As president of Latin America’s most diverse conglomerate, with business interests ranging from the Internet to beer, Steven Bandel is thankful these days that he has a strong stomach.
2002 was an awful year for Latin America. The Latin region posted its worst economic performance in two decades, and Bandel had the unenviable task of adapting the Cisneros Group of Companies to the tough times: cutting thousands of jobs, halting planned expansions and reining in investments in most new ventures.
But Bandel is confident the efforts will pay off, now that many of Cisneros’ rivals have exited the Latin market or are too weak to effectively compete. He’s optimistic that 2003 will be the year to grab market share and position the Latin-focused group to resume growth.
“We’re long-term players in Latin America. We know there are cycles, and we’re flexible enough to adapt to good times and bad,” said Bandel, 49, in an interview at his Coral Gables offices.
But during restructuring, he concedes, “you need the stomach and heart for it.”
Captaining a down-shift was a new role for Bandel.
During two decades with Cisneros, he’d helped the privately held group expand steadily from its base in soft-drinks, TV and radio in Venezuela to become a force throughout the Americas, with revenues estimated at $3.5 billion last year.
In the 1990s, he’d helped lead the group into Internet and other new media, taking stakes in such high-profile ventures as satellite TV channel DirecTV Latin America and Internet service provider AOL Latin America, both with major operations in Fort Lauderdale.
But the end of the dot-com boom and this year’s recession in Latin America stunted demand so sharply that few — other than big, Latin-focused groups — could afford to stick it out.
Some rivals pulled up stakes, especially in money-losing new media. The Weather Channel Latin America shut down, and Sky TV Latin America left hard-hit Argentina, to name two examples.
The Cisneros Group in contrast dug in its heels and shuffled its ample portfolio to seize opportunity from the crisis.
At AOL Latin America, for instance, the group worked with its U.S. partners to cut staff in Argentina, as AOL subscriptions plummeted amid Argentina’s worst financial crisis.
Yet it also turned the plunge in the value of Argentina’s currency to its advantage, shifting AOL Latin America call-center operations from higher-cost Mexico and Puerto Rico to now cut-rate Argentina to slash costs.
Analysts call the group’s moves shrewd and pragmatic.
“This is probably one of the most astute conglomerates on the planet,” said Jerry Haar, a University of Miami research associate and author of the just-released book, Winning Strategies for the New Latin Markets.
“They’re taking a healthy pause, and the way they’re looking at Argentina is brilliant,” Haar said. “Gustavo and Ricardo [Cisneros, the principals] are like orchestra leaders, who know which instruments to play quietly and when to hit a crescendo.
Still, orchestrating the shift was especially wrenching for the Cisneros Group because of political upheaval in Venezuela, the homeland for many top executives, including Bandel.
Venezuela’s virtual civil war took an emotional toll on the staff. Plus, it sometimes brought the group directly into the center of controversy, with government supporters accusing Venezuela’s media of bias and even charging Cisneros with helping to engineer the brief ouster of Venezuelan President Hugo ChM-avez in April.
Rumors swirled too that Cisneros aimed to expand into oil, Venezuela’s lifeline — a claim the group also denies.
“We’ve never been involved in the energy business, nor do we intend to be, either in petroleum, electricity or natural gas,” said Bandel, describing Cisneros’ business focus instead as “TIME”: technology, Internet, media and entertainment, including beer.
As 2002 ends, Bandel estimates the group shed more than 5,000 employees but kept revenues steady at roughly $3.5 billion this year, with continued profits. It offset weakness in Argentina and Venezuela partly by investments in a major beer company in Peru and in small, specialized software companies in Brazil, he said.
For 2003, plans call for renewed growth, as Latin American economies rebound modestly — likely expanding 1.8 percent after a 1.1 percent decline this year, according to World Bank projections.
The group sees special opportunity in beer sales, TV production in cut-rate Argentina and in Brazilian media, now that Brazil allows foreign investment in media companies.
Still, Bandel will need to keep his stomach strong.
Latin America’s recovery depends partly on solid U.S. growth, but prolonged war with Iraq could derail U.S. revival. And failure to mend debt problems in Argentina and political conflict in Venezuela could drag the region down again, analysts warn.
Bandel remains flexible short-term and confident long-term. “When Latin America rebounds,” he said, “then we can too.”
Doreen Hemlock can be reached at or 305-810-5009.
