Marfrig to Close Some Poultry and Beef Plants17 May 2013
GLOBAL - In its latest quarterly report, Marfrig reports an increase in net revenue of 28 per cent for the period compared to the same quarter of 2012. The company announced the closure of four poultry plants at Seara Brasil and two Marfrig Beef plants in Argentina as well as a restructuring of the feedlot structure in Brazil, Argentina and Uruguay.
Marfrig Alimentos S.A. has announced its results for the first quarter of 2013 (1Q13). Among the highlights is that net revenue grew by 28.3 per cent between first quarter 2013 (1Q13) and the same period of 2012 (1Q12), driven by the sales volume growth of 4.3 per cent and average price increase of 23.0 per cent.
EBITDA was BRR491.1 million, increasing 19.6 per cent from 1Q12, with EBITDA growth of 24.7 per cent at Seara Foods and of 14.3 per cent at Marfrig Beef. EBITDA margin was 7.6 per cent in 1Q13, down 60bps from 1Q12; and Leverage ratio (Net Debt/EBITDA) of 4.4x , down from 4.5x at the end of 1Q12.
Net revenue grew 47.8 per cent at Seara Brasil to BRR2.05 billion, compared to BRR1.38 billion in 1Q12.
The processed product units arising from the asset swap agreement (TCD-CADE) ended the quarter with capacity utilisation of 60 per cent, compared to 45 per cent in 4Q12. The Fill Rate returned to historical levels at the end of the quarter, reaching 75 per cent, demonstrating the company's operational focus and the stabilisation of the logistics operations.
Fixed costs fell at the Seara Brasil headquarters in Itajaí, with a positive impact on cash flow in 2013 of around BRR7.0 million (BRR10.0 million on an annual basis).
Expected reduction in working capital needs in the second quarter of up to BRR40 million, due to the reduction in and better control of inventories.
Four Seara Brasil plants are to be closed by 30 June 2013 and the equipment transferred to other plants, diluting fixed costs and generating estimated cash flow savings in 2013 of BRR23 million (BRR33 million annualised).
Rationalisation of logistics footprint with closure of at least four Distribution Centers, with projected savings in 2013 of up to BRR20 million (BRR38 million annualised).
Net revenue growth at Moy Park was 27.5 per cent from 1Q12, driven by the industry’s accelerated consolidation in Europe and the positive exchange variation in the period (12.2 per cent).
A new commercial model has been created for the Marfrig Group in Europe to increase coordination between the operations and sales of Seara Brasil, Keystone Thailand and Marfrig Beef, and obtain margin expansion in the short and medium term.
Net revenue growth at Keystone Foods was 14.6 per cent, with higher sales to McDonald’s and growth in other food service clients accompanied by higher margins.
To date, China’s avian influenza has not had a material impact on Keystone’s operations.
Cattle slaughter in Brazil has increased 23.8 per cent, increasing capacity utilisation.
Two plants in Argentina are to be closed, with estimated cash flow savings in 2013 of BRR30 million.
Restructuring of Zenda (leather operation in Uruguay) should free up BRR50 million in cash flow in 2013.
The feedlot structure in Brazil, Argentina and Uruguay is to be reduced, which should free up approximately BRR70 million in cash flow over 2013.
You can view the full report by clicking here.