May 17, 2023

Increase in chicken prices as companies hold back production, says BRF SA CFO

Chicken prices are rising as companies start to cut production to reduce global oversupply, Fabio Mariano, chief financial officer of BRF SA, said on May 16, after a glut helped to push the Brazilian pork and poultry producer to a first-quarter loss.

The firm posted a R$1.024 billion net loss for the three months to end-March, with high grain prices also affecting results. BRF chief executive officer Miguel Gularte said a significant fall in grain prices, combined with efforts to improve operating efficiency, will help to shore up margins and bolster results going forward.

Gularte said when he took over as CEO in August 2022, the plan had been to achieve efficiency gains of 24.5%. He said the company had already reached 25.5% despite a challenging operating scenario.

BRF's results reflected weakness in export markets, with lower chicken prices dragging margins into negative territory in a business segment that has posted double-digit margins in the past. The company said it has continued to increase sales of higher-margin, processed food products in markets like Turkey and in the Gulf states, retaining a leading position in those regions.

BRF also said it's confident that confirmation of two highly pathogenic avian flu cases on wild birds in Brazil is unlikely to spark trade bans.

Brazil's sanitary status remains unchanged, as per guidelines of the World Organization for Animal Health (WOAH), Gularte said.

- Reuters