Release Date: February 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Marfrig Global Foods SA (MRRTY, Financial) reported a 22% increase in consolidated net revenue for Q4 2024 compared to Q4 2023, reaching 41.3 billion reais.
- The company achieved a consolidated adjusted EBITDA of 3.7 billion reais for Q4 2024, with a margin of 9.1%.
- Marfrig Global Foods SA (MRRTY) reduced its leverage ratio to 2.47 times in US dollars, marking a significant improvement in financial stability.
- The company reported strong free cash flow generation, with a positive free cash flow of 1.6 billion reais for Q4 2024.
- Marfrig Global Foods SA (MRRTY) paid out significant dividends in 2024, with a dividend yield of 29.8%, highlighting strong shareholder returns.
Negative Points
- The North American segment experienced a 22.2% decrease in EBITDA for Q4 2024 compared to the previous year, with an EBITDA margin of only 1.9%.
- Escalating cattle prices and lower values for drop credit items negatively impacted margins in the North American market.
- The company faced a decline in exports to China, with the share of exports dropping from 60% to 46% year-to-date.
- Despite strong demand, the company anticipates lower capacity utilization in the US due to declining fed cattle supplies.
- The South American operations saw a decrease in the share of exports to China, which could impact future revenue from this key market.
Q & A Highlights
Q: Can you talk about your capacity utilization in South America and its sustainability in 2025, considering lower cattle supply in Brazil?
A: Rui Mendonca, CEO & Member of Board of Executive Officers, explained that their business model, which includes large industries and value-added products, has led to improved margins. They have achieved over 90% occupancy in slaughter due to their confinement strategy, which ensures quality and sustainability. This model is sustainable and recurring, with efforts to capture operational efficiencies.
Q: What are the expected investments and working capital for 2025, and how does BRF fit into your liability management efforts?
A: Tang David, CFO, stated that working capital for 2025 will be flat, respecting quarterly seasonality. CapEx for beef in 2025 will be slightly below 2024 levels. They reduced debt by 5 billion rials in Q4 and plan further reductions. BRF's board will decide on dividend payouts, and Marfrig's cash generation is sustainable, with potential asset sales in Uruguay.
Q: What is the outlook for the US cattle industry, particularly regarding heifer retention and cattle prices?
A: Timothy Klein, CEO, President and Director, noted a slowdown in cow liquidation, indicating potential heifer retention in 2025. Improved drought conditions should support this trend, leading to a more balanced cattle supply.
Q: How do you view the potential market access to Japan and South Korea for Brazilian beef exports?
A: Rui Mendonca highlighted that Japan and South Korea represent significant opportunities for Brazilian beef exports. Access to these markets could enhance profitability, as they are large markets with high demand for quality beef.
Q: What are the benefits of remaining a listed company, given the low free float level?
A: Timothy Klein emphasized that leaving the stock market is not under consideration. Being a listed company provides benefits in capital allocation and dividend payouts. The buyback program is attractive, and they see growth opportunities in the protein market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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