for 75 percent of the region's nominal GDP.
It is important to note that although countries across Latin America have
certainly felt the impact of the current global financial crisis, the
region has been less affected than most others, largely because of
conservative financial practices. Household debt is at manageable levels,
and banks are not highly leveraged. Meanwhile, unprecedented reductions in
country risk and interest rates have created unique opportunities for
investment.
Fortunately, most multilatinas have low leverage ratios. Nonetheless, they
are responding to the crisis prudently by exercising tight cash management,
improving their balance sheets, enhancing their cost and organizational
efficiency, streamlining their organizations, managing their top lines
aggressively, adopting product portfolio and pricing approaches,
reassessing investments, divesting noncore businesses, and improving risk
management.
At the same time, they are leveraging their internationalization experience
to position themselves for growth: building in value creation discipline;
defining international growth strategies and philosophies around core
capabilities; monitoring global markets and planning the evolution of the
company's international footprint; managing timing carefully; and creating
and replicating capabilities to enable sustainable international growth.
The report's authors expect Latin America to sustain above-average
performance in the medium to long term, with Brazil, Chile, Colombia,
Mexico, and Peru leading the pack and providing critical mass for growth in
the region. Against that background, the authors anticipate that, after a
period of relative retrenchment, the multilatinas will continue their
international growth, building on the lessons they have learned in their
recent, highly successful internationalization experience.
Methodology for Selecting the 2009 BCG Multilatinas
To arrive at the list of 100 multilatinas, a team of BCG consultants
performed a comprehensive analysis of nonfinancial companies active in the
region. The team first compiled a list of 471 such companies with 2007
revenues greater than $500 million, based on international and local
rankings from Argentina, Brazil, Chile, Mexico, and other Latin American
countries, and on a detailed consolidation of international groups. Next,
the team undertook a thorough study of the companies' annual reports, Web
sites, and press coverage and built a comprehensive proprietary database
that characterizes each player according to the nationality of its equity
controller, the sectors and countries in which it operates, and its
business model and apparent strategy, as well as its revenues, net equity,
number of employees, and EBITDA. The 100 2009 BCG Multilatinas all have
Latin American equity control and all have significant assets or operations
(factories, mines, ports, railways, or distribution centers) outside their
home countries. The analysis was based entirely on public sources.
To order a copy of "The 2009 BCG Multilatinas: A Fresh Look at Latin
America and How a New Breed of Competitors Are Reshaping the Business
Landscape," go to
www.bcg.com/impact_expertise/publications/publication_list.jsp?pubID=2990
To arrange an interview with one of the authors, please contact Eric
Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com.
About The Boston Consulting Group
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