Brazilian meat giant ‘dissatisfied’ after loss

By Oscar Rousseau contact

- Last updated on GMT

Loss-making BRF said sales of flagship brand Sadia performed well in the Middle East
Loss-making BRF said sales of flagship brand Sadia performed well in the Middle East

Related tags: Middle east, United arab emirates

Meat processor BRF’s fourth-quarter net income fell by over 130% as a combination of political uncertainty and market challenges pushed results into the red.

BRF, which claims to be one of the world’s largest meat processors, posted a loss of BRL460 million ($150m), after posting BRL1.4bn ($462m) in the fourth quarter a year earlier.

2016 was marked by challenges that affected our short-term results,​” the company said in a statement.

The combination of industry factors, current scenario and political uncertainty, added to certain internal execution challenges, caused results to be well below expectations and well below the company’s potential.​”

These short-term results leave BRF deeply dissatisfied.​” 

Focus on globalisation

High raw material costs and increased competition in regional markets, especially Asia, contributed to the loss.

The company said it had started 2017 with absolute focus on the commercial and operational execution of its business plan. This plan will see BRF enhance its global production chain and roll out new products as the Brazilian firm targets consumers in every corner of the globe.

While BRF expressed disappointment with its fourth- quarter trading figures, the business said it was pleased with the progress it had made to grow as a global company. Sales volumes to all markets increased by 16% year-on-year.

BRF sells its products in more than 150 countries and has 54 factories across Argentina, Brazil, the United Arab Emirates, Netherlands, Malaysia, the UK and Thailand.

BRF Q4 results – in brief

Net revenue:​ BRL8.5bn ($2.7bn)
Loss:​ BRL460m ($150m)

‘Atypical’

In its home market Brazil, BRF had what it called an “atypical​” quarter. Meat consumption is low, as the country continues to struggle with recession, and results were also hit by higher margins, particularly the rising cost of grain.

In the Middle East and North Africa (MENA), a challenging macroeconomic climate caused volume sales to fall by 3%. Processed meat, however, saw accelerated growth of 15% quarter-on-quarter.

Revenue was dented in Asia as a result of increased local competition combined with the devaluation of local currencies relative to the Brazilian real.

Net operating revenue dropped by 10% quarter-on-quarter in Europe, as BRF​ had to compete in what it called a “challenging macroeconomic​” market.

Latin America, excluding Brazil, saw net operating revenue rise by 6.3% quarter-on-quarter with Mexico and Cuba proving strong volume-based markets.

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