As Brazil Suffers, BRF Spends $496 Million to Grow Overseas

  • Foodmaker expects an additional $600 million in annual revenue
  • BRF agrees to buy assets in Thailand, Argentina and the U.K.

BRF SA, Brazil’s biggest maker of processed food, expects sales to increase by 6 percent after completing three separate acquisitions in Asia, Europe and South America, the company said.

The deals totaling $496 million should add about $600 million in annual revenue while increasing production capacity by 230,000 metric tons, Chief Executive Officer Pedro Faria told journalists on a conference call Wednesday. The deals will double overseas output to 8 percent of BRF’s total production, he said. Company sales of chicken to frozen pizza reached $9.9 billion over the past 12 months.

BRF, which got a little more than half its revenue from Brazil last year, has been seeking to grow abroad as the contraction in South America’s largest economy fuels rising unemployment and a slump in retail sales. In Brazil, the company’s earnings before interest and taxes fell 45 percent in the third quarter from a year earlier, frustrating investors and sending shares to the lowest level in more than a year last month.

"We continue to seek expansion overseas as part of the plan to make BRF a global company," Faria said. Over the past two years, the company has moved to expand in countries including Kuwait, Indonesia, Singapore and the U.K., he said. 

‘Promising Scenario’

The company said late Tuesday it agreed to purchase Thai poultry processor Golden Foods Siam Ltd. from Navis Capital for $360 million, pay $85 million for Eclipse Holding Cooperatief UA, which owns pork operations in Argentina, and 34 million pounds ($51 million) for Universal Meats, a food distributor in the U.K. BRF will pay for the transactions with its own cash and debt, Faria said.

The acquisitions “should create value for the company, which has very comfortable cash and debt levels,” Felipe Silveira, an analyst at the brokerage Coinvalores, said by phone from Sao Paulo.

The foodmaker announced acquisitions in Qatar and Argentina totaling $183.5 million in October. "We are looking for opportunities where BRF can be a relevant player," Faria said.

The deal in Argentina will make BRF the second-largest pork producer there, Faria said. The company sees a "promising scenario" after pro-business candidate Mauricio Macri was elected president last month. He takes office Dec. 10.

BRF slid 0.1 percent to close at 56.22 reais in Sao Paulo. Earlier it fell as much as 2.6 percent. Brazil’s benchmark Ibovespa index dropped 0.3 percent.

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