SAO PAULO, Feb 27 (Reuters) - Listed meat processor BRF

said on Thursday food sales exceeded expectations in

the first two months of the year in Brazil, with the company

planning to expand production of processed foods to capture

revenue from strong demand, executives said on Thursday.

"Regarding 2025, we started the year quite well both in

terms of volumes and market diversification," said the company's

CEO Miguel Gularte in a conference call to discuss

fourth-quarter earnings. "There are cost challenges, but we are

prepared."

The world's largest chicken exporter, BRF said on Wednesday

fourth-quarter net profit was 868 million reais ($149.33

million), up 15% from the same period a year earlier. The annual

result was the best in history.

Still, BRF shares fell as much as 8.8% in mid-morning

trading, as investors punished the stock because "results were

the first in a while that missed market expectations," according

to a Bradesco analyst in a note to clients about BRF's

performance in the last quarter of 2024.

BRF's CFO Fabio Mariano told analysts BRF sees a positive

scenario for protein prices, with a "very balanced equation

between supply and demand", including for chicken.

In 2023, meat companies suffered from global chicken

oversupplies.

BRF processes pork and chicken, serving the domestic market

and exporting to countries like China and the Middle East, among

others.

Regarding operations, the CFO highlighted that the growth in

demand for processed foods in Brazil reduced idle capacity at

BRF units, improving operating efficiencies.

That will allow the company to allocate resources to

expansion projects, especially in the processed and frozen food

category.