Mar­copolo uses rough roads to en­ter more re­mote African mar­kets

The Star Early Edition - - BUSINESS REPORT / INTERNATIONAL - Fabi­ola Moura and Leonardo Lara

BUS MAKER Mar­copolo is us­ing Brazil’s rough roads as a call­ing card to en­ter mar­kets as re­mote as Ghana and Cameron as it tries to shield its busi­ness from a re­ces­sion at home.

The com­pany started ex­port­ing to 12 new coun­tries in the past year and now ships to 40 mar­kets world­wide, ac­cord­ing to Ri­cardo Por­tolan, the ex­ports man­ager. That helped put it on track to boost­ing ex­port rev­enue in dol­lar terms by 50per­cent last year.

As Brazil mud­dled through its worst re­ces­sion in at least a cen­tury, Mar­copolo re­fo­cused its ef­forts on off­shore mar­kets to com­pen­sate for the sharp drop in do­mes­tic sales.

Bus sales tum­bled 29 per­cent to 12 000 units last year, ac­cord­ing to data re­cently re­leased by the Na­tional Ve­hi­cle Man­u­fac­tur­ers As­so­ci­a­tion, known as An­favea. The fig­ure sets the mar­ket back a decade and compares with a peak of 35 000 in 2011, when Brazil’s econ­omy was boom­ing.

“Ex­ports were a pos­i­tive sur­prise for Mar­copolo,’’ said Credit Suisse an­a­lyst, Felipe Vi­na­gre, in an in­ter­view. “The com­pany proved it has an in­ter­na­tional prod­uct.”

Still, an­a­lysts re­mained neg­a­tive on the stock, which had one of the worst con­sen­sus rat­ings among Brazil small caps, ac­cord­ing to Bloomberg data. Among an­a­lysts who rated the stock, there were six hold rec­om­men­da­tions and nine sells – in­clud­ing one from Vi­na­gre, who keeps a neg­a­tive view be­cause of un­cer­tainty about Brazil’s re­cov­ery.

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‘Ex­ports were a pos­i­tive sur­prise for us – the com­pany proved it has an in­ter­na­tional prod­uct.’

Te­mer’s abil­ity to re­vive growth and have trimmed fore­casts for a much-awaited re­bound. Ac­tiv­ity is ex­pected to grow 0.8 per­cent this year, af­ter tum­bling about 3.5per­cent last year, and 3.8per­cent in the pre­vi­ous year.

Mar­copolo was cau­tious about the econ­omy and ex­pected the do­mes­tic mar­ket to start re­cov­er­ing in the sec­ond half of this year, said Por­tolan. An­favea saw a 12per­cent rise in sales to 13400 buses for this year as new may­ors started ren­o­vat­ing mu­nic­i­pal fleets.

Mar­copolo buses, which are de­signed with struc­tural re­in­force­ment such as ex­tra-re­sis­tant sus­pen­sion sys­tems to cope with Brazil’s rut­ted and of­ten un­paved roads, are well suited for mar­kets fac­ing sim­i­lar chal­lenges re­lated to a lack of in­fra­struc­ture.

The buses’ fea­tures cou­pled with the Brazil­ian cur­rency’s de­val­u­a­tion this decade helped the com­pany be­come more com­pet­i­tive abroad, Credit Suisse’s Vi­na­gre said.

“It could be harder for it to sell in the Euro­pean mar­ket, which re­quires higher so­phis­ti­ca­tion, but in mar­kets sim­i­lar to Brazil it has good cost and qual­ity,” he said.

Mar­copolo started trad­ing in Cameroon last month and was bet­ting it would grow in the long term.

PHOTO: BLOOMBERG

Tech­ni­cians check a Par­adiso bus made with a Daim­ler-Mercedes chas­sis. Mar­copolo is re­fo­cus­ing its ef­forts on off­shore mar­kets to com­pen­sate for the sharp drop in do­mes­tic sales.

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