S&P cuts Marfrig outlook to negative

Standard & Poor's said it revised the outlook on Marfrig Frigoríficos e Comércio de Alimentos SA to negative from stable.

At the same time, the agency said it affirmed its B+ corporate credit rating on Marfrig and on its $375 million notes due 2016.

The rating action reflects Marfrig's lower-than-expected cash flow generation, leading to weak credit metrics for the rating category, associated with the company's aggressive growth strategy in 2007 and beyond, S&P noted.

In the agency's opinion, the company will report negative discretionary cash flow in the future, limiting the potential improvement to its financial profile and negative rating factors are partly offset by the company's improved business diversification, its relatively good distribution of sales in both local and external markets and the company's competitive cost position with Brazilian beef producers.

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