A booming beef industry and exports for a Brazilian company

One of the largest beef companies in the world, operating on several continents, presented its financial results for the first quarter of 2022. Marfrig’s net sales in Brazil were 22.3 billion reais, up 29 .6% year over year. Adjusted EBITDA reached R$2.7 billion in 1Q22, up 60.9%, and Adjusted EBITDA margin was 12.3%.

Marfrig posted a net profit of R$109 million and cash flow from operations was positive at R$1.2 billion due to better performance of operations in all regions where the company operates.

Another highlight of the quarter was the leverage ratio, measured by the ratio between net debt and adjusted Ebitda for the last 12 months. This index reached 1.53x in dollars at the end of March and 1.36x in reais.

In the first quarter of 2022, the net turnover of Marfrig’s North America Operation, represented by the North American National Beef, reached a new all-time high: 15.8 billion reais (3 billion dollars), representing a growth of 30 .6% compared to the same period last year. year. The performance results were driven by the 26.9% increase in average price and the 2.9% growth in sales volume. During the quarter, gross profit from the operation was 2.8 billion reais ($538 million), up 59.5% year-on-year.

The North America operation accounted for 71% of Marfrig’s total net income in the first quarter of the year. Adjusted Ebitda was 2.3 billion reais ($453 million), up 63.4% year-on-year, representing 87% of the company’s total Ebitda as of course of the quarter. The adjusted EBITDA margin was 15%.

The US domestic market continues to be the largest consumer of products offered by Marfrig’s North America Operation (89%). As with other international markets, Japan and South Korea accounted for 60% of National Beef’s export revenue.

In the first quarter of this year, the sales volume of Marfrig’s South America operation reached 345,000 tons, an 11% growth compared to the same period in 2021. Marfrig recorded net sales of 6.5 billion reais in the region, an advance of 41.2% in the annual comparison. The performance is driven by the 27.2% higher average total selling price. The average increase in export prices (+37.1%) was the main highlight of the period.

Exports accounted for 65% of the operation’s revenue, a record percentage with growth of 473 basis points compared to the same period in 2021 and 1,341 basis points compared to the fourth quarter of 2021. In the first three months of 2022, around 68% of total export earnings were correlated to sales in the Chinese and Hong Kong markets.

In addition to investments in the construction of the hamburger factory in Bataguassu, Mato Grosso, which should add 24,000 tons to the company’s current capacity, expansion projects are underway at the Tacuarembó factory, in Uruguay, and San Jorge, Argentina.

Adjusted EBITDA for the South America operation was R$411 million in the first quarter of 2022, 94.9% higher than last year. Ebitda margin reached 6.4%, 175 basis points above 1Q21. Gross profit was R$654 million, up 63.7% on the same basis of comparison.