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Exclusive - Brazil's BRF to reopen plant, catering to Mideast halal market
September 21, 2017 / 12:07 PM / a month ago

Exclusive - Brazil's BRF to reopen plant, catering to Mideast halal market

SAO PAULO (Reuters) - BRF SA (BRFS3.SA) will reopen a food processing plant in Brazil by January, a company executive told Reuters, the first big move aimed at reviving profitability since the country’s No. 1 chicken exporter announced the departure of its chief executive officer.

The plant in Brazil’s midwestern state of Goiás will be overseen by One Foods Holdings Ltd, BRF’s halal processed food unit, Marcelo Schmeider, the division’s head of operations, said on Thursday.

The plant’s entire fresh chicken production will be halal and shipped to Middle East markets, he said. The total market for halal meat, which complies with Muslim dietary rules, could grow to $60 billion (£44.47 billion) by 2020.

Lower feed prices and a promising outlook for global demand for halal products led BRF to reopen the plant, Schmeider added. The Goiás plant has been shut since June last year, coinciding with lacklustre performance at One Foods amid escalating competition and higher import duties in Saudi Arabia.

One Foods was formally launched as a standalone company in January, underscoring BRF’s desire to expand in the buoyant halal market independently from other regions.

The Goiás plant’s capacity equals about 5 percent of BRF’s fresh chicken sales in the Middle East last year, which totalled 849,000 tonnes.

BRF said last month that Pedro Faria, its CEO since 2015, would leave at the end of the year. His departure comes in the wake of three consecutive quarters of losses and fallout from a food safety scandal.

Investigators have alleged widespread bribery of food inspectors in Brazil’s meat industry in a probe known as “Weak Flesh,” which temporarily suspended operations at a different BRF plant in Goiás state.

Shares (BRFS3.SA) have fallen 3 percent this year, reflecting the impact of the scandal, weak operational performance and rising debt, which contributed to BRF’s first-ever annual loss in 2016. The stock was little changed on Wednesday at 46.89 reais.

BRF’s effort to take One Foods public sputtered after the scandal. BRF had aimed to raise $1.5 billion from the One Foods initial public offering in London, Reuters reported in January.

Editing by Guillermo Parra-Bernal and Jeffrey Benkoe

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