BRF posts 1st annual profit after 3 consecutive years of losses

BRF recorded net income of R$ 1.2 billion in continuing operations in 2019, reversing a loss of R$ 2.1 billion in the accumulated period of 2018, according to the company on Tuesday (3). This is the first profit after 3 years in a row of losses. In the fourth quarter, net income in continuing operations totaled R$ 690 million, more than double that recorded in the same period last year (R$ 313 million). The total corporate net income reported was R$ 297 million in 2019, against a loss of R$ 4.4 billion in 2018, after a series of measures to restructure its operations, including several asset sales. The net revenue of the largest chicken processor in the country in the year was R$ 33.447 billion, a 10.8% increase compared to 2018. Adjusted Ebitda (earnings before interest, taxes, depreciation and amortization) totaled R$ 1.413 billion in the last quarter of 2019, an increase of almost 68% year-on-year. In 2019, it totaled R$ 5.3 billion. The company also reported a rise in gross margin in 2019 to 24.1% from 16.1% a year earlier, partly due to strong sales in Asia and Brazil, where net revenue grew 7.4% to more than R$ 5 billion in the fourth quarter. International operation and challenges In the international segment, BRF recorded sales growth of more than 17% in the fourth quarter to R$ 4 billion, mainly reflecting the effects of African swine fever, which decimated herds and boosted meat imports by China, the Reuters. Despite higher grain costs compared to the same period last year, BRF said more efficient commodity acquisition processes and use of alternative inputs were helping mitigate these effects on margins. While BRF has reduced its inventory levels through improved logistics and stricter controls of goods in Brazil, its halal business in the Middle East faces challenges due to shipping restrictions between Turkey and Iraq, which is impacting its subsidiary Banvit. The shutdown of operations at the Abu Dhabi food processing plant, which serves the Saudi Arabian market, is also a concern, BRF said.