(Bloomberg) -- Marfrig Global Foods SA surged the most since August after the meat producer posted strong results and approved a plan to pay extra dividends and cancel some treasury shares.
The company controlled by billionaire Marcos Molina has been rewarded by its bet in chicken as lower feed costs and booming demand boost profits. Third-quarter earnings before items such as interest and taxes jumped 60% from a year earlier to the highest for the period since 2021, the company said late Wednesday.
Marfrig’s board also green-lighted an extra payment of 2.5 billion reais ($433 million) to investors and a 2.2% reduction in the number of shares outstanding.
The company gained as much as 11% in Sao Paulo on Thursday, the biggest intraday increase since Aug. 19 and the best performance among main peers globally.
The extra dividends came as a surprise to some investors who expected Marfrig to use cash to pay down debt, according to Morgan Stanley.
“The numbers are expressive,” analysts including Ricardo Alves, who have a recommendation equivalent to “buy” on the stock, said in a note to clients. “We continue to see Marfrig deleveraging its balance sheet by year-end in spite of such expressive distribution.”
Meat producers including JBS SA and Tyson Foods Inc. have seen a strong rebound in profits even as they weather a downturn in their US beef operations. The companies have benefited from a strong demand for chicken and lower prices for corn and soybeans — a key ingredient for animal feed.
Marfrig’s chicken business BRF SA reported Ebitda of about 3 billion reais, a record for the third quarter, according to a separate earnings statement. Results also beat analyst expectations.
BRF accounted for 76% of Marfrig’s earnings in the same period.
Earnings were boosted by improvements in factory efficiency, the expansion of export markets and growth in sales of processed foods, said BRF Chief Executive Officer Miguel Gularte.
The company expects chicken sales from Brazil to benefit next year if US President-elect Donald Trump presses ahead with promises to slap tariffs on Chinese products.
“China is a major source of chicken and pork demand due to limitation of local production and rising incomes,” Gularte said in a call with reporters. “Chicken has room to grow in the country.”
BRF said on Wednesday its board approved the distribution of 946 million reais in interest on capital to shareholders on Dec. 5. The company will also buy back an additional 30 million shares.
--With assistance from Gerson Freitas Jr. and Leda Alvim.
(Corrects spelling of company name in 10th paragraph.)
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