February 28, 2017
BRF reports big Q4 loss
In a securities filing last Thursday, BRF reported a fourth-quarter loss of 460 million reais (US$150 million) compared with a profit of 1.4 billion reais in 2016, according to Reuters.
It cited a spike in feed costs and stiff competition in several markets.
Gross profit shrunk 10.1% quarter-on-quarter to US$543 million, while gross margin fell 2.2% below the preceding quarter to 19.7%, the company reported.
In a statement, BRF said "2016 was marked by challenges that impacted BRF's short-term results. A combination of sectoral and conjunctural factors, political uncertainties, plus a few internal challenges in terms of execution, led to results falling well short of expectations and far below the company's potential."
It also said it was overhauling management protocols to avoid repeating mistakes that led to the huge quarterly loss.
Chairman Abilio Diniz and chief executive officer Pedro Faria told analysts a lack of real-time information and miscommunication between industrial and commercial divisions had left the company with heightened inventories that must now be liquidated.
"In a genuine effort to preserve profitability, we lost perspective of the bigger picture," Faria said.
Diniz said he was leading a new steering committee to help the company respond quicker to market shocks like it saw in 2016.
"We're working to correct the mistakes that we made," he said, refuting rumours that his family's investment vehicle would sell its stake in the company.
Diniz however said he could not guarantee short-term results, but there were strong signs of a recovery in foreign markets and Brazil, which was in severe recession for the past two years.