Brazilian meat giant Sadia swung to a net loss during the first quarter of the year but confidence that exports would recover led the company to stick to its margin targets.

Sadia, which is in talks with Brazilian food group Perdition over a possible tie-up, yesterday (14 May) booked a net loss of BRL239.2m (US$113.8m) for the three months to the end of March.

In the first quarter of 2008, Sadia generated net income of BRL248.3m.

The global economic downturn has hit the company’s exports, with overseas sales down 3.3% during the quarter to BRL1.16bn.

Sadia’s domestic sales, however, rose 22.7% to BRL1.7bn and drove a 10.6% climb in group turnover to BRL2.86bn.

EBITDA slumped by almost 76% to BRL62.5m, while EBITDA margins dropped from 11.3% last year to 2.5% during the first quarter of 2009.

However, president Gilberto Tomazoni said Sadia was seeing signs of recovery in Europe, which could boost exports during the rest of the year.

“We are seeing the signs of a tentative recovery in export markets, particularly in Europe, and believe exports will reverse the trend seen during the first quarter of 2009,” Tomazoni said.

“These reasons support the company’s decision to maintain the EBITDA margin forecast of between 8% and 10% over the year.”