Investors dump BRF shares after wider quarterly loss

Investors dump BRF shares after wider quarterly loss

SAO PAULO Reuters - Investors dumped shares in Brazilian food processor BRF SA on Thursday after a wider than expected quarterly loss, partly due to management's nonrecurring events.

In mid-afternoon trading, BRF was down by 12% and was the worst performing stock on Brazil's Bovespa index.

The company posted a loss of just above $90 million on Wednesday, citing hedge accounting related to debt security and the effect of hyperinflation in Turkey.

BRF Chief Executive Lorival Luz tried to make sure investors that those would stabilize or fall going forward, adding that the final two quarters of the year tend to be stronger in terms of demand.

The falling household income weighed on the BRF, which derives most of its sales in the domestic market. It said it was able to raise product prices to protect margins.

In a note to clients, Itau BBA said the company's ability to lift prices exceeded their expectations, but were not enough to fully offset cost inflation in the quarter.

JPMorgan analysts said we take the results with a grain of salt.

The Brazilian market continued to show weakness, debt levels rose and the company burned cash, despite BRF's stellar performance in the halal segment, where the company sells meat according to Muslim dietary requirements.

BRF said that the halal segment would continue to grow, as the Fifa World Cup will increase tourism and sales in the Middle East later this year.

The worst is over, according to Credit Suisse analysts.

They noted poultry supply adjustments last quarter supported an improvement in margins.

Credit Suisse believes that there will be some relief with hog raisers poised to lower supply in the coming months, potentially boosting profitability.