BRF SA (ADR) (NYSE: BRFS) has reported the net profit of 138 million reais ($42.44 million) in the third quarter of FY 17. The earnings before interest, tax, depreciation, and amortization, came in at 1.1 billion reais, which is above the consensus of 980.75 million reais. The stock rose over 0.9% in the after-hours session on November 9th, 2017.
BRFS has swung to a profit in the third quarter after the three consecutive quarterly losses as the company bounced back from a national food safety scandal, but the company has missed the analyst consensus of a larger rebound. BRFS results were partly affected earlier in the year due to the fallout from the “Weak Meat” food safety scandal in Brazil that alleged food inspectors accepted bribes, resulting in plant closures and an ensuing management shakeup.
BRFS in the third quarter has reported 8.8% growth compared to the second quarter to 8.7 billion reais due to the favorable market conditions and the new corporate structure that was announced in July 2017.
Moreover, OneFoods, which is a unit strategically focused on serving Muslim markets, has also posted healthy operational third quarter results. This is due to the gradual recovery of commercial dynamics in Islamic markets, as well as the consolidation of Banvit’s first quarter numbers. BRF’s operations in Turkey have consistently exceeded the expectations in terms of performance and numbers, underscoring the strategic value in the company’s acquisition of Banvit.
Furthermore, the international division of the company, that consolidates activities in Asia, Europe, the Americas and Africa, has launched the ‘Global Optimisation’ management program. The company has taken the initiative to maximise the profitability by taking advantage of commercial opportunities in different regions by dynamically deploying the relocation of animal protein products. The company has done so that the business unit reports growth in essentially all the markets.
Additionally, BRFS has invested 369 million reais in the third quarter of FY17. The company had allocated a share of 138 million reais of this amount to growth, efficiency and support, 73 million to biological assets, and 58 million to leasing and other items. The third quarter has a reduced investment level relative to the second quarter due to the more challenging macroeconomic and market scenarios, in addition to the company’s commitment to leverage reduction.