Strong second quarter for Marfrig Global Foods
The company saw a positive growth in net revenue (+26%) and in adjusted EBITDA (+41%) from 2Q14.
Following on from a strategic review conducted during the first quarter (Q1) of 2015, Marfrig made the decision to sell Moy Park. Although the transaction is expected to be consummated early in the fourth quarter (Q4) of 2015, Marfrig signed an agreement to sell the Northern Irish-based company in late June for approximately US$1.5 billion.
The company explained the decision in a statement: “Although a good business, the Moy Park unit did not fit perfectly with this strategic direction, given its greater focus on the retail channel and the lack of significant operational and commercial synergies with the rest of the group.”
The proceeds of the transaction will be used to reduce the group’s debt, subsequently improving its capital structure and accelerating the planned reduction in its financial leverage.
With America-based Keystone Foods still in the group, and having industrial units across South America and global sales offices, Marfrig Global Foods remain an international company, even after the Moy Park transaction.
Considering this, 58% of net revenue will continue to come from its international operations, while 78% of the revenue will be pegged to currencies other than the Brazilian real (BRL).
Currency translation effects aside, the financial result was an expense of R$418m in 2Q15. This is down 20% compared to 2Q15.
Meanwhile, net debt ended the period at R$9.4bn. On a pro-forma basis, this will decrease to R$5.6bn.
Gross profit for 2Q15 was R$164m, equating to a growth of 102% compared to the R$81m reported in 2Q14. Without taking into account the exchange variation effect, 2Q15 gross profit rose 47% against Q2 2014.
At 1.6m head, the volume of cattle slaughtering at Marfrig Beef remained practically the same for the first six months of the year. Although relatively stable, it is a decrease of 7,700 head from the same period of the previous year. This is a result of the lower cattle slaughtering volume in Brazil, which has seen a decrease of 14,000 head.
“Based on the current level of available finished cattle, which we expect to remain stable over the coming quarters, we made a strategic decision to adjust our production capacity to this new situation. Therefore, we closed temporarily five units in Brazil, which effectively reduced the number of processing plants to 10 and eliminated approximately 29% of authorised slaughtering capacity.”
