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BRF Sees Sales Profits Rise

02 March 2015

BRAZIL - Brazilian meat, poultry and dairy processing giant BRF saw net income more than double in 2014 reaching R $ 2.2 billion, an increase of 109.4 per cent compared to the previous year.

Operating profit EBITDA, in turn, reached R$4.9 billion, an increase of 56.4 per cent compared to 2013.

Net Operating Revenue (NOR) was R$31.7 billion, four per cent higher than in 2013.

The company said the performance comes from positive results in the international market, growth of sales outlets in Brazil and the greatest quality of care.

Net Operating Revenue grew by 4.4 per cent in 2014, driven by improved average prices in Brazil and in the international market, in addition to volume growth in food services.

BRF said this was achieved by placing the consumer at the centre of the business in all 110 countries that BRF operates.

In 2014, there was also fall of the company's debt level, which ended the last quarter with a ratio of net debt to EBITDA (last twelve months) of 1.04 compared to 2.17 times for the same period in 2013.

The sale of milk to Lactalis business for R$1.8 billion was in line with the strategy to focus on businesses that are core to the company.

A strategic partnership was formed with Frigorífico Minerva, which absorbed the BRF's cattle slaughter plants in exchange for an equity stake in the company.

Also in line with the BRF strategy of internationalisation, three of the company's distributors in the Middle East: Federal Foods, United Arab Emirates, Al Khan Foods (AKF), Oman, and Alyasra in the State of Kuwait were bought during teh year.

In addition, a processing plant was opened in Abu Dhabi, with capacity to produce up to 70,000 tonnes a year.

The moves were aimed at strengthen the company’s portfolio in regions such as South and Southeast Asia, Middle East and Africa.

The company also announced the creation of a joint venture with PT Indofood, which will explore the poultry and processed foods business in Indonesia.

In 2014 Net Operating Income in Brazil reached R$ 13.9 billion, a 6.8 per cent increase compared to the previous year.

EBIT in Brazil reached R$ 1.8 billion, an increase of 39.5 per cent compared to 2013.

The concept of Go-to-Market (GTM), which was developed in May, facilitated the approach to small retailers and possible gradual growth in volumes, removal of redundancies and improved productivity.

Investments in systems, IT and personnel training also allowed an increase in sales and business efficiency.

In the international market net operating revenue reached R$ 13.3 billion in 2014, a growth of 1.5 per cent compared to the previous year.

BRF said that in the international market the company adopted the strategy of reducing volumes (down 12.3 per cent compared to 2013), offset by higher average prices, both in the Real, which rose by15.7 per cent, and dollar, which rose by 6.2 per cent.

The Russian ban on poultry and pork from the United States, European Union, Canada, Australia and Norway directly impacted the flow of trade and the price of the proteins on the international scene during the second half of the year, BRF said.

In 2014, the Food Services net sales increased by 8.8 per cent to R$1.7 billion.

Volume increased by 9.7 per cent in the year, while average prices remained practically stable dropping by just 0.8 per cent.

The period was marked by increased sales to the fast food chains, industrial kitchens and small businesses across the country.

BRF said the market is undergoing a regulatory movement of informal business networks and emergence of more structured restaurants, creating another opportunity to expand into this segment in 2015.

TheCattleSite News Desk



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