Improved second quarter results for Marfrig

Brazil
Published:  27 August, 2019

Consolidated net revenue for the Brazilian meat processor totalled R$12.2 billion (US$2.93 billion) in the second quarter of 2019, up 9.8% from the corresponding quarter a year ago.

Marfrig’s gross income also grew to R$1.5 billion (US$361,000), with gross margin of 12.4%. Consolidated adjusted EBITDA was R$1.1 billion (US$264 million) advancing 13.3% on the same period last year. Adjusted EBITDA margin stood at 9.1%, expanding 30 bps from a year earlier. Net income was R$86.5 million (US$20.81 million) in the period against a net loss of R$582 million (US$140 million) in the second quarter of 2018.

The Brazilian meat processor acquired Iowa Premium in June, adding 1,100 head a day to the primary processing capacity of its operation in North America, which now stands at 13,100 head/day. “With an acquisition price of around US$150 million, the transaction will strengthen our portfolio of higher value products, consistent with our strategic growth plan”, said Marfrig, which has just announced an agreement with U.S. based Archer Daniels Midland Company (ADM) to jointly develop plant-based products.

In Brazil, primary processing volume in the second quarter of 2019 stood at 5.8 million head, 1.5% lower than in the same period of 2018 and 2.2% lower than in 1Q19, according to Brazil’s Ministry of Agriculture. Marfrig said the quarter was adversely affected by the ten-day suspension of exports to China due to an atypical case of bovine spongiform encephalopathy (BSE) in the state of Mato Grosso. The ESALQ price reference for cattle was R$153.3, virtually stable in relation to the first quarter of the year, although 8.9% higher than in Q2 2018, a period that was affected by a national truck drivers’ strike.

In Uruguay, data from the National Meat Institute (Inac) show a 7.4% increase in total primary processing in the second quarter of 2019, year-on-year, although the number of 584,000 head is 5.7% lower than in the first quarter of 2019. In Argentina, according to the Ministry of Agriculture, a total of 3.3 million animals were processed, in line with Q2 2018 and 5.9% higher than in the previous first quarter, supported primarily by the local currency depreciation, strong demand from China, and resumption of exports to the U.S.