By Noel Randewich
MEXICO CITY (Reuters) - Grupo Mexico is planning infrastructure acquisitions and double-digit growth in its railroad unit to help Mexico become a transport hub between Asia and the United States.
Mexico needs more roads, ports and warehouses to help the transport industry take off, said Eduardo Gonzalez, chief financial officer of Southern Copper, whose parent company Grupo Mexico owns a big chunk of the country's railroad network.
"Once you have your hands around all these aspects that are not well developed at this stage, then the potential to grow the railroad division is huge," he said on Friday, speaking on behalf of Grupo Mexico at the Reuters Latin American Investment Summit in Mexico City.
Businessmen often complain Mexico's railroads are expensive and inefficient.
Railroads have about 18 percent market share in Mexico's freight industry, compared to more than 40 percent in Canada and the United States, Gonzalez said.
Grupo Mexico, whose Ferromex and Ferrosur operators make up more than half of Mexico's railroad market, plans to make investments to improve transport infrastructure, Gonzalez said.
"You can bet that we will be seeking to acquire more infrastructure and more businesses that will help grow the railroad division this year," he said.
Grupo Mexico's railroad business expanded by about 10 percent last year, handing its parent firm about $300 million in earnings before interest, tax, depreciation and amortization, Gonzalez said.
Grupo Mexico bought Ferrosur in 2005 in a deal worth $307 million. Since then, Mexico's competition bureau has told Grupo Mexico it cannot merge the two railroads and must operate them separately. Grupo Mexico is appealing the bureau's ruling.
The two railroads account for about 8 percent of Grupo Mexico's business, with most of that coming from Ferromex.
Gonzalez said Grupo Mexico's plans would not be hurt much if courts eventually order the company get rid of Ferrosur.
"We can add billions of dollars of value without Ferrosur," he said.
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