The company attributes the profit decline to an increase in gross debt to fund payments for Marfrig units being acquired.
Financial Performance Overview
Minerva ended the third quarter with a net profit of R$ 94.1 million, a 33.3% decrease compared to the same period last year, according to its financial report released on November 6. Despite the drop in profit, revenue and operational cash generation, as measured by EBITDA, reached record levels, driven by strong external demand for beef and stable leverage.
Minerva’s CFO, Edison Ticle, explained the profit drop:
“Our gross debt increased, but we haven’t yet reaped the benefits from the new units. This creates operational costs, but as these units start generating results, we’ll adjust this metric,” he told reporters.
Acquisition of Marfrig Units
On October 28, Minerva completed the acquisition of 13 production plants and a distribution center from Marfrig, located in Brazil, Argentina, and Chile.
- Total Investment: R$ 7.2 billion
- Payment Timeline: R$ 1.5 billion paid in Q3 2023; R$ 5.7 billion settled in late October 2024.
The acquisition excludes three slaughter units in Uruguay, pending local regulatory approval.
Operational and Financial Highlights
- EBITDA: Reached R$ 813 million, a 13.9% annual increase and a new record.
- Revenue: Hit R$ 8.5 billion, up 20.3%, marking an all-time high for a single quarter.
- Debt Management: Free cash flow of R$ 667.3 million helped reduce leverage, lowering the net debt-to-adjusted EBITDA ratio from 2.8x to 2.6x.
- Production Metrics:
- Cattle slaughter increased by 16.9%, totaling 1.096 million head.
- Beef sales rose 15.2%, reaching 384,400 tons.
Export Performance
Minerva generated 60% of its revenue from exports during Q3 2024, reflecting robust global demand for beef.
- Key Markets:
- The U.S. and China accounted for 15% each of export revenue.
- U.S. demand is driven by a local cattle shortage, while China’s resumed purchases boosted volume and prices.
CEO Fernando Galletti de Queiroz highlighted the impact of the newly acquired Marfrig plants:
“With these new facilities, Minerva’s share in South American beef exports will rise from 20% to 33%. Currently, we already lead beef shipments on the continent.”
Domestic Market Growth
Domestically, Minerva generated R$ 3.6 billion in revenue during Q3, supported by strong year-end seasonal demand. Queiroz expects this positive trend to continue.
CFO Ticle noted that the rise in cattle prices in Brazil is more linked to off-season effects and drought rather than a shift in the cattle cycle:
“The cycle remains favorable for the upcoming year.”
Impact of U.S. Election Results
The re-election of Donald Trump may heighten American protectionism. However, Minerva sees potential benefits for South American exporters in scenarios involving trade tensions between the U.S. and China.
“If the U.S. retaliates against China and vice versa, China’s response might target food imports. This could naturally shift Chinese demand to South American suppliers,” said Ticle.
CEO Queiroz also sees opportunities for trade alignments:
“For instance, ideological alignment between the U.S. and Argentina could lead to reduced barriers and increased trade, which we could leverage.”
However, both executives emphasized that these scenarios remain speculative, and the company will monitor developments under the new U.S. administration.
