Latin America: a balanced performance
In Latin America, a well balanced mix of markets and products resulted in good performance for Bekaert throughout the whole region in 2010 with the exception of Venezuela.
In general, the economic performance of the Latin America region was good, with a GDP growth of 5.7% and higher demand in the construction sector and the consumption of durable goods, including automotive. The exception to this trend was the Venezuelan economy which continued to suffer from lack of growth, high inflation and high interest rates.
The recovery of construction and infrastructure development in the emerging regions led to a worldwide surge in demand for minerals. Actual growth in mining operations is likely to continue as emerging regions keep urbanizing and industrializing.
Our business in the region achieved outstanding results across all sectors, including construction. Rising demand for raw materials was key to our increased business. Our well distributed presence in different Latin American countries allowed us to benefit from this growth in different mining activities such as copper and aluminum, and in agriculture.
We took additional steps in the Latin American markets towards the integration of our production platforms by further consolidating our activities in the Bekaert Ideal Holding. Collective purchasing activities by the Holding secured competitive prices. To answer the strong drive in demand we invested in capacity expansion at several plants.
Ecuador
The Ecuadorian economy grew in 2010 by 1.9%. Inflation was down to 3.3% versus 4.3% in 2009.
In 2010 we continued the integration of Ideal Alambrec, our Bekaert operations in Ecuador, into the Bekaert Ideal Holding. The company celebrated its 70th anniversary in 2010 and released the Manual para la Construcción, a toolkit compiled to provide construction workers with training and safe building practices in order to erect safer housing units for low income families.
Colombia
The Colombian economy showed a strong performance in 2010 with a GDP of 4.5% versus 0.7% in 2009.
The interest rates were amongst the lowest in Latin America, favoring construction projects as well as the consumption of durable goods with financing becoming more accessible for the local population.
The diplomatic and commercial relations with Venezuela suffered major fluctuations during the year impacting the overall activity of the country, since Venezuela is an important commercial partner and traditionally the second most important destination for Colombian exports.
Our subsidiary Proalco obtained the ISO 14001 certification in 2010 and is leading several environmental and educational projects involving children and other representatives of the communities near our plant in Muña, south of Bogota.
The Muña plant broke its production record for the second year in a row, leading to an increase of production output.
Venezuela
The Venezuelan economy continued to shrink in 2010 as GDP ended 2.5% lower than the previous year. Also, inflation and interest rates remained high in 2010.
During 2010, Venezuela suffered from a severe energy crisis, primarily caused by a long-lasting drought which adversely affected (mostly hydro-powered) electricity generation. As a consequence, our local wire rod producer faced production restrictions thus preventing normal supply to our Venezuelan subsidiary Vicson. We maximized our efforts to maintain supply to our customers, including the import of raw materials. Both top line sales and result were hit drastically as a result of the foreign exchange effect. In 2010 Vicson celebrated its 60th anniversary.
Peru
The Peruvian economy continued to grow at a very fast pace in 2010, as illustrated by the 8.7% GDP growth. Prodac, the Bekaert subsidiary in Peru, performed very well throughout the year.
The agricultural and mining sectors are expanding fast, while the development of construction activities is being supported by low interest rates.