BRF has seen its net revenues for 2017 decrease by 0.8% to BRL 33.47 billion ($10.33 billion) in the wake of the so-called carne fraca scandal.
For the same period, the Brazilian meat processor’s gross profit shrank by 8.3% to BRL 6.9 billion ($2.13 billion) as it was also hit by global restrictions on the import of its meat.
In the fourth quarter of the year, net operating revenue rose 1.9% to BRL 8.9 billion ($2.74 billion) due to higher sales volumes primarily in Brazil and the Southern Cone during Christmas time.
Last year, BRF was implicated in an extensive food corruption scandal in which health officials were accused of taking bribes to allow unsafe meat to be exported overseas – including some that may have been rotten, or contaminated with salmonella. The affair was dubbed Carne Fraca – or ‘weak flesh’ – by the country’s media.
It prompted BRF to undertake a undertake a major group restructuring, followed by a management re-shuffle and the appointment of José Aurélio Drummond Jr as CEO to turn around the fortunes of the company.
This week, the company said that “around 50%” of adverse results for 2017 arose from the weak flesh operation; at one point at least 35 major economies had restricted imports of Brazilian meat.
Despite the poor publicity, the company’s net revenues in Brazil last year rose by 2.8% to BAR 15.19 ($4.68 billion).
José Aurélio Drummond Jr said: “We faced one of the most challenging times in the food industry with the commencement of the Weak Flesh Operation, which affected dozens of companies in our industry, including BRF, primarily in the international market.
“Nonetheless, the company responded quickly and appointed a dedicated team of executives and external consultants to promptly deal with the issue, with assertiveness and transparency, particularly in discussions with the stakeholders and authorities involved. We put in our best efforts to take the required measures to mitigate any impact on our company and industry. We revisited food quality and safety processes and reinforced our internal control and compliance areas.
“Accordingly, in a short period of time, BRF had already received clearance again to export to a number of markets. These measures are permanent and will be constantly improved. They have always been and will continue to be taken, primarily considering their enormous importance and prominence in our managing processes.”
He concluded: “We reaffirm our belief that the challenges we faced in 2017 allowed us to implement an important course correction, whose results should be strongly evident as of 2018. This correction should reflect substantial improvements in our financial performance, including local and global growth, recovery of margins and lower leverage ratios.”
Earlier this year, BRF launched its Kidelli discount brand in Brazil after restrictions imposed by the country’s anti-trust authority were lifted. Consisting of 13 products including sausages and beef burgers, it targeted at cost-conscious consumers, who account for around 30% of Brazil’s processed food market.
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