Marfrig hits record-high revenue and earnings in Q4 2019
Founded in 2000, the Brazilian food-processing giant operates 21 primary processing units, 12 further processing units and seven distribution centers across Brazil, Argentina, Uruguay, Chile, and the US. As one of the leading beef companies in the world, the company has a daily slaughter capacity of more than 31,000 heads of cattle and can produce 232,000 tons of hamburger a year.
“We enjoyed a quarter of extraordinary results that confirm the effectiveness of our strategy based on focus, operational excellence and investments in a portfolio of innovative and value-added products,” said Eduardo Miron, Global CEO of Marfrig Global Foods. “The records set in the fourth quarter made a decisive contribution to meeting our guidance given for the whole of the year.”
In 2019, consolidated net revenue was R$49.9 billion (compared to the guidance range of R$47 billion to R$49 billion), up 11.2% from 2018. Adjusted EBITDA set a new record, increasing from 33.7% year-on-year to R$4.8 billion.
Robust markets and expanding exports
The company attributes results to a “robust and growing” market in North America and becoming South America’s largest beef exporter to China in 2019.
Sales reflected the continuous increase of prices and demand for meat in the U.S. domestic market across the retail, wholesale and foodservice channels. Marfrig also grew its stake in U.S.-based meatpacker National Beef from 51% to 81.7%.
In the fourth quarter, North America operation posted net revenue of $2.3 billion (R$9.6 billion), a 10.2% year-on-year increase, and a 36.5% increase in gross profit to $343 million (R$1.4 billion).
Marfrig South America, which expanded the number of plants certified to export to China in 2019, continues to increase profits from the sustained Chinese appetite for Brazilian beef – a primary driver of growth. Fourth quarter net revenue in South America increased 34.3% year-on-year to R$4.6 billion, and gross income nearly doubled, reaching R$655 million.
“Results reflect the combination of the increase of over 36% in the average export price, the growth of nearly 22% in export volumes, the higher prices in Brazil’s domestic market and the 8.1% depreciation in the Brazilian real against the U.S. dollar,” the company said in a statement.
In December, Brazilian state development bank BNDES sold its 33% stake in Marfrig, opening up resources to reduce the company’s debt load.
Sustainability and innovation
“Just like in our pillars of ‘financial solidity’ and ‘operational excellence,’ in the pillars ‘sustainability’ and ‘products and clients’ we made important advances over the past year,” said Miron. “There were many intense months with a strong focus on innovation.”
In July, Marfrig became the industry’s first company to issue Sustainable Transition Bonds, issuing $500 million in 10-year bonds to purchase cattle in the Amazon Biome region and promote sustainable cattle farming.
A month later, it announced a partnership with U.S. agribusiness firm Archer Daniels Midland Co. to produce plant-based products in Brazil. Burger King used the plant-based patties to launch its meatless 'Rebel Whopper'.
Marfrig then announced the launch of its proprietary Revolution brand of plant-based products for export, including an exclusive artisanal recipe that is expected to appear on Outback Steakhouse menus by end of February 2020.