Mexico will experience less economic growth in 2012 due to market uncertainties in Europe and the rest of the world, but not slide into negative territory.
Gabriel Casillas, vice president and chief economist with J.P. Morgan in Mexico City, offered the forecast during a discussion on the Mexican economic and political situation at the Latin Trade CFO forum held Nov. 17, 2011.
"Everyone will be hit by this, has been hit by this and Mexico is no exception," Casillas said.
Casillas forecasts 2012 GDP growth of 2.5 percent--compared with 4.5 percent GDP growth in Mexico for 2011--which he called, "not bad," given that Mexico has had GDP growth of less than 2 percent between 2000 and 2010, comprehensive economic and structural reforms are still pending and the world economy is slumping.
Despite the economic turbulence of recent years--and labor troubles in three of its most important mines--mining and transportation conglomerate Grupo Mexico grew impressively over that time, growing revenues from $5.9 billion in 2008 to $8 billion last year.
And even with a tough lending market, Grupo Mexico's CFO Daniel Muniz Quintanilla managed to obtain a $1.5 billion syndicated loan in December 2009 in order to close a nearly $4 billion deal to bring ASARCO out of bankruptcy. The deal was part of Grupo Mexico's strategy of finding merger and acquisition targets with "low multiples" and building "world-class assets."
Muniz was awarded the CFO of the Year--Dynamic Growth--Mexico and spoke on navigating the commodities boom. He acknowledged that helping guide Grupo Mexico through 2008 wasn't easy, but credited a disciplined approach for achieving stellar results in difficult times.
"We have a lot of volatility in copper," he remarked. To overcome that, "you have to build and diversify," he added, along with having a strong, conservative balance sheet and "being very aggressive in cost cutting."
Being aggressive with costs was a common theme at the CFO forum. Knowing your business was another. Muniz, a lawyer by training, got to know Grupo Mexico's business by living in Cananea, home to an important copper operation (now known as Buenavista) in Sonora state--and the source of billion-dollar losses during a strike related to the legal problems of the fugitive leader of the country's mining union.
Another CFO advising his counterparts to know their businesses intimately is Luis Olloqui Aguirre of Cinepolis, the fourth largest cinema company...