São Paulo – Brasil Foods, the company resulting from the merger between Sadia and Perdigão, confirmed on Thursday (11) that it is going to build a processed food factory in the Middle East. The unit will be installed in the United Arab Emirates at the cost of US$ 120 million, according to the company.
Since 2007, Sadia has been showing interest in a factory in the region, but with the 2008 crisis, which affected the company deeply and resulted in the merger with its main competitor, the project did not come off paper. The intention, however, never stopped being shown publically by company executives.
According to a BRF press statement, investment will be made in two phases. The first should consume US$ 95 million and the second, US$ 25 million. The factory, according to the organisation, should start operating late next year. When it is totally operational, the intention is to produce 80,000 tonnes of food a year.
The company says the Middle East is “strategic” to its internationalisation project. The region is the main international market for Brazilian chicken, the product is the BRF cash cow and the Sadia brand is among the best known there.
According to the press statement, the Middle East answers to 31.8% of BRF exports. Its products are currently exported to the Emirates, Saudi Arabia, Egypt, Kuwait, Qatar, Bahrain, Iraq, Jordan, Lebanon and Iran.
To the company, the factory “should be built in an important hub to consolidate its leadership position”. The company also aims to boost access to other markets, to have greater flexibility for adaptation of products to local tastes and to strengthen distribution.
BRF made use of the opportunity presented by the presentation of second quarter and first half figures to announce the construction of the factory. The group informed that net profit reached 881 million reals (US$ 540 million) in the first six months of 2011, growth of 279% in comparison with the same period last year. Revenues grew 16% to 12.3 billion reals (US$ 7.6 billion). The company’s EBITDA (earnings before interest, tax, depreciation and amortization) reached 1.6 billion reals (US$ 982 million), with a 13% margin.
Despite announcement of the new factory, the company will have to sell assets and brands it owns to fulfil an agreement established with the Administrative Council for Economic Defence (Cade) for the organisation to approve the merger between Sadia and Perdigão.
*Translated by Mark Ament
