Minerva SA: Results pressured by higher cattle prices and WK consumption

Research evidence excerpt

J P M O R G A N

Latin America Credit Research

17 August 2026

Minerva SA

Results pressured by higher cattle prices and WK

consumption

Neutral

BEEFBZ

Moody's:

S&P:

Fitch:

Ba3

BB

Outlook:

STABLE

The above agency ratings are at the corporate level

Minerva’s 2Q26 results were soft: EBITDA margins compressed amid higher

cattle costs, and FCF was negative due to a sizable WK build. Looking ahead,

while China’s quota for Brazil is close to fully utilized, the company expects

to mitigate this through its diversified export footprint, reallocating volumes

to China from other origins with available capacity. On the balance sheet,

leverage is still elevated—particularly when factoring in supplier agreements

—and a tougher cattle cycle in Brazil could limit the pace of improvement.

Against this backdrop, we see limited scope for tightening from current levels

and maintain a Neutral recommendation across the curve.

Minerva posted an EBITDA margin contraction, driven by higher cattle

costs, and negative FCF pressured by a significant WK build. Adj. EBITDA

was US$235 million in 2Q26 (-7% yoy; +7% qoq), with an 8.4% margin (-0.8 p.p.

yoy; +0.1 p.p. qoq). Top line was modestly higher, supported by improved pricing

dynamics in both international and domestic markets, with sales volumes broadly

flat yoy but higher qoq (+5.1%). Export pricing strengthened (average export price

US$6.1/kg, +15.1% yoy; +6.7% qoq), while domestic pricing was R$28.6/kg

(+3.4% yoy; -5.1% qoq). FCF was negative at US$162 million, driven by WK

consumption of US$212 million, net financial results that increased sharply to US

$112 million due to negative FX impacts and higher debt, and capex of US$40

million, down both yoy and qoq. FCF was negative at US$162 million, driven by

WK consumption of US$212 million, net financial results that increased sharply

to US$112 million due to negative FX impacts and higher debt, and capex of US

$40 million, down both yoy and qoq. Importantly, liquidity remains comfortable,

with a cash position of US$2.9 billion covering 2.7x short-term debt, sufficient to

meet debt amortizations through 2029. Per our calculations, net leverage increased

…