M.Dias Branco (MDIA3), a leading Brazilian manufacturer of pasta and biscuits, reported disappointing financial results for the first quarter of 2025, triggering a significant drop in its stock prices. On May 2, 2025, the company announced an EBITDA of R$ 179 million, which fell short of market expectations by 30%. By 11:05 AM (Brasília time), shares had plummeted 13.76%, trading at R$ 22.
Despite a 3.2% increase in net revenue compared to the first quarter of 2024, reaching R$ 2.2 billion, this growth was primarily driven by higher product prices rather than an increase in sales volume. “We would have liked to see growth in volume. This is an important point of attention for the company. Our priority is to reverse this trend,” stated Fábio Cefaly, director of new business and investor relations at M.Dias Branco, in an interview with NeoFeed.
The financial results for the first quarter of 2025 also revealed a net profit of R$ 69.4 million, which was a staggering 55.2% lower than the R$ 154.9 million reported during the same period in 2024. Analysts attributed this decline to the rising dollar affecting commodity costs, with wheat prices increasing by 4% and palm oil prices soaring by 24% compared to the previous year.
Experts from Itaú BBA characterized the quarter as a hurdle in M.Dias Branco's path to profitability recovery, indicating that pricing strategies failed to offset the rise in commodity prices as anticipated. “The results for the first quarter of 2025 do not provide clear evidence of market share recovery,” noted analysts from Bradesco BBI, who emphasized that volume growth is crucial for the company's financial recovery.
In a broader context, the company is facing challenges due to external market conditions. Retailers are experiencing reduced financial capacity to invest in stock, which further complicates M.Dias Branco's efforts to recover volumes. The firm has been focusing on controllable factors, yet the volatility of results may weigh heavily on investor sentiment before optimism can return.
In terms of segment performance, net revenue from M.Dias Branco's main products, which include biscuits, pasta, and margarines, fell by 0.2% to R$ 1.682 billion. However, revenue from the milling and oil refining segment saw a 17.4% increase, reaching R$ 417 million, while the adjacencies segment, which includes cakes and snacks, reported a 10.6% increase in revenue, totaling R$ 109.7 million.
The company reported a decrease of 0.7% in the volume sold, dropping from 397.1 thousand tons to 394.2 thousand tons in the first quarter of 2025 compared to the same period last year. This decline in volume is seen as a significant concern, especially as the company had previously indicated that recovering market share was a top priority.
Investment analysts have been closely monitoring M.Dias Branco's performance. According to BTG Pactual, the company has been on a difficult trajectory, with no substantial results from the restructuring process that began in the third quarter of 2024. The bank has downgraded its recommendations for the stock, suggesting that the second half of 2025 will be crucial for the company to demonstrate tangible progress in its restructuring strategy.
Moreover, JPMorgan expressed concern over the weak performance in key indicators and the strong compression of margins. While operational cash generation improved to R$ 280 million, double that of the first quarter of 2024, the overall sentiment remains cautious. The bank reiterated a neutral recommendation with a price target of R$ 26.
As M.Dias Branco navigates these challenges, it is imperative for the company to focus on volume growth in its primary product categories. The results for the first quarter of 2025 have set a low base for the year, raising questions that remain unanswered since the end of the previous year.
In summary, while M.Dias Branco has made strides in certain areas, the overall results for the first quarter of 2025 highlight significant hurdles ahead. The company must address these challenges head-on to restore confidence among investors and ensure a path toward recovery and growth.
