Solid Performance by Moy Park Leads to Marfrig's Profitability

BRAZIL - Marfrig has reported positive results owing to a solid performance from its UK and European poultry operation, Moy Park.
calendar icon 9 August 2013
clock icon 4 minute read

Improvements in sales to Foodservice and exports by Marfrig Beef Brazil has helped Marfrig‘s net revenue grow by 9.4 per cent in the second quarter of the year compared to the same period in 2012.

The results also benefited from a solid performance from Marfrig’s UK and European poultry operation Moy Park led by the Agri-Fresh and Convenience Foods segments.

Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) was R$739.7 million in 2Q13 with EBITDA margin of 16.6 per cent, growing 3.5 per cent from the second quarter of 2012 when it was R$714.8 million with an EBITDA margin of 17.6 per cent.

However adjusted EBITDA for the quarter saw a drop of 20 per cent compared to the same period in 2012 down to R$283.6 million from R$354.5 million.

Consolidated gross income was R$492.7 million in the second quarter of 2013, falling by 12.4 per cent from R$562.2 million in the second quarter of 2012, explained by margin compression in the Beef and Keystone Asia operations (thanks top avian flu in China. Gross margin was 11.1 per cent, decreasing 270 bps from the second quarter of 2012.

Moy Park saw strong sales growth rising by 6.1 per cent compared to the same period last year.

Moy Park’s fresh poultry sales grew by 19.6 per cent and there were in increases in EBITDA which together with efficiencies offset the higher feed costs

The company said that the successful re-organisation and integration of Marfrig's business units in Europe - Moy Park, Keystone Europe and Marfrig Beef, under the leadership of Moy Park, have created a stronger platform to grow Marfrig's international sales in Europe.

The UK market is presently characterised by a stated ambition by key retailers to source more meat and poultry from a local supply base, which Marfrig said presents opportunities in the market.

Keystone had a net operating result of 12 per cent growth in the second quarter of the year thanks largely to the depreciation of the Brazilian real against the US dollar.

There was a 13.5 per cent reduction in sales volume at Keystone, explained by adjustments to the US operations and avian influenza outbreaks in Asia.

However, the average price increased by 29.5 per cent, due to the increased diversification of channels with more Food Service clients.

Marfrig Beef saw growth of 9.7 per cent led by a 3.3 per cent growth in cattle slaughter bringing the company up to 71 per cent of capacity.

Marfrig Beef –saw increases of 1.3 per cent in volume and 8.3 per cent in average price compared to the second quarter of 2012.

The conclusion of the temporary closure of two production units in Argentina and the gradual reduction in the feedlot infrastructure in Brazil, Argentina and Uruguay, are expected to reduce costs and expenses.

Marfrig should see the completion of the divestment of Seara Brasil and Zenda to JBS for R$5.85 billion in the third quarter of the year following the approval of the Brazilian anti-trust authorities, CADE.

The second half of the year should see Marfrig Beef have a stronger focus on the foodservice sector and the small and mid-sized retailers.

The company said it will be exercising stronger control on costs and expenses in the second half of the year.

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