BRF, Brazil's Food Processor, Reports Increased Q3 Net Loss Due to Grain Price Surge and Chicken Oversupply.

14 Nov, 2023

BRF, Brazil's Food Processor, Reports Increased Q3 Net Loss Due to Grain Price Surge and Chicken Oversupply.

Brazil's leading pork and poultry processor, BRF SA (BRFS3.SA), has revealed an increased net loss in the third quarter, attributing it to challenges arising from an excess of chicken supply and efforts to manage grain prices. The reported net loss of 262 million reais ($53.37 million) exceeded the previous year's figure of 136.7 million but marginally outperformed the projected loss of 279 million reais, as per the LSEG consensus.

Notwithstanding these challenges, BRF highlighted positive developments in its operational performance. The company achieved a significant double-digit EBITDA margin of 11.9%, approaching historical levels of profitability, even amid pricing pressures in the fresh meat segment. Net revenue for the quarter remained stable at 13.8 billion reais, maintaining a level similar to the preceding year.

In addressing concerns about recurring cost pressures associated with corn, a vital component of animal feed, BRF's management expressed optimism, indicating that the worst may be behind them. CEO Miguel Gularte underscored the impact of predictive models and strategic grain procurement on the company's results, considering them competitive differentiators that have proven highly efficient.

Despite grappling with challenges stemming from a global oversupply of chicken, impacting prices and the sector at large, BRF remains cautiously optimistic. Management pointed out signs of a slowdown in chicken production from major suppliers such as the U.S. and Brazil. On the demand side, prices are showing signs of recovery in specific markets, contributing to improved export prospects.

BRF reported an EBITDA of 1.2 billion reais ($244.45 million), slightly exceeding LSEG consensus estimates of 1.17 billion reais. Despite the incurred losses, the company's strategic initiatives and emerging operational enhancements position it for resilience in navigating the complexities of the poultry and grain markets.