Minerva Foods decreases loss during the second quarter

Minerva Foods’ loss declined 88% in the second quarter of 2019 with the help of increased Argentine beef exports to China, which suffers from African swine flu that has decimated many of its pigs.

Between April and June, Minerva Foods had a negative net result of R$113.2m. During the same period last year, the net loss had been R$925.9m.

Minerva’s chief finance and investor relations officer, Edison Ticle, said in an interview with Valor after the release of the balance sheet that the company would have profited had it not been non-recurring items.

These factors include an expense of about R$40m paid to the company’s bond holders to release guarantees tied to the subsidiary Athena Foods. The release was critical for guaranteeing the initial public offering of the subsidiary on the Santiago (Chile) stock exchange but was postponed by adverse market conditions and is yet to occur.

Hyperinflation in Argentina was another factor that had an impact of R$40m in revenues, but without effect on the company’s cash.

According to Ticle, operationally Minerva’s second quarter results were positive, especially outside Brazil. The company reported positive free cash flow of R$99.8m, and the leverage ratio (ratio between net debt and Ebitda) was stable at 3.8 times.

Asian demand

Strong Asian demand for meat, especially from China, made Athena Foods, a subsidiary of Minerva’s business group in Argentina, Uruguay, Paraguay, Chile, and Colombia, primarily responsible for the company’s revenue, with 42% of gross revenue in the second quarter. This movement could be intensified in August, with the resumption of slaughter in the closed Venado Tuerto Argentine unit.

The meat business in Brazil, which includes exports made from the country, accounted for another 42% of gross revenue. The rest was generated in the trading area.

In the second quarter, Minerva’s net revenue totaled R$4bn, an annual growth of 7.7%.

According to Ticle, demand from China could have been higher if Minerva had greater capacity to export to the country from Brazil. Currently, only the Barretos (SP) fridge is authorized to export to the Chinese.

To address this issue, the company expects more refrigerators to be enabled, possibly in August, during the visit of the Minister of Agriculture, Tereza Cristina, to the country. There are two Brazilian Minerva plants in line for the license.

Minerva is also optimistic about China opening up to Colombian beef, where the company accounts for 70% of beef exports.

Source: Valor

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