By Nayara Figueiredo
SAO PAULO (Reuters) – Marfrig reported on Tuesday that it had a net profit of 650 million reais in the fourth quarter, down 44.5% compared to the same period in 2020, pressured by BRF’s asset purchase operations.
According to Marfrig, there was a negative effect of 1.176 billion reais “from the mark-to-market of the investment in BRF shares and the growth in interest”, as the company increased its debt in local currency, influenced by the increase in the Selic rate.
“The profit would be 1.7 billion reais if it weren’t for the mark-to-market of BRF’s shares,” Tang David, vice president of finance and investor relations at the company, told reporters.
Last year, Marfrig intensified purchases of BRF shares and reached a stake of 33.25%, becoming the main shareholder in the poultry and pork giant.
On the other hand, adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) totaled 4.18 billion reais in the quarter, up 98.3% year-on-year.
The North America operation, represented by National Beef, accounted for most of the Ebitda, with 714 million dollars (3.9 billion reais), and a margin of 22.3%, a jump of 141% compared to the same period in 2020. .
According to the company, the performance in the US was mainly due to the greater supply of animals and the rise in the selling price of meat.
Last year, demand for beef in the US market bottomed out since 2009, Marfrig said based on US Department of Agriculture (USDA) data.
“For 2022, we will have an Ebitda margin of 2 digits, but lower than in 2021… in the lower 2 digits”, said Tim Klein, president of Marfrig’s North America operation.
Despite the effects of the pandemic, the company’s South America operation generated record net revenue of 6 billion reais in the fourth quarter, up 7.6% year-on-year.
“In Brazil, the drop in beef consumption, the lower supply of raw materials and the interruption of exports to China generated impacts in the sector”, said the company.
However, the president of the South American operation, Miguel Gularte, said that the Chinese authorized the entry of batches produced before an embargo that took place in September, and continued to be active in purchases at the end of the year and in the first months of 2022.
“There was excellent consumption of them (Chinese) parties,” said Gularte, citing factors that also contributed to boosting the average price of exported protein.
Marfrig said it had its best result in 2021, with records in net revenue, profit, Ebitda and cash flow.
In this scenario, the company proposed to pay 383 million reais in additional dividends, totaling 2.17 billion reais in dividends, which correspond to 58% of the accumulated net income.
“We started 2022 in a much more favorable situation than in 2021, with a much better offer of cattle and prices”, he said.
He added that the arroba price has remained relatively stable and China, the main overseas buyer, remains active.
Regarding the war in Ukraine, the executives said that no significant impact on the company’s operations is expected, as there is no strong export of meat to the Russians.
“One factor that has not happened, but would not surprise me if it does, is the increase in demand for canned goods, which typically occurs in war scenarios,” said the CEO for South America.
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