Good morning, ladies and gentlemen. Welcome to Minerva's second quarter earnings release conference call. Joining us today are Mr. Fernando Galletti de Queiroz, CEO, and Mr. Edison Ticle, CFO, and IRO. This presentation is being recorded and simultaneous translation is available by clicking on the interpretation button. If you're listening to the video conference in English, you have the option to mute the original audio in Portuguese by clicking on Mute Original Audio. The presentation is available for download at ri.minervafoods.com in the Presentations tab. During the company's presentation, all participants will be on a listen-only mode. The question and answer session will begin once the presentation is concluded. Should you wish to pose a question by audio, please click on the Q&A icon, type in your name and affiliation. When your name is announced, a prompt to unmute your microphone will appear on the screen.
Please unmute your microphone and proceed with your question. If you wish to ask a question in English, please do so in writing by clicking on the Q&A button and typing in your question. Please note that statements that may be made during the video conference call regarding Minerva's business prospects, operating and financial goals, are based on projections made by the company's management, which may or may not materialize. Investors should appreciate that political, macroeconomic, and operating factors may affect the company's future and lead to results that differ materially from those expressed in such forward-looking statements. To begin the earnings release conference call for the second quarter, 2024, I will turn it over to Mr. Fernando de Queiroz, CEO, for his presentation. Please go ahead, Mr. Fernando de Queiroz.
Good morning, everyone, and thank you for joining us on Minerva Foods earnings conference call for the second quarter, 2024. Minerva has concluded the first half of the year, delivering robust operating and financial results, thereby reaffirming the consistency and discipline of our business strategy. Once again, the company has demonstrated that geographic diversification is a key pillar of the operational and commercial execution of our business model, reducing risks, maximizing our arbitrage capacity, and strengthening our corporate strategy as the largest beef exporters in South America. In Q2 2024, our gross revenue totaled around BRL 8.2 billion, with an EBITDA reaching BRL 745 million, and an EBITDA margin of 9.7%.
In the first six months of the year, EBITDA has added up to approximately BRL 1.4 billion, and over the last twelve months, gross revenue has reached approximately BRL 30 billion, with an adjusted EBITDA of BRL 2.7 billion. Free cash generation, a priority for the company, continues to be a highlight, having reached BRL 404 million in the quarter, adding up to BRL 771 million in the semester, and over BRL 1.5 billion LTM in Q2 2024. Our sound cash generation performance continues to contribute to our capital structure, which concluded the quarter with a stable adjusted net leverage of 2.98 times net debt over EBITDA. As in previous quarters, I would like to comment on the acquisition process of selected Marfrig assets in South America.
That is the acquisition of the 16 industrial plants in Brazil, Argentina, Uruguay, and Chile. Minerva Foods continues to work with antitrust agencies to conclude the process as soon as possible, so that we can begin our own process to integrate the new assets. We remain optimistic regarding the final approval by regulatory authorities, and we'll keep the market updated on any developments on this topic. As usual, in our conference calls, before moving on to the highlights of the quarter, I would like to share with you a little of our vision regarding prospects for the global animal protein market. We remain confident of the opportunities and prospects of the global beef market. The imbalance between supply and demand remains one of the main drivers for the industry.
The United States continues to face complex constraints on animals ready for slaughter, which, combined with a resilient demand, ends up putting pressure on the availability and prices of beef in the American market. We, producers in South America, are benefiting from this severe restriction, since we're going through the opposite time of the cattle cycle, especially in Brazil, but there are also positive indicators in Paraguay and Uruguay. This context leads to direct benefits in terms of accessing the American market, and that is becoming clearer quarter after quarter by the increasing exposure of Minerva Foods to the US. Furthermore, reduced supply in the US unlocks opportunities in other international markets. In other words, this is a unique opportunity to expand the global reach of beef produced in South America.
In that context, Minerva Foods' geographic diversification strategy has once again demonstrated its effectiveness, having enabled the company to arbitrage operationally and commercially among its markets of origin, and therefore tap into the best opportunities in our industrial park. As a result of this strategy and our footprint in the South American continent, we continue to obtain new permits, such as Paraguay's recent approval to export beef to Canada, yet another major consumer market in the NAFTA region.... Hence, now three of Minerva Foods' plants in the country are qualified to export to this market, with a capacity of approximately 6,300 heads a day. It's worth mentioning that currently, a large part of our industrial park has access to all markets in the NAFTA region, and our products are exported to the United States, Mexico, and Canada.
Finally, I couldn't fail to highlight the distribution in domestic market, especially in Brazil, which has been achieving very resilient results and has posted a considerable increase in revenue on an annual basis. We continue to advance with favorable prospects in the domestic market, a reflection of the work that has been put into strengthening our brands and maximizing our commercial reach, bringing Minerva Foods and its products increasingly closer to end consumers. Now, let's go back to our performance in the second quarter 2024 on slide two. Starting with gross revenue, which totaled BRL 8.2 billion in Q2 2024, and BRL 29.9 billion in the last twelve months. Exports accounted for 61% of the consolidated gross revenue in the quarter, and 63% year to date.
They remain one of the company's main operational drivers and confirm our ability to arbitrage and access to the international market. Now, moving on to our operating earnings. EBITDA in the second quarter reached BRL 745 million, 5% up from the previous year, with an EBITDA margin of 9.7%. In the last 12 months, Minerva Foods adjusted EBITDA totaled BRL 2.7 billion, with a margin of 96%. I'd like to highlight our free cash generation, which reached a significant BRL 404 million in Q2 2024, adding up to approximately BRL 1.5 billion in the last 12 months, a result that reflects the company's operational, commercial, and financial excellence.
Finally, speaking of our capital structure, we concluded the semester with a stable adjusted net leverage of 2.98x net debt over EBITDA, which, combined with our solid cash position of BRL 16.5 billion, puts us in a comfortable liquidity position for the next quarters. Let's now move on to slide 3 and take a more detailed look at other highlights for the second quarter. As I mentioned at the beginning of the presentation, the imbalance between supply and demand continues to provide us with excellent commercial opportunities in the global beef market, including the opening of new markets, such as is the case of the approval of 3 of our plants in Paraguay to export to Canada. Also, in the second quarter, we have continued to advance our sustainability agenda, one of Minerva Foods' main corporate values.
For yet another year, we have achieved 100% compliance in sales with direct supplier farms in the Amazon biome, based on the social-environmental criteria established in the public livestock commitment. Q2 2024 also brought news from the Renoí program and MyC arbon. New technical cooperation agreements have been signed, and new projects aimed at generating carbon credits starting at the end of 2026 have been certified. We have also made progress with the export of over 300 tons of products from the Zero Carbon Impact line in the second quarter, especially to premium markets such as NAFTA and the US and Europe. In the institutional sphere, we have published the 13th sustainability report, base year 2023, which follows the main internationally recognized frameworks such as GRI, SASB, and TCFD, and it was also verified by an independent audit.
It is worth mentioning that Minerva Foods, as in previous years, is the first company in the industry to publish its report, a testament to its pioneering role in the sustainability agenda. Now, let's turn to slide 4 to talk a little about Minerva Foods' export performance in Q2 2024. In the second quarter, we continued to lead beef exports from South America, with approximately 20% market share in the continent. Once again, reaffirming the competitive advantages of our geographic diversification strategy and our exporting DNA. The quadrant at the top of the slide shows the gross revenue breakdown by destination for Q2 2024. The Americas region was the main gross revenue driver, with a total of 36%, Brazil being the highlight with 18%, and Chile with 7%.
Next, we have Asia, with 21% of total gross revenue, with China accounting for 14% of those. The NAFTA region represented 15%, consisting mainly of the U.S.A., which accounted for approximately 13% of our gross revenue. I'd like to stress the resilience of demand from emerging markets, in particular, Asia and the Middle East, which continue to be relevant destinations for our exports, with around 43% of the combined market share. Furthermore, I'd also like to draw attention to the performance of the North American market. The U.S. have stood out as an important consumer market, accounting for 19% of our consolidated exports, or approximately 13% of the company's gross revenue, a reflection of the restrictions on beef production in the region, and which naturally opens up opportunities for exporters in our continent.
This scenario should become even more marked in the coming quarters, not only due to strong American demand, but also the impact on neighboring countries, such as Mexico and Canada, which, with the recent permits of South American producers, should fast-track the demand for beef from our continent. Minerva Foods currently has access to the NAFTA market through plants in Brazil, Argentina, Uruguay, and Paraguay.... In the bottom right-hand corner of the slide, we provide more detailed information on the performance of our exports for both our beef operations in South America and our lamb operations in Australia.
Starting with our cattle operations, shown in the two charts on the left, Asia continues to stand out in the quarter, totaling 27% of our exports revenue, followed by NAFTA with 19%, the Middle East with 16%, the Americas with 15%, and in the last twelve months, Asia was also a highlight, accounting for 33% of our revenue, followed by the Americas with 18%, NAFTA with 15%, CIS with 13%, and the Middle East with 11%. Finally, I'd like to reiterate once again, the current cattle cycle momentum in South America, particularly in Brazil, where there have been wide availability of animals and record slaughter volumes over the last few months, a trend that should continue at least until the end of 2025.
I cannot fail to mention the resumption of animal availability in Paraguay and Uruguay, markets that are expected to expand their supply and production volume over the next four years. Going back to the results, the graphs on the right show our operations in Australia, whose main destination is NAFTA, with a 38% share, followed by the Middle East with 24%, and Asia representing 21% of exports of the country in the quarter. Europe and Oceania came next with 11% and 4% respectively. In the last 12 months, NAFTA also remained the main destination with a 38% share. Asia following closely behind with 23%, followed by the Middle East with 20%, Europe with 9%, and Oceania with 7%.
Before turning the floor over to Edison, I would like to once again reiterate our optimism with the coming quarters and the prospects for the global animal protein market. Recent permits continue to point to great opportunities ahead. The mismatch between supply and demand continues to create a favorable scenario in the market, mainly due to the favorable cattle cycle in Brazil and the negative cycle in the U.S. Add to that, the availability of labor, which in the U.S., is increasingly scarce. Furthermore, I'd like to underscore once again, our ability to arbitrage in the international market, thereby mitigating risks, maximizing our operating efficiency, and adding value to our operation. For the second half of 2024, we remain confident of our strategies in business, always attentive, focusing on risk management, and pursuing increasingly efficient and profitable operating, commercial, and logistical solutions.
Now, I'll turn it over to Edison, who will talk about our financial and operating performance. Thank you, Fernando. Let's now turn to slide 5. On slide 5, we're going to talk about Minerva's operating performance and gross revenue, both for the second quarter, 2024, and the last twelve months. In line with our focus on exports, the international market accounted for 66% of our gross revenue in the quarter, and 64% LTM, Q2 2024, excluding the others division. Breaking down by region, exports in the Brazilian operations reached 58% in the quarter and 60% in the last twelve months. In our Latam operations, excluding Brazil, exports accounted for 70% of gross revenue in the quarter and 69% LTM. The lamb operation in Australia was no different.
Exports reached 82% of gross revenue at the end of Q2 2024, and 71% in the last twelve months. Now, on the right-hand slide, side of the slide, we have the breakdown of revenue by origin. Brazil continues to stand out, representing 46% of gross revenue in the quarter and 49% LTM, followed by Paraguay, which became the second main origin in the quarter with 16%, and 15% in the last twelve months. Argentina contributed 14% to the revenue in the quarter, 9% in the last twelve months, while Uruguay obtained 11% and 13% revenue in the quarter and LTM, respectively. Australia accounted for 7% of our revenue, both in the quarter and the last twelve months, and Colombia had 4% share in our revenue breakdown in Q2 2024 and LTM.
Finally, the others' line item, which refers to the former trading division, contributed 2% of our revenue in the quarter and 3% in the last twelve months. Moving on to slide 6, we'll discuss net revenue and EBITDA. Let's start with net revenue, which reached BRL 7.7 billion in the second quarter 2024, up 5% year-over-year and 7% quarter-over-quarter. In the last twelve months, Minerva Foods net revenue added up to BRL 28.1 billion. As for our earnings, EBITDA in Q2 was BRL 745 million, up 5% year-over-year, and 18% quarter-over-quarter, resulting in a margin of 9.7%. In the first half of the year, EBITDA reached BRL 1.4 billion.
In LTM Q2 2024, our EBITDA added up to BRL 2.7 billion, with an EBITDA margin of 9.6%. Again, on this slide, I'd like to draw your attention to the constancy and consistency of our margins over recent quarters, a testament to how assertive our geographic diversification strategy is, and how it allows us to extract maximum efficiency from our operating park, as well as arbitrage.... reaffirming our excellence in operational and commercial execution, and especially in risk management of this commodity. We're very happy to share these results. There's a lot less volatility than we usually see across other commodities, and we attribute that strongly to our risk management strategy, our beef desk, our choice meetings, and so on. There's a whole framework that applies to our daily management here at Minerva Foods. Now, moving on to slide 7, we'll talk about financial leverage.
Our leverage ratio is measured by the net debt over EBITDA indicator for the last 12 months, came in at 2.98 times at the end of Q2 2024. And as a reminder, this indicator is adjusted by BPU's pro forma EBITDA of BRL 11.6 million from the 2 months prior to the incorporation of this asset, and does not consider the down payment of BRL 1 billion, referring to the acquisition of Marfrig's assets in South America. We didn't consider that because the acquisition has not yet been completed, and therefore, there's no contribution from that EBITDA to the company. Now, let's turn to the next slide to discuss the net profit and operating cash flow. Our net profit in the quarter was BRL 95 million, even with the considerable non-cash impact of FX variation in the quarter.
Over the last 12 months, that impact was over BRL 1 billion. Over the last 12 months, net profit added up to approximately BRL 70 million. Moving on to the right-hand side of the slide, we can see the operating cash flow in the quarter, which was positive BRL 766 million, and roughly BRL 4.2 billion year to date in the last 12 months. Here, I'd like to highlight Minerva Foods' excellent operational and financial execution, which even in circumstances of great volatility, continues to deliver very robust and consistent operating cash generation. Let's move on to slide 9 to talk about free cash generation, one of our organization's main management drivers and objectives.
On Slide 9, building up the cash flow for this quarter, we started with an EBITDA of BRL 745 million, and the working capital line consumed BRL 700 million in the quarter, especially due to the accounts receivable item. That line is predominantly dollar-denominated, so it ends up being impacted by FX variations and increase in sales in the international market. So those two factors drove that account. Our CapEx for the quarter was approximately BRL 204 million, primarily spent on investments in maintenance, BRL 50 million in the organic expansion of our operations, and as a result of our hedging policy and the instruments to protect our balance sheet, the financial result on a cash basis was positive BRL 564 million. Thus, we have reached a recurring cash generation of approximately BRL 404 million in Q2 2024.
I would also stress that in this semester, free cash generation added up to approximately BRL 771 million positive. Looking now at year-to-date results over the last 12 months, free cash flow was positive BRL 1.5 billion, already taking into account all the impacts of the acquisition of ALC and BPU in the quarter. Building up our cash generation, we started with an EBITDA of BRL 2.7 billion, a CapEx of BRL 773 million. Then we have a positive working capital variation over the last 12 months, five hundred and sixteen million, and the cash basis financial result, which was negative by around BRL 713 million. Adding up all the variables, we arrive at a recurring free cash flow of BRL 1.7 billion for the last 12 months, ending Q2 2024.
Add to that, the acquisitions of ACL and BPU, our cash flow reaches a total of BRL 1.5 billion, resulting in an annualized free cash flow yield of approximately 40% compared to the company's current market cap. Again, I'd like to highlight and acknowledge our team's effort and dedication in keeping focus and discipline required to deliver solid cash generation, which is a result of Minerva Foods' financial and operational strategy, which we pursue every day here at Minerva Foods. Now, on slide 10, we'll discuss the bridge of our net debt. At the end of the previous quarter, our net debt added up to BRL 7.5 billion. For the debt bridge in Q2 2024, we've had the benefit of a total free cash generation of BRL 404 million, reducing the debt.
The effect of FX variations with an impact on the debt of BRL 1.3 billion, and that has an impact of our own gross indebtedness and increases the debt. And we also have about BRL 278 million positive related to non-cash derivatives. Adding up the variables and building up the bridge, we arrive at a net debt of BRL 8.1 billion at the end of the quarter. Here, again, I'd like to highlight the efficacy of our hedging policy, which even in a quarter with highly volatile effects, has managed to effectively protect our balance sheet. Let's move on to the next slide, where I will comment on our capital structure.
On slide 11, as I mentioned previously, net leverage measured by net debt over adjusted EBITDA. So adjusted by the pro forma BPU performance and excluding the advanced payment for Marfrig's assets in South America, it ended the quarter at a stable 2.98 times. Following our very conservative cash management strategy, we concluded the second quarter in a comfortable liquidity position, with approximately 16.5 billion BRL, and a debt duration, which is also comfortable, of approximately 4.6 years, and approximately 86% of our long-term debt, as you can see, is in the amortization flow at the bottom of the slide. As for our debt profile, roughly 76% of our debt is exposed to FX variations.
Allow me to remind you that we follow our hedging policy to the letter, which establishes that the company currently must hedge a minimum of 50% of long-term FX exposure. This policy, again, I will repeat, has proven to be very effective and very efficient over the last few quarters. I'd like to reiterate once again that the company continues to actively pursue an increasingly balanced capital structure, with a lower risk profile and less burden. Finally, as Fernando mentioned, with regards to the acquisition of new assets, we continue to focus on completing the final stages of the process. We are awaiting approval by the regulatory agencies, so we can begin the integration process as soon as possible. As soon as we have any updates, the company will inform the market.
Now, I turn the floor back over to the operator, so we can start the Q&A session. Thank you very much. Thank you. We will now begin the Q&A session. To ask questions in audio, in Portuguese, please click on the Q&A icon and type your name and affiliation. When your name is announced, the prompt to activate your microphone will appear on the screen. Please unmute your microphone and proceed with your question. Please wait while we poll for questions. Our first question is from Henrique Brustolin, from Bradesco BBI. Please go ahead, Mr. Brustolin. Good morning, Fernando and Edison. Thank you for taking my questions. I have a couple, please. The first one, looking at Brazil, the impact or benefit that you'll probably have from a devalued real, will probably not be reflected in the second quarter results.
So how do you see the profits in the country progressing over this quarter, and especially now, starting Q3, how do you see that benefit reflecting on the company's results? So that's the first question. The second question is about exports to the U.S. It's interesting to see that they're still ramping up, in considering Brazil's quotas being full. And what was your export mix to the U.S. between Argentina, Uruguay, and Brazil? And specifically about Brazil, how do you see profits from exports in even extra quota? So those are my two questions. Thank you. Good morning. I'll take the first, and then I'll turn it over to Fernando. Flavio, since there was an FX depreciation in this quarter, the profitability in exports in the quarter have improved.
But as you said, our average export price and our profit considered an average exchange rate that was below the current exchange rate. So what we expect, and what we have been seeing in the first two weeks of the third quarter, is that earnings at the front are much better than the average of the second quarter, when we talk about exports. So that shows us that margins will be at least in the middle of that level in the third quarter. And looking at exports, especially considering the exchange rate from the end to the middle in the third quarter. Let's wait for the end of the quarter, but obviously, the third and fourth quarter are usually the best quarters in the year. So we're optimistic, considering our earnings for the next quarter. Those exports to the U.S. reiterate what we've said about the U.S. cattle cycle.
But more than that, it's about the competitiveness that South America will have. There are two ways to fatten the cattle, grains and pasture, and obviously, the cost caps has opened significantly. So regardless of the U.S. quota, Brazil and South America have been proving to be highly competitive. And considering the FX policies in each country, in Brazil, also Paraguay, which is going to step into that space. And so geographical diversification in South America, which is Minerva's main strategy, has proven to be highly effective and showing results that beef is a North-South trade, and we are occupying more and more space regardless of the quota systems. Fantastic! Just as a follow-up question. To the second one, please. Was there any significant difference in your exports mix, especially to the U.S. in the second quarter? So considering the quota, Brazil and Argentina, and Paraguay have open quotas.
So I just wanted to know whether there was a large difference, or if you continue with the same export mix. Well, Argentina's quota and Uruguay's quota account for 20,000 tons, and they have a linear division across the months and distributed based on company's performances. So, there has been no dramatic change in Brazil for these other origins, but South America, as a whole, is becoming increasingly more competitive to all markets. The U.S. is just one more example. That's great. It was very clear. Thank you. The next question is from Leonardo Alencar, from XP. Please go ahead, Mr. Leonardo. Good morning, Fernando. Good morning, Edison. I have a couple of questions, and I may ask for a bit more color. So I'd like to start with Argentina.
There was some recent news, if you could comment on the reduction of retentions in exports, also for beef, and that was recent. So we're talking about heifers and beef. So if you could talk about Argentina in general, processed meat, fresh meat, do you think the situation in Argentina is going to improve? So my first question is about Argentina. Second question is about Brazil. The slaughter volume has increased considerably. It's still a bit low, but still coming in strong in the second quarter. The first quarter, strong slaughter volumes in Brazil, so part of that was going to be exported, but a lot of that was going to stay in the domestic market. I mean, the bigger ones, you were probably closer to zero idleness in your bigger operations. So record export volumes in July.
So if you could talk about your prospects for the second semester, because if exports are not supported, there may be more beef in the second semester as expected. So will domestic demand be enough to support the margins that you have been seeing? So if you give me a bit more color on that dynamic, that would be great. And if I may ask a third question, the others line drew my attention. There was a drop in it. It used to be more representative, especially concerning Colombia, and that has had a reduction. So what's in that others revenue, please? Leo, so let's start with Argentina. The environment in Argentina is improving gradually. The first main impact for us was the reduction in the difference between the official dollar and what they call the blue dollar, was reduced to close to zero.
So it's a level playing field of competitiveness for all companies. As for the change in export taxes, that's good news. Manufactured products are not highly consumed in Argentina, so the incentive to that export does bring about competitiveness, but the government is giving positive signs that it will interfere less. There will be less restrictions. We no longer have the compulsory restrictions on some cuts to the Argentine market. We're very optimistic about Argentina, and the curve is already showing growth. So we're very positive about what's going to happen in Argentina, and we'll recover our strong brand there. As for Brazil, based on our studies, we see that the cycle in Brazil will be prolonged. We don't see a reduction in it. We concluded the month with a national slaughter record in Brazil.
We celebrated that over 200,000 heads were slaughtered, which goes to show a very positive dynamics. There's a lot of innovation going on in Brazil, you're aware of that? The integration with other crops, with livestock. Would you like to jump in about the others line? Well, if you look at the second quarter 2024 and 2023, there was a 33% drop, mainly due to the exports of live cattle. So there's been a reduction, a considerable reduction, and the idea is to discontinue that operation. So that's why there has been such a reduction since then. In the first quarter, there was a 17% drop, which is normal, especially considering our energy generation. There are some seasonal peaks, and it's volatile. That's why it's in the others line. So you can expect some volatility in that line, but it's becoming less and less relevant.
It's between 2%-3% of the company's total revenue quarterly, and once we conclude the acquisition of the new assets in South America, the relevance will drop by 40%-50%. So it will become less and less relevant. That's great. Just as a follow-up question, Edison, discontinue the live cattle operation, could you provide some more color on that, please? Yes. We're gradually discontinuing our live cattle operation because of the volatility in revenue, and return on invested capital is good, but it's becoming less relevant. And to our strategy, especially in line with our objectives of ESG, it no longer makes sense in terms of risk and return to keep that operation going. Some of the assets we had that were related to that operation, we have disposed of over the last 12 months.
Probably by the end of the year, we should discontinue that operation at Minerva. Okay, thank you for the details. Our next question is from Gustavo Troiano, from Itaú BBA. Mr. Troiano, please go ahead. Good morning, Fernando and Edinho, for taking my questions. My first question is about the US. Your ability to increase your export mix to the US has been discussed for a while, but what I'd like to hear from you is, going into 25 and assuming a scenario where cattle supply continues to drop in the region, do you think that export mix will continue to increase? And if so, I'd like to understand up to what point, to try and understand if you might discuss new permits or increasing the quota, considering that scenario. My second question is also about the change in exports mix.
Could you talk about the working capital cycle with that change? So as you increase your exports to the U.S., I'd like to hear from you what the difference in the export cycle from Asia to the U.S. will be, so we can try to understand what the impact will be on your working capital cash flow as that change takes place, if that is indeed your basis scenario. Thank you. That's an excellent question, Gustavo, and let me add another country to the equation for 2025. For the U.S., we're seeing a huge reduction in slaughter. There will be a reduction in the slaughter of cows, and it will have an impact on the production of calves. The U.S. is an operation where Minerva has a distribution operation in the U.S., so we're opening new markets, both in food services, retail, and meat packing.
It's a very active market, we're looking for alternatives. Beef in America is part of our mix of Brazil, Argentina, and Uruguay. We're very well-positioned to have an increase. We think that there will be a premium in the US, but there will be a trade-down, and that trade-down will favor beef from South America. Considering our distribution structure in the US, it might have an impact on our working capital. So Edinho will talk about that. Well, you know that when we increase exposure to riskier markets, the counterpart is that you have to increase prepayments. Therefore, there's an improvement in working capital.
The same way, when you diversify to less risky markets, as is the case now, that we are reducing Asia and increasing the US, naturally, the working capital cycle worsens temporarily due to these new markets and the credit policy we work with when it comes to this class. Now, if you look at our working capital worsening, this quarter is BRL 700 million. It's in the receivables account. Half of that is due to the FX effects from receivables. 70%-80% of our receivables are dollar-denominated, so the FX depreciation has a direct impact, increasing that account in BRL, but not necessarily having grown in terms of volume. It's just a translation from dollars into BRL. That was roughly BRL 300 million this quarter. The other BRL 390 million-400 million are related to the increase in the operation, indeed.
If you compare this quarter to the same to the first quarter this year, the operation is accelerating by 16%-17% in terms of volume. So that does require more working capital, and based on the trade-down of our sales going to less risky markets, then you have a longer cycle. Now, looking at a snapshot for the year, in the second quarter, we consumed BRL 700 million. We're consuming BRL 350 million, BRL 380 million in the year, up until July. Our projection for the year... would be to repeat what we've done in the last couple of years, which is to have a flat working capital consumption, or maybe another BRL 100 million, BRL 200 million for the year. We still see the same scenario for this year, so we believe this change in the second quarter will be a one-off.
We'll be operating closer to this mix of the second quarter, and we do not expect any additional working capital requirements until the end of the year. There will be fluctuations and volatility, but we still believe that by the end of the year, we'll be delivering on target close to zero or BRL 200 million, tops. Gustavo, I mentioned China in that equation, and Edinho has just put it very well when it comes to working capital in the U.S. What we're also doing is to monitor how China has been slaughtering animals this year. China has the third-largest herd, but producers are decreasing their herd, similarly to what we saw happen in the U.S. So it's very likely that there will be a lack of internal supply, and China will go back to this equation, to this market, and it will be very relevant. Thank you.
It's very clear. Let me remind you that to ask questions via audio, please click on the Q&A button, type in your name and affiliation or type in your question. Please wait while we pull for questions. Our next question is from Thiago Duarte from BTG Pactual. Mr. Duarte, please proceed with your question. Thank you. Good morning, Fernando. Good morning, Edison. Good morning, everyone. I have a couple of questions. The first one is about the margins. Gross margin was really good. Historically speaking, one of the best for the second quarter, but it was partly offset by the SG&A, at least when we look at the revenue percentage. So I would imagine the company is getting ready to integrate the assets that will be coming in, and I would imagine that this is part, if not the whole, of a heavier SG&A structure.
So does that assumption make sense, and does it explain that potential issue? And my second question is to Edison about hedging. As you mentioned, your hedging strategy was key, especially this quarter. And I get the feeling, considering the quarter as a whole... I mean, we can only see a snapshot of the balance sheet at the end of the quarter, but you're practically fully hedged over the quarter. So I'd like to hear from you, what kind of hedging can we consider looking forward? I know that your minimum policy is 50%, but 50%-100% is quite a lot. So I'd like to hear that from you. So we'll start with the hedging 'cause it's easier. Our policy is established by a matrix that takes into consideration the cost of hedging and the company's leveraging.
So if you look at our leveraging and the cost of hedging, the recommendation is to hedge 55% of our long-term debt and plus or minus 10. So it's not 50% to 100%, it's 50% to 65%. Right now, we're at 57%, but that plus or minus 10 is discretionary. So it's up to me and my team to make that decision based on what's happening in the market. I think I've answered your question, right? Yes, you have. Thank you. About the first question on SG&A, there has been an increase of about BRL 35 million, and that can be split into 18 to 19 to BPU consolidation expenses. So BPU has increased that when compared to the second quarter 2023. But the BPU's margin that's coming in now because of what's happening in Uruguay, is worse than the company's average margin.
So SG&A, given the integration of BPU, ends up being disproportionate, as if it had the same gross margin and EBITDA as the rest of the company, or if it had a bigger margin, it would dilute that cost. That's why if you look at it as a percentage, it looks higher. And the other part, the remaining increase in SG&A, has to do with the second quarter, where we have increased the payment reimbursement, where we've paid bonuses to employees. A large part of that has to do with our compensation regime, quarter by quarter. But it's been realized in the second quarter. There's no relevant integration expenses. It's important to say that, because we'll be using less structure. We have hired some people, expanded our staff to prepare the team and our management structure for these new plants, but that's not relevant. We have always highlighted that...
as a huge synergy potential of this deal. We will be bringing in assets and variable costs, but no fixed costs. So fixed cost will be considerably diluted. So it will not, it will not affect that line, Thiago. That's very clear. Thank you. Let me remind you that to ask questions, please click on the Q&A button, type in your name and affiliation or your question. Please hold while we poll for questions. If there are no more questions, I'd like to turn the floor over to Mr. Edison Ticle, to read the questions in writing. Please go ahead. Thank you. First question is, how long do we expect the regulatory approval to take for the acquisitions? Well, there's a legal term that says that given the date we made the request on, this should take place in the fourth quarter, so sometime between October and December.
That's what we expect officially. Luis asks: Good morning. When you announced the purchase of Marfrig assets, the dollar was 4.95, and your net debt over EBITDA was 5x. Now, the dollar is about 5.60, but has the acquisition become cheaper? If so, will that multiple go down to 4.60x, 4.70x? Well, we have always thought that we'd be able to extract quite a lot of value from that acquisition, so a higher EBITDA than expected. With that, the acquisition multiple and the payback of the acquisition would go down to figures lower than what we had estimated. Now that the dollar has gone up and our exporting profile, the profitability of exports improved at the end of the second quarter. It's even better in the third quarter than it was in the second quarter, which was better than the average of last year.
Therefore, the answer to your question is, yes. We can't estimate by how much, but definitely, looking at value-generating drivers and what we can extract from acquisition, they're much better and much clearer than when we made the acquisition. Although, I think we're the only ones who see that. I don't think the market is still looking at that in any detail. Considering the price of the share right now, why not buy back your own shares? The decision to buy back shares is made by the board, not by the management. However, it is discussed in board meetings, and obviously, we're waiting on the decisions made by the regulatory agencies so that we can have a more in-depth discussion about what to do in terms of capital allocation.
And obviously, now speaking as the CFO and in charge of our balance sheet, there is an objective to deleverage the company and to use all the resources. And when we consolidate the acquisitions, to have as the priority goal, to deleverage the company. And that has been said by the board that that is the main goal for this management. If that priority changes, then the discussions might change. But right now, the board, and we are in line with the board, we agree, believes that the best use for our generated cash is to deleverage the company. Pedro Seixas is asking if we can expect that the approval of the acquisition of assets in Uruguay will still happen in the fourth quarter this year, and the integration as well?
As I said, we're working based on legal deadlines, and they say it will be between October and December. So that is what the company expects to be the official deadline for all the assets acquired. Based on the cattle cycle, can we expect a down cycle in Brazil being offset by Uruguay and Paraguay? Well, speaking of cycle, we're very optimistic about the cycle in Paraguay. In Brazil, we disagree from market analysts. We believe that it will continue to be good in 2025. Not only continue to be good, but we believe that productivity gains and the better use of females have made the bottom and the top of the cycles to have changed significantly.
The number of animals that are ready for slaughter, even at the most negative, unfavorable part of the cycle, we believe that the number of animals is about 3-4 million heads more than it was in 2020 or 2021, which was the floor of the last negative cycle. The same goes for the positive side of the cycle, which we had 30, about 30 million heads ready for slaughter a year. That number has also changed, and it's now closer to 37-38 million heads in the positive side of the cycle. There have been structural changes that are important.... I don't see any analysts looking at that. We'll try and provide more color on that, especially when we do get the regulatory approvals.
The company is fully focused on obtaining those approvals, but we're very optimistic, structurally speaking, about the cattle cycle in Brazil than most analysts. So in answer to your question, Brazil and Paraguay still have very positive cycles in 2025, and the number of heads ready for slaughter will be at a higher level than what we've seen in the last 5 to 10 years. And Uruguay will possibly go into a positive cycle as of 2025. Let me check if there are any more questions. The price of beef, we're very optimistic. As I've said, Fernando mentioned that when he talked about exports, and to us, the domestic market results, to our surprise, have been better than we had imagined for the year. That's it. The other questions are about the approvals for the Marfrig deal. I've already talked about that.
Do we have a guidance for second semester of 2024, 2025? Can we expect the same impact? Yes. Our projections and simulations are compatible with those of the market. They're still valid. We have shared those with the market, and we do not have a guidance for liability management. We're always ready to make the most of market opportunities in terms of dividends and costs. Our objective is to have an optimized capital structure and especially less burdensome. There's a question from Guilherme, from Santander, so I'll turn it back over to the operator. Mr. Palhares, please go ahead. Thank you, Edison. I had some technical issues. I'll be quick. If you could comment on the breakdown of the company's financial results, there have been positive results in terms of the cash impact of derivatives and the net interest on the cash basis. Thank you.
If you look from a recurring point of view, with the higher level of gross debt, there have been... The expected financial expense will be BRL 450 million for the quarter. If we look at liabilities minus revenue at our cash, our-- The FX hedging for the quarter, if we look at all these interest expenses, liabilities, financial expenses, look at the hedging, it has contributed with roughly BRL 800 million to the cash. That's why the cash financial expenses were just over BRL 500. The contribution from the hedging was about BRL 800 on a cash basis. Great, Edison. Thank you. The Q&A session is now concluded, and I will turn it over to Mr. Fernando de Queiroz for his closing remarks. Please go ahead, Mr. de Queiroz. Thanks, everyone, for this conference call.
Before we conclude, I'd just like to reemphasize the opportunity and the space that South America has been occupying recently. More open markets, higher penetration in the existing markets. So what we had estimated for South America, 40%-50% trade globally, is coming to fruition. Again, we have proven our operational excellence, our focus, our discipline, and how much geographic differentiation can bring us in terms of efficiency. Minerva's exporting DNA has proven to be increasingly more effective with a commodity that is becoming increasingly more global. We continue to be confident in the company's consistent results. And lastly, we'd like to thank. I would like to personally thank Minerva's team for their focus and for how they're preparing for the integration of these new assets. Again, after 19 acquisitions, we're now moving on to the 20th acquisition.
We'll definitely have to face challenges, but I feel very confident in our team. I'd like to congratulate our team in the operation and the specific integration team. After all, our company is committed to sustainability, not only environmental sustainability, but financial sustainability, so connecting people, food, and nature. Thanks once again, and we're here for you. If you need anything, if you have any questions, just reach out. Thank you. Minerva's earnings conference call is now concluded. For further questions, please contact the investor relations team at ri@minervafoods.com. Thank you for joining us, and have a great day.