Brazil's BRF upbeat on Q4 domestic sales, chicken exports outlook

SAO PAULO (Reuters) - Brazilian food processor BRF SA is optimistic with the outlook for sales during the final quarter of 2023 based on the strength of its well-known brands Sadia and Perdigao, management said on Tuesday, referring the company's main market Brazil.

Shares in the firm rose by more than 7% to 13.22 reais at one point in trading but later paired gains to a raise of about 2.8%, as investors see the management's ongoing turnaround plan reflected on results even as the pork and chicken processor posted a third-quarter loss on Monday.

"Operations in Brazil are improving, with EBITDA margins rebounding by 220 bps to 12%," Banco Santander wrote in a note to clients. However, the bank called BRF's international division's results "uninspiring," with declining EBITDA margin driven by still low export prices amid a global chicken glut following recent outbreaks of avian flu.

During a call to discuss third quarter results with analysts, BRF CEO Miguel Gularte said that prospects for chicken prices in exports market are already improving, with increases of up to $350 per metric ton depending on destination.

While BRF continues to generate negative free cash flow, analysts in general saw progress based on the success of overall operating improvements, according to remarks during the call with management.

BRF burned 21 million reais in the third quarter, improving from the cash burn of 700 million reais in the preceding quarter, according to the Santander note.

(Reporting by Ana Mano; Editing by Steven Grattan)

By Ana Mano