By Brazil Stock Guide – MBRF (B3: MBRF3; OTC: MBRFY) reported net income attributable to shareholders of R$69 million in the second quarter of 2026, down 19.5% from a year earlier, even as revenue and operating earnings increased.
Net revenue reached a record R$40.72 billion, up 4.9% year over year. Adjusted EBITDA rose 5.4% to R$3.20 billion, while the margin was virtually unchanged at 7.9%, compared with 7.8% in the second quarter of 2025.
The operating improvement, however, did not translate cleanly into bottom-line earnings. MBRF’s net financial loss widened 23% to R$1.78 billion, mainly due to higher interest costs. Net interest expense increased 22.7% to R$1.42 billion.
The company posted a pretax loss of R$382 million, compared with a R$308 million loss a year earlier. A positive R$423 million income-tax and social-contribution line allowed MBRF to remain profitable.
Sales volume increased 1.5% to 1.97 million metric tons, a record for a second quarter. Export volumes rose 10.8%, while domestic volumes declined 3.1%.
International revenue climbed 16.5% to R$12.71 billion, offsetting growth of just 0.4% in the domestic market. Businesses generating U.S.-dollar revenue accounted for 72% of consolidated sales, with the United States representing 45% of total revenue and Brazil accounting for 23%.
Costs outpace revenue
Cost of goods sold increased 5.5%, faster than revenue, reflecting higher cattle procurement costs across the Americas, inflation and rising logistics expenses. Those pressures included higher diesel prices in Brazil and the rerouting of shipments because of conflicts in the Middle East.
As a result, gross profit rose just 1.1% to R$4.87 billion, while the gross margin narrowed to 12% from 12.4%.
Efficiency programs offset part of the pressure. MBRF+ delivered R$328 million in gains during the quarter, while synergies from the integration of Marfrig and BRF totaled R$158 million. Cumulative synergy capture reached 47% of the company’s full-year 2026 target.
Selling, general and administrative expenses remained broadly stable at R$3.58 billion. As a percentage of revenue, SG&A fell 0.4 percentage point to 8.8%, while administrative expenses declined 13%.
BRF remains the earnings engine
BRF continued to anchor consolidated profitability, accounting for 79% of MBRF’s adjusted EBITDA.
The division’s revenue increased 1.1% to R$15.43 billion, while adjusted EBITDA rose 3.8% to R$2.60 billion. Its adjusted EBITDA margin expanded to 16.8% from 16.4%.
In Brazil, BRF’s sales volume was still down 6.5% from the second quarter of 2025, but increased 4.6% from the first three months of this year. Export volumes grew 9.3% year over year.
Sadia Halal delivered record profitability. Based on unaudited management figures, the unit generated adjusted EBITDA of US$95 million, more than double the US$46 million recorded a year earlier. Its margin rose to 16.1% from 9.2%, on revenue of US$590 million.
North American revenue grows, but margins remain razor-thin
In North America, U.S.-dollar revenue increased 14.9% to US$3.75 billion, supported by high beef prices and 2% growth in sales volumes.
Almost none of that additional revenue reached EBITDA, however. The division’s adjusted EBITDA increased just 1.7% to US$26 million, with a margin of 0.7%, compared with 0.8% a year earlier.
The benchmark cost for cattle purchases rose 15.9%, reflecting a smaller U.S. herd and tight animal supplies. North America accounted for 46% of MBRF’s consolidated revenue but only 4% of adjusted EBITDA.
In South America, revenue increased 26.4% to R$6.39 billion, driven by an 8.8% rise in volume and stronger prices. Adjusted EBITDA advanced 22.1% to R$570 million, although the margin slipped to 8.9% from 9.2%.
Net debt reaches R$45 billion
Cash conversion remained one of the quarter’s weakest points. Operating cash flow totaled R$2.17 billion, but was insufficient to cover R$1.41 billion in capital expenditures and R$1.62 billion in financial expenses. The result was a cash burn of R$864 million.
The company attributed part of the pressure to higher BRF inventories in transit to the Middle East, fully stocked cattle feedlots, a seasonal inventory build ahead of promotional campaigns and changes in payment terms with suppliers.
Net debt ended June at R$45.01 billion, up 2.4% from the first quarter and 19.7% from a year earlier. Leverage increased to 3.41 times adjusted EBITDA, from 3.37 times in March and 2.74 times a year earlier.
Gross debt reached R$68.12 billion, up 12.3% year over year. Short-term debt jumped 73.7% to R$14.68 billion, while cash and financial investments totaled R$23.11 billion. Despite the cash burn, MBRF repurchased R$261.6 million of its own shares during the quarter.
The results show a more integrated company delivering efficiency gains and growth across its main markets, but still struggling to convert EBITDA into net income and cash. BRF is offsetting the weak profitability of the U.S. beef cycle, while high interest costs, working-capital requirements and leverage continue to limit bottom-line improvement.
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