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December 24, 2014 01:00 AM

Rotoplas opens first US plant

Stephen Downer
Correspondent
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    Grupo Rotoplas SAB de CV
    Rotoplas says its new California plant will serve customers in Nevada, California and Arizona.

    MEXICO CITY — Mexico City-based Grupo Rotoplas SAB de CV opened its first rotational molding plant in the United States earlier this month, according to Chief Financial Officer Mario Antonio Romero Orozco.

    Rotoplas invested about $10 million in establishing the plant in Merced, Calif., Romero said in a telephone interview. The plant employs about 100.

    Asked to detail the facility's production capacity, Romero, a 19-year Rotoplas veteran, replied that it was “enough to serve Nevada, California and Arizona.”

    Rotoplas, which makes water storage tanks, held an initial public offering on Dec. 10. The six IPO underwriters have exercised their over-allotment option and made an additional 18.8 million shares available on the Mexican Stock Market (Bolsa Mexicana de Valores, or BMV), Romero said.

    Romero Orozco told Plastics News the triggering of the over-allotment confirmed high demand for the stock.

    In a BMV filing Dec. 23, Rotoplas, which describes itself as a provider of individual and integrated water solutions (it also makes hydraulic pumps, pipes and water filters), said the total number of shares sold in the IPO was nearly 144.3 million or roughly 29.7 percent of its stock.

    The IPO raised an estimated 4.17 billion pesos ($283 million) for Rotoplas. The company's stock symbol is AGUA. On its website Rotoplas explained it will use the funds to expand in the United States and “consolidate integral solutions” in Mexico and Brazil. The IPO also gives it sufficient resources for acquisitions, it added.

    “We are mainly focused right now on organic growth,” Romero said, adding that Rotoplas is “aiming to become a relevant player in the United States. There's a demand and it's a growing demand. There's an imbalance between the supply and demand of water. It's mainly the Sun Belt that's suffering from drought.”

    For the 12 months through September Rotoplas reported pre-tax sales of 6.4 billion pesos ($445.9 million). It operates 25 manufacturing plants in 12 Latin American countries, eight of them in Mexico, and employs 2,600.

    Individual water solutions represent 75 percent of the business and integrated water solutions the remaining 25 percent, said Romero, side-stepping a question about what percentage of the company's earnings come from rotational molding.

    “But integrated water solutions is growing more rapidly,” he said, explaining that most of the resources raised in the IPO” will be dedicated to that part of the company's business.

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