Growing with the world: Chile's Duncan Fox enjoyed big numbers in 2003 on free trade and a strong dollar.

Chilean conglomerate Duncan Fox owes a lot to its exposure to international markets. Bolstered by Chile's freetrade deals with the United States and the European Union (EU), the No. 1 Hot Growth Company in the LATIN TRADE annual ranking of small and medium-sized companies is reaping benefits from the fact that some 60% of its assets are tied to international trade.

Duncan Fox's revenues hit US$67.6 million at the end of September 2003, a 92% leap over the year-earlier period and up nearly 23% on average over three years. Net earnings at $19 million soared 542% for the annual period and 254% on average over three years. Its share price also roared forward in 2003, more than doubling by year's end. Analysts note that Duncan Fox's stock price jumped following positive developments on Chiles trade front, including the country's trade deal with the EU, effective on February 1, 2003.

Part of investor reaction in due to Duncan Fox's majority 40.5% share it holds directly and indirectly in the fish company Sociedad Pesquera Coloso. "When Chile signed its free-trade deal with the U.S., some said that the fish sector would be the one that would benefit most," says Richard Kosche, head of international markets at the Santiago stockbroker EuroAmerica Corredores de Bolsa.

Coloso, which exports canned and frozen fish, fish flour and fish oil, is the leader in the huge fish sector of northern Chile. Its earnings reached $23.96 million in the first nine months of 2003, up from $17.28 million in the same period in 2002. Coloso is 51% of Duncan Fox's total assets. Coloso exemplifies the company's broad export strategy, shipping products not only to the United States and EU but also to Asia, Africa and the test of South America.

Duncan Fox's varied interests include a 66.5% share in Hoteles Transandinos, which controls the Holiday lnn Express hotels in Chile and in Buenos Aires, Argentina. Additional real estate investments include a 34.2% stake in the company Ayres through a subsidiary, Inversiones Los Olivillos. Ayres indirectly invests in real-estate protects in Buenos Aires. Also through Inversiones Los Olivillos, Duncan Fox has a 40% share of Inmobiliaria Lampangue, a real-estate developer in Chile. Duncan Fox management declined to comment for this story.

Duncan Fox's ability to diversify its businesses and expand into new markets while limiting risk is perhaps best illustrated by Alimentos y Frutos, a frozen fruit and vegetable business that it controls 100% via a subsidiary, Inversiones Los Cerezos. Alimentos y Frutos is now the outright leader in its sector after astutely moving forward while its two principal rivals made major missteps, says Felipe Barriga, Alimentos' commercial director.

Barriga says its rival Frisac immersed itself in Argentina just before that nation's peso debacle and Agrinova lost sight of its core competencies by getting into businesses like importing Brazilian pizzas. Alimentos y Frutos, meanwhile, increased export volumes by 20% in the last, three years and enjoyed a 12% surge in sales in Chile. In 2003, the company's worldwide sales increased 30% over 2002, while sales in Chile rose 20%.

Barriga attributes the results to effective cost-cutting measures, such as reducing the company's staff by a fifth to 350 employees, as well as investment in new technology. "We have improved our distribution channels and created new products, which our competition hasn't dones," says Barriga, including the creation of a new line of frozen fruit and the introduction of traditional Chilean food products into the domestic market, which represents 60% of tire company's sales.

Favorable exchange. The firm's global strategy combined with a strengthening export environment enabled Alimentos' operating results to jump 30% in 2003 over 2002's numbers. "The improvement in the company's operating results started back in 2001, in accordance with the effort we made in external markets and a favorable exchange rate" of the U.S. dollar to the Chilean peso, says Roberto Bozzo, finance director for Alimentos y Frutos.

Alimentos y Frutos also has expanded beyond its traditional export, markets of Japan, France, Italy, Germany, England, Venezuela and Colombia. In 2003, it started to export to Costa Rica, Panama and Ecuador, and this year it plans to continue to branch into Brazil and Australia. Like Coloso, Alimentos y Frutos has hedged its bets internationally. "We have a very good mix of markets," says Barriga. "So when Japan is bad we can save ourselves by being in another market."

Not all is clear sailing, though, for Alimentos y Frutos and Duncan Fox's other properties. The U.S. dollar began to depreciate markedly against the Chilean peso in late 2003, a problem for exporters. However, robust 4.4% economic growth predictions for Chile in 2004, the country's trade deals and Duncan Fox's own savvy strategy make it one to watch.