15 November 2013

2 minute read

South America

Marfrig Alimentos S.A. has released its results for the third quarter of 2013 (3Q13), highlighting a positive operating cash flow (before capital expenditure and interest) of 236 million real (BRR) in the quarter, reversing the trend of recent quarters.

Net revenue grew by 11 per cent as the result of the good performance of Marfrig Beef in Brazil's domestic and export markets, as well as the improvement in its international business units and the positive effects from exchange variation during the period.

In 3Q13, adjusted Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) grew 34 per cent from 2Q13 to BRR375 million, with adjusted EBITDA margin expanding 130 bps to 7.6 per cent.

Operational improvements in all businesses in the quarter were marked by revenue and EBITDA growth and margin expansion.

Financial leverage ratio (Net Debt/EBITDA) of 2.8× at the end of 3Q13, down from 3.8× at the end of 2Q13.

In Corporate news, the company reports that the Marfrig Day event held in São Paulo and New York included an announcement of its 'Focus to Win' strategy and presentation of growth targets for each business units as well as financial policies and guidance for the next five years, effectively strengthening management's engagement in creating value for shareholders.

Regarding the strategic plan to reduce costs, expenses and interest, Keystone Foods reduced its G&A expenses by six per cent from 2Q13, while Marfrig Beef kept its expenses stable despite the 10 per cent growth in sales from 2Q13.

The report notes that, in 3Q13, Marfrig incurred BRR102 million in interest and exchange variation related to transferred debt that will cease to have an impact as of 4Q13.

EBITDA from the international operations - Moy Park and Keystone Foods - is already close to BRR700 million on an annualised basis, compared to BRR557 million in 2012, clearly demonstrating the growth of these operations, as announced in 1Q13.

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