Meats business, synergies drive BRF 3Q earnings

by Bryan Salvage
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SÃO PAULO – BRF Brasil Foods closed the third quarter with net income of R$ 365 million (US$211 million), an increase of 73 percent. Net sales were R$ 6.3 billion (US$3.7 billion), up 10.4 percent from the same period in 2010. Gross profits improved 13.5 percent to R$ 1.6 billion (US$900 million). EBITDA reached R$ 722.5 million (US$418.32 million), equivalent to a margin of 11.5 percent.

The company said its good earnings were driven by operating performance, particularly the meats business, combined with capitalizing on synergies. This was achieved despite the challenging foreign exchange situation and the high cost of the main raw materials, both of which contributed to a squeeze on the quarter's margins.

Domestic market sales revenue reported growth in relation to meats (18.5 percent) as well as dairy products (8.2 percent), surpassing the R$ 3.8 billion ($US2.2 billion) mark, an increase of 14 percent. The period’s highlight was in processed meat products (industrialized and frozen), which contributed an increase in sales of approximately 24 percent.

Revenues from exports came to R$ 2.5 billion (US$1.5 billion), 6 percent higher than in the third quarter of 2010. The performance registered on the Far Eastern, European, Middle Eastern and American markets offset the losses arising from the ban on the Russian market. The exchange rate affected the competitiveness of the company's products sold on the international market for most of the quarter.

BRF's investments totaled R$ 252.6 million (US$146.25 million). Of the total, more than 61.4 percent was dedicated to projects for productivity, improvements and automation, while 32.6 percent went to new projects.

For the first nine months of 2011, BRF registered net income of R$ 1.2 billion (US$690 million), a 180 percent year-on-year improvement and a reflection of the recovery in export markets in the two initial quarters of the year together with the most satisfactory level of domestic business. Net sales were R$ 18.6 billion (US$10.8 billion), up 14 percent from the same period in 2010. Gross sales totaled R$ 4.7 billion (US$2.7billion) in the period -- equivalent to growth of 21 percent. EBITDA of R$ 2.3 billion (US$1.3 billion) represented an increase of 39 percent, with a margin of 12.5 percent.
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