BRF posts Q2 loss of $269 million

The company cited global chicken oversupply as the cause
calendar icon 15 August 2023
clock icon 2 minute read

Brazilian food processor BRF SA said on Monday it lost 1.337 billion reais ($269.13 million) in the second quarter, which was worse than a loss of around 715 million reais projected by analysts, hit by oversupply in the chicken market, reported Reuters.

The company's earnings before interest, tax, depreciation and amortization, a measure of operating income known as EBITDA, came in at 1 billion reais, above the average of analysts' projection of 917.43 million reais.

Net revenues fell by an annual 5.7% to 12.2 billion reais, according to an earnings statement.

Last quarter, BRF said it increased its sales volume in Brazil, where it derives most of its revenue.

However, the average sale price fell by 1.3% on a quarterly basis, as the price of fresh chicken in Brazil remains below the historical average, reflecting an oversupplied global market.

"The export segment was battered by the chicken glut," BRF CEO Miguel Gularte told journalists. He noted the threat of export bans related to avian flu delayed a recovery of prices even in the face of improving supply and demand dynamics in recent weeks. "Importers became more conservative because of the bans, including Japan."

Brazil is considered free of highly pathogenic avian influenza under criteria from the World Organization for Animal Health. Yet Brazil confirmed cases on wild flocks and backyard poultry, triggering temporary regionalized import bans from Japan.

BRF said the liquidation of chicken stocks in the sector mitigated the effects of price adjustments that BRF applied in some types of processed products.

In the International market, BRF said it partially recovered margins and remained a top chicken exporter to Gulf countries, where it says its market share is 50%.

During the quarter, BRF also obtained 15 exports permits to sell products to China, Japan and Singapore, South Africa and Argentina, improving its business prospects on global markets, management said.

($1 = 4.9679 reais)

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