August 15, 2011
Marfrig Announces Financial Results for Second Quarter of 2011
SAO PAULO, Aug. 15, 2011 /PRNewswire/ -- Marfrig Alimentos S.A. (BOVESPA: MRFG3 and ADR (Level 1): MRRTY), a global food company, today reports earnings for the second quarter ended June 30, 2011.
Marfrig's export revenues at its Beef Brazil and Seara divisions scored market share gains during the second quarter despite the challenging global backdrop of higher raw material prices (mostly grains and cattle) and a 2.1% appreciation in the average Brazilian real/U.S. dollar exchange rate for the period. The capture of synergy gains at Seara and solid performance at Keystone Foods, Europe and Beef Brazil partially offset pressures across the industry exerted by the stronger local currency and higher raw material prices.
Key Financial, Operating and Strategic Highlights
- Net revenue of R$5.32 billion, up 49.6% from R$3.56 billion in 2Q10 and 1.3% from R$5.25 billion in 1Q11;
- Beef exports accounted for 23.7% of Brazil's total beef exports in 2Q11, versus 20.7% in 1Q11 and 15.7% in 2Q10. Poultry exports also posted a strong performance, growing to account for 23.1% of Brazil's total poultry exports in 2Q11, versus 22.7% in 1Q11 and 19.9% in 2Q10(1);
- Gross income of R$712.3 million (13.4% gross margin), up 19.0% from R$598.3 million (16.8% gross margin) in 2Q10;
- EBITDA of R$277.8 million, growing 9.7% from R$253.2 million in 2Q10 and declining 17.7% from R$337.3 million in 1Q11;
- Positive cash flow from operations of R$109.4 million in the period
- Expanded product lines with new launches of value-added products in order to gain market share;
- Captured opportunities worldwide by increasing cross-selling opportunities by drawing on the global distribution platform established by the Group's geographic diversification;
- Delivered a better financial result by focusing on sustainable results, controlling our working capital needs and enhancing free cash flow;
- Optimized debt management in order to strengthen the balance sheet and extend the debt profile;
- Short-term debt as a percentage of total debt declined to 22.7% from 29.6% in 1Q11.
(1) Source: Ministry of Development, Industry and Foreign Trade
Comment from Marcos Molina dos Santos, CEO & Chairman
"The second quarter continued to pose the challenging environment seen since early 2011, with a weaker U.S. dollar and high grain and livestock prices set against the backdrop of the financial scenario in Europe and the United States, which continue to show signs of economic stagnation. Despite this adverse operational environment, Marfrig worked to improve its cash flow by reducing its use of working capital, maintaining a high cash balance and improving its debt profile, with the percentage of short-term debt falling to 22.7%, from 29.6% in the previous quarter. We continue to identify synergies and improvements in our operations, working to add more value and prioritize the most profitable channels. While we expect the current volatile operating environment to continue into the second half of the year, we also expect to benefit from our financial and operational discipline in order to meet our goals of achieving growing and sustainable margins and creating value for our shareholders."
INCOME STATEMENT 2Q11 1Q11 2Q10 Var % Var % (In million 2Q11 x 2Q11 x R$) 1Q11 2Q10 NET SALES 5,322.0 5,252.1 3,557.5 1.3% 49.6% Cost of goods sold (4,609.7) (4,523.4) (2,959.2) 1.9% 55.8% GROSS INCOME 712.3 728.8 598.3 -2.3% 19.0% SG&A (600.9) (547.0) (456.7) 9.8% 31.6% OPERATING REVENUE (EXPENSES) (611.8) (569.9) (460.5) 7.4% 32.8% NET INCOME IN THE PERIOD (91.0) 23.5 103.8 n/a n/a EBITDA 277.8 337.3 253.2 -17.7% 9.7%
The Marfrig Group is one of the largest global food companies based on beef, pork, poultry and fish. Its diversified and flexible operating base is comprised of production, commercial and distribution units, which are installed in 22 countries on 5 continents. Considered one of the most international and diversified Brazilian food companies, its products are present in more than 140 countries. With approximately 90,000 employees, the Marfrig Group is the largest sheep producer in South America, the largest beef company in Argentina, the largest poultry producer in the United Kingdom and the largest private company in Uruguay and Northern Ireland.
IR Contact Rua Chedid Jafet, 222 Bloco A -1o andar -Vila Olimpia Sao Paulo -SP -CEP: 01451-000 Tel: (11) 3728-8600/8650 www.marfrig.com.br/ir [email protected]