The 'B+' corporate credit rating on meat processor Marfrig Alimentos S.A. reflects the volatile demand in the commodity-oriented fresh meat export market, the risks inherent in the meat industry, and the industry's high dependence on raw material sourcing. Moreover, Standard&Poor's Ratings Services sees Marfrig's aggressive acquisitive strategy, leveraged capital structure, and the integration risks associated with its now substantial poultry operations as significant risks. Conversely, we believe the company's more diversified meat-and-poultry portfolio, increased economies of scale in poultry and beef production, and well-built logistics and distribution network partially offset these negatives. We expect volumes and prices to increase gradually in export markets and anticipate steady performance for Marfrig in the domestic market--which has been strong, with higher-value-added
