Good afternoon, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everybody to Minerva's second quarter of 2019 results conference call. Today with us, we have Fernando Queiroz, Chief Executive Officer, and Edison Ticle, CFO and Investor Relations Officer. We wish to inform you that this event is being recorded, and all participants will be in listen-only mode during the company's presentation. If you need any assistance during this call, please press star zero to reach an operator. The audio and slideshow of this presentation are available through the live webcast at www.minervafoods.com/ir in the MZiQ platform. The slideshow can also be downloaded from the webcast platform in the investor relation section in this website. Before proceeding, we wish to mention that all forward-looking statements may be made during this presentation relating to Minerva's business prospects, operations, international estimates, and goals.
They are based on the beliefs and assumptions of the company management and all the information currently available. They involve risks, uncertainties, and assumptions, because they relate to the future events, and therefore depend on the circumstances that may or may not occur in the future. Investors should understand that the general economic conditions, industry conditions, and other operating factors could also affect the future results of Minerva and could cause results to differ materially from those expressed in such forward-looking statements. I wish to now turn over the floor of the conference call for Mr. Fernando Queiroz, CEO, who will begin the presentation. Mr. Queiroz, you may proceed with your presentation.
Thank you. Good morning, everyone, and thank you for participating in Minerva's conference call on the results for the second quarter of 2019. I'd like to begin this conference with a brief discussion about a topic that has been widely discussed in the last few months, the African swine fever, and the opportunity related to the outbreak. Let's move on to slide two. African swine fever is a disease that since the second half of 2018 has been decimating pigs herds in Asia, particularly in China, with a great impact on the animal protein market. In the graph on the right, we see that pork accounts for a large share of the global meat diet, especially in China, where it represents almost 50% of the animal protein consumption, almost all of which is supplied by their domestic production.
This means that as a direct effect of the ASF outbreak in China, we expect to see a substantial reduction in this production, therefore, prices rising and consumption of pork are suffering with it. According to the FAO, the ASF outbreak has reached 234 regions with confirmed cases, most of which in China and neighboring countries such as Vietnam, Cambodia, and also in Eastern Europe. Containing the outbreak represents an enormous sanitary challenge, since the disease spreads easily and is highly lethal to the herds and does not have any control mechanisms such as preventive vaccines. As a result, some experts believe China pig herd will shrink by 30%, which would be a great impact on the entire animal protein chain. It's worth noting that China has approximately 50% of the global pig herd.
In the graph on the bottom left corner, we can see some interesting figures, such as the significant decline in pork production in China in 2019 and the prediction for 2020, a clear consequence of the recent and still present ASF outbreak in the country. There are some market indicators supporting that this supply shock will be offset or partially by consumption of other proteins, such beef, thus creating a great opportunity to our industry. As we can see in the information on the bottom right corner, due to the availability of healthy herd and low production costs in South America, we currently account for 70% of the Chinese beef imports, which have been increasing substantially in recent years, thanks to the higher income levels, urbanization, and the westernization of the consumption patterns in China.
This increased share of South American exporters also benefit from difficulties faced by other players, such as Australia, which has been increasingly facing tough climate conditions over the past few years, and the U.S., which has export restrictions due to the utilization of hormones in the herd that is forbidden in China. Also, the uncertainty related to the trade war. I would like to highlight Athena Foods exposure to the Chinese market, mainly through our operations in Argentina. In the first half of 2019, our Rosario plant was, on a global basis, the plant with the largest volume of beef exported to China among 100 another units worldwide. In view of this good moment, and in order to maximize the opportunity in the Chinese market, in June, we resumed our operation in Venado Tuerto unit, also in Argentina.
Currently, this unit is on the ramp-up stage and will be at full operation by late August. To conclude, we believe that African swine fever will further drive growth of beef consumption in China, indirectly benefiting beef producers in South America, the region that's best prepared to meet growing demands in Southeast Asia. In this context, we believe that our footprint in South America, our expertise in the Chinese market, and the first effects of the African swine fever outbreaks on animal protein consumption and its production chain will create great business opportunity in the upcoming quarters. It's also worth to say that this impact is not only a temporary issue, as also has interesting long-term perspectives. As ASF outcome implies in protein consumption changes, not only because of prices, but also due to changes in population consumption habits.
Let's move to slide 3 to discuss the main highlights for the second quarter of 2019. We'll begin with operating cash flow, which totaled BRL 322 million in the second Q of 2019, and BRL 1.3 billion in the last 12 months. Another cash indicator, the free cash flow, was positive for the sixth consecutive quarter, totaling BRL 143 million in the second Q 2019, and BRL 642 million in the last 12 months. Thanks to the strong operational performance, consolidated gross revenues totaled BRL 4.3 billion in the second Q of 2019, and in all-time highs, BRL 17.8 billion in the last 12 months ended in June. Our revenues breakdown shows that 43% of gross revenues, or BRL 1.9 billion, came from Athena Foods, our operation in South America, ex-Brazil. The Brazilian industry division accounted for 42% of the total, or BRL 1.8 billion of consolidated revenues.
Our trading division was responsible for the remaining 15%, with approximately BRL 630 million. In the second quarter, Minerva exports once again stood out, accounting for 67% of the gross revenue in the second Q19, 14% higher than in the second Q18. Consolidated net revenues reached BRL 4 billion in the second Q19, 8% more than in the second Q18, reaching BRL 6.7 billion in the last 12 months ended June. EBITDA totaled BRL 364 million in the second Q19, up 3% over the second Q18, with an EBITDA margin of 9%, 20 basis points higher than in the previous quarter. Adjusted EBITDA came to BRL 1.6 billion in the last 12 months, with an adjusted EBITDA margin of 9.6%. The net results adjusted for the non-cash and non-recurring effect totaled approximately BRL 27 million in the quarter.
We closed the second quarter with a leverage measured by net debt to LTM EBITDA ratio of 3.8 times, in line with the first Q19. Our debt duration remaining at a very comfortable level at around five years. It's worth noting that in early April, we conclude that the redemption of our perpetual bonds, our most expensive debt, reinforcing the company's commitment to pursuing a more efficient capital structure. Let's have a look on slide four, where we'll talk briefly about Minerva's operation performance, beginning with our exports. In the second Q19, Minerva continued to be the main exporter in the countries where it operates. In Paraguay, we accounted for 47% of the beef exports, consolidating our position as the country's main exporter. In Uruguay, we have 20% market share of beef exports. In Argentina, our market share reached 17%, six percentage points more than in the previous quarter.
It is important to point out that we maintain our position as the leading South American beef exporter with a 21% market share. Recalling that South America represents 35% of the global exports, Minerva's total exports represent approximately 7% of the worldwide exports of beef. On the right side of the slide, we have a breakdown of exports by region. In the Brazilian industry division, the two main destinations were Asia and Middle East, which together accounted for more than half of the division. In Athena Foods exports, Asia was once again the main destination, accounting for 42% of exports, 11 percentage points more than in the same period last year. I believe that it would be useful to talk about the increase in Athena's exports growth to China, in particular as revenues from exports to this country as they grew 61% between second Q18 and second Q19.
This means that in addition to the market share growth, we also had a significant increase in our volume of exports to Asia in the last 12 months. I will now pass the floor to Edison, that will discuss Minerva main financial and operating highlights.
Thank you, Fernando. Let's move to slide five. Minerva's gross revenue reached BRL 4.3 billion in the second quarter of 2019, 80% more than in the second quarter of 2018. In the last 12 months ended in June, gross revenues reached BRL 17.8 billion, an all-time high and 14% higher than in the LTM second quarter 2018. The Brazilian industry division capacity utilization rate declined to approximately 76.7%, falling 3.4 percentage points from the previous quarter. This decline was mostly due to the rainy season, which lasted a little longer than normal at the beginning of the quarter, and also the one-week suspension of exports to China. At Athena Foods, the capacity utilization rate stood at 75.4% in the quarter, 3.9 percentage points higher than in the first quarter of 2019.
We were able to increase the capacity utilization rate thanks to higher demand in China. This increase was more noticeable in Argentina and partial normalization of Far West slaughter volumes that were a little bit lower in the first quarter due to the rainfall. Overall, the company's consolidated installed capacity utilization rate was at 76% in the second quarter, in line with the first quarter, and within the 75%-80% range that we consider to be ideal. Sorry. On the upper right corner, we have a breakdown of the company's gross revenue by division. For the first time, Athena Foods division accounted for 43% and became bigger than the other divisions in Minerva. Brazilian industry division contributed 42%. The trading division generated 15% of gross revenues in the second quarter 2019.
Finally, on the bottom right corner, we once again emphasize that the great exposure of Minerva consolidated exports to regions with strong potential demand, such as Asia, especially China, that accounted for 37% of total exports in the quarter. Let's move to slide six to continue discussing operating results. The company's consolidated net revenue, which is BRL 4 billion in the second quarter, 8% higher than in the same period last year. While in the last 12 months ended in June, net revenues stood at BRL 16.7 billion. A growth of 12% year-on-year. Also regarding our top line, exports accounted for around 67% of gross revenue in the Brazilian industry division and 77% in Athena Foods. EBITDA reached BRL 364 million in the quarter, 3% higher year-on-year and also a record for our second quarter with an EBITDA margin of 9%.
In the last 12 months, adjusted EBITDA reaches BRL 1.6 billion with a margin of 9.6%. Finally, the net debt-to-EBITDA ratio stood at 3.8 times in the quarter, practically in line with fourth quarter and first quarter 2019. We will now move on to slide seven to discuss net results and cash flow. Considering the net results before income and social contribution taxes and excluding the non-cash effects that impacted the results such as FX variation, monetary correction in Argentina, FX hedge, and exceptionally in this quarter, the payment of the consent solicitation to our bondholders, the company would have record a net income before taxes of approximately BRL 27 million. Bear in mind that the consent was a waiver signed in April to exclude Athena Foods from the guarantee structure of the bonds issued by Minerva.
In terms of cash, operating cash flow was BRL 322 million in the second quarter. Net income adjustments were BRL 336 million, while the working capital variation was a positive BRL 99 million. Our working capital line was supported by the suppliers line that contributed with BRL 46 million in cash in the quarter, and the other payables line, which includes the advances from clients that generated cash of around BRL 132 million. This line is a little bit volatile because it's correlated to our credit policy and to the destinations of our exports. The credit policy requires prepayments depending on the countries, depending on the client's credit score. There's a great correlation between these accounts and the breakdown of our sales. In the second quarter 2019, recurring free cash flow was BRL 143 million.
We begin the build-up with an EBITDA of BRL 264 million, CapEx of BRL 68 million, a negative financial result of BRL 295 million, and finally, a positive variation of working capital of BRL 99 million, which resulted in a positive free cash flow of approximately BRL 100 million. However, with the adjustment for the non-recurring effect of BRL 43 million related to the consent solicitation, the recurring free cash flow in this quarter was BRL 143 million. It's important to highlight that this is the sixth consecutive quarter of positive free cash flow, which is a very important indicator for the industry since we are in a commodity sector, so cash flow generation is pretty much volatile. These results reflect the company's commitment to pursuing a more efficient operational and financial management for the long term.
Recurring free cash flow reached a substantial BRL 642 million in the last 12 months. We started with an EBITDA of BRL 1.6 billion in the period, CapEx of BRL 186 million, negative financial results of approximately BRL 1 billion, and a positive variation in working capital of BRL 196 million, resulting in a positive free cash flow of approximately BRL 580 million. Adjusting for the non-recurring items in the period that were around BRL 63 million, we have a recurring free cash flow of BRL 642 million for the last 12 months. Let's move to the last slide of the presentation to discuss capital structure. Our leverage, as we already mentioned, measured by the net debt-to-EBITDA ratio, remaining flat at 3.3 times at the end of June.
The company had a cash position of 3.1 billion BRL at the end of the quarter. Around 75% of our debt was exposed to the dollar variation. Duration of our debt, approximately five years. It's also worth noting the reduction of approximately 750 million BRL in our gross debt, showing our commitment to pursue a more balanced capital structure in order to reduce the carrying cost of our cash and also reduce the financial expenses going further. Still on the topic of liability management, in the second quarter, we issued 400 million BRL of a local debenture at the rate of CDI plus 180 basis points. It's a three-year debenture. 100% of the proceeds were used to refinance short-term debt. This concludes our presentation. Let's now begin the Q&A section. Thank you very much.
Thank you. We'll now start the question-and-answer session for investors and analysts. If you would like to ask a question, please press star one. If at any point your question has been answered, you may remove the question from the queue by pressing the pound key. Right now, we have a question from Luca from Goldman Sachs. You may proceed.
Hi. Good morning. Thanks for the question. I listened to the earlier call, so I only have maybe more of a general sort of follow-up on capital structure. The results today, and I think everything we keep hearing and seeing clearly show that the environment, the outlook for the sector has improved, has changed, is looking better, especially compared to when you sort of initially started to examine or looked into the Athena Foods transaction since then. With that in mind, can you maybe walk us through, is that still the only and preferred option, or how fluid is that discussion in terms of other alternatives for de-leveraging capital structure?
Especially considering what might be the optimal corporate structure sort of in the medium term now that the urgency is still there from a balance sheet standpoint, but maybe it's a little less pressing given how the sector and the outlook has evolved. Thanks.
Hi, Luca. Different thing. I think the IPO of Athena Foods has two important objectives for us. The first one, obviously, is to speed up the deleveraging process of our balance sheet. I think there's another one, which is unlock hidden value from our international operations. When we pursue the IPO of Athena Foods, we have these two main objectives in mind. We have been very careful in terms of valuation to do this IPO. We have the chance or the option to do the IPO until April next year. Obviously, we are open to other opportunities, to other alternatives. So far, we keep having the IPO of Athena Foods as our plan A.
Right. Sorry, when you say hidden value, why would it be hidden? At the end of the day, you are in the same sector. You are listed in Brazil, which is arguably the most developed of the markets in LatAm and the one where there's probably greater awareness and understanding about the protein industry in general. I think you've mentioned the hidden value before, why would it be hidden? Why an IPO?
It's a good question, Luca. Firstly, the multiples of the companies in the sector in Brazil, they suffered a bit because of the high leverage of the sector. As you probably know, Athena Foods has practically no debt. This would imply a premium to Athena Foods compared to any other listed player in Brazil. The second is that the growth of Minerva, 100% of the growth will be done in Athena Foods. When you see the growth in Minerva, it's diluted in our operations. When you focus only on Athena Foods stands to be an important growth company. Third, Athena Foods has more access to markets that are growing more fast in the world, like Asia, like China.
It's much more exposed to those markets than Minerva as a whole. I think there are a couple of reasons that would imply Athena Foods to have a better valuation than Minerva. I think I mentioned three, the three most important of them, if you want, we can discuss further other reasons why we see Athena Foods at a higher valuation than Minerva.
I would add to what Edson said, Luca, that our position as a leading exporter in all these countries in South America that we are in, this also brings a different value for being the number one or number two exporters in all these countries that we have.
Okay. No, that was clear. Thank you. Thanks for the clarification of the answer. It was very interesting. Thank you.
Remembering, if you have a question, please press star one. Our next question is from Thiago Melo from Bradesco BBI. Thiago, you may proceed.
Yeah. Hi, Fernando and Edson. Thank you for the question. I'd like to ask you on food service. In our view, the segment has become something of a trending topic, and we see it gaining some investor attention. I would like to know if you have any updates on the segment in both terms of growth and profitability, as we now move to the ASFs. Also, we have talked to some other protein companies such as, for example, BRF, and they have mentioned interest in teaming up for a possible food service partnership. I would like to know if that would be on the table for Minerva. Thank you.
Worldwide, we are present in three main segments. It's the retailers, the industries, and the food service. There is a big growth and a lot of demand from the food service segment. That's why Minerva is specialized in working in niches. We are one of the biggest exporter of organic. We are one of the biggest exporter on special breeds such as Hereford or Angus. Things like that, it's part of our strategic plan. The growth, especially in Southeast of Asia, is very focused into the food service, where our presence is very strong and keeps growing. We are world suppliers of food service chains. We are very, very close and we are partnering with them on their development, on development of their products.
It's a part of our strategy and it's part of what's happening to the world, that will be more and more segmented.
Okay, thank you. Just a quick follow-up. In terms of partnerships, would you see something possible due to either a protein portfolio diversification?
No, I will not go down to the chain. Our focus is to produce in the origins and to have partnerships in delivering the products to our clients. We are not operators of a food service chain, it's not our focus.
Yeah, okay. Thank you very much.
Remembering, if you have a question, please press star one. As there are no further questions, this concludes the question and answer session. At this time, I would like to turn the floor over to Mr. Fernando Queiroz for any closing remarks.
I'd like to end this conference call by emphasizing that we remain confident in our business model, in our team's hard work, and in the combination of meritocracy, appropriate strategy, operational efficiency, capital discipline, and commitment to the ethical and sustainable practices as the best way to create long-term value. I once again would like to thank all the Minerva team for their effort and dedication to reach the results that we discussed today. I would like to thank you all for the interest in Minerva, and please feel free to contact us should you have any questions. Thank you very much.
Thank you. This concludes today's presentation. You may disconnect your line at this time. Have a nice day.