August 3, 2012

Marfrig possess remaining two BRF Brazil Food plants

Brazilian processor, Marfrig, will possess remaining plants it acquired in an assets trade with BRF Brasil Foods, and expects the company and its main brand in Brazil, Seara, to gain US$830.3 million per year in income from the new assets.

After taking over three BRF plants in June and five more in early July, Marfrig's Seara will take the reins of the final two plants that BRF traded to it in late 2011, a government-mandated assets release for BRF that was part of the approval for the 2009 merger between Sadia and Perdigao that made BRF. In addition to 10 plants, Marfrig acquired eight distribution centers and 13 brands in the deal.

The assets acquisition has been challenging at times, but overall the factory transitions have been smooth, David Palfenier, Seara Brasil's CEO, said. One of the biggest adjustments for Seara has been the onset of pizza production it acquired from BRF.

Previously, Marfrig's frozen pizza production was limited to third parties. The company now produces 900 tonnes of pizza per month, maximum capacity at its newly acquired plant in Lajes, Santa Catarina.

Ham production is also at maximum capacity already at the new Carambei, Parana-state plant, which Seara took over in July. The market has absorbed max production from this plant, Palfenier said, with the Carambei plant offering a maximum capacity of 26,000 tonnes per year. The deal with BRF promises the installation of a new ham production line with annual capacity of 30,000 tonnes, the location still undisclosed.

With the two new BRF plants that Marfrig will take on this week, the company's daily poultry slaughter capacity will rise from 2.5 million birds to three million, and its swine slaughter from 11,200 tonnes per day to 13,700 tonnes. Marfrig's Seara Foods, a division that includes Seara Brasil, recorded net revenue of US$6.94 billion in 2011, and Marfrig a net revenue of US$10.65 billion.

If all goes right in 2012 with the new assets, Marfrig will expand its market share of processed meat in Brazil from 9% to 21%. The new BRF assets will boost the role of processed meats in Marfrig's revenue from 52% in 2011 to 63% this year, a positive because the processed segment is less subject to price fluctuations.