By Brazil Stock Guide – Minerva SA (BEEF3 BZ; MRVSY US) reported a 57% drop in second-quarter profit as higher cattle costs, narrower operating margins and increased working-capital requirements offset revenue growth, according to the company’s earnings release published Wednesday.
Net income fell to R$ 196.9 million from R$ 458.3 million a year earlier. Profit more than doubled from the first quarter, when the South American beef producer earned R$ 87.3 million.
First-half net income reached R$ 284.2 million. Over the 12 months through June, the company posted a profit of R$ 489.2 million, reversing a loss of R$ 829.8 million in the previous comparable period.
Revenue Rises
Net revenue increased 1.3% from a year earlier to R$ 14.1 billion and rose 5.2% from the first quarter. First-half revenue totaled R$ 27.5 billion, up 9.5% from the same period in 2025.
Revenue over the trailing 12 months climbed 29.1% to a record R$ 57.2 billion. Gross revenue advanced 29.3% to R$ 60.9 billion over the same period.
Second-quarter gross revenue rose 2.4% to R$ 15.1 billion. Export markets accounted for 56.6% of the total, compared with 43.4% from domestic sales.
Margins Tighten
The cost of goods sold rose 2.5% to R$ 11.76 billion and represented 83.4% of net revenue, up from 82.4% a year earlier. Minerva attributed the increase mainly to higher prices for slaughter-ready cattle, particularly in Brazil as the livestock cycle turned.
Gross profit declined 4.1% to R$ 2.34 billion, while the gross margin narrowed to 16.6% from 17.6%.
Earnings before interest, taxes, depreciation and amortization fell 5.5% to R$ 1.23 billion. The EBITDA margin contracted to 8.7% from 9.4%.
On a sequential basis, EBITDA rose 10%, and the margin increased from 8.3%. Trailing 12-month EBITDA reached R$ 4.9 billion, up 22.1%, with a margin of 8.6%.
Selling expenses declined 3.7% to R$ 813.4 million. General and administrative expenses increased 8.6% to R$ 611.5 million, reflecting higher freight costs and inflation.
Financial Costs Weigh on Profit
Minerva posted a net financial loss of R$ 756.8 million, 26.7% wider than a year earlier. The result was partly driven by a reversal in foreign-exchange effects.
Currency fluctuations generated a positive result of R$ 128.6 million in the second quarter of 2025 but produced a loss of R$ 35.2 million in the latest period. Financial income fell 38.5% to R$ 110.9 million.
Financial expenses declined 2.4% to R$ 762.5 million. Minerva said it maintains hedges for at least 50% of its long-term foreign-currency debt.
Domestic Sales Offset Export Decline
Export revenue fell 3.5% from a year earlier to R$ 8.52 billion, even as it rose 7.4% from the first quarter. Export volume declined 5.9% to 277,300 metric tons.
The average export price increased 15.1% to $6.10 per kilogram, helping offset the lower volume.
Domestic gross revenue rose 11.3% to R$ 6.55 billion. Volume increased 7.7% to 228,700 tons, while the average selling price gained 3.4% to R$ 28.60 per kilogram.
Total sales volume was little changed at 506,100 tons. Cattle slaughter declined 3.8% to 1.43 million head, while sheep slaughter at the company’s Australian and Chilean operations reached 754,000 head.
China Leads Export Demand
China remained the main destination for exports from Minerva’s operations in Brazil, Argentina, Colombia and Uruguay. It accounted for 18% of second-quarter export revenue, while the US represented 12%.
Asia generated 39% of export revenue over the 12 months through June, up from 27% in the previous comparable period. China alone accounted for 32% of exports.
North America’s share fell to 18% from 33%. The Middle East accounted for 11%, the European Union for 9% and the Commonwealth of Independent States, led by Russia, for 8%.
“This performance once again demonstrates Minerva Foods’ operational and financial strength,” Chief Executive Officer Fernando Galletti de Queiroz said in the release. “In a global environment marked by geopolitical uncertainty, shifts in trade flows and different stages of cattle cycles, our presence across multiple geographies expands our ability to capture opportunities, mitigate risks and arbitrage markets.”
Regional Results Diverge
Brazilian gross revenue rose 4.5% to R$ 8.6 billion, with sales volume also increasing 4.5%.
Colombian revenue climbed 33.1% to R$ 544.4 million despite a 4.7% decline in volume. Paraguayan revenue advanced 12.6% to R$ 1.76 billion, even as volume dropped 32.4%.
Revenue in Uruguay increased 4.3% to R$ 1.64 billion, while volume declined 29.7%. Argentina posted an 11.8% revenue gain to R$ 1.21 billion, accompanied by a 6% increase in volume.
Australian revenue rose 11.5% to R$ 747.6 million. Sales volume more than doubled to 44,000 tons.
Other operations, including live cattle exports, protein and energy trading, and third-party product sales, posted a 50.6% revenue decline to R$ 570.5 million.
Working Capital Drains Cash
Operating cash flow was negative by R$ 54.6 million, compared with positive cash generation of R$ 320.1 million a year earlier.
Working-capital requirements consumed R$ 1.07 billion, primarily because accounts receivable increased by R$ 609.7 million. Minerva linked the increase to higher sales to Asian customers with longer payment terms.
Inventories rose by R$ 252 million, while biological assets increased by R$ 155.3 million.
Free cash flow to shareholders was negative by R$ 611.4 million after capital expenditure, interest payments and working-capital movements. Trailing 12-month free cash flow remained positive at R$ 635.9 million.
Minerva said it has generated about R$ 7.5 billion in cumulative free cash flow since 2020.
Net Debt Climbs
Net debt increased 1.4% from a year earlier and 4.9% from the first quarter to R$ 14.36 billion. Net leverage stood at 2.9 times trailing EBITDA, compared with 3.2 times a year earlier and 2.7 times in March.
Total debt reached R$ 29.3 billion, up 9.7%. About 81% was classified as long-term debt, and roughly 70% was linked to the US dollar.
The company ended June with R$ 14.9 billion in cash and equivalents, which it said was sufficient to cover scheduled debt repayments through 2029. Average debt maturity was about 4.3 years.
Minerva issued $600 million of notes due in 2036 with an annual coupon of 7.5%. The proceeds were earmarked for extending the company’s debt maturity profile.
During the first half, the company repurchased and canceled $232.9 million of international bonds, equivalent to about R$ 1.2 billion. Repurchases since the beginning of 2025 totaled $617.7 million, or approximately R$ 3.4 billion.
The company also repurchased R$ 66.2 million of debt securities in the domestic market.
Capital Spending Declines
Capital expenditure fell to R$ 205.9 million from R$ 289.1 million in the first quarter. Maintenance investments accounted for R$ 169.6 million, while R$ 36.3 million was directed toward organic expansion.
Capital expenditure totaled R$ 1.23 billion over the trailing 12 months. Maintenance projects accounted for R$ 917.7 million, while expansion investments totaled R$ 308.4 million.
Minerva also had 187 million subscription warrants outstanding, representing potential future cash proceeds of R$ 930.3 million.
Middle East Exposure Remains Limited
The Middle East represented about 10% of Minerva’s export revenue and approximately 6% of consolidated revenue over the 12 months through June.
Israel, Jordan, Lebanon and Saudi Arabia accounted for about 85% of the company’s exports to the region. Minerva said the logistics routes serving those markets remained operational because they were located away from Iran and the Strait of Hormuz.
The company said sanctions and other measures related to the war between Russia and Ukraine had not affected its interim financial statements as of June 30.
Sustainability and Audit Review
Minerva reported full compliance in an external audit of its Public Livestock Commitment, which covers environmental controls for cattle purchases in the Amazon.
The company was included for a sixth consecutive year in the Corporate Sustainability Index operated by B3 SA (B3SA3 BZ). It also increased the number of animal-welfare targets achieved to 32 from 29.
BDO RCS Auditores Independentes said its review found no matters indicating that Minerva’s interim financial statements were not prepared, in all material respects, in accordance with Brazilian accounting standards, IAS 34 and regulations issued by Brazil’s Securities and Exchange Commission.
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