BRF Has Net Income of R $ 307 Million in The Second Quarter of 2020

Over 1 million tons of products were sold, generating consistent margins for the 5th consecutive quarter;

In Brazil, processed products recorded a growth of approximately 13% in relation to the 2nd quarter of 2019 and represent 75% of total sales;

Expenses associated with preventing and combating Covid-19 totaled R $ 218 million this quarter, in more than 30 initiatives to strengthen the health and safety of employees, in addition to the continuity of its operational chain

BRF, one of the largest food companies in the world, recorded net income of R $ 307 million in continuing operations in the second quarter of 2020, which represents an increase of 60.8% over the same period last year. The result, amid a challenging scenario, reflects the growth in sales in all categories, further leveraging the strength and credibility of its main brands. In the period, the company surpassed the level of 1 million tons of food sold worldwide, being the fifth consecutive quarter with solid levels of profitability.

“These results reflect our ability and agility to meet new consumer demands in different markets and cultures. We have an engaged team, with a strong essence, united around our purpose. I am confident in our long-term growth project, because we have the best people, the best brands and the best products ”, highlights BRF CEO Lorival Luz.

One of the highlights of the quarter was the increase in the sale of processed products in the Brazilian market, which grew by approximately 13% in relation to the same period last year and indicate assertiveness in the food production and supply strategy that provide convenience for consumers. In the domestic market, about 75% of sales come from processed products, that is, cold, frozen, margarine, ready meals, among others, which bring the strength and confidence of its brands Sadia, Perdigão and Qualy, offering consumers quality , variety and practicality in the preparation. The remaining 25% is made up of fresh products, mainly specific cuts of chickens and pigs and their lines of semi-ready for consumption.

“We remain focused on growth and profitability, with operational and commercial excellence, integrated planning, anchored in an organizational culture that promotes respect and appreciation of people, maintaining financial discipline”, highlights Lorival Luz. “We have registered important advances in the various channels and regions where we operate, positioning ourselves solidly, with products with greater added value. ”

The total net revenue obtained by BRF reached R $ 9.1 billion, an increase of 9.2% in relation to 2Q19. In Brazil, net revenue increased 13.7%, reaching R $ 4.6 billion in 2Q20. This result was favored by the expansion of 6.3% in the volume sold, especially that of processed products, which grew almost 13% in the quarter. In the international market, the effects of the Covid-19 pandemic affected the volume sold, which contracted by 8.2% compared to 2Q19. Even so, net revenue surpassed R $ 4.2 billion, presenting a growth of 5.6% due to higher average prices in the period.

In 2Q20, Consolidated Adjusted EBITDA totaled R $ 1.031 billion, down 15.4% compared to the same period last year, when excluding the tax effects reported in 2Q19. By also excluding expenses associated with Covid-19 in 2Q20, this indicator would have reached R $ 1.3 billion, the same level as in the first quarter of this year.

The Company’s net leverage, measured by the ratio between net indebtedness and Adjusted EBITDA for the last twelve months, reached 2.89x in 2Q20, compared to 3.74x in 2Q19, and the average debt term extended to 4.2 years, 1 year increase compared to 2Q19. After the recent debt borrowings / settlements announced in July and August 2020, the average term was extended to 4.9 years.

Investments made in the quarter totaled R $ 582 million, representing an increase of 24% compared to 2Q19, of which R $ 203 million was allocated to growth, efficiency and support; R $ 236 million for biological assets and R $ 144 million for leasing and others. Among the highlights, the construction of the sausage factory in Seropédica (RJ) and the acquisition of Joody Al Sharqiya Food Production Factory, a processing unit located in Dammam, Saudi Arabia, whose product portfolio includes breaded cuts, marinades and hamburgers.

Social Responsibility and Sustainability

The incorporation of sustainability criteria into management and strategy is a permanent journey for BRF, which seeks to anticipate market changes, prepare the Company to capture opportunities and ensure the appropriate treatment of risks and impacts.

BRF, which is the only company in the food sector to compose the B3 Corporate Sustainability Index (ISE), has also expanded its commitments to environmental, social and corporate governance aspects. The company is one of the signatories of the Brazilian Business Council for Sustainable Development (CEBDS) movement to combat illegal deforestation in the Amazon and promote sustainable development in the region, with economic and social inclusion of local communities.

The Company also remains on the FTSE4Good, an index measured by the Financial Times Stock Exchange Russell that assesses companies’ environmental, social and governance practices.

At the Annual General Meeting, the Board of Directors was renewed by an absolute majority of shareholders, with three new members and a more diverse composition, with complementary skills and experiences. In the total contingent of BRF, the female presence in leadership positions increased from 18% to 22%.

Also during 2Q20, R $ 218 million was invested in resources to care for the physical integrity of employees and ensure the continuity of the operational chain and, thus, to combat the effects of the Covid-19 pandemic. If the period from February to June is counted, this amount reaches R $ 247 million. More than 30 initiatives related to preventing and fighting the virus were implemented in the BRF operation worldwide, being the first company in the sector to sign a Term of Commitment with the Public Ministry of Labor - MPT, nationwide, constituting a reference for the market and for the country. Other actions:

- One of the first companies to make a public commitment not to fire;

- Maintained more than 8,200 employees away from risk groups and actively searching their homes and without impacting their remuneration, corroborating our protection and care strategy for people;

- Implemented a weekly recognition plan, adopting financial and food support for the BRF employee, benefiting around 65 thousand employees;

- Created and expanded the Dr. BRF consultation channel to over 30 thousand beneficiaries among third parties and integrated;

- Distributed more than 3.5 million PFF2 masks;

- Sanitizes about 230 tons of fabric masks per month;

- Provided approximately 600 thousand liters of alcohol gel spread over thousands of sanitation stations;

- Installed around 10,000 square meters of acrylic to separate critical activities and cafeterias;

- Formed a testing team of more than 70 people with exclusive dedication and application of tests in more than 40 locations;

- Made donations to more than 90 cities in Brazil, United Arab Emirates, Kuwait, Oman, Qatar and Turkey, benefiting more than 180 entities;

- Hired approximately 6.7 thousand temporary employees in our factories, distribution centers and retailers in the commercial area;

- Added more than 400 buses to the employees’ transport fleet;

- Replaced more than 8,300 air conditioning filters, in addition to constant monitoring;

- Installed 33 thermal cameras and acquired more than 2 thousand thermometers for measuring employees’ temperature.

“BRF was undoubtedly one of the companies that invested the most in health and safety for people in preventing and combating the Covid-19 pandemic in Brazil and perhaps in the world. We do not save resources and efforts in our operations and in the communities where we operate. We are a reference in the sector for a series of measures that we have adopted since the beginning of the pandemic to offer the best conditions of safety, health and well-being to our operational chain. And, thus, continue to honor our daily commitment to keep the market supplied ”, adds Lorival Luz.

About BRF

The world’s largest global chicken exporter, BRF has iconic brands such as Sadia, Perdigão and Qualy. Its purpose is to offer quality food that is more and more tasty and practical, to people all over the world, through the sustainable management of a long, complex and living chain, which provides a better life for everyone, from the farm to the table. Based on fundamental commitments to safety, quality and integrity, the Company bases its strategy on a long-term vision and aims to generate value for the communities in which it operates, its employees and members, shareholders and society