December 10, 2007

Brazil's Minerva slaughterhouse seen revenues up 30 percent

Brazilian top beef slaughterhouse Minerva is seen to end the year with a 30-percent rise in sales due to continual increases posted in the last months.

In September, the company's gross revenues have already grown 25 percent compared to the same period of 2006, totalling 1.13 billion Brazilian reais (US$ 629.3 million), according to figures disclosed last week to the press and investors by CEO Fernando Galletti de Queiroz. In the same months of last year, Minerva revenues stood at 907 million reais (US$ 505.1 million). Of the total gross revenues posted by the company from January to September this year, 831.7 million reais (US$ 463.1 million) came from exports and 300.6 million reais (US$ 167.4 million) came from the domestic market.

According to Queiroz, factors that contributed to the performance of the slaughterhouse include low beef production cost in the country, and the heated global demand, coupled with the impossibility of foreign competitors increasing their outputs. He said Brazilian beef is one of the world's most competitive, with production costing only US$ 1.50 per kilogramme, cheaper than major beef producing countries such as Uruguay (US$ 1.70), Australia, (US$ 2.41), in Canada, (US$ 2.85) and in the United States, (US$ 3.14). In Argentina the cost is lower at US$ 1.45, he said.

Even in the face of price adjustments due to exchange rates and high demand, the price of Brazilian beef remains competitive said Queiroz. Countries that compete with Brazil in beef, such as Australia, for instance, are unable to increase their output due to the unavailability of natural resources, such as water, he said.

In Argentina, where the government controls prices and exports in order to avoid inflation, raisers are unmotivated about investing in cattle farming. Furthermore, Europe has hinted at the possibility of opening its market to Brazilian live cattle, which implies that the continent does not possess a large enough herd to increase its slaughtering. Moreover, global consumption of beef is currently on the rise with China's utilisation surpassing its production as the Chinese annual beef ranges from four to five kilograms per person.

The rising income in some countries such as in the Middle East is also placing meat on the menu for lower income classes. Countries in the Far East are also adopting Western habits, such as beef consumption.

Minerva is Brazil's third largest beef exporter and the world's eighth largest slaughterhouse, with a capacity for five thousand heads of cattle per day, and a processing capacity for 1,200 daily tonnes. In July this year, the company was listed in the New Market of the Sao Paulo Stock Exchange (Bovespa), joined only by companies committed to adopting corporate governance practices that extend beyond legal requirements. Its operations are raised to 333 million reais (US$ 185.4 million) with current market value at 1 billion reais (US$ 556.9 million). Presently, 17.7 percent of the company's total shares is foreign-owned and by the end of the current year, Minerva will have invested 95 million reais (US$ 52.9 million), due to expansion and construction of units.  The company owns units in the states of Para, Rondania and Tocantins (all in northern Brazil), Goias and Mato Grosso do Sul (in the Midwest) and Sao Paulo and soon overseas as it is eyeing production units in Uruguay and Paraguay. Purchases in Brazil and in Australia are also a possibility, he said.

Minerva currently owns offices in Algiers, in Algeria, Beirut, in Lebanon, Tehran, in Iran, and Moscow, in Russia. In 2008, Minerva plans to slaughter 7,850 heads of cattle and to debone 11,600 per day.