The Brazilian food company BRF (BRFS3) recently published its fourth-quarter results for 2024, showing promising revenue figures alongside increased net profits. For the period, BRF reported a record net revenue of R$17.5 billion, marking a growth of 21.6% from the previous year’s fourth quarter. The company also achieved a net income of R$868 million, up 15% year-on-year, indicating solid operational efficiency and market demand.
Despite these positive figures, BRF faced some headwinds, particularly concerning margin contractions which were greater than expected. Analysts had anticipated reduced margins, but the extent of the decline, 3.2 percentage points quarter-on-quarter, came as a surprise to many investors, who are expected to respond with caution during market trading.
Several factors contributed to BRF's record revenues, including increased volumes sold at the end of the year, which benefited from favorable seasonal trends. The company effectively captured market share, particularly within processed food products, which typically yield higher margins. The fluctuation of the USD/BRL exchange rate also played a role, positively impacting revenues from BRF's international segment.
On the other hand, rising production costs negatively impacted the bottom line. The total costs of goods sold outpaced revenue growth, which raised concerns about profitability going forward. Spending on selling, general, and administrative (SG&A) expenses also increased, up to R$2.6 billion—an 18.3% quarter-on-quarter rise—primarily driven by marketing and performance-based bonuses tied to earlier successes.
Despite the minor setbacks, BRF's overall performance for the year was noteworthy. Total revenue for 2024 reached R$61.4 billion, reflecting a 14% increase from 2023. This growth was driven by the company’s strategic advantages, including solid marketing initiatives and product innovation, which have positioned brands like Sadia and Perdigão as market leaders.
CEO Miguel Gularte commented, “The historical results of 2024 reflect the strategic direction and consistency of efforts made over the past two years, focusing on operational efficiency and market opportunity capture.” This positive affirmation showcases the company’s commitment to strengthening its market position and improving operational metrics.
BRF also announced its intention to repurchase up to 15 million of its own shares, representing about 1.8% of its outstanding shares, as part of its commitment to maximizing shareholder value. This program is scheduled to continue until October 7, 2025. The shares were recently trading at R$17.48 after reflecting the downward pressure from the latest earnings report.
Looking forward, BRF is optimistic about performance, forecasting growth potentials for 2025, even with anticipated margin pressures. Analysts, including those from XP Investimentos, maintained their recommendation of 'buy' for the stock based on the expected benefits from the increasing trend of consumers opting for more affordable protein sources—often termed 'trade down'—due to rising beef prices.
While BRF is preparing for upcoming challenges—including fluctuated commodity pricing and potential impacts from avian influenza—the overall market consumption remains resilient. The company remains well-equipped to adapt to changing conditions, reinforcing its strategy for future growth by increasing its capacity for production.
Overall, BRF’s fourth-quarter results were met with mixed reactions. While the company celebrated record revenues and profits, heightened concerns surrounding margin contraction and operational costs signal challenges for the food giant moving forward. Investors will be watching closely as BRF navigates the economic environment and implements its strategic growth initiatives, hoping for stability and profitability amid market fluctuations.