Net operating revenue generated by Sao Paulo, Brazil-headquartered BRF increased 14.4% to total R$8.3 billion in the third quarter of 2015. EBITDA followed the growth trend to reach R$1.52 billion, a 34.8% increase compared to 3Q14. Return on invested capital also registered positive results, advancing 13.9%, from 9.1% in 3Q14.
Ranked as the seventh largest food company in the world by market capitalization (at US $14.75 billion), BRF is a leading producer of frozen protein. Its extensive product line of some 40 brands ranges from Sadia oven-ready chicken in cooking bags to IQF chicken breasts, chicken cordon bleu, schnitzels, crispy chicken liver and nuggets, to pizza and lasagna. Distributed under the relaunched Perdigao brand are Brazilian-style pork sausages accented with calabresa chili pepper, and a line of Meu Menu ready meals.
“BRF’s international expansion, which was intensified in the quarter, boosted the company’s results, while maintaining a strong and sustainable pace of growth,” said Global CEO Pedro Faria. These conditions led to a decrease in the net debt in the period, which stood at 1.24x, compared to 1.40x in 3Q14. BRF’s net income increased by 53% to R$877 million in 3Q15. EBITDA margin also grew to 18.4%, from 15.6% in 3Q14.
In Brazil, net operating revenue amounted to R$3.954 billion, a 3.8% increase compared to 3Q14. This result was driven by growth of 7.8% in revenue from processed products and 8% in fresh poultry.
“We believe that the challenging economic scenario demands efficient initiatives. We are confident of our strategy of establishing a more robust commercial structure, with a regional focus and better execution, combined with the reinforcement of BRF’s leadership through a repositioning of our core brands,” said Faria.
26% Gain in Middle East and Africa
The company’s performance in the international market, especially in the Middle East and Africa (MEA), merits special mention. Net operating revenue in the region was R$1.9 billion, a 26.2% gain compared to 2014. Volumes decreased, but the bottom line benefitted from a 34.8% increase in average prices compared to 3Q14. EBIT margin from the MEA region reached 19.4%, mainly due to the structural changes that have been implemented.
Furthermore, BRF’s strong cash position enabled it to continue expanding across emerging markets. In October, the agreement signed with Qatar National Import and Export Co. (QNIE) enabled it to acquire the frozen foods distribution business from QNIE for US $140 million. In the same month, BRF acquired from Molinos Rio de la Plata seven brands in franks, hamburger and margarine categories. The transaction amount was approximately US $43.5 million.
In September, BRF announced that it was listed on the Dow Jones Sustainability – Emerging Markets Index (DJSI) for the fourth consecutive year. In addition, the three major international credit rating agencies (Moody’s, Standard & Poor’s and Fitch) raised the corporate rating of BRF this year.
‘Glocal’ Approach to Fuel Future Growth
In October BRF was in high profile in Cologne, Germany, complete with live cooking demonstrations and product presentations, at the Anuga food and beverage exhibition. At the helm of the busy stand was Roberto Banfi, the company’s chief executive officer for Europe & Eurasia.
Discussing the process of evolving from largely being a protein commodity provider to becoming a higher value-added products leader, Banfi commented: “The next phase in our ‘glocal’ approach will further strengthen our link with regional consumers and help create value for the entire supply chain, regional clients and partners.”
At the show, the BRF team illustrated how it leverages market research to better understand the impact of live “glocal” consumer trends on the food industry, and create products that connect with these evolutions. Among the trends are:
- Very Fast, Very Easy, Very Good. Busy lifestyles continue to drive the demand for more convenient food, with no compromise on flavor and quality. Sadia lasagna, pizza and fully cooked products of the premium lines make great examples of products matching this trend.
- Naturalness. With increasing global concern on weight balance, freshness and minimally processed food is gaining importance on worldwide demand. This trend is addressed with the Sadia Vegetables and the Sadia Light product line.
- I Deserve it. The search for small pleasures and the rise of food eaten between meals is creating an increase in demand for high-quality snacking. BRF ranges such as Sadia Miss Daisy and Sadia Cubox Crock Music meet this requirement.
- Democratization of Gourmet. Consumers are looking to express themselves with new sensations, tastes, and sophisticated recipes that they can enjoy cooking. BRF’s Easy Baking and Cubox Premium gourmet lines are particularly suited to meet this need.
- Conscious and Ethical Consumerism. Shoppers are demanding more and more information on social responsibility, supply chain sustainability and product traceability. As such, BRF is making more information available regarding its animal welfare, volunteering, environmental, quality and waste control programs.
“While operating on a global scale, we need to focus on local customers and their specific needs,” said Vienna, Austria-based Marcos Delorenzo, head of marketing, trade marketing and innovation for Europe-Eurasia. “In-depth market research is key in responding to local consumer demands, and this is why we recently invested to grow our capabilities in Europe and Eurasia with a dedicated marketing team in our region.”
