Brazil-Problems still to be ressolved in meat and poultry industry.

BRAZIL-PROBLEMS IN THE MEAT INDUSTRY.

Derivatives contracts tied to the exchange rate have imposed Sadia the first loss over 64 years of operations, posting net $2R.5bil losses, of which $2Rbil over Oct - Dec. Due to accounting regulations derivatives were written in the just value and gains & losses accounted for 2008. Net indebtedness rose to $6R.7bil as of Dec, added $1R.9bil from derivatives contracts. Net income rose 23,2% to $10R.7bil, and gross income was a record $12R.2bil. Investors relations manager Welson Teixeira says net financial results in 2008 were negative $3R.9bil, with $2R.5bil expenses with derivatives. Sadia has a short term gross debt of $4R.16bil, or 48,7% of its financial liabilities of $8R.54bil, while it has financial assets of $2R.5bil what puts the short term debts into $655Rmil. Around $1R.4bil are due to end March 2009 and most part of it renewed for 180 - 350 days. Sadia is due to pay $2Rbil over July - September and is concentrating to perform its duties, either associating with meat processing companies or divesting assets. Non operating assets could raise up to $1Rbil, and eventually a higher sum if included operating assets. President Manager Gilberto Tomazoni mentions a poultry plant in n Russia and a cattle unit at Varzea Grande (Mato Grosso) to be enrolled for divestiture. Tomazoni says the company ended 2008 with cash availability of $900Rmil, and there are no issues around solvency. He decided not to comment the rumours around merging talks with Perdigao.