Brazil’s BRF pledges changes after bad first quarter; shares tumble & More News Here

Logos of Brazilian meatpacker BRF SA are seen within the headquarters in Curitiba, Brazil October 1, 2019. REUTERS/Rodolfo Buhrer

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SAO PAULO, May 5 (Reuters) – Brazilian meals processor BRF SA (BRFS3.SA) on Thursday attributed disappointing first-quarter outcomes to an increase in prices and inflation in its home market, and vowed to spice up its margins and return to profitability.

In separate calls with analysts and journalists to debate the outcomes, BRF Chief Executive Officer Lorival Luz stated administration is making ready measures “to simplify” the corporate’s construction, declining to elaborate.

He stated the plan doesn’t contain asset gross sales or manufacturing unit closures.

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“We will change the way we operate in all areas of the company, we will simplify processes and procedures,” Luz stated, including that among the measures will probably be launched this month. “The aim is to become more dynamic and effective, to work with agility towards our goals of growing and posting profits in a sustainable way.”

The poultry and pork processor posted a lack of 1.5 billion reais ($298.5 million) within the first quarter, and burned greater than twice that quantity in money because it weathered the financial downturn in Brazil.

The outcomes mirrored poor meals gross sales and margins within the South American nation and the impression of a derivative-related write-off of 406 million reais.

BRF’s new Chief Financial Officer Fabio Mariano stated the expense tied to a corn spinoff place needed to be acknowledged within the first quarter.

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“When we look back, it was not quite the right decision,” he stated in response to a query from Reuters, referring to the benefit of that hedge place.

BRF shares have been down round 12% at one level in morning buying and selling earlier than paring losses to commerce 6.3% decrease in Sao Paulo, making it one of many largest losers on the trade.

Credit Suisse analysts stated BRF was going by “testing times.”

“We believe consensus will significantly trim their estimates to reflect the somewhat unexpected new scenario,” the analysts wrote. “The company’s production chain is long and complex, which demands a few quarters to get it back on track again.”

Referring to the first-quarter outcomes, JP Morgan stated “we didn’t see that coming,” and downgraded the inventory to underperform.

“We think the macro scenario remains challenging, with corn prices near all-time highs and logistics costs at elevated levels, while China lockdowns pose risks to a big part of BRF’s export market,” JP Morgan stated.

($1 = 5.0256 reais)

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Reporting by Ana Mano, further reporting by André Romani
Editing by Chizu Nomiyama and Paul Simao

Our Standards: The Thomson Reuters Trust Principles.

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