Marfrig Global Foods S.A.

Overview Key strengths Key risks One of the world's largest beef processors, with a significant market position in competitive beef-producing countries such as Brazil, Uruguay, and the U.S. High exposure to commodity price volatility because the company essentially produces a single commodity--beef. Record-high margins in the U.S. due to high beef demand and cattle availability, resulting in low leverage. Low margins in its South American operations due to lagging demand amid sluggish economic recovery and cost inflation, especially of cattle. Sound liquidity position, including a revolving credit facility at National Beef. Track record of acquisitions that leveraged the company, which could negatively affect its financial policy. In the U.S., high beef demand is driving price hikes that far outpace the

...Record-high cutout ratios in the U.S. are driving Marfrig's EBITDA, despite lagging margins in Brazil. In the U.S., high beef demand is driving price hikes that far outpace the recent cattle price increases in the country because of the high cattle availability there. Cutout ratios are at record-high levels, but we expect them to gradually decrease in 2022 to reach margins at about 7%-8% in the following year at U.S. subsidiary National Beef--still above the industry's historical average (about 5%). In Brazil, feeble economic recovery and falling beef consumption due to high inflation, combined with high cattle prices, have been driving margins downward. We expect...

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