Brazil's BRF cuts payments to suppliers as margins narrow
SAO PAULO, Sept 29 (Reuters) - BRF SA, the world's largest poultry exporter, said it would apply a 5 percent discount to most of its purchases in Brazil, where a recession and rising grain prices are reducing profitability.
In a Thursday statement sent to Reuters, the Brazilian company said the discount would be effective throughout the fourth quarter to "maintain the business sustainable in the face of the country's ongoing macroeconomic challenges."
The company derives about half of its annual revenue from Brazil.
It informed suppliers of the decision in a recent memo, Bloomberg News reported on Wednesday.
BRF, whose processed food brands in Brazil include Sadia and Perdigão, reported a 92 percent drop in second-quarter net income after soaring corn prices hit its poultry and pork operations.
The company's shares were down 0.8 percent at 54.71 reais in early afternoon trading in São Paulo. The stock is up 1.4 percent this year, well below the benchmark Bovespa stock index's 36 percent gain.
BRF recently told Reuters it started to make forward corn purchases, bucking a multiyear strategy, to lock in supplies during a shortage linked to a surge in exports.
Corn prices measured by a regional index presented by market research group Cepea/Esalq CORN-CAMP-BRL fell recently from all-time highs in June, although they remain well above historical levels. (Reporting by Marcelo Teixeira; Editing by Guillermo Parra-Bernal and Lisa Von Ahn)
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