Brands, the ' motor ' of the LBR in the race for profitability

Ahead of the complicated operational restructuring of the LBR-Brazil Dairy, the Executive President Rami Goldfajn relies on the strength of some brands of the company to stem the margins compression checked in recent years and make the company to generate cash. Among all categories of dairy segment in which the LBR plays, the best bets are the national reach of Paulista requeijões and Poços de Caldas and long life milk (UHT) Parmalat.
Although the current portfolio of 11 brands distributed in 12 categories can be reviewed, as indicated to Goldfajn Value last Friday, the three strongest brands are the only of the LBR listed among the five most important in the country in their respective categories, according to research by Nielsen consulting commissioned by "SuperHiper", publication of the Brazilian supermarket Association (Abras).
Responsible for 65% of the turnover of r $ 2.4 billion in the last year, the Brazilian market of long life milk is led by LBR, which owns 15% of this category through seven brands (Parmalat, Leitbom, good taste, leader, DaMatta, Ibituruna and São Gabriel). Despite the leadership, only Parmalat has national reach, which indicates that some of these brands can lose importance or even cease to exist in the restructuring.
By the numbers from Nielsen, Parmalat is the third best-selling brand of UHT milk full of country, behind Elect (BRF) and Italac. The long full life accounts for 82% of sales of UHT MILK in the country, according to the Brazilian Association of long life Milk (ABLV). In the segments of skimmed and semi-skimmed UHT milk, Parmalat is the national leader. Last year, the total market of long life moved $ 6.2 billion in Brazil, according to estimate of consultancy Euromonitor.
Another relevant market to the LBR is the requeijões. According to Nielsen, the Paulista and Poços de Caldas, which belonged to Danone until 2008, contained in the third and fifth places in the national rankings, respectively. The Force is the leader in this category. The creamy cheese market, which includes requeijões, handled $ 1.3 billion in 2012, according to Euromonitor. Just as in the case of long life, the highlight of Poços de Caldas and Sao Paulo in requeijões opens space for the LBR reduce the other three brands less expressive: Good cream, Cedrense and leader.
In addition to the markets of long-life milk, cottage cheese and the LBR also shows strength with the cream. The company is a leader in this category thanks to the Parmalat brand, with 20% of the market. Good taste, Leitbom, and also integrate the Leader Ibituruna portfolio of LBR in this type of product.
Aside from the long-life milk, requeijões milk and cream, the LBR should reduce-at least briefly-the production of cheese and mozzarella, sectors that suffer from imports from Uruguay. "It's not that we're leaving, but at the stage where do not bring profitability, it is useless to produce," said the Chief Executive of the LBR, Nelson Bastos. As the value reported on Friday, Bastos will be responsible for financial restructuring, while Goldfajn is at the ready.
If Goldfajn will handle the tangle of tags and categories, Bastos structure a doable payment plan for the reorganization of the company. The Executive has fulfilled similar function during the process of judicial protection of same Parmalat in 2000. With the execution of the request, the LBR has 60 days to present a plan to creditors and 180 days for approval. At that time, the company cannot be performed. Currently, the debt of the LBR is about $ 1 billion.
Although the deadline for the approval of the plan is 180 days, sources familiar with the processes of doubt that it is ready in such a short time. "If the negotiations are running well until then, lenders do not run the debt and the company takes time," says a source, for whom a process such as the LBR takes about a year to be finally approved. Another risk is, after approved the plan, there are additions, which also delay payments.