BRF reported a net loss of BRL1.6 billion (US$408 million) for the second quarter of fiscal year 2018, attributing some of the company’s financial struggles to a Brazilian trucker strike and by trade restrictions.
The Brazil-based meat and poultry company’s losses, however, were an 846.6 percent improvement when compared to the losses incurred during the second quarter of the 2017 fiscal year.
Trade restrictions
“In this quarter, the intensification of trade policies with protectionist bias subjected BRF to significantly adverse conditions, particularly in international markets, but with significant impact on the domestic market as well,” Pedro Parente, BRF global CEO, and Lorival Nogueira Luz Jr., BRF chief operating officer, chief financial and investor relations officer stated in a letter to shareholders that coincided with the release of the quarterly results.
The BRF leaders disagree with the rationale behind those restrictions.
“At the end of May, the European Commission excluded 12 of our Brazilian plants from the list of establishments licensed to export to the European bloc, blocking us from exporting from our primary production platform. We do not see the technical grounds for this decision, as we strictly comply with all local and international sanitation regulations and laws,” Parente and Nogueira stated.
However, BRF has filed an appeal with the European Commission Court of Justice and is awaiting the decision.
Trucker strike
The truckers’ strike, which took place in May, was also a huge test BRF faced in the quarter.
“We consider our mitigation efforts successful as we attempted to minimize the magnitude of the impact on our operations. Direct losses totaled approximately BRL75 million (US$19.5 million), a relatively low figure compared to the more than BRL3 billion (US$780 million) shortfall estimated by the Brazilian Association of Animal Protein (Associação Brasileira de Proteína Animal or ABPA) for the entire industry.
Parente’s selection as global CEO was announced in June. Nogueira was appointed chief financial and investor relations officer in August 2017, and the operating officer at the time of Parente’s appointment.
