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Supply Chain

Brazil's BRF Turns Quarterly And Yearly Profit Despite Domestic Headwinds

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.

BRF posted a 932 million reais (€162.8 million) gain in the fourth quarter, up 3.3% from the same year-ago period, it said in an earnings statement on Tuesday.

The result was bolstered by a nearly 20% rise in net revenue, to 13.7 billion reais (€2.4 billion) in the quarter, although cost pressures and declining consumer confidence in Brazil, where it derives most of its sales by volume, hurt the business.

Factors including domestic inflation, income loss and uncertainty related to the COVID-19 pandemic weighed, as well as weather-related issues, which compromised South American grain production and caused feed prices to spike.

Challenges

"The food industry is still under pressure from rising commodity prices and disruptions in supply chains," BRF said.

Despite the headwinds, BRF was able to post a 437 million real profit for 2021. Still, this was down 68.5% from 2020, when overall margins were better.

On international markets, BRF pointed to a drop in both pork export volumes and prices in sales to key customer China during the fourth quarter, following a recovery in local production and a fall in consumption amid the pandemic.

This affected the segment's gross margins, but was partially offset by a rise in dollar prices for products sold to Japan and South Korea, BRF said.

The company benefited in the Halal meat sector, in which food products are prepared according to Muslim dietary requirements, from a pickup in economic activity.

As volumes and prices rose in Halal sales, both in Gulf countries and in Turkey, BRF grew revenue by respectively 33% e 11% in those markets, the earnings statement said.

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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