Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Marfrig Global Foods SA (MRRTY, Financial) reported a consolidated revenue of 37.7 billion reals, marking a 12.4% increase compared to Q3 of the previous year.
- The company achieved a consolidated adjusted EBITDA of 3.9 billion reals, which is 60% higher than Q3 2023.
- Free cash flow was positive at 1.4 billion reals, and the company reversed a previous loss to report a net income of 79 million reals for the quarter.
- Marfrig Global Foods SA (MRRTY) has been successful in reducing its leverage, with a consolidated leverage ratio decreasing to 2.86 times in dollars.
- The company announced a dividend distribution of 2.5 billion reals, yielding over 17% compared to the last share price, reflecting strong shareholder returns.
Negative Points
- Sales volume in North America decreased by 4.9% compared to the same quarter last year, primarily due to one less week of activity.
- The North American operation reported a significant drop in EBITDA, down 47.1% from the previous year, with a margin of only 2.4%.
- High cattle prices and lower drop values negatively impacted beef prices, which did not increase enough to offset these costs.
- The company faces challenges in the South American market, with a smaller share of sales to China compared to the previous year.
- Despite strong operational performance, the company still faces high financial expenses, amounting to 1.3 billion reals for the quarter.
Q & A Highlights
Q: What is Marfrig's current cash position and strategy regarding dividends and asset sales?
A: Marfrig's cash position is very comfortable across its three segments, with strong performance even during low cycles in the US. The company has been reducing leverage for six consecutive quarters. The decision to pay dividends was influenced by asset sales and tax monetization, allowing Marfrig to maintain robust margins and resilience. (Respondent: Unidentified_4)
Q: Can you elaborate on the cattle cycle in Brazil and its impact on prices and demand?
A: Since 2022, Brazil has experienced a strong cattle supply. In Q3, there was a 10% increase compared to 2023, leading to an imbalance between supply and demand and a rise in cattle prices. Marfrig's new operations model with feedlots has maintained high occupancy rates, supporting optimism for future quarters. (Respondent: Unidentified_1)
Q: How is the North American beef market performing, and what are the expectations for 2025?
A: Beef demand remains strong in North America, even in Q4, despite seasonal variations. For 2025, Marfrig expects cattle supplies to decline cyclically, with margins at the low end of the range. The company is prepared to manage through these conditions. (Respondent: Unidentified_3)
Q: What is the outlook for beef prices and leverage management in the US and Brazil?
A: Cattle prices are expected to rise, but robust beef demand should help manage margins. In Brazil, new export approvals and market diversification are expected to support price increases. Marfrig manages leverage on a consolidated basis and remains comfortable with its current levels. (Respondents: Unidentified_3 and Unidentified_4)
Q: How does Marfrig plan to enhance its portfolio of value-added products in South America?
A: Marfrig aims to increase the share of branded and boxed products, leveraging synergies with BRF. The company is focused on improving cattle quality and expanding feedlot operations to enhance margins and product offerings. (Respondent: Unidentified_4)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
