Marfrig Global Foods (MBRF3) Q2 2024 earnings summary

Executive summary

• Net revenue reached R$34.8 billion in 2Q24, up 16.5% year-over-year, with all segments posting sales growth, especially BRF and South America.

• Adjusted consolidated EBITDA was R$3.4 billion, a 64.8% increase year-over-year, with margin improving to 9.7%.

• Net income attributable to the parent company was R$75.4 million, reversing a loss of R$784.4 million in 2Q23.

• Free cash flow was R$419 million, and leverage improved to 3.38x in BRL and 3.05x in USD.

• Sustainability initiatives advanced, including 100% compliance in Amazon livestock audits for the 12th year and expanded supplier monitoring.

Financial highlights

• Gross profit rose 79.8% year-over-year to R$4.86 billion, with gross margin improving to 14.0%.

• North America net revenue was US$3.1 billion (+5.5% YoY), but EBITDA margin declined to 2.9% due to higher cattle costs.

• South America net revenue was R$3.7 billion (+17% YoY), with an adjusted EBITDA margin of 9.1% and 29 new export approvals.

• BRF net revenue was R$14.9 billion (+22.4% YoY), with an adjusted EBITDA margin of 17.6%.

• Operating cash flow was R$2.6 billion; capex was R$1.02 billion.

Outlook and guidance

• North America expects lower margins in the second half of 2024 due to reduced fed cattle supplies, but strong beef demand should help mitigate margin compression.

• South America anticipates continued volume growth from capacity expansion and feedlot investments, with additional 30% capacity expected early next year.

• Management continues to focus on value-added products, operational efficiency, and protein diversification for sustainable growth.

• BRF is positioned for potential dividend payouts, with a decision expected in November.

• CADE recommended approval of key transactions, pending final court approval and subject to certain restrictions.