BRF’s net income nearly doubles in a year
Accounting for 50% and 22% of total revenue, the company’s main markets are Brazil and the Middle East respectively, just as they were previously.
Earnings before interest, tax, depreciation and amortization (EBITDA) came in at R$5.7bn, representing a growth of 21.9% on the year previous. Meanwhile, net operating revenue amounted to $31.7bn, an increase of 4% in 2014.
According to BRF, growth was driven by the expansion of its international operations, an increase in the number of points of sale in Brazil, as well as improvements in the quality of customer service.
“To ensure the execution of production- and energy-efficiency, automation and support projects, the company invested more than $2bn in 2015,” explained Pedro Faria, global chief executive at BRF. “We maintained our strategy of capturing efficiency gains at our production units in order to streamline BRF and improve its agility.”
In the company’s native Brazil, sales of higher-value products for last year increased 7.4%, resulting in a rise of $12.2bn. Also during the course of the year, BRF sold 1.7 million tons (t) of processed items within the region, equating to a growth of 4.92% in 2014. The business believes this can partially be attributed towards the return of the Perdigão brand in certain categories, including hams and smoked sausage. Brand execution in both categories gradually improved.
Information from data collection service Nielsen also highlighted BRF’s dominance within the Brazilian market during 2015. The company reported that BRF ended the year with a market share of 63.9% in the ready-to-eat meals segment, 63.3% in the cold cuts category, 41.3% in the sausages sector, as well as 67.3% in margarines. BrandAnalytics pointed towards the Sadia and Perdigão brands of BRF as being the most valuable in Brazil’s food industry. The former of the two divisions isn’t just limited to the Brazilian market.BRF’s second most important market destination, the Middle East, saw the Sadia brand’s sales exceed expectations. This resulted in the company accelerating its project to expand production capacity at its Abu Dhabi plant from 70,000t a year, to 100,000t. The expansion also aims to serve new clients in North Africa, Sub-Saharan Africa and Asia.
In addition to this development, BRF moved forward in its direct production distribution, helping to minimise volatility in the prices practiced in the region. “In 2015, we announced the acquisition of part of the frozen foods distribution business of Qatar National Import and Export,” added Faria.
“The transaction is aligned with the company’s strategic globalisation plan, which aims to tap local markets and to strengthen BRF brands by distributing and expanding its production portfolio around the globe.”
The most prominent improvement for 2015 in the Asian market was in revenue from higher-value products, which increased 14.4% compared with 2014. Meanwhile, the success story for the Europe/Eurasia region was the growth in revenue for higher-value items of 12.9%, and 76.7% in fresh poultry.
Meanwhile, in Latin America, the better product mix in Argentina, especially the higher-value items, alongside the higher volumes from new markets such as Mexico drove forward results within the region. Sales of processed items in the area grew 59.3% compared with 2014, to $1.3bn.
BRF reported a growth in all regions for the fourth quarter (Q4) of 2015, with net operating revenue equating to $9bn, 11.3% higher than it was for Q4 2014. Net income came in at $1.4bn for that time period, a 42.8% rise on the previous year.
Also during Q4 2015, a series of acquisitions were announced by the company. In neighbouring Argentina, BRF acquired consecrated hot dog and margarine brands and announced the takeover of Campo Austral, allowing it to enter the country’s pork market.
Over in Asia, the company announced an agreement to acquire Thailand’s third-largest exporter of chicken products, Golden Foods Siam, while in Europe, it announced the acquisition of the UK-based food distributor Universal Meats.
