Peru, A Mining Country
Peru is a country with a high presence of leading international mining companies, which has allowed it to maintain a mining tradition for many years. The presence of the Andes Mountains throughout the territory, being its main source of mineral resources, provides great geological potential.
Both worldwide and in Latin America, the country is among the primary producers of various metals such as gold, silver, copper, lead, zinc, iron, tin, molybdenum, and tellurium, among others. This is the result not only of the abundance of resources and the production capacity of Peruvian mining activity, but also of the stability of the country's economic policies.
Minerals produced in Peru are in great demand in the current world market in countries such as the United States, China, Switzerland, Japan, Canada, and the European Union.
The construction sector, apart from mining and agribusiness, is one of the most important sectors for boosting domestic demand and employment in the country.
Peru's economy grew by 11.83% y-o-y in August, driven, among other things, by the construction, manufacturing, and transportation industries.
Likewise, the construction sector grew 1.9% in 2019; however, due to the effects of the Covid-19 pandemic it fell back 13.9% in 2020, but for 2021 the outlook looks favorable. According to the latest inflation report of the Central Reserve Bank (BCR), it is expected to achieve an expansion of 17.4% and by 2022 will be around 3.8%.
"The construction sector is a magnificent ally for the country's GDP growth. In short, it is a magnificent ally of the State to have more revenue and to carry out more works," said Justo Cabrera, a master’s degree level professor in Real Estate Management and Development at ESAN University.
Peru is one of the fastest growing economies in Latin America, which is complemented by macroeconomic soundness: low inflation rates, fiscal and trade surpluses, and strong net international reserves.
Peru has signed several bilateral agreements, including Free Trade Agreements (FTAs) with the United States, Canada, China, Singapore, South Korea, and Mexico, and is currently negotiating FTAs with Japan, Thailand, and the European Union. Peru has signed 32 International Investment Agreements that underpin its liberalization policy, with countries in the Pacific, Europe, and Latin America.
The opportunities offered by the country have made it one of the countries in the region with the highest investment in mining, with outstanding results and the presence of the top mining companies in the world. It is for this reason that projected investments for the coming years in exploration, exploitation, and mining expansions exceed US$ 56,158 billion.
In addition, the supplies and services that the mining industry needs are widely available in the local market, making Peru a privileged place for mining in South America.
A capital good is one that allows the production of a consumer good. In other words, they are those used to carry out the production process.
For the first quarter of 2021, imports of capital goods in Peru registered a growth of 24.1% compared to the same period of the previous year, reaching US$ 3,284 million in the quarter under analysis, mainly due to the increase in purchases of capital goods for industry. This opens a great opportunity for growth in this sector.
Ferreycorp as an Investment Opportunity
Ferreycorp S.A.A. is a Peruvian corporation specialized in the provision of capital goods and related services in Peru and abroad. It is the largest Peruvian distributor of heavy vehicle equipment for the mining and construction industries. In 2022 it will celebrate 100 years of operations and has more than 6,300 employees, including 15 subsidiaries such as Ferreyros, Unimaq, Orvisa, Gentrac, General de Equipos, Soltrak, Motored, Cresko, Trex, Maquicenro, Fargo, Forbis, and Sitech.
It is present mainly in Peru, its country of origin, which accounts for almost 90% of its revenues, as well as in some Central American countries and others in South America, such as Guatemala, El Salvador, and Belize.
Ferreycorp is a Peruvian corporation, founded in 1922 by Enrique Ferreyros Ayulo and four partners to engage in the marketing of consumer products.
In 1942, it began its activities in the capital goods business by taking over the representation of Caterpillar Tractor, which meant a total change in its activity.
From then on, it consolidated its operations into two large business units: consumer goods and capital goods. In the same decade, it began its decentralization with branches in the provinces.
In 1962, in order to sustain growth, the shareholders decided to open its shareholding and list the company on the Lima Stock Exchange.
At the beginning of the 1990s, the company disassociated itself from the consumer goods business and decided to concentrate its efforts on what today is its main business line, capital goods, for which it took on new representations that complemented the Caterpillar line. In this decade, the company decided to expand its offering to customers, in addition to the sale of new units, incorporating the provision of equipment for rental and the sale of used machinery. Likewise, it began to attend open-pit mining projects, recently concessioned or privatized, bringing the first Caterpillar off-highway mining trucks.
In 1994, it expanded its participation in the capital markets through corporate bond and commercial paper placements. The company became a major player, operating with great success and investor demand.
In response to the growth experienced, in 1997 it successfully placed shares in the domestic and international markets, which made it possible to increase capital by US$ 22 million.
In 1998-2001, the company faced a sharp slowdown in economic growth, which had a negative impact on sales. In this context, it was able to adapt its organization and finances to the new size of the market and at the same time accompany its clients during this time of crisis for the country.
Between 2002 and 2010, the company went through a period of accelerated growth, thanks to the incorporation of new lines of products and services as well as to the attention of clients in charge of large investment projects in the country, among which the mining, energy, oil, and the creation of new infrastructure sectors stand out.
In 2010, the internationalization of the corporation began with the acquisition of Gentrac Corporation of Panama, owner of Caterpillar distributors in Guatemala, El Salvador, and Belize.
In 2012, Ferreycorp was incorporated, a corporation that would allow for greater future growth of all the businesses of its subsidiaries, while maintaining the specialization of certain activities.
For the third quarter of 2021, the company obtained a net profit of S/ 86 million, 54% and 166% higher than that recorded in the third quarter of 2020 of S/ 56 million and 2019 of S/ 32 million, respectively.
Ferreycorp seeks to be a sustainable company; since 2017 it has sought to consolidate all aspects of sustainability to achieve a smaller footprint.
The corporation is committed to the agenda that the private sector embraces in an increasingly visible way, in accordance with the Sustainable Development Goals of the United Nations (SDGs), which seeks to contribute to the eradication of poverty, the protection of the planet, and ensuring prosperity for all, with an ethical and socially responsible vision.
It is one of the Peruvian companies with the greatest recognition in the field of corporate governance. A six-time winner of the BVL Key to the best corporate governance, the corporation is part of the Good Corporate Governance Index of the Stock Exchange.
Good compliance practices have been implemented for suppliers, thus achieving the Anti-Corruption Corporate Compliance System of Ferreycorp and its subsidiaries.
They contribute to four of the Sustainable Development Goals: affordable and clean energy; climate action; clean water and sanitation; and, finally, responsible production and consumption.
The corporation recognizes the efforts of its employees and ensures that it provides all of its employees with optimal working conditions and the necessary incentives for their integral development.
Ferreycorp also works closely with various sectors of the community, mainly in an area it considers key to the country's progress: the education of young people.