May 4, 2012

BRF Brasil Foods post fall of 60% in Q1 net earnings

World's leading exporter of poultry and Brazil's principal dairy processor - BRF Brasil Foods posted a 60% drop in its net income to BRL153.2 million ($81.13 million) in Q1, attributed to a fall in export prices and higher feed costs.

Net sales increased 5.3% to BRL6.3 billion (US$3.30 billion) in the quarter, boosted by increase in domestic and retail sales. EBITDA fell by 35% to BRL532 million (US$278.74 million), due to increase in the cost of raw materials such as milk and corn.

Export revenue remained flat, at BRL2.4 billion (US$1.26 billion), due to high inventories in Japan and turmoil in the Middle East.

BRF chief financial officer Leopoldo Saboya said the prices in the export markets fell in January and February but appear to be recovering with the reopening of markets in Iraq and Iran. "We see the oversupply falling and prices are beginning to react," Saboya added.

BRF saw a growth of 11% in the domestic/retail market, with sales totalling BRL3 billion (US$1.57 million); while its food service division saw a 10.4% increase in net sales.

BRF's new BRL30-million (US$15.72-million) cheese factory in Goiás, Brazil, increased its production by 1,000 tonnes per month. It also announced in March this year that it will absorb its wholly-owned poultry meat subsidiary Sadia by the end of this year to streamline the process.