March 11, 2013

Brasil Foods' income exceeds expectations

Due to cost cuts, higher prices and rising exports, Brasil Foods has reported earnings that beat analysts' estimates.

Brasil Foods (BRF) reported net sales of BRL28.5 billion (US$14.63 billion) for fiscal year 2012, 10.9% higher than posted in the preceding year, with a net income of BRL813.2 million (US$417.60 million). The meat giant reported net income of BRL562.8 million (US$289 million) in the fourth quarter, beating the average forecast of BRL374 million (US$192 million) in a Reuters poll and coming in well above the BRL121 million (US$62 million) earned a year earlier.

The company's efforts to accelerate the growth of its operations and at the same time comply with its commitments under the merger agreement were determinants in sustaining the positive result, the company explained in a statement.

BRF Chief Financial Officer Leopoldo Saboya said that recent gains in global grain prices should lose momentum throughout the year, in a relief sign after several quarters of cost pressures. Profit at the São Paulo-based company more than quadrupled in the fourth quarter on an annual basis after a move to raise prices for some of its frozen foods and cold cuts helped offset a surge in feed costs.

"In the second half, we think we could see costs cooling off from current levels, but no abrupt drop," Saboya said in an event, referring to feed costs.

Chief Executive José Antonio Fay, speaking at the same recent conference, said that most of the growth in revenue this year will come from a combination of improved pricing and a more profitable sales mix.