February 28, 2012

Brazil's Marfrig Alimentos expects to generate synergies of up to BRL330 million (US$193.3 million) from the integration of its pork and poultry divisions, it said Monday (Feb 27).

Marfrig sees cost savings in the next two to three years of BRL130-230 million (US$76.1-134.7 million) and additional revenue generation of BRL100 million (US$58.6 million) within the next five years, executives said in a presentation to analysts. The company had sales of BRL5.52 billion (US$3.2 billion) in the third quarter.

Like rival meat packers JBS SA and BRF Brasil Foods SA, Marfrig ballooned in size during the past decade through a wave of acquisitions. Its revenue rose fivefold from 2007-10 as the firm bought brands such as European poultry producer Moy Park, Brazilian pork giant Seara and US meat packer Keystone Foods.

But Marfrig, like other Brazilian meat packers, shouldered a heavy debt load in the process. Analysts see the company shifting its focus to consolidation and better organisation in coming years.

On Monday, Marfrig unveiled a plan to organise its three big poultry and pork brands--Moy Park, Seara and Keystone--under Seara Foods. While the brands will maintain separate identities, strategy will be decided by Seara.

The decision follows a move last year to integrate Marfrig's beef-exporting divisions in Brazil, Argentina and Uruguay.

The company's plan is to run its beef divisions under Marfrig Beef and its poultry, pork and processed foods under Seara Foods. The umbrella company, dubbed Marfrig Group, will determine allocation of capital, the investment budget and appointment of officers.

Marfrig Group Chief Executive Marcos Molina will serve as the interim CEO for Seara Foods. James Cruden will remain CEO of Marfrig Beef.

Marfrig's shares recently traded 0.8% higher at BRL9.30 (US$5.45).