29 July, 2008 - Perdigão closed the second quarter 2008 with gross sales of R$ 3.3 billion, 81.2% more than the same period in 2007.
Growth reflects the increase in sales both in volume as well as in revenues in the domestic and export markets. In addition to these factors, performance was also driven by the consolidation of the results from the acquisition of Eleva/Cotochés, among others, as well as outsourced production agreements signed with other dairy
product processors.
Exports reported an increase of 45.4% in meat volume and 64% in total revenues, reaching R$ 1.3 billion. The growth in international demand for animal protein (poultry and pork) from Brazil has sustained the positive performance in overseas markets. This, despite the continuing appreciation of the Real against the US dollar during the quarter and the increase in principal commodity prices well above levels recorded in the comparative period for 2007.
Domestic market revenues for the quarter increased year-on-year by 93.9%, reporting a total of R$ 1.99 billion. Sales volumes of dairy products increased 338.9% and by 30.5% in the case of meats. Performance in this market was driven by acquisitions, new partnerships - instrumental in enhancing milk output, and the expansion of the Company’s business in the margarine and other processed product segments, resulting in a 185.4% increase in sales volumes.
The improvement in the Company’s operations in meat and dairy products, allied to sales performance has been conducive in achieving good operating results. EBITDA reached R$ 233.2 million, 40.3% more than for the
comparative period last year.
Gross profit increased from R$ 411.2 million to R$ 624.6 million, equivalent to a year-on-year increase of 51.9%. Net adjusted income reported growth of 44.7% to R$ 102.5 million before the effect for the amortization of
goodwill arising from the acquisition of some major operating assets.
In May, Perdigão fully recognized goodwill of R$ 1.5 billion (the difference between book and market value), accruing from the acquisitions of Eleva, the margarine businesses and the of Batávia still not controlled by the Company. This generated a tax benefit of R$ 501.3 million in addition to a net negative non-recurring effect in the quarter of R$ 984.3 million.
Perdigão invested R$ 225.6 million between April and June, equivalent to an increase of 46.1% compared with the preceding fiscal quarter. Of this total, R$ 51 million was dedicated to the acquisition of Laticínios Cotochés. The rest was allocated to construction work at the Bom Conselho agroindustrial complex in the state of Pernambuco, and expansion in warehousing and supply infrastructure in addition to the modernization of certain production lines.
EXPORTS
Stronger overseas demand, particularly for poultry meats, was critical to the Company’s performance in increased sales volume, better prices and added product value. In the meat segment, volumes increased 45.4% and revenues by 61.8% in the quarter.
Revenues generated by the dairy products business reached R$ 19 million thanks to the implementation of a continuous program of exports, principally of powdered milk.
Processed products contributed 22.9% to export revenues, volumes increasing by 32.6% in relation to the second quarter of last year. The average prices of exports continued to rise, reporting an increase of 9.9% in dollars FOB (Free on Board) compared with the first quarter of this year and 32% year-on-year. As a result it has been possible to partially offset
the increased costs of the principal raw materials. In terms of Reais, the average prices of meats increased 11.3% against higher average costs of 19.8% against the same period in 2007.
DOMESTIC MARKET
The meat business in the second quarter accounted for 49% of domestic market sales, corresponding to a growth of 30.5% in volumes. Specialty and frozen products also reported a 14.5% hike in volume due to higher disposable
incomes in Brazil.
The pass-through to domestic market prices was insufficient to cover the increased cost of the leading raw materials, resulting in narrower margins. This lag between prices and costs was further impacted by changes in product mix resulting in an increase of 9.6% in prices while average costs rose 18.7%.
In the dairy product business, revenues from milk increased 676.8% and 99.3% from dairy processed items, driven by the expansion of the operations following the Company’s latest acquisitions (Eleva/Cotochés) and the
partnership agreements signed in this sector with CCL and CCPL.
Due to the greater participation of UHT and pasteurized milk in the dairy product mix, average prices fell 10% against average costs 21.7% higher.
FIRST HALF PERFORMANCE
In the first half of 2008, Perdigão also registered growth in sales volume and revenues, reporting gross sales of R$ 6 billion, 70.4% up on the same period in 2007.
Exports amounted to R$ 2.4 billion and equivalent to a 55.5% increase in relation to the first half of 2007. Sales volumes rose 40.3%.
Domestic market sales reported R$ 3.7 billion, a growth of 81.3% against the same period last year. In the meat business, sales volumes were up by 30.8% at 393.8 thousand tons. Revenues from dairy products rose by 229.4% and sales volumes, 263.5%.
During the period, the company continued to invest heavily in increasing production capacity and consequently, market share, both in relation to the meats segment and also the dairy products and margarine businesses. Total investments in the first six months of 2008 surpassed R$ 2 billion.
STOCK MARKET
Once again, financial trading volume was a record at US$ 35.8 million/day of shares traded on the São Paulo Stock Exchange (Bovespa) and on the NYSE – New York Stock Exchange. This corresponds to a significant growth of 120% in the quarter. For the accumulated first six-month period this year, the average daily turnover was US$ 31.2 million – a year-on-year increase of 142%.
During the quarter, Perdigão’s shares – Code PRGA3 - appreciated 7.5% and its ADRs – PDA, by 19.7%, so outperforming the São Paulo Stock Exchange (Bovespa) and Dow Jones stock indexes. However, with the international scenario strongly impacting the capital markets, the shares reported a decline of 2.4% for the first half as a whole, while the ADRs rose 10.5%.