RIO DE JANEIRO, December 17 (Fitch) 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
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