CEO of Brazilian food processor BRF steps down, shares close lower

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The logo of meat processing company BRF SA is pictured at its unit in Fortaleza, Brazil January 10, 2019. REUTERS/Paulo Whitaker

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SAO PAULO, Aug 30 (Reuters) – Brazilian food processor BRF SA (BRFS3.SA) said on Tuesday chief executive Lorival Luz had resigned and would be replaced by Miguel Gularte, a senior executive at beef packer Marfrig Global Foods SA (MRFG3..SA).

Shares of the poultry and pork processor were around 6% higher in early trading in Sao Paulo, but closed down 1.10% at 16.19 reais ($3.17) as investors of the BRF digested the news.

“To some extent, Miguel Gularte can be described as a beef guy,” BTG Pactual analysts said in a note to clients.

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Whether he can reposition BRF to face fierce competition in Brazil remains an open question. “These are very different industries and require a different skill set,” BTG said of comparing beef farms to pork and poultry processors.

BRF said the move did not reflect an intention to merge the two companies, even though the market had been speculating about it for some time.

Marfrig, which owns 33.27% of BRF, previously said it was only interested in a passive stake in BRF.

But BTG analysts see Gularte’s appointment as “another sign of how Marfrig is effectively taking over and influencing BRF’s operations”.

XP analysts said in a note that Gularte’s appointment was “unexpected”, also pointing to the fact that his background comes from the beef industry.

Still, XP thinks Gularte “should be able to make BRF more agile, removing the troublesome inertia that was responsible for lost opportunities in BRF’s past.”

BRF, owner of well-known brands Sadia and Perdigao in Brazil, has been reeling from high cost inflation and makes most of its sales domestically.

Unlike rivals JBS SA (JBSS3.SA) and Marfrig, BRF does not process cattle or own factories in countries like the United States.

Gularte was Managing Director of Marfrig until today’s announcement.

Marfrig, whose shares fell 3.78% after the bell on Tuesday, has named Rui Mendonca as the new CEO for South America replacing Gularte.

($1 = 5.1134 reais)

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Reporting by Gabriel Araujo and Ana Mano; Editing by Kirsten Donovan and Jane Merriman

Our standards: The Thomson Reuters Trust Principles.

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