Minerva lost R$717m. But cattle isn't the villain, the hedge is
Excluding hedge and FX effects, recurring profit was R$120 million. Leverage rose to 3.2x.
To save you time3
- Why did Minerva post a loss?
- A negative R$1.6bn financial result, driven by commodity hedges (R$254.7m) and FX hedges and swaps (R$471.5m).
- And operations?
- Recurring profit, excluding those effects, was R$120 million. Revenue was R$14.5bn, above analyst estimates.
- What's the concern?
- Leverage rose from 2.9x to 3.2x in one quarter.
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The headline is scary: a R$717.3 million loss in Q3, versus a R$120 million profit a year earlier. But look inside before drawing conclusions about Minerva.
Where the loss came from
From the financial result, negative R$1.6 billion. Two lines explain much of it:
- commodity hedges: R$254.7 million;
- FX hedges and swap mark-to-market: R$471.5 million.
And the cattle business?
Excluding those effects, recurring profit was R$120 million. Revenue reached R$14.5 billion (-6.4%), above the R$13.9 billion analysts expected. EBITDA margin was 8.3%, versus 8.9% a year earlier.
The warning
Leverage rose to 3.2x, from 2.9x in Q2.
What I'd watch
Operations hold up; the balance sheet is stretched. And there's a short-term headwind: China, the top destination for Brazilian beef, has exhausted its quota until December.
