BRF S.A. Announces Its New Plan and Current Challenges



Price movement of BRFS

BRF S.A. (BRFS) has a market cap of $11.3 billion. It fell by 2.5% to close at $13.79 per share on June 10, 2016.

The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 0.29%, 0.66%, and -0.01%, respectively, on the same day. This means that BRFS is trading 4.1% above its 20-day moving average, 2.0% above its 50-day moving average, and 5.5% below its 200-day moving average.

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Related ETF and peers

The Schwab Emerging Markets Equity ETF (SCHE) invests 0.63% of its holdings in BRFS. The ETF tracks an index of emerging markets companies weighted by market cap. The YTD price movement of SCHE was 5.4% on June 10, 2016.

The market cap of BRFS’s competitors are as follows:

  • Unilever N.V. (UN) – $135.2 billion
  • Tyson Foods (TSN) – $22.4 billion
  • Hormel Foods (HRL) – $18.4 billion

BRF’s new plans

In its June 10, 2016, press release, BRF S.A. stated, “BRF S.A. is currently studying for a possible investment in Namibia. The European Union has also signed a trade accord with Namibia and five other African countries on the same day.”

The release also noted, “The company is facing challenges in getting money out of Angola due to some restrictions. There is no blockage of payment originating from sales in the country.”

Performance in 1Q16

BRF S.A. (BRFS) reported 1Q16 net operating revenue of 8.1 billion Brazilian reais, a rise of 15.2% compared to its net operating revenue of 7.0 billion reais in 1Q15. The company’s cost of sales as a percentage of net operating revenue rose by 8.2%. Its operating income fell by 29.1% in 1Q16 compared to 1Q15.

Its net income and EPS (earnings per share) fell to 39.0 million reais and 0.05 real, respectively, in 1Q16, compared to 462.0 million reais and 0.54 real, respectively, in 1Q15.

BRF’s cash and cash equivalents fell by 4.0%, and its inventories rose by 35.4% in 1Q16 compared to 1Q15. Its current ratio fell to 1.6x, and its debt-to-equity ratio rose to 2.0x in 1Q16, compared to 1.9x and 1.5x, respectively, in 1Q15.

Next, we’ll discuss Delphi Automotive.


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