•  Net losses narrow
  •  EBITDA up 20.3%
  •  Sales up 12.9%
Marfrig paying down debt

Marfrig paying down debt

Brazilian food group Marfrig has insisted it remains committed to de-leveraging its balance sheet as it booked a drop in 2012 losses.

Marfrig has reduced its high debt levels over the past 12 months, with lower financing costs improving its financial position. In December, it sold BRL924m (US$460.8m) in shares, although this was less than expected.

Announcing its annual results yesterday (27 March), Marfrig said it will continue to pay down debt during 2013.

In a regulatory filing, Marfrig revealed its 2012 net loss before equity interest narrowed to R$223.9m (US$111.2m), from a net loss of R$749m in 2011.

The company also booked an improvement in EBITDA for the 12 months to the end of December on higher sales and improved margins. EBITDA rose 20.3% to R$2.13bn. EBITDA margin rose to 9%, up from 8.4% in 2011.

2012 revenues were up 12.9% and Marfrig said it aims to continue to drive double-digit organic growth at its Seara Brasil and Keystone Asia units.

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? Net Revenue growth of 21.0% in 4Q12 versus 4Q11 and of 12.9% in 2012 versus 2011, reinforcing the focus on two-digit organic growth at both Seara Brasil and Keystone in Asia;

? Consolidated EBITDA growth of 20.3% in the year to R$2.13 billion with EBITDA margin of 9.0%, compared to R$1.77 billion in 2011 with EBITDA margin of 8.4%;

? EBITDA of R$405.9 million in 4Q12, which was impacted by the record increase in grain prices and the logistical challenges faced by Seara Brasil in integrating the new assets and distribution centers arising from the asset swap agreement with Brasil Foods, which are still in the ramp-up process and have been operating at below optimum levels;

? Improvement in net loss before equity interest to R$223.9 million in 2012, from R$746.0 million in 2011.


? The Group’s balance sheet was strengthened by the R$1.05 billion public share offering in December, which helped bolster the balance of Cash and Marketable Securities (R$3.2 billion at end of period).


? Refinancing of short-term debt facilities through the US$600 million Senior Notes issue concluded in January 2013;

? Renewal of the US$600 million revolving credit facility at Keystone Foods composed of a US$200 million loan maturing in 7 years and a US$400 million revolving credit facility maturing in 5 years, which will be concluded in the coming weeks.


? Strengthening of management practices and separation of the functions of CEO and Chairman of the Marfrig Group, which will be concluded by end-2013, as well as the hiring of a new CEO for Keystone Foods, Mr. Frank Ravndal;

? Commitment to greater transparency in earnings disclosure with the publication of more detailed figures;

? Implementation of an action plan to streamline operations at less profitable units;

? Creation of a planning unit reporting directly to the CEO to support the Group’s strategic positioning.


? Seara Brasil has the potential to improve its cash generation as from the second quarter of the year;

? Margins in the Beef segment remain pressured in early 2013 (1Q13), but we remain cautiously optimistic on the remainder of the year;

? Group’s commitment to deleveraging.  


Original source: Marfrig