© Leaders League
After three leaderless weeks, on June 14th BRF’s administrative council formally appointed former head of Petrobras, Pedro Parente, as its new Global CEO. Brazil’s largest food company, which owns the famous Sadia and Perdigão brands, had been provisionally led by interim president Lorival Nogueira Luz Junior since April 23rd.
Expectations that Mr. Parente might take over at BRF sent stock options up by 3.3% shortly before his announcement. Due to his departure from Petrobras only weeks earlier, Parente had to obtain clearance from Brazil’s Public Ethics Committee. As the committee decided no conflict of interest exists between the state-run oil corporation and the food processing giant, Mr. Parente was given the green light to start his new role on June 18th, without serving the customary quarantine period.
Parente’s two-year term as Petrobras CEO ended after May’s two-week long truckers’ strike. Following a tense standoff between the federal government and a number of driver-led syndicates, the Brazilian government gave into the truckers’ demands. Concessions meant reducing diesel prices, freezing them for the next 60 days and interfering with the price policy implemented at Petrobras for the first time since Parente had taken office. Mr. Parente mentioned the issue in his resignation letter, stating that the strike and its consequences had brought his diesel price policy into question.
Besides destabilizing Petrobras, the strike also affected other sectors of the Brazilian economy. Widespread fuel shortages at gas stations and disrupted supply-chains, for example, affected BRF’s ability to deliver food to supermarkets, causing the company to announce a 10% price increase in products due to the strike.
BRF has lost 43% - R$12.8 billion - of its market value since the beginning of 2018. By assuming the hotseat at BRF, Parente’s challenge is to turn the company's fortunes around. BRF has struggled both with EU restrictions to Brazilian meat products as well as China’s 38.4% tariff increase on Brazilian poultry. BRF’s international market revenue has decreased by 13.7% since the beginning of 2018 due to said restrictions as well as the Brazilian Real’s weak performance against other national currencies.
Mr. Parente faced similar obstacles upon taking over as the CEO of Petrobras: high levels of debt; asset mismanagement; and scandals which tainted the company’s reputation both at home and abroad. According to Bloomberg, Mr. Parente’s administration was praised for its improvement of Petrobras’ reputation, its responsible management of company assets and its market-oriented price policy.