Marfrig Slumps After Bigger Loss Than Forecast: Sao Paulo Mover

Marfrig Alimentos SA, Brazil’s second-largest food maker, plummeted the most in three months after posting a quarterly loss that was higher than analysts expected because of rising animal-feed costs.

The shares dropped 5.2 percent to 8.44 reais at the close in Sao Paulo, the biggest decline since Dec. 11. It was the biggest loser in the benchmark Bovespa stock index, which gained

0.6 percent.

Marfrig’s fourth-quarter net loss of 284.2 million reais ($141 million) compares with a 146.5 million-real loss a year earlier, the Sao Paulo-based company said in a filing late yesterday. Marfrig was expected to post a loss of 63 million reais excluding one-time items, according to the average of nine analysts’ estimates compiled by Bloomberg.

“It was a challenging quarter, pressured by feedstock prices,” Sergio Rial, the head of Marfrig’s food-processing unit Seara Foods, said in a conference call with analysts today. “We see a gradual improvement in coming quarters.”

Marfrig doubled its processed-food capacity after the acquisition of plants from BRF - Brasil Foods SA last year amid increasing prices for corn and soybeans used to feed its livestock. Average corn prices in the quarter rose 18 percent from a year earlier in Chicago, while soybeans advanced 26.

The company reported “weak results,” showing that the integration of recently acquired plants from Brasil Foods was a “tough process,” Ricardo Boiati, a Sao Paulo-based analyst at Banco Bradesco SA whose recommendation on the stock is under review, wrote in a note to clients today.

Seara Foods accounts for about 70 percent of Marfrig’s total sales, according to data in its earnings report. Brasil Foods is Brazil’s largest food maker.