Gross sales totalled BRR6.3 billion, 4.3 per cent higher, reflecting the good performance recorded in the domestic market and improvement in important international markets such as Asia and Eurasia.

Cash generation in terms of EBITDA reached BRR587 million, 54 per cent up on the same quarter 2009. This good performance was a reflection of cost savings and reduced operating expenses resulting in a margin of 10.6 per cent, the best registered by the company since 2009 – confirmation of the gradual and consistent recovery seen over the past few months.

Domestic market sales encompassing meats, dairy products and processed products in general were BRR3.8 billion, an increase of eight per cent. Pro-forma growth of 10 per cent in sales volume was driven by stabilisation in the economy, improved disposable incomes and the expansion in consumption.

Export volume increased 10 per cent in the quarter and revenue totaled BRR2.4 billion, in line with 2009. Export sales reflected a 9.3 per cent decline in average prices in Reals, the impact of the foreign exchange effect; however returns from this business posted a substantial improvement.

Net income of BRR132 million in the quarter was equivalent to a net margin of 2.4 per cent.

BRF's capital expenditures were R$ 155.7 million in the period and largely used for projects for increasing productivity and for improvements, in addition to new industrial units under construction, including Lucas do Rio Verde (MT) and Vitória de Santo Antão (PE).

Domestic market

During the second quarter, demand continued robust in the domestic market with the World Cup contributing to increased consumption of food products. The best performance was reported by the processed products segment – a five per cent growth in volume.

Sales from the meats business rose 5.4 per cent on a pro-forma basis and volumes were up by 7.5 per cent. However, average prices slipped by 1.9 per cent due to a 15.8 per cent growth in the volumes of in natura products where prices are lower.

Dairy product volumes were 17.1 per cent higher compared with the same quarter last year. Sales revenue also reported an increase of 5.4 per cent. Despite an improved sales performance, average milk collection costs increased, squeezing segment margins.

Exports

Despite a decline of 8.3 per cent in average prices in Reals caused by the foreign exchange effect, meat export volumes were up by 10.2 per cent. Prices and volumes to the Eurasian market improved both for poultry as well as pork products due to the Russian ban on these items from the US. During the period, Japan continued to register improvement in prices while volumes remained stable.

Although there was a 27 per cent recovery in average prices in Reals, the dairy product business posted a 19 per cent decline in sales due to weaker international demand and high inventory in the leading producer regions. Better average prices were influenced by an improved product mix and a focus on sales of dairy products to the Middle East and Africa.

First-half sales revenue totals BRR12 billion

The first half of the year was characterised by volatile financial markets provoked by a scenario of continuing instability. The improvement in company performance was driven by stronger domestic demand and a gradual recovery in exports.

BRF's first half gross sales were BRR12 billion. The domestic market segment reported the best performance, sales rising by six per cent. EBITDA exceeded the BRR1 billion mark and corresponding to a 9.8 per cent margin.

Further Reading

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