SAO PAULO (Reuters) - Brazilian food processor BRF SA (BRFS3.SA), the world’s largest chicken exporter, swung back to profit after three quarters of losses as a deadly pig disease in China helped lift meat prices and sales volumes across regions, it said on Friday.
An outbreak of African swine fever, which triggered an unprecedented global meat supply imbalance, boosted results, the company said in a statement. Production adjustments in Brazil also helped, with certain plants closed or partially halted to weather weaker demand caused by trade restrictions in past quarters.
Carambeí, the last of seven plants where BRF had announced layoffs and sent workers on furlough, will go back online in September, sooner than planned, company executives told journalists on a conference call.
That plant primarily serves the Middle East, a demanding and lucrative market where the company sells “halal” products derived from animals slaughtered in accordance with Islamic law.
BRF said overall consolidated average selling prices rose by more than 17% in the second quarter. Prices picked up more notably at the end of the quarter, it said, citing the effect of the deadly pig disease.
In Brazil alone, prices rose by an annualized 30% for chicken and 35% for pork, BRF said.
BRF reported a 191 million reais ($48.74 million) gain last quarter, while analysts had forecast of a loss of 50.2 million reais.
Analysts expressed surprise at how quickly BRF was able to increase production, and noted its ability to pass higher meat prices on to international markets.
BRF shares opened nearly 8% higher after the earnings statement.
Net revenue rose by almost 18% to 8.33 billion reais.
BRF said the outlook for protein prices will remain strong in coming months, citing the severe effects of African swine fever.
The company also highlighted its performance in Saudi Arabia, a key market where suppliers face restrictions related to the requirements to sell in halal markets.
BRF said halal market sales rose by 12.5% in the quarter as prices rose in Saudi Arabia, which enforces strict requirements to certify meat suppliers.
Adjusted earnings before interest, taxes, depreciation and amortization, a measure of operating profit known as EBITDA, was 1.547 billion reais in the period, nearly double the average analyst estimate of 825.20 million reais.
Reporting by Ana Mano; Editing by Steve Orlofsky and Richard Chang