July 2, 2022

Marfrig has historic revenue and operating profit with the US

Sao Paulo, October 26 – Brazilian animal protein producer Marfrig was in its historic third quarter for its revenue and operating profit, driven by strong demand in the United States, the improvement of the vaccine in the country and the consequent reopening of the economy.

Consolidated net income for the third quarter was R $ 23.63 billion, higher than the consensus R $ 21.7 billion, and 40.4% higher than a year earlier. Operating profit, as measured by the EBITDA concept, more than doubled, growing 115.6% on the same comparative basis to R $ 4.73 billion against an estimate of R $ 3.95 billion.

EBITDA margin is 20%, 700bps higher than the previous year. In a statement, the company maintains that all operations have record results due to higher sales volumes and prices. But this highlights the strong demand for beef in the United States.

“This quarter’s historic performance is illustrated by Operation North America’s record, which offset South America’s low profits, under pressure from higher raw material prices. During the quarter, 95% of the consolidated EBITDA became EBITDA of North American operations, ”Marfrig said.

Marfrig in the US market

Performance in the North American market “came from an economic situation further driven by the progress of the vaccination process against Govt-19, the replenishment of stocks in the food-service chain, the federal government’s financial stimulus and the season.”

The protein manufacturer lists 43% increase in prices in the North American market as the drivers of results compared to values ​​for the same period of 2020.

Net income from consecutive operations for the quarter reached R $ 1.67 billion by consensus, 148.7% year-on-year, but down 3.6% year-on-year. However, the net financial outcome was negative at R $ 1.27 billion, affected by the exchange rate variance and the mark-up of the investment to buy shares in the BRF.

“In addition to net interest growth, the firm’s share of debt in the local currency (reais) has been affected by an increase in the base interest rate. During the quarter, the exchange rate was negative at R $ 696.3 million.

The company’s net income in dollars is 92% of total, and it is sold in North America and exported from South America. In the third quarter, the United States accounted for 66% of sales and export earnings to China, while Hong Kong accounted for 11%, while Brazil’s accounted for 7%, “he explained.

Organic growth

During this period, Marfrig invested R $ 530.6 million in its operations, “approximately 54.4% of which was allocated to R $ 288.8 million, for organic development projects”.

Operating liquidity was positive at R $ 4.7 billion and net debt fell 12.2% to US $ 2.52 billion compared to the second quarter. “When measured by rail, there was a 4.5% reduction in net debt.”

The foreign exchange rate is 1.07%, measured in dollars, the ratio between net debt and EBITDA. Common shares of Marfrig (MRFG3) Ends the day with a 0.85% drop.

Text: Yolanda Nascimento
Edition: Gabriel Ponte and Leticia Matsura
Art: Move