Super bird: posting record profits, food giant Sadia nevertheless looks abroad to stretch its wings.

Brazilian food manufacturer Sadia had a good 2005. It posted net profits at a record US$281 million, a 50% increase from the year before. The company attributed its gains to cheaper supplies, improved operational efficiency and strong demand for its products abroad. And although Sadia already is a star Brazilian chicken exporter, it won't be resting on its laurels, executives say. There's a lot to do.

For 2006 to be a repeat of last year, executives say Sadia will need to mix things up and diversify. New products and new markets should make the company grow by 15% this year. Sadia's got the math done: It has the logistics ability to ship to more than 100 countries in 20-ton container ships. Taking its cue from its success at home, the company finds out what its clients like and serves it up. "Europe likes chicken legs the most. The Japanese like meat from the breast, and the Chinese prefer wings and feet," says Alexandre de Campos, director of international sales in the United Kingdom. "This is our job. It's really about finding out what the customer wants."

Diversifying markets was fundamental for international growth. "Five years ago, Sadia had a large concentration of its business in the Middle East," Campos says. "Brazil became the world's largest poultry supplier, today exporting to more than 100 countries, and Sadia drafted two plans of action: diversify markets and cut dependency on only one segment." Today, about a third of all company exports ship out for Europe, another third go to the Middle East and the remaining third go to Asia and other countries. "Our portfolio makes it so we don't run into crisis by being centralized," he says.

Based on its certainty regarding that plan, Sadia expects to invest $390 million this year. Half of that will go to projects in the state of Mato Grosso, where a new poultry plant and a new pork-processing plant are scheduled to start up in 2008. The poultry facility, already close to completion, will run at a 500,000-head capacity two years after opening. The pork plant will process 5,000 pigs a day.

With 2005 foreign poultry sales of 2.8 million tons, Brazil does not expect bird flu to threaten its dominant market leadership. "Perhaps we can be of help controlling it," says Roberto Goncalves, president of Brazil's association of poultry exporters in Sao Paulo. "Brazil today does not have bird flu, and one of the country's advantages is to supply products from a place where there is no problem. [Sadia] is a well-managed company that is taking all the preventative measures in all aspects to get us through this in a very positive way."

Sadia's foreign sales were record setting last year, with exports hitting 1 million tons. It might be tough to move that kind of volume this year, as shipments abroad slipped slightly during the first half. "Exports this year aren't looking so well. We have a demand crisis as a result of bird flu that has reached the Middle East and Europe," says Walter Fontana Neto, president of the company's board of directors and grandson of the company's founder.

"Some shipments were either suspended or canceled. During the first few months [of this year] we suffered a little in terms of price and volume, but we hope to recover by the second half," Fontana says. Even though Brazil is not on the bird-flu map, it has always run the risk of birds arriving sick in the country, and psychological factors over the illness affect exporting companies. Trust. Nevertheless, Sadia feels that the worst has passed, and consumption in European markets is beginning to offset earlier losses. Consumers still trust the brand, and Sadia is confident improving sanitation systems and adding new product lines will help perk up foreign sales. "Bird flu is an important issue, but Sadia is a well-diversified company," says Fontana. "More than half of our revenue does not come from the domestic market, and we export many industrialized products and pork. Bird flu will have a relevant impact, but not a definitive one."

CARLOS ADESE * SAO PAULO