Minerva Foods’ Debt Gamble: Can South America’s Top Beef Exporter Balance Growth and Risk?

Minerva Foods, South America’s leading beef exporter, reported a record R$962.5 million ($173M) EBITDA in the first quarter of 2025, a 53% increase from the previous year.

The company also posted a net profit of R$185 million ($33M), reversing a loss from the same period last year. Gross revenue reached R$11.9 billion ($2B), up 55% year-on-year, with exports representing 56% of total sales.

These figures highlight the company’s strong operational performance and growing international demand, especially from the United States and China.

However, Minerva’s rapid expansion came at a cost. After acquiring 13 meat plants from Marfrig in late 2024, its net debt surged to R$15.6 billion ($3B), and its leverage ratio (net debt to adjusted EBITDA) reached 3.7 times.

To address this, Minerva’s board approved a capital increase of up to R$2 billion ($360M), offering 386.8 million new shares at a 20% discount. Major shareholders, including SALIC International Investment Company and VDQ Holdings, committed to the deal, ensuring at least R$1 billion ($180M) in new funding.

The company aims to use these funds to pay down debt and strengthen its balance sheet. If fully subscribed, the capital injection could reduce leverage to about 3.0 times, improving financial stability and saving over R$300 million ($54M) in annual financial expenses.

Minerva’s Capital Raise May Dilute Shareholders by 65%

Yet, the move could dilute existing shareholders by up to 65% if they do not buy new shares. The capital increase follows a challenging 2024, when Minerva posted a R$1.56 billion ($281M) net loss, driven by foreign exchange swings and higher debt costs.

Despite this, the company expects net revenue between R$50 billion ($9B) and R$58 billion ($10B) in 2025, up from R$34.07 billion ($6B) last year.

The integration of new plants contributed R$1.48 billion ($267M) in gross revenue in the first quarter, with beef sales from these units more than doubling over the previous quarter. Minerva’s strategy focuses on stabilizing its finances while capitalizing on strong export demand.

The U.S. accounted for 35% of export revenue in the first quarter, while China’s share is expected to rise as new export licenses take effect. The company’s ability to manage debt and maintain export growth will determine if its bold expansion pays off.

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