April 26, 2018 / 2:07 PM / 3 months ago

NEWSMAKER-After rescuing Petrobras, CEO Parente called in to calm BRF

SAO PAULO, April 26 (Reuters) - A Brazilian commodities giant racking up losses as tensions flare on its board and corruption scandals grab headlines — Pedro Parente has been here before.

The scale of challenges at food processor BRF SA may not compare with what the 65-year-old chief executive of Petroleo Brasileiro SA tackled at the state-run oil company.

But people with firsthand knowledge of his work say the experience prepared him well for the task ahead.

Parente is expected to be confirmed on Thursday as chairman of the board at BRF, the world’s largest poultry exporter, which lost more than 1 billion reais ($290 million) last year and is seeking its fourth chief executive in five months.

His nomination has helped forge consensus among bitterly divided shareholders, who are counting on his track record of cool-headed leadership amid crisis to help settle the currently headless chicken processor.

BRF shares have surged more than 20 percent in the week since news of Parente’s nomination was first announced.

“Parente alone won’t pull off a turnaround at BRF, but he’ll calm the board, which is a nervous wreck right now,” said one of the executives familiar with his leadership style, who asked not to be named because his appointment had not been finalized.

If confirmed as chairman on Thursday, Parente has said he will stay on at Petrobras but resign from the board of stock exchange operator B3 SA Brasil Bolsa Balcão. It is not uncommon for Brazilian executives to sit on multiple boards, but rarely does one person take the helm of two companies facing such serious challenges.

Parente has rarely shied away from a challenge.

As a central banker in the 1980s, he navigated Brazil’s sovereign debt defaults. As chief of staff to President Fernando Henrique Cardoso in 2001, he handled a severe electricity crisis. And when Petrobras was beset with corruption scandals and crippling debts nearly two years ago, he agreed to take the role of CEO.

Petrobras shares have since climbed more than 150 percent.

GRAINS TRADE

Another former colleague highlighted Parente’s work prior to Petrobras, as CEO of Bunge Ltd from 2010 to 2014, giving him a background in the grains trade, which proved to be an Achilles heel for BRF last year.

Poor management of a spike in the price of corn, which is used for chicken feed, contributed to BRF’s heavy losses. Some analysts blamed a recently installed team of retail and finance executives for ignoring its agribusiness roots.

Former Chairman Abilio Diniz, a supermarket tycoon who stepped down this month, said last year that BRF had lost connection at times between the sales and production sides of the business.

“Since Parente has worked at a trading firm, he certainly understands the challenges,” the second executive said, adding that increased competition in Brazil’s corn market had forced the food industry to take a more proactive approach to sourcing.

A third person said Parente’s efforts at Petrobras to turn the page on years of alleged political corruption at the state oil giant had also prepared him confront an ongoing inspections scandal at BRF.

Chief Executive Pedro Faria was arrested last month on charges that he and other executives were aware of fraudulent practices to evade food safety checks. The news erased a fifth of BRF’s market capitalization in a day and contributed to trade issues with Europe, which has blocked imports from several BRF plants.

Faria’s successor, José Aurélio Drummond Jr, resigned on Monday, giving a new board led by Parente a chance to make its mark immediately on management.

$1 = 3.48 reais Reporting by Aluísio Alves and Ana Mano; Additional reporting by Rodrigo Viga Gaier in Rio de Janeiro; Writing by Marcelo Teixeira; Editing by Brad Haynes and Daniel Flynn

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