Winner #3: FMC Corp (NYSE:FMC)
A diversified chemical company that serves worldwide agricultural, industrial, environmental, and consumer markets, FMC decided to boost its presence in Brazil a couple of years ago. It had already built a solid position in the country by selling high-quality insecticide and herbicide to cotton and sugarcane farmers, despite its reluctance to match periodic discounts offered by competitors. Then, in early 2011, it aggressively increased its product range to include chemicals for the country’s vast soybean market.
Results since then have been impressive. While this company also does not break out results by individual countries, its fourth-quarter 2012 results announced in early February noted that Latin American revenue “increased 23%, reflecting strong market conditions in Brazil driven by key crops such as sugarcane and soybeans (and) increased planted acres.”
Latin America represents about 55% of FMC’s Ag Products division. This, in turn, is responsible for about 45% of the company’s total revenue.
Brazil’s agricultural economy is expected to remain strong over the next several years, and the chemicals that FMC sells are popular for increasing yield — especially when farm income is overflowing. The company should continue to benefit going forward.
Winner #4: Titan International Inc (NYSE:TWI).
This U.S.-based firm has substantially increased its global footprint over the last 18 months through an aggressive series of acquisitions in Australia, Europe and South America. The last of these may prove the most significant, as it gives Titan a much bigger presence in Brazil.
That deal closed in April 2011, and gave Titan control of The Goodyear Tire & Rubber Company (NASDAQ:GT)’s Sao Paulo-based Latin American farm tire business. The company noted that this would immediately give it improved access to the expanded operations in Brazil of two of its biggest customers (Deere and CNH Global NV (ADR) (NYSE:CNH)). It also announced it would expand production at the facility to include radial off-road tires for earth-moving and construction equipment.
Titan projected it would grow the Brazil business from its $250 million in annual sales at acquisition, to $400 million within two years. However, in its third-quarter 2012 earnings it admitted getting off to a slow start, because of bureaucratic snafus and weak currency translation. But it’s positioned well and should see gains in future quarters, as Brazil’s strong agricultural sector and growing construction segment raise all related boats.
Conclusion
Brazil doesn’t get a lot of play in the U.S. media, but investors with interest in companies operating there would do themselves a favor by digging a little deeper to keep abreast of what’s going on. The country is becoming increasingly important to a number of these firms, and that importance should only grow over at least the next three years.
The article 4 Winners as Brazil Prepares to Take Center Stage originally appeared on Fool.com and is written by Howard Rothman.
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