Brazil's BRF shares rise after strong quarterly results, positive demand and cost outlook (updated)

BRF SA

27/02/2024 14:42

(Updates headline, and recasts to focus on share performance,
adds analyst comments)
    By Ana Mano
       SAO PAULO, Feb 27 (Reuters) - 
    Shares in Brazilian food processor BRF SA  BRFS3.SA  rose
almost 6% in late morning trading on the Sao Paulo stock
exchange after the company reported strong fourth quarter
results. 
        In a call with analysts to discuss financial performance
on Tuesday, BRF executives indicated the company will maintain
momentum, with healthy margins likely to last throughout the
first quarter of 2024 thanks to an ongoing recovery of meat
prices and lower grain costs.
    A fall in corn prices, along with operating improvements
such as lowering inventories and focusing on the sale of higher
value processed products, has made the company leaner and more
competitive, executives said. 
        At the same time, proceeds from a 5.4 billion real
($1.09 billion) follow-on share offering cut BRF's leverage to
the lowest level in seven years, management noted. 
  
    On Monday, BRF said it had broken a seven-quarter losing
streak and posted a net profit for the final quarter of 2023. 
        The company highlighted a recovery of export markets and
said the outlook remained positive for international meat sales
as multiple BRF plants have recently received permission to sell
pork and poultry products abroad.
   Domestically, lower inflation in Brazil will likely improve
demand on the local market, where meat consumption levels have
been better yet not "ideal," said CFO Fabio Mariano.
        XP analysts said they expected "demand on the domestic
market to sustain margin recovery, which was delivered along
with better cash flow prospects on lower inventories and
sequentially better cash financial results."
  
        But the real surprise came from international market
performance, they said. 
  
        "The international operation took the spotlight with
price recovery across the board," XP analysts wrote in a note to
clients.
  
        
  
        ($1 = 4.9613 reais)
  

 (Reporting by Ana Mano)
 ((ana.mano@thomsonreuters.com; Tel: +55-11-5644-7704; Mob:
+55-119-4470-4529; Reuters Messaging:
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