São Paulo – The Marfrig Group, a Brazilian food manufacturing company, is going to sell its logistics operations in the Middle East. Halfway through last year, the group acquired Keystone Foods, a United States-based company that makes and sells poultry-, beef-, fish- and pork-based foods and also has a distribution arm that covers the Middle East, United States, Europe, Oceania and Asia. Operations in these five regions will be sold to another US-based enterprise, the Martin-Brower Company.
The news was announced during a Marfrig teleconference this Tuesday (20th), and according to Marfrig’s chief of Corporate Planning and Investor Relations, Ricardo Florence, the deal should go through in the fourth quarter this year, after receiving legal approval. The sale is valued at US$ 400 million and the company should use the funds to reduce its debt. Marfrig’s gross consolidated debt stood at 10.3 billion reals (US$ 7.5 billion) in late June.
According to Florence, the logistics and distribution arm of Keystone Foods posted revenues of between US$ 500 million and US$ 550 million, out of a total of US$ 2.7 billion. “The company judged that its main line of business does not include distribution and logistics services,” said Florence. According to him, through the sale, Marfrig demonstrates its focus on its main business, which is proteins.
According to the Marfrig CEO, Marcos Molina, when the group took over Keystone Foods, its focus was already to grow in proteins. “There was no synergy with other activities,” he explains regarding the operations being sold. Keystone’s distribution segment is geared toward fast food and caters mainly to McDonalds restaurants. Not only does the company distribute the meat, it is also in charge of storage, ingredients and store-to-store delivery of all sorts of products, from disposable cups to sandwich and soda packaging.
Logistics operator Martin-Brower is already a supplier of services to Marfrig in Brazil. Molina guaranteed that Marfrig will not lose ground with McDonalds as a result of the sale because, according to him, the fast-food chain itself wants synergy, with each link focusing on their business. Keystone’s logistics arm distributed not only Marfrig’s products, but also products by other suppliers to McDonalds. “In Europe, 99% came from other manfuacturers,” said Molina.
The Brazilian group announced that it should also sell another operation whose main focus is not proteins, a private port terminal in the state of Santa Catarina for which there already is a buyer, according to Florence. This, however, should be the only other major sale by the company to reduce its debt. Further, according to Molina, Marfrig intends to focus on synergy and cost reduction. One of the performance-boosting measures will be to increase the rate of industrialized products the group sells.
*Translated by Gabriel Pomerancblum
