The Company reversed the loss reported in 1Q, showing signs of a recovery cycle in sales and results

São Paulo, August 15, 2023 – FriGol, one of the main and most traditional slaughterhouses in Brazil ended 2Q23 with a gross revenue of R$821 million, up by 12% over 1Q23. This increase was accompanied by profitability, with a net income of R$24 million, reversing the loss of R$15 million reported in 1Q23. Earnings before interest, tax, depreciation, and amortization (EBITDA) came to R$29 million, with a margin of 4%.

“It was a period of recovery following a 1Q marked by self-embargo on exports to China. However, as expected, the YoY drop in export revenue was impacted by the appreciation of the Real and the drop in prices paid by the Chinese market. For this reason, we adopted the same strategy as that implemented during the embargo period, redirecting sales to the domestic market, where we have brands and a strong customer relationship,” says Eduardo Miron, CEO of FriGol. “The fact that we have balanced sales between the domestic and the export markets is positive for our company, as it allows flexibility in directing sales,” he adds.

Compared to 2Q22, gross revenue fell by 15%, net income declined by 53%, and EBITDA was 66% lower.

“As a consequence of financial disciplined and working capital efforts, we closed 2Q23 with a cash position of R$292 million, up by 38% over the figure reported in 1Q23, and up by 36% YoY”, says Eduardo Masson, CFO at FriGol.

Confirming FriGol’s export-oriented DNA, exports accounted for 54% of gross revenue, up by 42% over 1Q23 and close to the level of 55% reported in 2Q22.

China was the main destination, followed by Israel.

Strategy

From an operational perspective, 2Q was marked by the conclusion of projects that increased production capacity in the three cattle plants in Lençóis Paulista, Água Azul do Norte, and São Félix do Xingu. The company is now prepared to slaughter 590,000 animals this year, a 25% increase compared to 2022.

“We chose 2023 as the year of operational efficiency, and we are meeting our goals by expanding production capacity, refining the supplier monitoring process to ensure sustainability, diversifying markets, and developing actions to get closer to customers in both the export and domestic markets. This way, we will be prepared to grow in the recovery phase of our sector,” emphasizes CEO Eduardo Miron.

With a strong focus on Asia in 2Q, FriGol participated in SIAL China in Shanghai, seizing the opportunity to strengthen relationships with key customers.

In addition to China, the Association of Southeast Asian Nations (ASEAN), a block of countries with a population of about 700 million people, is seen as having great potential for the company. In 2Q, FriGol obtained accreditation to export to Singapore, which adds to the accreditation obtained for Indonesia in January. The next step is to gain qualifications to export to the Philippines and Malaysia. In line with the strategy of diversifying markets, FriGol exports to more than 60 countries.

In the domestic market, the company continued to expand the Projeto Açougue Completo FriGol, which has proven to be a successful partnership with supermarkets by delivering high-value-added products.

Having sustainability at the core of its business strategy, FriGol, which monitors 100% of its direct suppliers across all biomes, recently announced that it is the first meatpacking company to implement the Voluntary Supplier Monitoring Protocol for Cattle in the Cerrado biome. Developed by the non-profit organizations Proforest and Imaflora, this initiative aims to contribute to responsible socio-environmental monitoring practices for the purchase of cattle-derived products in the biome.