Minerva believes environment for beef exports remains favorable

The favorable market for beef exporters should continue in the short term, according to Minerva company executives. Minerva experienced better-than-expected financial results in the first quarter and is expected to continue its policy of distributing at least 50% of its profit in dividends while the market is in its favor. This optimism is supported by the economic boost being witnessed in several countries thanks to advancing the Covid-19 vaccination.

Emerging markets are the highlight of the resumed demand, especially in Southeast Asia. The reopening of economies has led to a strong recovery in food service, precisely the segment that suffered the most at the beginning of the pandemic, said CEO Fernando Queiroz in a conference call with analysts.

Brazilian Exports of Bovine Meat (HS 0201 e 0202) | Jan 2018 to Mar 2021 | TEU

In the past quarter, 57% of the company’s Brazilian exports went to Asia, an increase of 15 p.p.  compared to the same period in 2020. Asians were also the main markets for exports by Athena Foods (38%), the business division in other South American countries. In total, Minerva’s international sales jumped 42%, guaranteeing a 39% growth in revenue in the quarter, to R$ 5.8 billion.

The scenario is particularly favorable for meat exporters in South America. In the animal protein market, of which Minerva accounted for 20% of meat exports in the first quarter of this year – the region has occupied the space of producers affected by new outbreaks of African swine fever in China, Southeast Asia, and Eastern Europe. The global supply of beef has also suffered from the effects of production problems in Australia. Minerva’s CEO said the company’s export volume and prices reflect this supply shock.

Minerva even sees gains in Argentina, which imposed new restrictions on exporters. The measures of the Alberto Fernández government ended up removing competitors from Argentina’s export market, even allowing the Brazilian company to increase its shipments and raise prices, said Edson Ticle, Minerva’s Chief Financial Officer.

To take advantage of the opportunities offered by the international market, the company has been using data analysis to “arbitrate” among the better-off factories. “One of Minerva’s major investments is in analytics, which allows us to identify which plant to accelerate and which we can consider decelerating,” explained Queiroz.

The data analysis allows the company to identify which of the 25 plants have qualifications for markets with higher demand, which exchange offers more gains, and where cattle supply is greater. With this strategy, explains the CEO, it is possible to have more stability in the margins and also react more quickly to instabilities.

The scenario for exports is not expected to change in the short term. According to Ticle, in this second quarter, the expectation is for a performance closer to that registered in March, when exports gained more traction.

With these perspectives and the results of the last quarter, the financial director affirmed that “everything leads to believe” that Minerva will maintain “controlled” leverage levels and “live up” to the minimum distribution policy of 50% of net income. In the last quarter, the net result was R$ 259.5 million, accumulating gains of R$ 685.4 million.

Even in the Brazilian domestic market, the low supply of live cattle, which recently led to historic increases in the price of raw materials, is not frightening, says Ticle. “It is not a problem for a company that is interested in gaining a spread. We see a very large space to continue transferring export prices,” he said.

Source: Valor

Sharing is caring!