Marfrig Global Foods (MBRF3) Q2 2024 earnings summary

Executive summary

• Consolidated net revenue reached R$34.8 billion in Q2 2024, up 16.5% year-over-year, with North America contributing 47%, South America 10%, and BRF 43%.

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

• Net income was R$75 million, reversing a loss of R$784 million in Q2 2023.

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

• Sustainability initiatives advanced, with 100% compliance in Amazon livestock audits for the 12th year and new climate projects launched.

Financial highlights

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

• 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% and strong export growth.

• Gross profit rose 79.8% YoY to R$4.86 billion, with gross margin up to 14.0%.

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

Outlook and guidance

• North America expects lower margins in H2 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 30% additional capacity expected early next year.

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

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

• CADE recommended approval of the BRF transaction, pending final court approval.