Brazilian food processor BRF SA posted a wider-than-expected quarterly loss on Thursday as trade embargoes, a drop in sales volumes and higher feed prices weighed on management's efforts to turn the company around.
In its second quarter after a corporate restructuring following a string of bad financial and operating results, BRF said it lost 812 million reais (€190.7 million). That was almost double the average loss of 443 million reais (€104.1 million) forecast by analysts, according to IBES data from Refinitiv.
A decrease of roughly 3% in total sales volumes was partly compensated by price adjustments which helped the company keep net revenue roughly flat at 8.76 billion reais (€2.1 billion), BRF said.
Tight Market
BRF, the world's largest chicken exporter, said the average price of whole chicken in Brazil rose about 10% from last year as the market tightened in the face of higher grain costs. BRF also cited one-off events including a truckers strike in May and trade bans as contributing to the price spike.
The trade embargoes, introduced after Europe found gaps in Brazil's food inspection procedures, more than halved direct BRF poultry sales to Europe and Eurasia, which totaled 8,000 tonnes last quarter compared with 17,000 tonnes a year ago.
A Russian trade ban on Brazilian pork exports also hammered BRF's business there. The company's direct pork exports to Europe and Eurasia tumbled to 1,000 tonnes from 28,000 tonnes, the filing showed.
Sale Of Assets
BRF's international pork sales last quarter fell 37% to 31,000 tonnes and international poultry sales fell 8% to 181,000 tonnes.
Regarding the sale of assets located in Argentina, Europe and Thailand, BRF said it had started to receive non-binding proposals. It has so far disposed of non-operating assets worth 210 million reais (€49 million) to cut debt as part of its turnaround plan.
BRF maintained the target of reducing indebtedness at a ratio of 4.35 times adjusted earnings before interest, tax, depreciation and amortization (EBITDA), a measure of operating profit.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
