Record net revenue for Marfrig in Q3

Brazil
Published:  09 November, 2018

The Brazilian meatpacker, which acquired a controlling interest of U.S. based National Beef in June 2018, has posted record net revenue of R$11 billion (US$2.94 billion) in the third quarter of 2018, up +21% year-on-year.

Marfrig says adjusted EBITDA also achieved a record in the quarter at R$1.08 billion (US$289.35 million), with margin of 9.7%. Operating cash flow is also reported to have improved significantly, to R$804 million (US$215.44 million). These consolidated results include the full impact of the National Beef business. According to Marfrig, despite the U.S.-China trade war tensions and the increasing U.S. protectionism, the global scenario in the beef industry remained positive.

The cattle availability in the U.S. combined with stronger domestic and international demand are said to have supported better margins. In Brazil, cattle slaughtering was 6.3 million head in the quarter, representing increases of +4.3% over the same quarter in 2017, and +8% over the previous quarter. Despite signs of improvement in domestic consumption, Marfrig says its margins in Brazil remained under pressure in face of the uncertain political and economic environment.

On August 20, the Company announced the divestment of U.S. based Keystone for an enterprise value of US$2.4 billion. Deducting from this amount the interest held by noncontrolling shareholders, Marfrig’s net proceeds, which will be used to reduce its gross debt, is US$2.2 billion. The deal was approved by the antitrust authorities in the U.S., Japan and China, as well as by Brazil’s BNDESPAR, but the approval by the antitrust authority in South Korea is still in progress, and the transaction is expected to be concluded in 2018.