May 2023 – FriGol reported gross revenue of R$730 million in the first quarter of 2023, down by 30% from the same period in 2022. EBITDA (profit before interest, taxes, depreciation, and amortization) was negative by R$2.6 million, with a margin of -0.4%, reaching the breakeven point, compared to a record result of R$94 million reported in the first quarter of 2022, when the margin stood at 9.4%. The Company reported a net loss of R$15 million, compared to a net income of R$65 million recorded in 1Q22.

“In our industry, the first quarter is traditionally the weakest quarter of the year. As expected, the first quarter of 2023 followed this seasonality and was also jeopardized by the almost one-month self-imposed embargo of Brazilian exports to China. Because of that, sales to the export market fell by 11 percentage points. During the self-imposed embargo, FriGol adjusted its production, accelerated its growth projects, and turned its exports to other countries and the domestic market”, said Eduardo Miron, the CEO at FriGol.

The atypical results reported in the first quarter of 2022 should be taken into consideration when analyzing the quarterly comparisons, says Eduardo Masson, CFO at FriGol. “The first quarter of 2022 was extremely atypical because of the strong demand from China with the resumption of exports after the three-month embargo at the end of 2021. The resumption positively impacted volumes and prices, which were also benefited by the higher dollar”, explains Masson. “On the other hand, despite all the challenges faced in the first quarter of 2023, our results were better than those reported in 2021 and 2020”, says the CFO.

FriGol ended the first quarter of 2023 with a net debt/EBITDA leverage of 2.1x and preserved cash at R$212 million, 182% higher than the R$75 million reported in 1Q22, due to the Company’s focus on financial discipline.

Strategy

For 2023, FriGol maintains the growth projection at around 20% of revenue. For this reason, it is investing R$45 million in CAPEX, which includes the expansion of the slaughtering capacity in its three beef production units. The expectation is to slaughter around 590 thousand cattle this year, 25% more than in 2022.

“We reported revenue growth above 20% in the last three years, and we want to maintain this average in 2023. Each year we use a specific strategy, and now we bet on increasing the operational efficiency of our plants”, says Eduardo Miron. In 2022, the Company recorded an all-time high revenue of R$3.8 billion.

The diversification of markets to promote sustainable growth is another strategy adopted by the Company, which, in January was qualified to export to Indonesia and, at the beginning of the second quarter, to Singapore. The countries of the Association of Southeast Asian Nations (ASEAN) has a population of approximately 700 million people and is Asia’s second-largest market, behind China only.

“We are focusing on this region because beef consumption is growing. At the end of 2022, we participated in a mission with Brazilian executives and authorities, which was essential for us to strengthen commercial relationships with ASEAN countries”, said Miron. According to him, the next step is to gain qualifications to export to the Philippines and Malaysia, thus covering four ASEAN countries.

In the domestic market, the Company will follow the strategy of expanding the sales of products with higher added value and extending the Açougue Completo project, which is a successful partnership with supermarkets.

As a privately held company, FriGol has stood out in the market regarding its communication and commitment to the ESG agenda. Accordingly, the Company recently launched its Annual and Sustainability Report, in which it presents to all stakeholders financial, environmental, social, and governance information, following the guidelines of the Global Reporting Initiative (GRI), in line with the UN Sustainable Development Goals (SDGs). The publication is available in the 2022 Annual and Sustainability Report.

About FriGol

FriGol is one of the main and most traditional beef and pork meatpacking companies in Brazil. Founded in 1992 by the Gonzaga Oliveira family, who had been in the beef business since 1970, FriGol is strategically located in the states of São Paulo and Pará. The Company currently has an important share in the domestic and international markets, with a presence in more than 60 countries in the South and North Americas, Europe, the Middle East, Asia, and Africa.

For further information, visit FriGol’s website.