Manufacturers try to circumvent weak demand with greater control of costs

The largest manufacturers of consumer goods are still struggling to minimize the impact of the economic framework in the results. The strategy has been dribbling lower demand and higher costs, expense control and aggressive pricing policies.
In the food and beverage sector, the BRF and giant Ambev delivered net income of R$ 877 million and r $ 3 billion respectively in the third quarter, a result of inside job to equalize costs increase and slowdown in consumption, analysts evaluated
According to an analyst at Coinvalores, Sandra Peres, the food manufacturer faced a challenging situation, which led the company to not pass on the full cost-high agricultural inputs-retail prices, such a strategy if marked the resumption of the brand Perdigão in several relevant categories.
The company must maintain aggressive strategy of Brazil prices until the end of this year, but for 2016 will have to promote readjustments on pressures as the devaluation of the real against the dollar, said the Director of the BRF, Flavia Faugeres, in Conference call.
In the domestic market, the sales volumes of the BRF fell 1.8% between July and September compared with the same period last year. Already the domestic operations revenue grew 3.8%, packed by advance sales of processed and the back of the brand Perdigão. Abroad, the Middle East continued to be featured, with a 26.2% higher revenue, due to favorable pricing in real panorama.
The manufacturer of beverages, in turn, scored only 1% high in sales pushed by beer while the soft drinks had a fall. Company executives were told that the company must keep price adjustments in line with inflation, the strategy resulted in revenue in the country 10.5% higher than 2014.
To minimize the impact of smaller domestic sales this year, Ambev comes intensifying cost management. Between July and September, the cost of goods sold (COGS)-excluding depreciation and amortization-per hectolitre in Brazil grew 7.6%, below the inflation for the period. Because of this, the company reduced its forecast of a CPV type high for a middle digit of the year. As the Gradual Investment Analyst, Christina Henry Florentino, a middle digit means something around 5%.
Yet the financial Vice President of Ambev, Nelson Jamel, said the company can make a revaluation of its capabilities if the São Paulo State Government raise the tax on circulation of Goods and services (ICMS) of beer. "We're going through some extremely challenging, with increase of a number of costs. If it is approved, will certainly have an impact on prices and sales volumes.
The Government of São Paulo discusses in the Legislative Assembly a tax increase of 18% to 25% later this year.
Hygiene and health
The imported inputs should still continue weighing in Natura and Hypermarcas. The high of the dollar had a strong influence on the results of the two companies in the last quarter and follows on the radar.
To lower consumption and high costs, the Natura continues expanding sales channels, with tests in the retail, electronic services and greater number of consultants. The manufacturer of cosmetics has been facing difficulty to improve margins even having applied price increase in the first half of this year, in line with inflation.
The VP of finance and Institutional Relations of Natura, José Roberto Dragos, says that, if necessary, new settings will be applied. He said, however, that the main strategy of the company, at the moment, is the management of cash and working capital.
"The exchange rate will continue to be volatile and we believe that the level of dollar around the $ 4 will be seen also in the fourth quarter," commented. About 40% of the company's costs are tied to American currency.
Already confirmed a readjustment in Hypermarcas disposable diapers in the last quarter. According to the company President, Claudio Bergamo, a pass-through of costs in dollars. On the other hand, in the view of analysts from Brokerage Factor, Caio Moreira and Thomas Change de Mello, high American currency has benefited the company front multinationals that compete directly in consumer division and were not competitive at retail.
Nevertheless, analysts noted the company's strategy with a focus on the pharmaceutical sector, which despite the quarter's performance, has better future.
The company negotiates the sale of brands of diapers Pom Pom, Sambrook and Cremer to Kimberly-Clark. Another part of the company (cosmetics) was sold at the beginning of the week, for Coty.