BRF SA Goes Back To The Future With A Bold 10-Year Growth Plan

Everything old is new again, and so it would seem with BRF (BRFS). Management laid out bold growth targets for the next 10 years at its December 8 investor day, but the underlying concepts (expanded processed/packaged food offerings, international expansion) harken back to the goals and ambitions of prior management teams... goals that proved impossible for the company to reach then.

That BRF has tried this before and come up short does not invalidate this plan. BRF has a better management team today and my takeaway from the presentations is that this new effort will be driven more by internal innovation than M&A than in the past, and I think that’s an important differentiation. I also believe that the global market can support the growth that BRF is looking to achieve, but the goals are ambitious. The further you go out in time, the fewer the number of estimates, but BRF’s 2023/2024 revenue target is about a third higher than analysts previously expected, and I expect some “show me” skepticism.

When I last wrote about BRF, I was bullish on the long-term potential of the business but more cautious in the near term given weaker spreads and margins. The shares have since risen about 20%, but my basic thesis is the same – I do see a path to a higher share price over time, possibly a much higher share price, but the near term does offer risk as poultry spreads remain pressured.

 

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BRF SA Goes Back To The Future With A Bold 10-Year Growth Plan