BRF financial turnaround apparent in second quarter

BRF reported progress in its financial turnaround while reporting its financial results for the second quarter of fiscal year 2019.

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BRF reported progress with the company's financial turnaround in its financial results for the second quarter of fiscal year 2019.

On August 9, the Brazil-based meat and poultry company reported a net income of BRL191 million (US$48.5 million) for the second quarter, up dramatically from the same quarter of the 2018 fiscal year, when the company reported a net loss of BRL 1.44 billion (US$364 million). BRF reported a net loss of BRL113 million (US$28.7 million) for the first quarter of 2019.

“During the second quarter of 2019, BRF moved on its turnaround process,” BRF Global CEO Lorival Nogueira Luz Jr. said in a message to shareholders.

The second quarter of 2019 marks only the second quarter in recent history that the once financially troubled company reported a positive net income. It also reported a net income of BRL313 million (US$79.4 million) in the fourth quarter of fiscal year 2018.

In an effort to improve its financial situation, BRF in 2018 announced it would divest of all assets in Argentina, Europe and Thailand. It finished that initiative in early June when it sold its Thai and European operations to Tyson Foods.

Earlier in 2019, BRF entered talks with Marfrig Global Foods to discuss a possible merger, but those talks ended in July.

Luz reported that high protein prices have been affecting the livestock industry, as poultry and swine prices rose more than 35 and 45 percent, respectively during the quarter on a year-over-year basis. Those price increases challenge non-integrated companies more than they do BRF.

“In the case of BRF, we have a highly integrated chain, with 100% integration for poultry and over 95% for swine, eliminating almost all of the company’s exposure to the livestock industry. We have also been working to expand the licensing of new plants to serve international markets, and four plants are under and advanced process of analysis and discussion,” said Luz.

“Undoubtedly, the work we have done so far is rewarding, but there is still a lot to do. Our achievements put us in a unique position to leverage the excellent opportunities in this upcoming positive cycle, especially in regard to the protein industry, as well as to the more favorable macroeconomic environment for consumption when compared to recent years. Accordingly, we will continue to adhere closely to our profitability turnaround plan.”

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