Brazilian meat group Brasil Foods ended 2011 on a sour note after seeing its profits plunge in the last three months of the year.
For the three months to the end of December, the group recorded net income of BRL25.7bn (US$14.13bn), a decline of 66.4% on a year earlier.
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The drop was a result of a BRL215m provision on costs to merge Sadia in the business, although without that provision, the company said net income would have been BRL336m, still down 7% from a year earlier. Brasil Foods was formed from the takeover by food group Perdigao of debt-laden rival Sadia in 2009.
EBITDA in the period also declined, sliding 4.1% to BRL919.5m. Its EBITDA margin fell from 15% to 13%, which was linked to lower margins from Brasil Foods’ business in export markets in the quarter.
Pressure from raw material costs, which Brasil Foods saw throughout 2011, remained in the fourth quarter. Corn and soybean prices were up year-on-year, although the company did see prices ease from the third quarter.
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Fourth-quarter sales, however, totalled BRL7.1bn, an increase of 10.9% on 2010. The rise was primarily due to processed meat sales to domestic and foodservice customers, the company said.
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By GlobalDataFor 2011 as a whole, net profit was up 70.1% at BRL1.4bn. Adjusted net income was up 96.8% to BRL$215m.
EBITDA amounted to BRL$3.2bn, 23.1% higher than 2010. Brasil Foods made an EBITDA margin of 12.6%, up 100 basis points on the year. The increase reflected the company’s success in capturing synergies, although grain costs and instability in export markets caused some pressure on margins.
Net sales climbed 13.3% to reach BRL$25.7bn, largely due to good meat sales at home and abroad.
Looking back at the year, Brasil Foods said: “In 2011, we were confronted with a hostile scenario in the export market with the deceleration in several of the world economies and the continual appreciation of the Real. Our costs also came under pressure as a result of the rise in commodity prices and an increase in payroll above inflation.
“However, it was exactly in this inclement environment that we succeeded in ending the year with excellent results, given the momentum, clear evidence of the company’s major potential going forward and this in spite of the delay during a good part of the year before receiving the final report on the merger from the anti-trust authorities.”
