Shot at Kizad factory proves unmissable for Brazilian boss
It must surely be the true mark of executive dedication, especially on the part of a Brazilian businessman, that he passes up the chance of watching his favourite football team in order to clinch a big business deal.
That is what Pedro Faria, global chief executive of Brazilian foods group BRF, did last month. Torn between watching his team Atletico Mineiro play in a cup final back home, and launching a multimillion dollar investment in Abu Dhabi, he chose the latter. “I was supposed to be giving away the trophy too, but this is more important,” he says with just a hint of regret at the timetable that prevented him being in Belo Horizonte for the game.
From an executive view, the fixture scheduled in Abu Dhabi was unmissable. BRF, Brazil’s fourth largest exporter and its biggest in consumer goods, was opening a new plant in the Khalifa Industrial Zone Abu Dhabi (Kizad) on which it had already spent $180 million and to which it is committed to a further $200m of investment in the medium term.
“We had an invitation from Kizad, and although we looked at other sites in the region this was the most compelling proposition,” Mr Faria says. The deal was smoothed through by BRF’s local partner, the influential Al Nowais family of Abu Dhabi. “The collaboration and cooperation we had from Abu Dhabi officials was very good,” he adds.
The time was right for a major move in the Middle East, which BRF sees as its “home outside of Brazil”, Mr Faria explains. The region is BRF’s largest foreign market, and accounted for 17 per cent of global turnover last year. The company had a regional hub in Dubai, but the Kizad deal offered other advantages.
“There is room for expansion in Kizad, it is only limited by the size of our ambitions. We see it as a hub for global expansion. We’re having interesting discussions with potential partners in West Africa and South-east Asia, and Kizad is perfectly placed for those opportunities. There is also the project of a regional railway link for the future,” he says.
The new factory is the biggest foreign investment yet in Kizad, and will employ 1,400 people as part of the capital’s strategy of economic diversification. Kizad opened formally two years ago with the ambition of becoming one of the largest industrial free zones and trading ports in the region.
There was some speculation that Kizad would cannibalise business already going through Jebel Ali, by some way the biggest port in the Middle East which also has its own dedicated industrial zone, but the BRF investment seems to be proof that the two can exist side by side, even complement each other, from their bases just a few kilometres apart on the UAE coastline.
“One of the attractions of Kizad was that it was so close to Jebel Ali. We already use that as our main import hub in the region. A lot of what we bring in comes through Jebel Ali, and that will continue,” Mr Faria says.
What BRF brings through Jebel Ali at the moment, overwhelmingly, is chickens. The group is the largest exporter of poultry in the world, Mr Faria estimates, and is best known in the region for its range of frozen and processed chickens and other poultry products – burgers, frankfurters, breaded items and sauces – under the 30-year-old Sadia brand.
The produce is 100 per cent halal certified. BRF is the largest halal producer in Brazil, and has 17 plants there that cater for Muslim customers in the country. The group employs 3,500 Muslims in Brazil, Mr Faria says.
The UAE and the Arabian Gulf region are already a big market for its products. The new plant will feed BRF’s well developed infrastructure and distribution system in the region. “Saudi Arabia is a very big market, and in the past we have enjoyed good business in Iraq and Iran too. Those have [been] smaller of course, but there is potential upside in both and we have to be here to react faster to any developments,” he says.
Regional political instability does not worry BRF. “We’ve been here 30 years and the market has never failed to meet our objectives. In any case, we’re Brazilian so we’re used to turmoil,” Mr Faria says.
He says the new Brazilian government under re-elected president Dilma Rousseff would be good for business. “There will be more checks and balances, but the government understands the importance of global companies for the Brazilian economy, and will encourage them. Imminent reforms can jump-start the economy.”
The Kizad investment has been financed from BRF’s own resources, which are considerable. “Our bonds have a better rating than the sovereign. Around 45 per cent of our revenues comes from exports, so even if there is a cooling down in the Brazilian economy we are less vulnerable to that. And a weaker currency is good for exports,” he says.
With an MBA from Chicago University and a career in private equity and banking, Mr Faria is regarded as one of the rising stars of the Brazilian corporate scene. Appropriately enough for a man responsible for the export of so many chickens, his football team’s nickname is “galo” – Portuguese for “rooster”. Maybe next time he will get the chance to present them with a cup.
Follow The National’s Business section on Twitter
Published: December 30, 2014 04:00 AM