March 20, 2009

Brazilian meat company Marfrig said Thursday (March 19) it expects recovery in Brazilian beef export volumes this year. "Although January and February saw a fall in volumes such as for beef exports, we have seen an improvement in March," Ricardo Florence, Marfrig's investor relations director said during a conference call.

 

Marfrig said the last quarter of 2008 was impacted by the international crisis, with a tightening of credit to important importers, such as Russia.

 

In the quarter, 47,800 tonnes of fresh beef were exported to Russia, down 64 percent from 133,000 tonnes in the third quarter, said Marfrig.

 

But the situation is improving. The company expects the European Union to allow more than 1,000 new ranches in 2009 to sell fresh beef to the EU, while Russia is increasing orders as stocks decline and Chile is allowing imports from some Brazilian states.

 

Florence said Marfrig's export volumes in the first quarter of 2009 should be the lowest of the year, but will improve throughout 2009.

 

Marfrig will meet its guidance target of exports for the full-year 2009, he said.

 

Florence warned, however, the international climate will remain "challenging."

 

The company said, for example, Russia, Brazil's No.1 customer for beef, should see 50 percent fewer volumes of beef shipped by Marfrig in 2009 compared to last year.

 

Delays in payments of some weeks for beef shipped to Russia had occurred, but on the whole Marfrig has selected its clients carefully, Florence said.

 

Marfrig also said it was "too early" to discuss the acquisition of distressed assets of other meat companies available in the market.

 

"We want to focus on our own consolidation and our own assets and ensure that they are performing," said Florence.

 

Marfrig intends to inaugurate a new factory in Brasilia in the second quarter of 2009. The unit will focus on preparing cooked chicken products to ship to countries such as the UK.

 

Marfrig will also make investments to modernize poultry plants in Brazil's Sao Paulo and Parana states.

 

Marfrig slaughtered 719,727 heads of cattle in the fourth quarter, down 19.7 percent from a year ago.

 

Marfrig reported late Wednesday a fourth-quarter loss of 74.2 million Brazilian reals (US$33 million), reversing a net profit of BRL26.3 million in the year-ago period.

 

The company attributed the reversal to the depreciation of the Brazilian real versus the US dollar, which increased the costs of its debts in the period.

 

Marfrig's revenue rose to BRL6.7 billion in 2008 from BRL3.7 billion in the previous year.

 

Marfrig operates 57 plants in nine countries and sells to more than 120 countries.

 

Brazil is the world's No.1 beef exporter.