São Paulo – Brasil Foods (BRF) saw an increase in revenues from its operations in Middle East and Africa in the second quarter of this year. According to a balance sheet issued last Monday evening (13th), the company posted a 9% increase in total revenues from the same period of 2011, at 6.8 billion reals (US$ 3.36 billion). Net profit, however, was down 99% to 6 million reals (US$ 2.9 million). The reason for the decline, according to the company, was an increase in costs prompted by commodities’ prices.
The company’s sales volume in Africa was up 9.9% from the second quarter of 2011 and net revenues were up 21.7% using the same basis of comparison, from 181 million reals (US$ 89.4 million) to 221 million reals (US$ 109.2 million). Revenues from business in the continent from April to June, however, were down from the first quarter’s 227 million reals (US$ 112.2 million).
In the Middle East, BRF posted net revenues of 1 billion reals (US$ 494.4 million) from April to June 2012, as against 782 million reals (US$ 386.6 million) in the same period of last year, according to the balance sheets. The sales volume was up 29.7% using the same basis of comparison. In the first quarter this year, the company posted revenues of 735 million reals (US$ 363.3 million) in the region.
In a statement, BRF claims that total sales in quarter two reached 1.4 million tonnes, up 4.9% from the same period of 2011. That, however, did not suffice to maintain the profit, which stood at 498 million reals (US$ 246.2 million) in the second quarter of 2011. The company informs that not even the inclusion of input costs into final costs was enough to “offset the costs resulting from the sharp increase in grain prices.” The company sells mostly meats.
The United States maize crop failure caused the commodity, which is used as animal feed, to reach record-high prices this year. The price of the product on the Chicago Stock Exchange exceeded US$ 7.50 per bushel in July, up 29% from June, according to Brasil Foods calculations. The price of soya bran, which is another input, hiked 59% by in July as against January this year.
Besides, the company claims that net profit was down because the meeting of the agreement reached with the Administrative Council for Economic Defence (Cade) entailed “transitory costs” and “temporary loss” of operational efficiency. After the Sadia-Perdigão merger which originated Brasil Foods, the Cade ordered the enterprise to sell factories and alienated and suspended certain brands in order to prevent monopoly formation.
*Translated by Gabriel Pomerancblum
