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Renner Herrmann S.A.

Renner Herrmann S.A.

Avenida Carlos Gomes 111
Porto Alegre, Rio Grande do Sul 90480-003
Brazil
Telephone: (55 51) 378-2410
Toll Free: (0800) 51-2380
Fax: (55 51) 378-2422
Web site: http://www.renner.com.br

Private Company
Incorporated:
1927 as Renner Koepke & Cia., Ltda.
Employees: 3,000
Sales: $270 million (2004 est.)
NAIC: 321114 Wood Preservation; 325510 Paint and Coating Manufacturing; 332431 Metal Can Manufacturing; 488310 Port and Harbor Operations; 551112 Offices of Other Holding Companies

Renner Herrmann S.A. is a holding company for interests in the manufacture of industrial paints, varnishes, and allied products in Brazil and other South American countries. The most important is Renner Sayerlack S.A., one of the largest manufacturers of industrial paints in Latin America. Other units include "operational" Renner Herrmann S.A., which makes maritime paints and metal cans and conducts industrial maintenance in the port cities of Curitaba, Paraná and Porto Alegre, Rio Grande do Sul. Tintas Renner, which is part of Renner Sayerlack, has manufacturing plants in Chile and Uruguay as well as Brazil.

LEADING PAINT MANUFACTURER: 192790

Born in 1884, Antônio Jacob Renner was descended from German immigrants to Brazil's southernmost state, Rio Grande do Sul, where his father owned grain mills and a meatpacking plant. A. J. Renner pioneered in the manufacture and sale of waterproof ponchos for gauchos and experimented with flax raising for linen, developing three varieties suitable for growing on his own tracts of land. The energetic A. J. eventually became a textile magnate whose enterprises led Brazil in turning out ready-made clothing. But there were other Renner companies as well. Most were based on the raw materials of Rio Grande do Sul, including a tannery; felt, shoe, porcelain, and lime-mortar plants; and a factory that made concrete tubes. The Renner group dominated the economy of the state. In addition, there was a Renner company that made sewing machines; a retail chain, called Lojas Renner; and a Banco A.J. Renner. (Lojas Renner was sold to J.C. Penney in 1998.)

In 1927, A. J.'s sons Waldemar and Leopoldo Renner founded, with Arthur Koepke (or Koepcke), a company to manufacture powder paints in Porto Alegre. This was an artesanal process at first and involved manually grinding colored earth, minerals, and charcoal, then combining them with pigments and boiled linseed oil. The resulting mixture was then filtered, pressed, dried, and ground into powder. Waldemar retired in 1935, and Ernesto Herrmann joined the firm in 1941, when Koepke retired. In 1947 Hugo Herrmann, who was married to A. J. Renner's sister, entered the firm as an industrial chemist. This enterprise became Renner Herrmann S.A.Indústria de Tintas e Óleos. On Le-opoldo's death in 1952, Hugo Herrmann became its director.

Renner Herrmann opened other Tintas Renner plants in the 1960s in the states of São Paulo and Bahia. It expanded greatly in the 1970s by purchasing rivals, including, in 1977, Ideal Tintas, and, in 1980, Sayerlack S.A. Indústria Brasileira de Vernizes, which specialized in varnishes for wood finishing. During the 1970s the company pioneered in introducing polyurethane acrylic paints for buses. The company bought a factory in Curitiba in 1982. Then, in 1984 and 1986, respectively, it purchased two São Paulo companies, Oxford and Polidura, thereby vaulting to first place among some 300 paint manufacturers in Brazil. It also acquired Tintura, a company in the state of Pará and opened another plant in Gravataí, Rio Grande do Sul. Renner Herrmann was, in 1987, the first paint manufacture in Brazil to introduce a "tintometric" multicolor system enabling customers to choose the color they wanted in their homes, boasting that it could double the colors offered by competitors. For repainting automobiles, this system enabled some 25,000 variations to be prepared by the dealer from 50 basic products in a few minutes.

By this time Tintas Renner S.A. was no longer wholly owned by Renner Herrmann. By 1985 the giant German firm Hoechst AG had taken a stake in the company, which had become a joint venture. The following year DuPont do Brasil S.A. exchanged its shares of its Polidura paints and coatings operation, which it had acquired in the early 1970s, for a 23 percent equity interest in Tintas Renner. Hoechst had an equivalent equity share, leaving Renner Herrmann with the majority stake.

NUMEROUS CHANGES

In 1990 Tintas Renner had annual revenue of $400 million. Pinturas Renner Uruguay S.A. in Montevideo, formerly Sintéticos del Plata, was making paints for the automotive industry and exporting to other Latin American countries, and headquarters in Brazil had just bought an Argentine site for a similar plant. Renner also opened a distribution center in Paraguay and secured a license to make paint products in Bolivia for Espintbol, the leader of the market in that country. In 1993 it purchased a controlling share of a Chilean paint manufacturer, Pinturas Blundell S.A., and purchased two Argentine producers, Pintcol S.A.I.C.F. and PamexPinturas Americanas de Exportación. These latter acquisitions were in connection with a partnership formed with Sevel, which was then the leading automobile manufacturer in Argentina.

In Brazil itself, Renner held 60 percent of the market in paints for the automotive industry in 1990. It also held 40 percent of the market in paints for electric home appliances and about 10 percent of the market for civil construction. The following year, in conjunction with Oxiteno Nordeste S.A. Indústria e Comércio, it established a joint venture, Oxiquímica S.A., to make acrylic acid and acrylates, prime materials for the manufacture of acrylic paints, in Triunfo, Rio Grande do Sul. In 1993 it opened its first franchised retail units. These units, "paint boutiques," were equipped with terminals which enabled customers to look at a house exterior or interior that they wanted to paint and experiment with colors based on the company's multicolor system. Also that year, the company spent $7 million to open a Porto Alegre shopping center in an area where it had its headquarters. The venture failed to thrive and was sold in 2003.

KEY DATES

1927:
Waldmar and Leopoldo Renner found a company to make powder paints.
1947:
Hugo Herrmann enters the firm, which becomes Renner Herrmann.
1980:
The company buys Sayerlack, which specializes in varnishes for wood finishes.
1986:
Renner Herrmann has become the largest paint manufacturer in Brazil; DuPont do Brasil takes a stake in the Tintas Renner joint venture.
1993:
The company opens franchised "paint boutiques" for the home.
1995:
Renner Herrmann and DuPont restructure their joint venture, called Renner DuPont.
1997:
Renner Herrmann forms a coatings joint venture with The Valspar Corporation of Minneapolis.
2001:
The company merges Sayerlack and Tintas Renner to form Renner Sayerlack.
2002:
Renner Herrmann sells its stake in the Valspar venture and becomes a private company.
2004:
DuPont purchases Renner Herrmann's share of the Renner DuPont joint venture.

Tintas Renner was going through a restructuring during the early 1990s, a recessionary period for the Brazilian economy. Marcos Bier Herrmann, its executive director, described the company to Suzana Naiditch of the Brazilian business magazine Exame as harboring "a babel of cultures." Its brands were redefined, with the poorest performers eliminated. Its five industrial plants were rationalized so that each would specialize in a particular line of products. Its production and administrative processes were reformulated in order to adopt the most modern management methods. A quality-control program was instituted. The company had seven training centers for concessionaires and auto workers who used its plants. A toll-free number was added so that employees could field customer complaints.

In late 1995 DuPont do Brasil and Renner Herrmann restructured their existing joint venture, which was now Renpar S.A., in order to focus on industrial coatings, original-equipment manufacturers, and refinish automotive coatings in South America. (Hoechst had sold its stake in Renpar the previous year.) The new joint venture, Renner DuPont Tintas Automotivas e Industriais S.A., did not include Renpar's architectural, marine, and wood-coating lines, all of which reverted to Renner Herrmann. DuPont dedicated its entire manufacturing capacity from its coatings plant in Valencia, Venezuela, to the venture. Renner Herrmann contributed two plants in Brazil, in Guarulhos and São Bernardo, São Paulo, and one in Argentina.

Renner Herrmann formed another joint venture in 1997, this time with Valspar Corp. of Minneapolis, a leading coatings manufacturer. The new company for the manufacture and sale of coatings for metal packaging, that is, paint for aluminum cans, in South America was named Valspar Renner Revestimento para Embalagens Ltda., with each partner holding a 50 percent share. A securities analyst said the joint venture had made Valspar the largest packaging coatings company in the world. In addition, besides being a holding company, Renner Herrmann formed, in 1997, an operational division with two business units. One, based in Curitaba, was for maritime paints and industrial maintenance, providing coatings to protect against corrosion from salt water. The other was for making metal cans in Porte Alegre. Also in 1997, Renner Herrmann created software that enabled customers using its multicolor paint system to view the results on computer.

A Brazilian bank issued an unfavorable analysis on Renner Herrmann in 1998. While acknowledging that Renner DuPont ranked first in Brazil in painting for original equipment manufacturers (including automakers), automobile repainting, and painting for industry in general, it noted that the joint venture's main competitors were four huge multinational firms and that the automotive-painting sector was characterized by global competition and "intense downside price pressure." The same firms were providing stiff competition in Renner Herrmann's architecture and house paints segment, which was represented by its Tintas Renner subsidiary. Sayerlack, the national leader in furniture paints and coatings, was doing better, but was only 60 percent owned by Renner Herrmann. The printing-ink segment, also first in its field, was represented by Companhia Química Industrial Brasileira, another subsidiary. Renner Herrmann sold this enterprise in 1999.

DOWNSIZING IN THE NEW CENTURY

Renner Herrmann's gross revenues came to BRL 852.25 million ($465.71 million) in 2000. The largest share, 42 percent, came from Renner DuPont. Sayerlack contributed 27 percent, and Tintas Renner, soon to be united with Sayerlack in Renner Sayerlack, 21 percent. The operational Renner Herrmann division accounted for 6 percent, Valspar Renner for 2 percent, and other sources of revenue, 2 percent. All these units lost money in 2000, and only Sayerlack made a profit in 1999. Twenty-seven percent of Renner Herrmann's revenues came from wood finishes, 21 percent from decorative uses, 20 percent from painting of original equipment manufacturers, and 16 percent from repainting automotive equipment.

Brazil's economic difficulties, and Argentina's as well, presumably contributed to Renner Herrmann's loss of BRL 8.8 million BRL ($4.8 million) in 2000. That year it sold its stake in Oxiquímica and reduced its participation in Renner DuPont to 51 percent. Renner Herrmann also merged Tintas Renner with Sayerlack, creating, on the first day of 2001, Renner Sayerlack S.A., which was now 75 percent-owned by Renner Herrmann. This merger was made in the interests of maximizing the use of distribution and to gain synergies in administrative areas. Renner Herrmann lost BRL 12.5 million (about $5.3 million) in the first half of 2001. Later in the year, it delayed a $3 million investment intended to raise paint production at the Gravataí plant from 100,000 metric tons to 150,000 metric tons a year. A company executive told Coatings World, "We have idle capacity and could double production now."

At the beginning of 2002, Renner Herrmann sold its stake in the joint venture with Valspar for $15 million. Three weeks later, it delisted its stock and became a private company. In 2004, DuPont purchased Renner Herrmann's stake in Renner DuPont and renamed brands such as Multicolor. This joint venture was doing about $130 million worth of business a year at the time.

Gravataí remained Renner Sayerlack's plant for manufacturing Tintas Renner paints for real property and interior decoration, and for manufacturing paints for industrial machinery under the name Renner Tintas Industriais. Cajamar, São Paulo, was Renner Sayerlack's plant for a complete range of solutions for coating wood surfaces. Tintas Renner was emphasizing the products of its Renner Tintas Industriais unit for buses, agricultural implements, construction machinery, and industry in general. Renner Sayerlack had sales of $253.2 million in 2004 and employment of 2,510.

PRINCIPAL SUBSIDIARIES

AlphaAdministração e Participações Ltda.; Pinturas Renner Chile S.A. (92%): Pinturas Renner Paraguay S.A.; Pinturas Renner Uruguay S.A.; Renner Sayerlack S.A. (75%).

PRINCIPAL COMPETITORS

Akzo Nobel S.A.; BASF S.A.; PPG Industrial do Brasil Ltda.; Tintas Coral Ltda.

FURTHER READING

"Brazil Investments Continue, More Cautiously," Coatings World, December 2001, p. 23.

"Du Pont Co., Inc. to Merge Brazilian Paint Operation," American Paint & Coatings Journal, December 23, 1985, p. 22.

"Du Pont's Brazil Unit to Merge," Journal of Commerce, December 3, 1985, p. 21B.

Fattah, Hassan, "DuPont, Renner Restructure Paints JV," Chemical Week, December 20, 1995, p. 18.

Fortes, Alexandre, "As Indústrias Renner," Hístoria, 2002, pp. 163-93.

Gain, Bruce, "Valspar and Renner Herrmann Form Brazilian Alliance," Chemical Week, June 4, 1997, p. 13.

Kannebley, Andrea, "Renner Herrmann," Votorantim Brazil Research, January 28, 1998.

"Latin Painting," Chemical Week, May 24, 1995, p. 45.

Maia Neto, J., Homen e Progreso, Porto Alegre: Livrania Salina, 1963.

Naiditch, Suzana, "A Renner quer pintar o sete lá fora," Exame, October 27, 1993, pp. 60-62.

"O que pinta de novo na Renner," Exame, February 7, 1990, p. 69.

"Valspar Enters Brazilian JV," Chemical Market Reporter, June 2, 1997, p. 3.

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