BRF Reports Total Net Sales of R$ 25.7 Billion for 2011

SAO PAULO, March 22, 2012 /PRNewswire/ -- BRF ended 2011 reporting strong earnings. The company exceeded forecasted growth in net operating revenue and investments despite the turbulent economic environment which permeated the international market throughout the period.

Net sales amounted to R$ 25.7 billion, 13.3% higher than 2010, largely sustained by good performance in the meat segment of the domestic market, food services and export market. Net income reached R$ 1.6 billion, equivalent to an increase of 97% compared with last year.

EBITDA – cash generation – increased 23% posting a record R$ 3.2 billion with a margin of 12.6%. Income before financial results (EBIT) was R$ 2 billion, a growth of 34.8%.

Production costs came under extreme pressure during the year due to the increase in raw material prices – in Brazil, corn prices rose 37.5% and soybeans, 14.7%, while on the international market increases were 59% and 25.9%, respectively.

However, the company's strategies which focused on the increase in productivity, sales efficiency, price and cost management policy as well as investments in innovation were instrumental in minimizing the effect of rising commodity prices.

INVESTMENTS

BRF's invested R$ 1.9 billion – 84.1% more than 2010 – in projects for modernization and expansion of production units, portfolio revamping, updating of technology systems and innovation.

The amount includes funds allocated for the acquisition of overseas assets (acquisition of a shareholding stake in Avex and the control of the Danica group in Argentina), a significant step forward in the company's internationalization project.

4th QUARTER

BRF posted fourth quarter 2011 net sales of R$ 7 billion a growth of 10.9% in relation to the same period in the preceding year. The domestic market accounted for net sales of R$ 3.3 billion, an increase of 7.6%. The highlight here was in elaborated/processed products which registered a growth of 12.5% in revenues and representing 59% of the operating margin for the period, largely due to the performance of the festive product line.

Exports amounted to R$ 2.7 billion in the 4th quarter, an improvement of 16.9% compared with the same period in 2010. Margins were squeezed due to the reduction in prices and demand in the Japanese and Middle Eastern markets, the two areas where inventories were highest. In addition, the strike in Itajai at the beginning of the quarter obliged the company to divert export shipments to other Brazilian ports.

In the 4th quarter, revenue in the food services area rose 10% with an operating margin of 16.8%. Processed products were responsible for 62% of the operating result in this segment. The diary products segment reported an increase of 4.7%.

Net adjusted income was R$ 336 million, down 6.7% due to narrower margins on export business during the quarter.

SOURCE BRF - Brasil Foods S.A.