DRIVES PERFORMANCE
plays a vital role in China’s
high sales figures
Other Markets
The opportunity of broadening the range of qualified markets provided by geographical diversification also places Minerva Foods in a unique position in South America. In 2019, the Company benefited from access to the United States market via Argentina and the authorization of imports to Japan from beef produced in Uruguay, a country that, like Paraguay and Colombia, was also authorized to export to Saudi Arabia.
In Brazil, the turning point was the opening of the Indonesian market, which is one of the largest markets for halal cuts in the world – something the country had been trying to achieve for the past three years. In all, ten plants in Brazil were qualified by October of which half are owned by Minerva.
In addition, South American producers have been filling the vacuum left by Australia, whose production has been tremendously affected by climate-related problems.
These developments signal the strengthening of South America as a major beef supplier to the world and further enhance Minerva’s unique geographical diversification and operational footprint.
Geographical diversification also involves the strategic positioning of 15 offices around the world acting more than just as business representatives. The teams of each office are composed of local professionals, aligned with the business strategy of the headquarters. As a result, the Company is able to draw up a specific and solid plan for each country where its brand is present.
management
enhances gains
For this purpose, there is a non-statutory Risk Committee, composed of members of the Board of Directors, employees and external consultants. This body assists the Executive Board and the Board of Directors in the application of mitigating measures inherent to risk factors. A constant analysis of aspects capable of affecting the business, the financial situation and the results of operation is performed and monitored for changes in the macroeconomic and industry scenarios that may be harmful to business activities.
In addition, the location of the industrial units in all the important cattle-producing regions of Brazil, Argentina, Colombia, Paraguay, and Uruguay reduces exposure to risks such as health outbreaks and climate change, which may jeopardize production that is dependent on resources such as water, electricity and animal feed.
The risks associated with climate change are mitigated through monitoring according to socio-environmental criteria (traceability) that aim, among other aspects, to combat deforestation.
Teams made up of representatives from different areas come together to work in a coordinated effort, using various internal and external resources and data, as well as the use of artificial intelligence to make day-to-day decision-making more effective. The practice encompasses the purchase of raw materials to the closing and receipt of sales under conditions that contribute to the mitigation of risks. That is a task that involves the following resources:
The meeting occurs daily and is coordinated by the Business Intelligence area, bringing together managers from various divisions and departments, such as the heads of the commercial, planning and production, livestock purchasing, treasury, trading and market risk areas. The Beef Desk is present in all countries where Minerva operates along with its subsidiary.
Princing -Pricing operates through price management based on the analysis of a number of conjunctural and structural factors. To define pricing, factors such as product and logistics costs, taxation, as well as market variables for the best positioning of products and brands, such as consumer demand, seasonality and competition in sales, are analyzed on a daily basis.
There was a strong demand for all these resources in 2019 due to the sudden and substantial increase in foreign sales as a result of Chinese demand, in addition to the entry of new markets, as was the case in Indonesia. The results obtained by the Company demonstrate the effectiveness of these resources in decision making.
Key manageable risks

sustainability adds
value to the brand
In 2019, Sustainability management became the main topic for Minerva Day in Brazil and in New York, during meetings and other performance review activities. Exposure of the subject was also expanded through the press and social media.
Continuous evolution
There has not been a single year in the history of the Company in which sustainability management has not been improved, 2019 was no different. Faced with the market’s concern about the fires that raged in the Amazon, Minerva Foods presented its investors with a positive panorama of its operations.
One of the key highlights is in the area of chain traceability, with the mapping and geospatial monitoring of all of its livestock suppliers in the region, thereby ensuring that 100% of its portfolio presents environmental and labor compliance and land use compliance.
The success of this effort ultimately set the Company apart from others in its sector. Minerva Foods is among the companies that have been audited by the Federal Public Ministry (MPF) for its operations in Pará and, in 2018, achieved the best results among major companies in terms of social and environmental monitoring of the supply chain. An audit of cattle purchases for 2018 and the first half of 2019 has not been initiated by the MPF to date.
In the Amazon biome, Minerva Foods also undergoes an independent audit of the Public Commitment for Livestock. In 2019 it again obtained 100% compliance in all its purchases in relation to compliance with the social and environmental criteria adopted.
In Brazil, the Company monitors more than 9,000 suppliers in the Amazon, covering an area of more than 9 million hectares, which translates into 100% geospatial mapping of suppliers located in the biome. The commitment extends to Paraguay, where Minerva has pioneered geospatial monitoring of the Chaco biome through criteria adopted concerning illegal deforestation, encroachment into indigenous lands, and areas of environmental preservation. In that country, in just a little more than a year of operation, the company has already had more than 50% of its suppliers mapped and the remainder certified by an independent audit conducted by independent auditors, BDO RCS Auditores Independes in December 2019.
103-2 e 103-3: Environmental compliance
103-2 e 103-3: Supplier environmental assessment
103-2 e 103-3: Forced or compulsory labor
With such a high degree of monitoring of its supply chain free of deforestation, the Company has made the largest contribution among other companies in its sector, in the fight against climate change through the mitigation of Greenhouse Gas (GHG) emissions resulting from changes in land use. It is also the only company in the sector currently financed by the IFC, of the World Bank Group, which supports its commitment to sustainability and its leadership in managing the socio-environmental issues of its production chain.
Since June 2019, the Company has been a member of the Global Roundtable for Sustainable Beef (GRSB). Composed by experts, academics, and large companies from four continents, GRSB aims to share management practices and maintain constructive dialogue concerning the directions of the global industry. As a new member, Minerva Foods strengthens the representativeness of the South American continent, which is the largest meat producer in the world, in global discussions. The Company is very transparent in its activities in the capital markets in response to the challenges of the chain and actively participates with its investors and shareholders. Therefore, sustainability guidelines are always present in meetings with investors in Brazil and abroad, and also with institutions such as the Emerging Markets Investors Alliance, in which Minerva participates in the roundtables regarding sustainability in the value chain for beef.
In 2019, Minerva Foods became a member of the Global Roundtable for Sustainable Beef (GRSB), the Global Sustainable Meat Bureau, whose goal is to share best management practices and maintain a constructive dialogue on global industry trends.
In addition to monitoring, additional actions regarding supply chain traceability were developed with the beginning of the project QR Code for the niche products of Angus and Estancia 92 in the Brazilian market. By 2020, the code on packaging will provide consumers with details regarding the origins of meat, the sustainability criteria adopted by the Company for the sourcing of raw materials, the certifications obtained, the type and quality of the cut, tips on recipes, and feedback from consumers. The objective is to expand this project to the other countries where the Company operates.
Minerva Foods joined the Brazilian GHG Protocol Program in 2019 and published its Greenhouse Gas Inventories (GHG) in the Public Emissions Register (RPE). The RPE platform, maintained by the program, gathers inventories from companies of several branches and is considered as a world reference.
Access the Public Emissions Register.
and deleveraging
guides business
In 2019, the complete integration of all operations expanded the benefits of geographic diversification and reinforced the effectiveness of the risk management model, pillars of operational and financial excellence that have defined Minerva’s trajectory.
The operational and financial performances reflect not only the high demand for beef and the strong momentum in the industry but also the Company’s excellence in managing its operations. It was this combination that provided a net profit of R$ 16.2 million for the year.
The evolution of the capital structure stood out as an additional highlight. The leverage, measured by the net debt/Ebitda indicator adjusted by follow on resources, was reduced to 2.8x, the lowest level in recent years, contributing to a solid cash position of R$ 5.5 billion, taking into account the resources from stock offerings.
During the period, the Company reaffirmed its commitment to deleveraging and creating value for its shareholders. The Board of Directors approved a new policy for the allocation of results that expands Minerva’s capacity to pay dividends as a result of its more balanced capital structure. This new policy provides for an increase in the minimum payout from 25% to 50% whenever the leverage in the closed year is equal to or less than 2.5x.
For the next few years, the goal is to further leverage the competitive advantages that have made Minerva Foods the largest exporter of its sector in South America, with a 20% market share. The Company will continue to invest in innovation, risk management, and market intelligence to achieve operational, commercial and logistical solutions that are increasingly more efficient, by arbitraging the markets and allowing distortions to be transformed into opportunities, with lower risk and higher profitability.