Marfrig Posts Record Net Revenue of R$ 5.52 Billion in 3Q11

Operating cash flow totals R$ 310.5 million, 184% up from the previous quarter.

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Nov 11, 2011, 05:25 ET

SAO PAULO, Nov. 11, 2011 /PRNewswire/ --

Message from the CEO & Chairman

The third quarter of 2011 marked an important step towards the consolidation of Marfrig's long-term strategy. The company improved its operational efficiency, with the capture of synergies among the business divisions, reduced costs and expenses and generated R$310.5 million in operating cash flow, all of which underlines our management team's commitment to delivering consistent results and creating value for our shareholders. Despite all the setbacks and uncertainties in the global economic scenario throughout the quarter, including inflationary pressure in the countries where we operate, exchange rate volatility and still high grain and cattle prices, we recorded robust net revenue growth of 45.1% over 3Q10 and of 3.8% over the previous quarter.

We implemented several initiatives aimed at continuing with our operational improvements and financial discipline, which resulted in higher capacity utilization in our plants, better control and management of working capital accounts, lower administrative and selling expenses, and, as expected, a reduction in Capex (R$92.9 million, excluding breeding stock) over previous quarters. The virtuous combination of all these factors allowed us to make considerable progress in regard to the generation of free cash flow and led to a substantial increase in operational profitability. The positive results show that our strategy of building a complete portfolio of high value-added products, strong brand loyalty and a global platform for the development, production, sale and distribution of food products, is increasingly aligned and integrated.

Marcos Antonio Molina dos Santos, *CEO & CHAIRMAN*

Key Financial Highlights

Consolidated net operating revenue of R$5.52 billion, up 45% from R$3.81 billion in 3Q10
Consolidated gross income of R$813.0 million in 3Q11, 34% up from the R$605.0 million (15.9% gross margin) in 3Q10
Consolidated EBITDA of R$637.5 million, 169,3% up from the R$236.7 million in 3Q10
Consolidated EBITDA margin stood at 11.5%, up 532bps and 632bps on 3Q10 and 2Q11, respectively;
Operating cash flow of R$310.5 million, versus R$109.4 million on June 30, 2011;
The 3Q11 net loss of R$540.0 million was owed to the non-cash effect of Real currency depreciation
Short-term debt accounted for 20.1% of total debt, versus 22.7% in 2Q11.

Statement (In million R$)	3Q11	2Q11	3Q10	% Var 3Q11 x 2Q11	% Var 3Q11 x 3Q10
NET SALES	5,524.2	5,322.0	3,807.2	3.8%	45.1%
Cost of goods sold	(4,711.2)	(4,609.7)	(3,202.2)	2.2%	47.1%
GROSS INCOME	813.0	712.3	605.0	14.1%	34.4%
*SG&A*	*(574.4)*	*(600.9)*	*(494.4)*	*-4.4%*	*16.2%*
% over net revenues	-10.4%	-11.3%	-13.0%	90 bps	260 bps
OPERATING REVENUE (EXPENSES)	(367.8)	(611.8)	(502.7)	-39.9%	-26.8%
NET LOSS	(540.0)	(91.0)	(68.6)	493.6%	687.2%
EBITDA	637.5	277.8	236.7	129.5%	169.3%
EBITDA Margin	11.5%	5.2%	6.2%	*630 bps*	*530 bps*
*ADJUSTED EBITDA()**	430.9	288.7	245.0	49.3%	75.9%
ADJUSTED EBITDA Margin	7.8%	5.4%	6.4%	*240bps*	*140 bps*
(*)Excludes Other operating revenues/expenses

About Marfrig

The Marfrig Group is one of the largest global food companies based on beef, pork, poultry and fish. Its diversified and flexible operating base is comprised of production, commercial and distribution units, which are installed in 22 countries on 5 continents. Considered one of most international and diversified Brazilian food companies, its products are present in more than 140 countries. With approximately 90,000 employees, the Marfrig Group is the largest sheep producer in South America, the largest beef company in Argentina, the largest poultry producer in the United Kingdom and the largest private company in Uruguay and Northern Ireland.

Contact:
Remi Kaiber Junior
IR Director
Ph: 55 11 3728.8650
[email protected]

SOURCE Marfrig