Brazilian poultry and pork processor BRF SA (BRFS3.SA) turned a profit of 823 million reais ($165.26 million) in the final three months of 2023, according to an earnings statement on Monday, ending a seven-quarter losing streak.
Including effects of hyperinflation in Turkey, where it also has large operations, net profit was 754 million reais, still much higher than analysts' forecasts of a net income of 339.57 million reais for BRF.
The company cited factors including a sharp drop in the price of corn, a key feedstock ingredient, along with operating improvements in a broad turnaround that began several quarters ago.
A recovery of export markets and 66 new authorizations for BRF export plants also helped the company "to end the year better than it started," CEO Miguel Gularte said.
"There are variables that we do not control, which are demand and price," Gularte said. "But if you have predictive power, product, delivery, logistics.... you can capitalize on the good moments and the peaks of the cycle."
Lower grain prices and better demand dynamics should continue throughout 2024, he said.
In spite of a strong fourth quarter, BRF lost 1.87 billion in 2023, marking the second consecutive yearly loss for the world's largest chicken exporter.
Still, BRF said higher fresh meat prices drove a return of the double-digit EBITDA margins in the final quarter, referring to the international segment.
According to BRF, profitability rose "across geographies" in the period. The most impressive gains came from the Gulf region, an important market where it sells "halal" products produced according to Muslim dietary requirements.
The Sadia and Banvit brands remain market leaders in its halal segment, BRF said. Gularte described sales in the Middle East as "the most evident example of international markets' comeback."
In Brazil, the company posted EBITDA margin of 15.6%, higher than the 9.1% recorded a year earlier thanks to better demand for processed food products.
BRF said overall net sales in the fourth quarter were 14.4 billion reais, 2.3% below the fourth quarter of 2022. The final quarter of the year is normally strong because of the holiday season.
BRF said it generated 613 million reais cash in the period, the first time in three years it amassed that much, CFO Fabio Mariano said in comments about results.
The company also noted EBITDA, a measure of operating income, was 1.9 billion reais in the fourth quarter, above the consensus of analyst expectations of 1.79 billion reais.
In the whole of 2023, BRF reported EBTIDA of 4.7 billion reais, 15% higher than 2022 despite a global chicken glut.
($1 = 4.9799 reais)
(This story has been corrected to change the year to 2022 from 2023 in paragraph 12)
