BRF has guaranteed Marfrig's earnings in the fourth quarter of 2023

Marfrig (MRFG3) found support in BRF (BRFS3), of which it is a major shareholder, to end Q4 2023 in the black. The beef company controlled by Marcos Molina ended the period with a net profit of R$12 million, compared to a loss of R$628 million in the same period in 2022.

The company saw its earnings before interest, taxes, depreciation and amortization (EBITDA) grow by 30.3% in the fourth quarter of last year, reaching R$2.9 billion. Net revenues decreased by 2.2% to R$36.6 billion.

With profits of R$823 million and EBITDA of R$1.9 billion in the fourth quarter, BRF was the tip of the scale for Marfrig. Thus, the company stopped a series of losses for four consecutive quarters.

“BRF contributed 64% to Marfrig's EBITDA in the fourth quarter of 2023. In the same period in 2022, the contribution was 44%. BRF has regained its profitability and we believe “It will continue to achieve strong results in 2024.”

As expected, results from the US cattle operation are underperforming. EBITDA from North American operations decreased 44.7% in the fourth quarter, to $79 million, a margin of 2.6%.

“U.S. margins are expected to be in the low single digits in 2024, which is better than what was recorded in the last cycle of declining cattle availability, between 2014 and 2015, when margins were close to break-even,” he said. Tim Klein, CEO of Marfrig's North American operations.

The CEO noted that the supply of animals for slaughter should only reach a higher level in 2026. For this reason, the company has already disbursed US$800 million in investments in recent years, half of which was used to reduce operational costs.

For South America, an increase in export-eligible units, a favorable exchange rate, a cycle of livestock oversupply and growth in the share of value-added products contributed to the operations. EBITDA in the region rose by 38% to R$732 million.

“In 2023, 40% of boneless meat sales were with one of our brands, ensuring greater added value. Last year, the share amounted to 30% of the company’s revenue,” said Rui Mendonça, Chief Operating Officer for South America.