BRF announced on Tuesday that Chief Executive Lorivar Luz has stepped down and will be replaced by Miguel Gralte, chief executive of beef packer Marfrig Global Foods.

The poultry and pork processor’s shares rose about 6% in early trading in São Paulo, but fell 1.10% to close at 16.19 reais as BRF investors digested the news.

Whether Miguel can change his BRF position to face stiff competition in Brazil is an open question. “These are very different industries and require different skills,” BTG said, comparing beef processing to pig and poultry processors.

BRF said the move did not reflect an intention to merge the two companies, but the market has been making similar speculations for some time.

From passive to active involvement

Marfrig owns 33.27% of the BRF, previously said their only interested in its stake in BRF was, passive.

However, BTG analysts see Gularte’s appointment as “another sign of how effectively Marfrig is controlling and influencing the operations of the BRF.”

In a memo, XP analysts stressed the fact that Gularte’s appointment was “unexpected” and that his experience came from the beef division.

Still, XP believes Gularte “should be able to make the BRF more agile and remove the nasty inertia that has caused the BRF to lose opportunities in the past.”
The owner of famous Brazilian brands Sadia and Perdigao, his BRF is suffering from high-cost inflation and derives most of its sales from the domestic market.

Unlike competitors JBS SA (JBSS3.SA) and his Marfrig, BRF does not process cattle or own facilities in countries such as the United States. Gularte was Marfrig’s managing director until today’s announcement.

After Tuesday’s bell, Marfrig named Rui Mendonca as the new CEO of South America, replacing Gularte, as shares fell 3.78 after his bell.

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Source: Reuters

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