Fitch: Latin American Protein Producers to Benefit from Improved Outlook

RIO DE JANEIRO--()--Market fundaments for Latin America protein producers are expected to benefit from an improved outlook in 2014, according to new Fitch Ratings report. 'In general, the fundamentals of the protein sector in Brazil are improving and are expected to be stronger in 2014. Softer grain prices are likely to reduce costs of chicken and pork producers,' according to Gisele Paolino, a Director at Fitch. 'Brazil beef producers should also benefit from a positive cattle cycle, high beef prices in the country and demand from exports markets,' added Paolino.

While Fitch expects cash flow from operations (CFFO) of all rated companies to increase, free cash flow (FCF) trends vary depending on their strategy towards expansion. Fitch expects BRF, Marfrig, Minerva and JBS to improve FCF during next year, while Rodopa's FCF may continue to be constrained by expansion plans.

The Brazilian protein companies are expected to lower leverage during 2014 due to expanding EBITDA and steady debt levels. Lower input costs, strong international demand, focused efforts on obtaining cost efficiencies and improving working capital management should fuel rising CFFO.

Fitch expects demand for animal proteins to remain positive in 2014 due to improving global conditions and projected turnaround in the Brazilian economy. International demand from emerging markets remains structurally positive with a growing middle-class and the development of modern retail chains in those markets.

For more information, a special report titled '2014 Outlook: Brazil Protein' is available on the Fitch Ratings web site at www.fitchratings.com.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: 2014 Outlook: Brazilian Protein

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Contacts

Fitch Ratings
Gisele Paolino
Director
+55 21 4503 2624
Fitch Ratings Brasil LTDA
Praca SV de Nobembro
Rio De Janerio
or
Joe Bormann, CFA
Managing Director
+1-312-368-3349
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526 (New York)
elizabeth.fogerty@fitchratings.com

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Contacts

Fitch Ratings
Gisele Paolino
Director
+55 21 4503 2624
Fitch Ratings Brasil LTDA
Praca SV de Nobembro
Rio De Janerio
or
Joe Bormann, CFA
Managing Director
+1-312-368-3349
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526 (New York)
elizabeth.fogerty@fitchratings.com