Despite disappointment, the company is planning for long-term improvement.

SAO PAULO, Brazil – Political uncertainty and internal challenges, among other factors, weighed heavily on the fourth-quarter financial performance at BRF SA, one of the world’s largest food companies.

Net operating revenues for the quarter totaled R$ 8.59 billion ($2,761,924,832) an increase of 1 percent over the third quarter of 2016. Gross profit declined 10.1 percent quarter-on-quarter to R$ 1.69 billion ($543,382,185), while gross margin was 2.2 percentage points below the preceding quarter at 19.7 percent, the company reported.

EBITDA for the period hit R$ 559 million, down 36.9 percent quarter-on-quarter, while the EBITDA margin was 6.5 percent, 3.9 percentage points below the third quarter of 2016.

In a statement, BRF said “2016 was marked by challenges that impacted BRF’s short-term results. A combination of sectoral and conjunctural factors, political uncertainties, plus a few internal challenges in terms of execution, led to results falling well short of expectations and far below the company’s potential.

“While these short-term results leave BRF deeply dissatisfied, at the same time the company is pleased with its structural evolution, with a view to the long-term construction of its business. BRF’s global growth process remains on course, with sales volumes on the international markets climbing 16.7 percent [year-over-year]. Even excluding the acquisitions made in the period, the increase would still be 5.9 percent.”

A bright spot for the company is its growing footprint in the halal products segment. In January, BRF launched a new halal unit called OneFoods; and, along with Qatar Investment Authority, acquired a 60 percent stake in the processing operations of Banvit Bandirma Vitaminli Yem Sanayii A.?. (Banvit), the largest poultry processor in Turkey.

“In the Halal world, the acquisitions in Oman, Malaysia, and more recently the announcement in Turkey, were important steps in the materialization of OneFoods,” the company said. “With the new entity already operating, BRF will be better able to assess strategic opportunities to accelerate growth in Muslim markets, as well as a potential capitalization.”