UPDATE 2-Brazil food processor BRF posts first annual profit as Q4 income more than doubles

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SAO PAULO, March 3 (Reuters) - Brazil’s largest chicken processor BRF SA reported its first annual profit in four years on Tuesday as fourth-quarter net income more than doubled after a series of measures to turn around its business following a string of losses.

BRF said it earned 690 million reais ($154 million) in the latest quarter versus 313 million reais in the year-ago quarter, on strong domestic and international sales - particularly to China. This helped it to a 2019 profit of 1.213 billion reais.

BRF said in a statement “strong management and excellent execution were essential to achieve these results”.

According to the statement, the turnaround involved reviewing its fundamentals, heightening the value of its brands and enhancing its operating capacity.

Sales volumes in the fourth quarter rose to 1.173 million tonnes from 1.153 million tonnes, including all proteins.

On the international segment, BRF increased sales by just over 17% to 4 billion reais, as it and other Brazilian companies boosted exports to China after an outbreak there of African swine fever, a deadly pig disease, killed its livestock.

Volumes sold in Asia over the latest quarter continued to exceed 200,000 tonnes, BRF said, adding the African swine fever crisis had a positive effect on prices of goods sold.

BRF also said adjusted EBITDA - earnings before interest, tax, depreciation and amortization - of 1.413 billion reais in the latest quarter, an almost 68% rise from a year earlier.

The company disclosed a significant advance in overall gross margins to 24.1% from 16.1% in 2018, thanks in part to strong sales in Asia and in Brazil, where net revenue rose 7.4% to more than 5 billion reais in the last quarter.

Despite higher grain costs compared to the same period a year ago, BRF said more efficient commodities procurement processes and use of alternative inputs was helping it mitigate these effects on margins.

While BRF reduced its stock levels through improved logistics and stricter inventory controls in Brazil, its key halal business in the Middle East continues to struggle due to shipping restrictions from Turkey to Iraq, which is impacting its Banvit subsidiary.

A halt in operations at the Abu Dhabi food processing plant that serves the Saudi Arabia market is also a concern, BRF said.

$1 = 4.4738 reais Reporting by Ana Mano; Editing by Susan Fenton and Emelia Sithole-Matarise