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The company has a team scouting for technology and start-ups
that fit Mexichem's main businesses - building and
infrastructure, agriculture and data communications and basic
materials, Chief Executive Daniel Martinez-Valle said.
The hub will also help develop new business models for the
company's customers and examine investment opportunities for
Mexichem's new corporate venture capital fund.
"Israel will be a significant source of deals," Martinez-Valle
told Reuters on Wednesday during a trip to Israel.
He declined to provide financial details but said this would be
a significant investment priority for the next five years,
adding: "Israel is the priority for building innovation."
In February, Mexichem acquired 80 percent of Netafim, the
world's largest provider of drip irrigation systems, for $1.5
billion in cash and debt. The rest of Netafim, which has a 30
percent market share, is held by Kibbutz Hatzerim.
Netafim and the new innovation hub will work closely together.
Both are part of Mexichem's drive to address global challenges
such as water scarcity and flooding.
Martinez-Valle said that despite recent volatility in financial
markets he was "very optimistic for the short and long term of
the company".
In mid-year Mexichem raised its 2018 outlook for growth in
EBITDA (earnings before interest, tax, depreciation and
amortization) to 25-30 percent from 20-25 percent forecast at
the beginning of the year.
"Today we feel optimistic we will fall within this range by the
end of the year," he said.
EBITDA in 2017 was $1.1 billion.
The CEO said he does not foresee any major impact from global
trade wars on the company's businesses. Mexichem operates in 110
countries, with Mexico accounting for 11 percent of its business
and the United States 20 percent.
Netafim had EBITDA of $133 million in 2017 on sales of $949
million. Its CEO Ran Maidan said on Wednesday that in 2019 he
expects double-digit EBITDA growth as Netafim capitalizes on
Mexichem's strong presence in Mexico, Brazil and other Latin
American countries.
Netafim is collaborating with Mexichem to improve the Mexican
company's existing water distribution business while also
reaching new customers, he said.
Netafim recently launched its management system that ensures
crops receive the right amount of water and fertilisers. "It
enables a farmer practically to grow his crops on his cellphone,"
Maidan said.
(Reporting by Tova Cohen; Editing by Adrian Croft
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