22 May 2003 18:01 [Source: ICIS news]
SALVADOR, Brazil (CNI)--FMC Quimica do Brasil plans to reduce its product portfolio to limit exposure to currency fluctuations, dropping revenues back to the levels of 2001 but boosting profitability, the agrochemicals producer confirmed Thursday.
As a result of the change in strategy, FMC Quimica do Brasil warned that its sales this year could fall to 2001 levels of $111m (Euro94.9m) compared with $117m last year. However, profitability will increase, it added.
The exercise will involve a rationalisation of production lines and a simplification of supply chains, triggering a 10-12% reduction in costs, the company said.
The number of products produced at FMC Quimica do Brasil’s factory in Uberaba, Minas Gerais state will be halved to 56 from 107.
The company, which is part of US agricultural and industrial chemicals producer FMC, said branded products will be cut from 71 to 51 while generic products and products produced for third parties will be reduced to 5 from 36.
FMC Quimica’s president for Latin America, Antonio Carlos Zem, explained that the products to be discontinued are "very low margin" and the company will now focus on those products that add the most value.
FMC Quimica do Brasil, which is a large importer of feedstocks, intends to reduce its exposure to any devaluation of the Brazilian Real. Zem predicts that the dollar will rise against the Real, reaching Real 3.5 at the end of the year.
The company is also encouraging its customers to pay up front in return for services and discounts. Zem said it will offer financing arrangements, including hedging mechanisms.
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