JBS posts profit as chicken and pigs make up for beef slump

Sao Paulo | Reuters—Brazil’s JBS SA, the world’s largest meatpacker, said on Tuesday that divisions that process chicken and pigs lifted its results, including poultry unit Pilgrim’s Pride, JBS USA Pork in the U.S., and Seara in Brazil.

Performance there compensated for the slump in the Beef USA division, which accounts for about a third of JBS’ revenue, the company’s second-quarter results showed.

JBS reported a net profit of 1.72 billion reais (C$432.3 million) for the quarter.

While the company missed forecasts by LSEG analysts, who had predicted a net profit of 2.02 billion reais, it returned to a profit after a net loss the same quarter a year earlier.

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Adjusted earnings before interest, tax, depreciation and amortization (EBITDA), a measure of operating income, were 9.88 billion reais for the quarter from April to June.

Gilberto Tomazoni, global chief executive officer of JBS, said in an interview that the results were boosted by favorable supply and demand dynamics, as well as lower prices of grains for animal feed and operational improvements.

Tomazoni added that the company’s processed food, poultry and pork unit in Brazil, Seara, had overcome past operational challenges, and while improvements had been incorporated, more adjustments would be made.

“It still has potential,” he said. “Now, with the incorporation of commercial issues, pricing, mix management, distribution management, we can do even better.”

Tomazoni said the dual share listing plan was still an important strategy for the company to unlock value in the U.S., one of its biggest markets. It is pending authorization from the U.S. Securities and Exchange Commission (SEC).

“When we have SEC approval for the registration, we’ll call the shareholder meeting and put it to a vote,” he said, adding that executives were still in talks with SEC officials.

While exports to China were down, he said those to other destinations, such as the United States, Chile and the Middle East, were holding up.

“Brazil’s animal processing volumes grew significantly, and domestic consumption was greater than exports,” Tomazoni said.

JBS increased free cash generation to 5.5 billion reais in the second quarter, which gave room to deleverage debt.

Guilherme Cavalcanti, chief financial officer, said reduced debt meant the company could maintain its growth plans.

Total revenue, for the first time, exceeded 100 billion reais in a quarter.

—Additional reporting for Reuters by Andre Romani