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(Press release / BRF)
Corporate news is busy, and investors pay special attention to the earnings season.
BRF reported that it had a loss of R $ 38 million in the first quarter of this year. The company paid R $ 204 million to close a lawsuit in the United States and suffered the effects of changes in the exchange rate in the period, which affected profitability. Despite the adverse effects, the company had a 21% expansion in net income, to R $ 8.9 billion. Despite the Covid-19 epidemic, BRF increased poultry exports to China and Turkey. Notre Dame Intermédica Group (GNDI) reported that it ended its share buyback program, having purchased just over 3.3 million common shares in B3. See what to watch for:
BRF reported that it had a loss of R $ 38 million in the first quarter of 2020, a better result than in the same period last year, when the losses were R $ 101 million. The company reported that it paid R $ 204 million to close a lawsuit in the United States, while its results were affected by the impacts of the sharp devaluation of the real against the dollar, part of BRF’s debt is in dollars.
Despite the negative result, BRF reported having closed the first quarter with net cash of R $ 10.5 billion, a better position than at the end of the same period in 2019, when it reached the end of March with R $ 2 billion in cash. .
Net income advanced 21% during the first quarter of 2019 to R $ 8.9 billion. The profit before interest, taxes, depreciation and amortization (Ebitda) was R $ 1.2 billion in the first quarter of this year, an increase of 67.2% compared to the same quarter of 2019. The Ebitda margin was 14%, an advance of 3.8 percentage points. BRF’s growth was greater abroad than in Brazil. Foreign operations grew 25.6% in net income, to R $ 4 billion.
In Brazil, the growth was lower, from 18.1% to R $ 4.65 billion. The volume sold by BRF grew 8%, which represented 1.1 million tons of meat. The devaluation of the real against the dollar worsened the company’s leverage, with a net debt to Ebitda ratio of 2.65 times (2.65x), a slight increase of 0.18 times during the fourth quarter of 2019. Still, the leverage decreased dramatically in Compared to the first quarter of 2019, when it was 5.68 times (5.68x).
BRF claims that it intensified the export of poultry meat to China in the first quarter, despite the effects of the Covid-19 epidemic. The company also launched Sadia brand pork on the Chinese market, in association with a local company. In Brazil, the company launched ribs on strips and vegetarian product lines. In the halal market, BRF resumed exports to Iraq and advanced the share of its Sadia and Banvit brands to 77% of the chicken market in Turkey.
Betina Roxo, analyst at XP Investimentos, points out that BRF reported stronger than expected results. The analyst notes that BRF’s net debt / EBITDA ratio fell from 6.1 times in the first quarter of 2019 to 2.7 times this year, but grew slightly in the quarterly comparison (2.5 times in the fourth quarter) due to the exchange rate effects. non-monetary (increase of 0.36 times attributable exclusively to this effect, according to the company), partially offset by solid cash generation.
“We see stocks trading at an attractive level of 5.7 times EEV / EBITDA in 2020 and we maintain our buy recommendation,” says XP.
Banks Itaú BBA and Morgan Stanley also rated BRF’s first quarter results as “strong and solid”, with an emphasis on sales in Brazil and China. Itaú BBA noted that the R $ 1.2 billion Ebitda reached 14% above the projection. “The results were largely good, with an emphasis on sales in various international markets, as the company took advantage of the depreciation of the real and the increase in the number of slaughterhouses capable of exporting to China,” said Itaú BBA. BBA comments that growth was also strong in Brazil, with the processed food division driving activity. Although the company reported a loss of R $ 38 million, the market estimated an even greater loss of R $ 104 million, so this result was not surprising.
“We were positively surprised by the increase in exports, mainly to China. There was an 11% growth in Ebitda in the international market, to R $ 445 million in the quarter, and this on a solid basis last year, “said the BBA, noting that African swine fever reached Asian countries and opened the market for BRF, mainly in China. BBA maintains the above-average, above-performance recommendation for the BRFS3 share, with a target price of R $ 42.00, an increase of 126% over the price of paper in B3 on day 8.
For Morgan Stanley bank, BRF’s quarterly results exceeded expectations. “BRF’s results reached 13% above our projections. As expected in Brazil, the main driver of the expansion was the foreign market, mainly China. China continues to be the main importer, sales to BRF increased by 90% to the Asian country annually, with a greater number of company slaughterhouses authorized to export there, ”said Morgan Stanley.
The bank detailed that exports to the halal market grew by only 3%, in part due to restrictions in Turkey, in part due to the temporary closure of the plant in Abu Dhabi, which exports to Saudi Arabia. On the balance sheet, BRF announced the acquisition of a slaughterhouse in Saudi Arabia. Although Morgan made a positive analysis, BRF’s shares continue to have an underweight rating (weight below the market average) and a target price of R $ 18.00 for 2020.
BRF also announced the purchase of Joody Al Sharqiya Food Production for $ 8 million.
M. Dias Branco (MDIA3)
M.Dias Branco experienced a 140.8% increase in earnings in the first quarter of 2020, from R $ 56 million to R $ 137 million. Ebitda was R $ 228.5 million, an increase of 103%.
The Ebitda margin increased by 5.5 percentage points, from 8.5% to 14%. Net income increased 24.3% to R $ 1.6 billion with double-digit growth in the volumes of cookies, pasta, flour, margarine and fats.
“We observed strong sales performance in the second half of March as a result of social distance measures to contain the Covid-19 pandemic,” the company said.
Banco Itaú BBA evaluated the positive results for the first quarter of M. Dias Branco, the largest milling industry and cookie maker in the country. “There was strong growth in sales volume, 25% in cookies and 27% in spaghetti pasta and macaroni annually. Ebitda reached 15% above our estimates ”, commented BBA. According to the bank, M. Dias Branco’s portfolio should be resistant during the coronavirus epidemic.
BBA comments that the sharp devaluation of the real may represent an increase in costs for the company later in 2020, because Brazil still imports more than 50% of the wheat it consumes. The bank maintains the market by taking note – market average, with a target price of R $ 39.00 for the MDIA3 share in 2020, an increase of 22.8% over the price in B3 on day 8.
IRB Brazil (IRBR3)
The IRB was informed of the establishment of a special inspection due to an insufficient composition of the assets that guarantee the technical provisions and, consequently, of the regulatory liquidity, in accordance with a relevant fact revealed by the IRB.
The situation arises, in particular, from the effects of the exchange rate variation in technical provisions in foreign currency, in view of the scenario caused by Covid-19, says the IRB.
Another factor identified was the increase in the provision for claims to be settled during the first four months of 2020. The decision can be reversed as soon as the technical provisions are in line with current regulations, at Susep’s discretion.
The company says it is committed and committed to finding alternatives to resolve the problem as soon as possible. The decision does not affect the regular management of the company’s business.
Centaur (CNTO3)
Grupo SBF, owner of the Centauro chain of stores, is seeking resources to reduce debt, according to Valor Econômico, citing three unidentified sources. The debt reduction was made with the generation of cash, which was affected by the crisis.
The company basically hired the same banks as the IPO in 2019, BTG Pactual, Bradesco BBI and Itaú BBA; Banco do Brasil was replaced by Santander, the publication says.
Morgan Stanley bank downgraded Gerdau’s recommendation for a share of equal weight – below-market exposure – citing unfavorable factors in the Brazilian economy, not the steel industry itself, which the bank defines as a “good company managed “”.
According to Morgan Stanley, Gerdau’s role offers a limited upside possibility. “As of March, Gerdau’s shares outperformed Ibovespa by 20 percentage points, but now there are some headwinds: the civil construction sector is weakening in the United States and prospects are for anemic economic growth in Brazil . We believe that the risk-reward ratio on paper is 1 to 1, ”says Morgan. The bank reduced the target price of the GGBR4 paper to R $ 13.70 in 2020, evaluating that the bullish potential of the stock is now limited.
Petrobras confirmed excellent quality oil in the southeast area of the Búzios field and greater potential in the pre-salt
Campo Albacora, according to a statement to the market. In the Búzios field, the well has a water depth of 2,108 meters. 208 meters of deposits have been identified that confirm the oil with the same quality as what is produced today in the field.
Petrobras is the operator of the consortium in the Búzios field, with a 90% stake. In Albacora, the discovery consists of some 214 meters of reservoirs, with the presence of light oil. Petrobras is the operator of the Albacora field, with a 100% stake.
Notre Dame Intermedica (GNDI3)
Notre Dame Intermédica Group informed the market that it ended its share buyback program on May 8. The health, laboratory and hospital plan company acquired 3.36 million GNDI3 common shares, or 0.56% of the company’s share capital, in operations in B3.
AutoBan, the concessionaire of the CCR Group that manages the Anhangüera and Bandeirantes highways, which connect the capital of São Paulo with the interior of the state, reported that there was a 25.7% drop in the traffic of paid vehicles on the two highways between May 1 and 7, compared to the same period last year. Among automobiles, the drop in traffic was 50.71%; Among commercial vehicles, there was a decrease of 1.5%.
In the accumulated for the year 2020, there was a fall of 21.4% in the paid traffic for passenger vehicles and a slight growth of 0.1% in commercial vehicles. In total, there was a 10.4% drop in the total traffic of the Anhangüera-Bandeirantes system from January 1 to May 7, 2020.
Paranapanema (PMAM3)
Paranapanema had a net loss of R $ 569.7 million in the first quarter of this year, the company said on the balance sheet. The result showed that the losses deepened in relation to the same period last year, when the loss was R $ 38.9 million.
According to the copper products manufacturer, the loss occurred due to the effects of the devaluation of the real against the dollar on its debt in US currency. Adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) were R $ 61.1 million in the first quarter, a decrease of 7% compared to the same quarter of 2019.
The company’s net income decreased 32% annually, to R $ 909.7 million in the first quarter. Paranapanema’s net debt increased from R $ 2 billion in the first quarter of last year to R $ 2.7 billion in the first quarter of 2020. According to the industry, 95% of its debt is indexed to the dollar.
The net debt to Ebitda ratio, which was 12.8 times (12.8x) in the first quarter of 2019, fell to 10.7 times (10.7x) at the end of March this year. On May 6, Paranapanema closed a new Consent Agreement (Standstill) with its main creditors, so that they do not execute the debts for 30 days.
Vale started the level 1 emergency protocol for the Dicão Leste dam.
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(With Bloomberg, Agência Estado and Agência Brasil)
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