(Adds CEO comments, share movement, company background)
By Ana Mano
SAO PAULO, May 11 (Reuters) - Outbreaks of the COVID-19 respiratory disease in different regions of Brazil could disrupt operations at the country’s largest chicken processor, a BRF SA executive said on Monday.
With the escalation of the public health crisis in Brazil, where most BRF plants are located, worker absenteeism and potential orders from health authorities to close meat plants constitute threats.
“There may be accelerated contamination in a region and this will undoubtedly affect supplies,” Chief Executive Officer Lorival Luz told reporters. “Perhaps the biggest challenge [related to pandemic] would be not on the demand side, but on the supply side.”
During a presentation for analysts to discuss first-quarter results, Luz also noted that BRF sees demand affected by a looming recession and new consumer trends amid the global pandemic.
The impact of the health crisis on the company’s sales will be more evident in second-quarter results, Luz said.
As BRF anticipated supply disruption problems, some weeks ago the company hired additional workers to keep operations as close to normal as possible.
In April, BRF said it would hire an additional 2,000 people both in-house and through outsourcing. Some 1,700 people have been permanently or temporarily hired, Luz told reporters, with more to be added gradually.
Luz declined to say which of the company’s plants were more likely to suffer disruptions.
On Friday, a municipal court in the southern Brazilian city of Lajeado ordered one of BRF’s plants closed for 15 days to contain the spread of the novel coronavirus. So far, BRF’s plant in Lajeado is the only one shut down because of the health crisis, Luz said, adding it was operating normally until Saturday.
Other plants operated by BRF and rivals may be closed as the levels of contamination rise in certain towns and regions, yet BRF does not expect as big an impact on supplies as in the United States, Luz said.
As it tries to understand how the COVID-19 crisis is affecting consumer trends and the supply chain, BRF said it is seeking bolt-on acquisition opportunities, aimed at businesses with liquidity problems in the wake of the pandemic.
BRF said on Sunday it reduced its net loss in the first quarter to 38 million reais ($6.63 million), narrower than a loss of 1 billion reais in the same period last year.
The company’s shares were up 2.56% at 21.30 reais in late morning after soaring 5% at the open on the improved results. (Reporting by Ana Mano in Sao Paulo Editing by Dan Grebler and Matthew Lewis)