Minerva intends to generate up to US$425 million in free cash and reduce debt

With favorable market conditions for South American beef exports and expectations regarding returns from the assets acquired from Marfrig, Minerva aims to generate between R$1 billion and R$2 billion in free cash this year (about US$425 million). “This will be used to reduce debt,” said CFO and Investor Relations Officer Edison Ticle in a conference call with analysts last Thursday. He highlighted that the company has repurchased bonds, which helped lower both gross and net debt.

On Wednesday, the company announced the repurchase of US$69 million worth of 2031 bonds at 13% below face value, capitalizing on a leverage advantage by redeeming the notes at a discount.

The repurchase program is set to continue up to a 20% limit of what is currently on the market, or around US$200 million in Minerva’s case.

Despite reporting a loss of R$1.57 billion in 4Q24, investors welcomed the news of this debt reduction drive and the return outlook for the new plants acquired from Marfrig.

During Thursday’s conference call, Ticle noted that the new facilities are operating at a capacity utilization rate of 65% to 70%, surpassing the 50% level recorded in last year’s fourth quarter. The goal is to reach 75% by mid-September. “We couldn’t operate two plants immediately, and one is still closed because it was taken over in conditions not consistent with Minerva’s standards—a plant in Mato Grosso,” Ticle explained. Investments are underway to bring these facilities up to Minerva’s standards.

Minerva CEO Fernando Galletti de Queiroz said he remains optimistic about the outlook for South American beef exports. Regarding Brazil, the opening of the Japanese market and upcoming tariffs are on the radar, according to Globo Rural.

Speaking about cattle supply, Ticle remarked that the company still anticipates a normal cattle cycle this year, with a decrease in slaughter volume compared to 2024, but higher than in 2023.

Furthermore, “if we look at feed costs (like corn and soybean meal), we might have a positive surprise in the second feedlot cycle. We’re starting to be more optimistic about how cattle are distributed over the year,” he observed.