Research Update: Marfrig Global Foods Upgraded To 'BB+' From 'BB' On Significant Influence On BRF And Controlled Leverage; Outlook Stable

Brazilian protein processor Marfrig Global Foods S.A.'s (Marfrig) proposed slate for BRF S.A.'s (BRF; BB/Stable/--) board was elected on March 28, 2022, and now Marfrig will exert significant influence over BRF's decision-making, although it only owns 33.25% of the company. We think that Marfrig will capture synergies in the short to medium term and likely gradually integrate both businesses in the long term, which will provide it with larger scale and greater protein and geographic diversification. We'll now proportionally consolidate BRF's financials into Marfrig's to better reflect its economic interest in BRF. Moreover, Marfrig's leverage remains controlled despite significant cash outflows in acquisitions and shareholder remuneration due to record-high cutout ratios and EBITDA margins in the U.S. offsetting depressed margins

...- Brazilian protein processor Marfrig Global Foods S.A.'s (Marfrig) proposed slate for BRF S.A.'s (BRF; ##/Stable/--) board was elected on March 28, 2022, and now Marfrig will exert significant influence over BRF's decision-making, although it only owns 33.25% of the company. - We think that Marfrig will capture synergies in the short to medium term and likely gradually integrate both businesses in the long term, which will provide it with larger scale and greater protein and geographic diversification. We'll now proportionally consolidate BRF's financials into Marfrig's to better reflect its economic interest in BRF. - Moreover, Marfrig's leverage remains controlled despite significant cash outflows in acquisitions and shareholder remuneration due to record-high cutout ratios and EBITDA margins in the U.S. offsetting depressed margins in South America. - On March 30, 2022, S&P Global Ratings raised its global scale issuer credit and issue-level ratings on Marfrig to '##+' from '##'. We...

Research Update