Tuesday, June 19, 2018

BRF SA Finally Catches A Break

"Once is happenstance. Twice is coincidence. Three times is enemy action." - Ian Fleming

Between rising costs, weakening positions in once-key markets, a scandal that has closed off the EU market, and a general sense of operational disarray, BRF SA (BRFS) has continued to struggle and has lost about half of its market value since the start of the year. At long last, though, investors finally have some good news to celebrate - the company's Chairman and former CEO of Petrobras (PBR) has been named as the new CEO.

To be clear, Mr. Parente has a lot of work ahead of him, and BRF's turnaround is not going to happen overnight. Nevertheless, I see more than a few casual similarities between Petrobras and BRF at the time Mr. Parente became CEO - both companies had unacceptable levels of inefficiency and high costs, both had serious regulatory/conduct issues, both had unfocused operations, both had issues with pricing and focus, and both had troublingly high debt. While Parente's success at Petrobras is no guarantee of a successful turnaround at BRF, I believe this was the best move available to the company and could, perhaps, represent the first few at-bats in what is likely to be a nine-inning turnaround cycle.

Read more here:
BRF SA Finally Catches A Break

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