Brazil’s BRF Posts Q2 Loss, Citing Global Chicken Oversupply
Brazilian food processor BRF SA has reported a loss of 1.337 billion reais (approximately €250 million) in the second quarter, which was worse than what analysts had anticipated.
The company’s financial performance was negatively impacted by an oversupply situation in the chicken market.
In terms of earnings before interest, tax, depreciation, and amortization (EBITDA), BRF posted 1 billion reais (around €180 million), exceeding the average analyst projection of 917.43 million reais (approximately €169.2 million).
The company’s net revenues declined by 5.7% year-on-year to 12.2 billion reais (about €2.25 billion), as stated in the earnings report.
In the previous quarter, BRF had reported an increase in its sales volume within Brazil, its primary revenue source.
However, the average selling price of fresh chicken dropped by 1.3% compared to the previous quarter due to a persistent oversupply in the global chicken market.
This oversupply affected the export segment significantly, with BRF CEO Miguel Gularte highlighting that the threat of avian flu-related export bans delayed price recovery, even as supply and demand dynamics improved recently.
Despite Brazil’s recognition as free from highly pathogenic avian influenza by the World Organization for Animal Health, cases in wild flocks and backyard poultry led to temporary regional import bans from countries like Japan.
It noted that the liquidation of chicken stocks in the industry helped offset the impact of price adjustments the company had implemented for certain processed products.
In the international market, the company managed to partially recover margins and maintain its position as a major chicken exporter to Gulf countries, where its market share stands at 50%.
During the quarter, the company secured 15 export permits for selling products to countries including China, Japan, Singapore, South Africa, and Argentina. This move has improved the company’s business prospects on the global stage, according to management.
