BRF Brasil Foods Q1 net earnings down 60%

Brazilian food company BRF Brasil Foods has posted a 60% drop in its net income to BRL153.2m ($81.13m) in the first quarter of 2012, compared to BRL383m ($202.83m) the previous year, due to fall in export prices and higher feed costs.

Net sales increased 5.3% to BRL6.3bn ($3.33bn) in the quarter, helped by increase in domestic and retail sales.

EBITDA reached BRL532m ($281.74m), down 35% compared to BRL816m ($432.14m) the previous year, due to increase in the cost of raw materials such as milk and corn.

The export revenue totalled BRL2.4bn, which was practically unchanged compared to last year, due to high inventories in Japan and turmoil in the Middle East.

BRF chief financial officer Leopoldo Saboya said the prices in the export markets fell in January and February but appear to be recovering with the reopening of markets in Iraq and Iran.

"We see the oversupply falling and prices are beginning to react," Saboya added.

BRF registered a strong performance in sales in the domestic/retail market totalling BRL3bn ($1.58m), a growth of 11%, while its food service division saw a 10.4% jump in net sales.

During the quarter, BRF introduced 11 products, which included savory snacks, rotisserie products and grill products.

Meanwhile, the company announced that it has received an investment grade risk rating classification from all three principal world rating agencies – Standard & Poor’s, Moody’s, and Fitch Ratings.

BRF, which is the world’s leading exporter of poultry and a principal dairy processor in Brazil, recently opened a BRL30m ($16.99m) cheese factory in Goiás, Brazil, which increased its production by 1,000t per month.

In March this year, BRF Brasil Foods announced that it will absorb its wholly-owned poultry meat subsidiary Sadia by the end of this year to streamline the process.