BRF – one of the two Brazilian meat giants implicated in the so-called carne fraca scandal – has announced a series of changes to its senior management in an effort to overturn losses and make a fresh start from a damaging six months.
Under the new set-up, there will be 14 vice-presidents reporting to BRF CEO Pedro Faria – an increase on the current structure, which includes five senior vice-presidents and six general managers with vice-president status.
The company’s operations in Europe, Asia, Africa and the Americas will be incorporated into a single international division. The new unit will be led by BRF’s current head of Asia, Simon Cheng.
There will also be separate vice-presidents for Brazil – by far its largest market in both volume and revenue – as well as OneFoods, BRF’s newly created halal division.
BRF provided reinforcements for OneFoods in January, shortly after the division was unveiled, announcing a $470 million deal for Turkey’s largest poultry processor, Banvit.
Analysis: A ‘long and difficult’ journey for BRF? By Alex Clere
At the end of February, FoodBev reported that BRF’s chief executive and chairman – Pedro Faria and Abilio Diniz – had reassured investors that it would make structural changes in order to avoid a re-run of the mistakes that led to a 4% fall in its fourth-quarter revenue and its first annual loss.
That was before details of Brazil’s meat scandal came to light. It already unveiled a first round of structural changes – including putting former Itambé CEO Alexandre Almeida in charge of its Brazilian business, and sacking chief financial officer Alexandre Carneiro Borges – and clearly expects that this latest shake-up, mostly focused on Faria and his relationship with BRF’s vice-presidents, will help further. To avoid a repeat of past events, the company needs to improve both its financial oversight and its standards procedure, ensuring that contaminated meat is not allowed to progress so far along the supply chain, and that employees aren’t allowed to indulge in such systematic corruption without being challenged about it.
That’s a big mountain for BRF’s top brass to climb, and it could mean a long and difficult road back to profitability.
The changes are the latest step in a series of measures designed to BRF back on track: in March, it unveiled a host of changes designed to prevent the kind of supply chain misconduct that led it to being implicated in the police investigation.
Along with JBS and smaller company Grupo Peccin, BRF was accused of paying health officials to overlook contaminated and potentially rotten shipments of meat.
The emerging scandal added to BRF’s woes; it had already vowed not to repeat the same mistakes that led to a 4% fall in like-for-like fourth-quarter revenues.
BRF said that ‘elevated inventories’ had negatively affected its margins in the Middle East and North Africa, Asia, and Europe.
In a conference call with investors, chairman Abilio Diniz and chief executive officer Pedro Faria blamed a lack of information and some miscommunication, and vowed to put in place protocols that would help the company to avoid a similar situation in future.
Gross profit in 2016 was 25% lower than the full year before, while it made a loss – of $112 million – for the first time.
Revenue for the year stood at BRL 39 billion ($11.79 billion) – up 4.9% – while total volumes increased by 3.8%
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