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Contents

SADIA S.A. – A BRAZILIAN FOOD PRODUCER ................................................................................................ 2 Introduction: ............................................................................................................................................. 2 Company Profile:....................................................................................................................................... 3 Corporate Structure: ................................................................................................................................. 3 Acquisitions and Investments: .................................................................................................................. 4 Financial Position: ..................................................................................................................................... 5 Currency Derivative Contract:................................................................................................................... 8 Loss in the Derivative Market: .................................................................................................................. 8 Consequences: .......................................................................................................................................... 8 Allegations against Sadia: ......................................................................................................................... 9 Substantive Allegations:............................................................................................................................ 9

which transformed its name to BRF .Brazil Foods S. Primarily it is one of the main Brazilian food producers.000 distributors distributing the food produced by the company in Brazil and its earnings increase mainly from exporting to almost 100 countries in the world. Brazil. it had 20 industrial plants with maximum production of 2. The most important thing is it ranked among the world’s leading producers of frozen foods and exports meat products around the world.A. turkey.A was created in Concordia. The company had to face a great loss in the derivatives market during 2008. as well as pasta. desserts.A.SADIA S. . Santa Catharina. and other products. In 2009 the company merged with the major competitor Perdigao. According to the data provided by its official website in reference to 2008 data. – A BRAZILIAN FOOD PRODUCER Introduction: Sadia S.3 million tons of food including chicken. pork and beef. margarines. There are at least 70.

More than that the other products include margarine and pasta.3 million tons of protein which include processed foods like frankfurters and sausages. settled in the aisles of chilled and frozen foods.A is shown below and it is necessary to note that the company has its own operating subsidiaries. The company produces food which includes 1. as well as convenience foods (ready to cook food) including hamburger patties. pizzas and etc. .Company Profile: The word Sadia in Portuguese means healthy. Corporate Structure: The corporate structure of the company Sadia S. which seems appropriate for a Brazilian producer.

e. The production was simply adjusted according to the demand of market. Due to this the Company increased its share in the market of chicken and pork products and diversifies by entering into margarine. It manufactures premium quality items like bologna sausage. This particular acquisition was worth R$0.e. beef and milk markets. and other activities i.e. a subsidiary of Grandi Salumifici Italiani (“GSI”).4 million. These products were basically created for the pet food market with an aim towards growth potential. The two popular brand names there Senfter and Sinosul are prepared from special recipes with the flavor of homemade seasoning typical of the state of Rio Grande do Sul. their entry into new businesses. the Company initiated its business in the new market i. The investment totaled approximately R$4 million in the assembly of a modern dog food production line in the animal feed plant at Francisco Beltrao in the State of Parana. The subsidiary is basically situated in the State of Rio Grande do Sul. The details of the acquisitions and investments are as under: Sino dos Alpes This plant was acquired in 30th March. a major competitor in the Italian meat industry. . Along with it the company restructured its corporation through reorganization and thus reducing costs of operation. frankfurters and sausage made from selected meats. in pet foods launching Balance and Supper brands. Due to this merger. tax and financing. operational activities. 2007.Acquisitions and Investments: Up till now the Company has undergone several changes which include acquisitions and diversification i. Perdigao intends to centralize the production of small-scale lines for specific market niches at the new unit. Pet Food In April 2007.

0 million. 2008. The primary items in its product mix are chicken nuggets and other breaded products. This plant is situated in the State of Mato Grosso. Italy.8 million with a goodwill of R$65. The joint venture was formed to enhance the marketing. it has 2 important brands in the European market: Fribo for hamburgers and Friki for poultry products.A also formed a joint venture with Unilever to identify business opportunities like managing branded products Becel and Becel Proactive.A. boiled and grilled chicken and other hamburger varieties. This acquisition was woth R$43. On August 1. Sadia S. Paraíso Agroindustrial This acquisition took place on 31st July. Spain. The acquisition basically occurred with an aim of enhancing the beef operations by 2011 as a part of their strategic plan. This purpose of this acquisition was to focus on the health conscious consumer segment in Brazil. It manufactures poultry. beef and convenience food products. The company was acquired from the Gale group at a price of approximately R$28. 2007. selling and distribution of Unilever brands through their advanced technology and innovation. Germany and France. 2007 and the investment was of approximately R$110.8 million. The main business of this unit to act as a poultry slaughtering unit and an animal feed plant. Its export markets for its products are the United Kingdom. Valore This particular acquisition occurred on June 19. Their aim was also to develop new products for European customers and enhance the marketing and distribution services. 2007. the Netherlands.Plusfood This Dutch Company was acquired on 2nd January. Most importantly. It was acquired at a price of R$74. this company was merged into Perdigao Agroindustrial S. 2007. which is located in Jatai in the State of Goias. This acquisition was done in order to boost the European sales. Unilever Margarine Business Unilever’s Margarine business was acquired on 1st Aug.7 million. This acquisition also focused on several concerns like animal health and food safety standards in accordance to environmental protection requirements. .0 million. Financial Position: The financial position can be determined by the following income statements and balance sheets which were basically not exposed in 2008 when the loss in derivative market occurred.

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The loss was due to its involvement in the currency derivative contracts hedging against US dollars exposure. Loss in the Derivative Market: On 25th September. the company’s shareholders were deeply shocked and saddened by the news which stated the loss it had incurred in the derivatives market. The contracts covered forward exposure for 12 months when the company’s policy contained the covering of forward exposure for 6 months’ worth of coverage.Currency Derivative Contract: Sadia entered into currency derivative contracts to hedge against the US dollar exposure.75 on 6th and 7th October. The amounts of these contracts were characterized as nominal.S. On 6th October. the company’s share fell $5. 2008 respectively.91 per share. It was due to this that the company’s Chief Financial Officer was fired. The loss was of R$760 million (U. $410 million). It continued to fall in the marketplace. declining an additional $1. the price per share declined to $7. The contract also violated the company policy in that they were far larger than necessary. It was also alleged that the loss was however greater than their earnings in 2008. .77 per share to $9.50 per share. 2008. 2008. the chairman and vice chairman resigned from their respective jobs. Consequences: Due to this particular loss. as the news of this particular loss got leaked in the entire marketplace.75 and $6. Due to this.

4. clear violation of company’s hedging policy.Allegations against Sadia: The purchasers of Sadia’s American Depository Receipts alleged that the currency derivative contract was unnecessary and was against the company’s policy i. All these misleading statement were issued to SEC by Sadia which are as under while the true facts are mentioned above. Below is the snapshot of that release: . Substantive Allegations: During the class period. The company’s statements about it financial position and future business prospects were misleading. The company lacked sufficient internal control. 3. The company lacked appropriate financial control. 2. The Financial statements were false. The company’s exposure to currency contracts was not nominal but large and speculative.e. the company issued a press release and filed a form 6-K with SEC. Other allegations included: 1. 5.

Gilberto Tomazoni – CEO. Managing Director .

On 30th April. the company filed to SEC: . the company once again created a misleading statement and filed it to SEC on form 6-K which included the following snapshot: On 30th July. 2008. 2008.

the company filed once again with SEC on the form 6-K which stated: . 2008.Gilberto Tomazoni – CEO On 25th September.

2008. Analysts were of the view that $406 million loss was more than the company’s earnings in 2008 which led to the firing of Chief Financial Officer. an article written by Associated Press notified that Sadia had incurred a big loss in the derivative market. The fluctuations and volatility in the exchange market led to the loss.On 26th September. . But Sadia’s officials reported that they can cover the loss having short term line of credit.

bestgore.aspx http://seekingalpha.brasilfoods.com/2013-01-25/news/36548186_1_sarang-wadhawan-stakesale-hdil .slc.Sources: http://en.co.com/ri/siteri/web/arquivos http://ktmc.com/apps/blog/show/30582595-fim-africa-stand-2013-amid-show http://www.com/article/1448461-chevrons-5-year-dividend-potential http://articles.fim-africa.wikipedia.uk/links.org http://www.com/tag/drugs/ http://www.indiatimes.economictimes.com/ http://www.