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Supply Chain

Brazil's BRF Reports €290m Loss In First Quarter

Brazilian poultry and pork processor BRF posted a massive first quarter loss, as inflation weighed on consumer sentiment and raised operating costs in its home market.

BRF said in a statement it lost 1.5 billion reais (€290 million), compared with a 22 million real profit in the same period a year earlier.

The company said its adjusted earnings before interest, tax, depreciation and amortisation, a measure of operating income known as EBITDA, was 121 million reais (€23.3 million), a 90% drop.

Challenging Operating Environment

The results reflect a challenging operating environment for the company, particularly in Brazil, where inflation reduced consumers' purchasing power at the same time meat companies faced higher fuel and feed prices.

BRF said disappointing food sales in Brazil ended up increasing its inventories, affecting suppliers and logistics. This scenario forced BRF to introduce measures including product promotions, corroding margins in the process.

BRF burned 3.7 billion reais (€710 million) of cash to weather the storm, the earnings statement said.

Aside from headwinds in Brazil, food sales to Asia fell 16.2% to 109,000 tonnes while sales in its home market rose 2.6% to 549,000 tonnes.

In the halal market, where food must be produced according to Muslim dietary requirements, the company increased sales volumes by a healthy 20.5% to 215,000 tonnes.

The Brazilian food processor BRF SA turned a profit in the final quarter of 2021, traditionally a good period for food sales due to the holiday season, helping it secure its third consecutive year in the black.

News by Reuters, edited by ESM – your source for the latest supply chain news. Click subscribe to sign up to ESM: European Supermarket Magazine.

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