By Brazil Stock Guide –
During the Q&A session with analysts, CEO Fernando Queiroz and CFO Edison Ticle tried to send a clear message: Minerva Foods (B3: BEEF3) has turned skepticism into results. Less than a year after acquiring a portfolio of plants from Marfrig Global Foods, the company completed integration ahead of schedule and delivered record profitability and cash generation.
But the market wasn’t convinced. Minerva’s shares plunged more than 10% at the market open, as investors questioned whether the company’s leverage and margins can sustain such rapid expansion. Analysts flagged that the strong numbers came with growing execution risks, high working-capital swings, and doubts about the full payback from the Marfrig acquisition.
Integration completed ahead of plan
In 2023, Minerva agreed to purchase 11 meat-processing plants from Marfrig, located across Brazil, Argentina, Chile, and Uruguay, in a transaction valued at roughly R$ 7.1 billion, including working-capital adjustments. The deal made Minerva the largest beef exporter in South America, expanding both slaughter capacity and geographic reach.
By the third quarter of 2025, the company had fully integrated 10 of those facilities — all except the Uruguayan operations, which remain pending regulatory clearance. The process, initially expected to take up to 18 months, was completed in less than a year.
“September was the first month with all assets performing normally — without ramp-up, with normalized margins and cash cycles,” said CFO Edison Ticle.
CEO Fernando Queiroz added that the alignment of administrative, commercial, and industrial systems across the new units accelerated synergies. “Integration wasn’t just fast — it was disciplined and structured,” he said.
The newly consolidated operations are expected to generate around R$ 17 billion in annualized revenue and about R$ 1.6 billion in EBITDA, slightly above the company’s initial forecast.
Market skepticism and acquisition cost
The Marfrig deal was controversial from the start. Several analysts argued that Minerva overpaid for assets in a volatile, low-margin industry. Ticle pushed back on that view during the call.
“Many said the acquisition was expensive, but looking at performance now, it’s clearly value-accretive,” he said.
According to Ticle, the company paid an effective 4.6× EBITDA multiple, below Minerva’s historical range of 5.0–5.5×. “Even under conservative assumptions, it was a compelling deal, both strategically and financially,” he said, emphasizing that the transaction strengthened Minerva’s ability to arbitrate between countries, currencies, and export markets — one of its core advantages.
Still, the CFO’s defense didn’t stop the selloff. Investors remain wary of the company’s high exposure to export cycles and currency volatility, especially amid tightening global demand and beef price adjustments in China and the U.S.
Record cash generation, muted reaction
Operational efficiency translated into the strongest cash result in Minerva’s history: R$ 2.5 billion in free cash flow, boosted by a R$ 2.5 billion working-capital release from inventory reductions, mainly in the U.S. market. Net debt fell 17%, to R$ 11.8 billion, reducing leverage to 2.5× EBITDA, the lowest since 2022.
“Even in a conservative scenario, we’ll end the year with R$ 1.5 billion in free cash flow and leverage below 2.5 times,” said Ticle.
The CFO also mentioned ongoing bond buybacks and liability management, which helped optimize the debt profile and cut financial costs.
A strong quarter overshadowed by market doubt
Despite the numbers, the tone in trading rooms was skeptical. Some analysts questioned whether Minerva’s record cash generation reflected sustainable fundamentals or short-term working-capital movements. Others pointed out that the company’s exposure to external markets — once a strength — could turn into pressure if beef exports lose momentum.
CEO Fernando Queiroz closed the call with optimism: “Integration was done quickly but with consistency. The challenge now is to turn scale into sustainable expansion.”
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