Fitch revises BRF to negative

Fitch Ratings said it affirmed BRF SA's long-term foreign and local currency issuer default rating at BBB-, national rating at AAA(bra) and senior unsecured notes at BBB-.

The outlook was revised to negative from stable.

Fitch said the affirmation reflects the brand equity of BRF's key food brands (Sadia and Perdigao) in Brazil, strong presence in the Middle East, and the agency’s expectation that the company will generate positive FCF in 2018 due to stronger operating performance and better working capital management.

The negative outlook reflects the company’s poor operating performance during 2016 and 2017 and weak credit metrics for the rating category, Fitch explained.

“Organic reduction of leverage could be further hindered by the ban from the European Union on products from a few Brazilian facilities, which forces the company to redirect exports to others markets and adjust its production capacity,” the agency said in a news release.

“A new board of directors was recently appointed to tackle these challenges.”

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