LONDON/SAO PAULO: Chinese food commodities trader COFCO is overhauling its operations in Brazil, including a management reshuffle, as it restructures its Nidera Sementes Ltda business following accounting irregularities reported last year, according to company documents and sources.
Since first investing in Dutch-based trader Nidera in 2014, COFCO has had several setbacks including a $150 million financial hole in its Latin American operations and $200 million in unauthorised trading losses on its biofuels desk.
COFCO completed its takeover of Nidera this year.
Company documents seen by Reuters and interviews with industry sources show the resignation of three top Nidera Sementes executives in Brazil this year.
The firm is also spinning off its ports unit known as Cereal Sul — Terminal Marítimo SA, valued at 130 million reais ($40 million). A source with direct knowledge confirmed job cuts as part of COFCO’s integration of Nidera in Brazil.
The cuts affected less than 1 per cent of COFCO’S workforce, currently 8,400 people.
In an annual company filing, Nidera Capital BV — Nidera’s holding company owned by COFCO — recorded a full-year loss of $266.6 million in 2016 versus a loss of $65.9 million in the 15 months ended in December 2015.
Profitability for the world’s biggest agricultural players including US agri-business group Archer Daniels Midland Co and rivals such as Bunge Ltd has been battered by thinning margins due to a global grain glut.
Together with Cargill Inc and Louis Dreyfus Corp, the firms are collectively known as the ABCDs and dominate global grain trading.
After investing over $3 billion to buy Noble Group of Singapore’s agri-business and Nidera, COFCO in recent months has tried to integrate the units into a cohesive structure.
The acquisitions gave the Chinese company assets in some of the world’s top grain, vegetable oil, sugar and coffee-producing regions.
On April 24, COFCO unveiled its new division COFCO International, which brings together its Swiss-based grain arm COFCO Agri and Nidera, led by new Chief Executive Johnny Chi.
COFCO’s efforts to consolidate its legacy empire include Brazil, a vital provider of commodities to world markets and among its biggest activities in South America.
According to documents seen by Reuters at least eight directors were appointed in Brazil at the same time that the top three decision-makers for the country resigned.
Marina Alves de Souza, previously Nidera’s Executive Director in Brazil, is now chief executive. — Reuters
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