The Argentina Investment Report for March 22, 2016

By Patrick Archer

CINCINNATIProctor & Gamble (P&G) this week announced it will increase investment in Argentina and expand efforts to be a good corporate citizen through its clean water campaign. The new $50 million investment will allow P&G to expand capacity and incorporate the latest technology to its local product offerings including Pampers, Pantene, Gillette and Always. The company will also expand the “Agua Limpia para los Niños” program which will treat 11 million liters of contaminated water for communities that need clean water.  The local P&G subsidiary has invested over US$1 billion in the country to produce products that reach 90% of the population. (Jornada Online)

RÍO GRANDE – In the ranking of the best performing investments in Argentina during the first 100 days of the Macri administration, one company co-founded by the new president in 1983 leads by a wide margin, according to iProfesional’s Rubén Ramallo. Río Grande-based Grupo Mirgor shares have risen 180.1% (Chart) over the last 100 days. In 2015, Mirgor shares were one of the best performing investments in Argentina rising 240%. Ramallo says the traditional manufacturer of air conditioning units invested $250 million last year to expand its production of cell phones, Samsung televisions, Pioneer entertainment systems and auto parts. (iProfesional)

FAIRFIELD – GE President and CEO Jeff Immelt said his company is prepared to support Argentina with technology and the necessary investment to generate more than 1.5 GW of energy before next summer which would provide electricity for 2.25 million households. “GE is ready to support the national government of Argentina through the delivery of resources and technological solutions to address the energy challenge the country faces currently and deliver the energy it needs in the short and long-term,” said Immelt adding that Argentina today “offers great opportunities for a company like GE.” (PanAm Post)

CÓRDOBA – The Minister of Transportation, Guillermo Dietrich, says Aerolíneas Argentinas will post a loss of 5.2 billion pesos this year. Referring to how the national carrier was run in the previous administration, Dietrich said: “There are incredible things, like how Aerolíneas was paying 3% commissions to travel agents when the competition pays 1%. Just by fixing these kinds of problems, we will save over $100 million.” Dietrich cited other examples of mismanagement and wasted funds including a 2008 contract for improving 97 kilometers of highway in Santa Cruz. “In 2008, the project was bid for 125 million pesos over 36 months. Today, only 36% of the project has been completed at a cost of 850 million pesos,” said Dietrich. (Télam)

SANTA FEArgentina’s dairy industry is facing a “terminal crisis,” says Marcelo Aimaro, president of the Santa Fe Dairy Producers Association. Aimaro says local dairy producers are currently receiving between 2.6 and 2.7 pesos per liter when they need to be earning at least 4 pesos to cover their costs. With milk at Argentina supermarkets currently selling for between 12 and 18 pesos per liter, Aimaro says “Someone is taking the money the producers deserve, and we know it is happening somewhere along the supply chain. There are entire towns that depend on this activity for their livelihood.” There are over 4,000 dairy farms in Santa Fe employing over 60,000. (Rosario Plus)

RÍO NEGRO – This week Dow announced plans to develop a large-scale wind farm in conjunction with Invap, the local manufacturer of the turbines. The move will allow the company to comply with the new law requiring companies to generate 8% of their energy from renewable sources before the end of 2017. Dow needs to cover that 8% of the 42 MW its petrochemical plant in Bahía Blanca consumes and its plants in Puerto San Martín, Zárate, Colón and Vendado Tuerto. The investment is conditional on Argentina resolving the conflict with the holdouts and emerging from default which will allow access to financing at lower rates, says Dow Argentina CEO Gastón Remy. (Clarín)

BUENOS AIRES – Once Argentina reaches an agreement with the holdouts from the 2001 default, there could be a flood of black market dollars coming home for whitening. The Merval’s Juan Nápoli estimates the inflow could be up to US$10 billion this year and US$10 billion in 2017. The US$20 billion is almost double the US$11.684 billion Argentina will need to issue in debt to repay the holdouts. INDEC estimates that Argentines currently hold US$230.557 billion in undeclared dollars, although sources like Tax Justice Network and FDI estimate the total amount is twice that. An estimated 65% of those dollars are in the United States, a percentage that is growing as more Argentines shift funds from Switzerland to the US, writes Cronista’s Mariano Gorodisch. (Cronista)

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