August 11, 2017 / 4:12 PM / 4 months ago

UPDATE 2-BRF readies Brazil discount brand after antitrust ban lifted

(Adds timing of restrictions, closing share price, details of recent market share)

By Ana Mano

SAO PAULO, Aug 11 (Reuters) - Brazilian food processor BRF SA will introduce a discount brand in its home market, executives said on Friday, as the end of antitrust restrictions in July allows it to target a niche that has grown during the country’s recession.

Antitrust agency Cade has lifted brand limits established in 2011, when it approved the formation of BRF from the merger of Sadia and Perdigão.

BRF is aiming the new brand at cost-conscious buyers representing some 30 percent of Brazil’s processed food market, executives said on a conference call with analysts.

The company plans to start marketing the new brand in the first quarter of 2018 after getting all regulatory approvals, management said, without specifying the products involved.

“The new brand will increase use of our installed capacity and will allow the use of leftover raw materials,” Chairman Abilio Diniz said on the earnings call.

Late on Thursday, BRF reported its third consecutive quarterly net loss as it reeled from a probe leading to accusations that more than 100 people, mostly inspectors, took bribes in exchange for allowing the sale of rancid food, falsified export documents or failed to inspect meatpacking plants.

Still, BRF shares closed 5.2 percent higher on Friday at 41.05 reais in Sao Paulo, after analysts such as Antonio Barreto of Itaú BBA pointed to lower costs for animal feed due to a bumper corn crop.

“There is reason to be more optimistic on BRF in the second half,” Barreto wrote in a research note, adding that the weak second-quarter results were widely expected.

BRF’s market share in Brazil rose by 0.8 percent to 54.4 percent in the second quarter from the first, management said, citing Nielsen data. The company’s market share had been falling consistently from 57.3 percent in the first quarter of 2016, BRF representatives told Reuters.

The company’s operations were disrupted when it became embroiled in the food safety scandal that resulted in the closing of one of its plants, and temporarily shut export markets.

“We ended the second quarter with positive growth, continuing the process of market share recovery,” said Chief Executive Officer Pedro Faria.

The gains would have been greater had it not been for the food safety scandal, he added. (Reporting by Ana Mano; Editing by Lisa Von Ahn and Tom Brown)

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