March 4, 2020
BRF prepares for volatile year after reporting first profit in four years
The Brazilian food processor expects volatility in 2020 due to uncertainty in forex, increasing prices for grain and COVID-19, reported Reuters.
BRF earned 690 million BRL (~US$154 million; 1 BRL = US$0.22) in its last quarter. This is a 121% annual increase based on boosted domestic and export sales, especially to China. This is the company's first annual profit in four years.
Altogether, the result means BRF's 2019 profit is 1.213 billion BRL (~US$268 million).
Executives from BRF said performance for 2020 could be impacted by a volatile forex, increasing prices for grain and the effects of COVID-19,
Lorival Luz, BRF CEO said there might be an impact on trade flows, even after measures from China and other governments to stem the spread of COVID-19. He added that exports in January and February were not affected by the virus.
BRF shares dropped to 27.28 BRL, a 3.3% fall.
The company projects exports to China will remain high as the country continues to supplement dwindling domestic meat stocks caused by African swine fever (ASF).
On the topic of corn inventories, BRF said it has enough supplies for the first half but did not explain further.
In the company's effort to mitigate higher grain costs compared to the year prior, BRF will make better commodities procurement and use feed alternatives.
BRF increased sales in its international business to 4 billion BRL or just above 17% thanks to increased exports to China.
The company's latest quarter volumes sold to Asia surpassed 200,000 tonnes of meat product, as ASF has driven prices of goods upwards.
BRF's middle east halal business is not as positive due to shipping restrictions imposed by Iraq to Turkey, affecting its subsidiary company Banvit. An additional concern is its processing plant in Abu Dhabi, which has stopped operations.
Saudi Arabia had recently suspended two Brazil-based exporting plants and BRF is working to rectify the situation.
- Reuters
