JBS earnings rise in recovering beef market
JBS SA, the world’s biggest beef producer, posted a third-quarter profit of 367 million reais ($178 million) on Tuesday, driven by its strong beef business in Brazil and recovering U.S. poultry operations.
A weaker Brazilian currency also helped JBS recover from a quarterly loss of 68 million reais a year ago.
The company said it benefited in the last quarter from an improved cattle cycle in Brazil, which has made more animals available for slaughter. JBS has also expanded its beef processing capacity in Brazil by 8,000 heads per day.
JBS’s Mercosul unit, which includes its operations in Brazil, Argentina, Uruguay and Paraguay, slaughtered 2.03 million heads of cattle in the quarter, compared to 1.72 million heads in the same period a year ago.
Third quarter profit missed a 404 million reais average estimate in a Reuters poll of analysts, as tax liabilities from recent acquisitions weighed on the bottom line.
JBS started out as a family butcher in Brazil and shot to the top spot in beef globally through an aggressive takeover strategy, which it has recently resumed. JBS bought local poultry producer Agrovento in November after leasing Frangosul assets controlled by French poultry producer Doux earlier in the year.
JBS’s U.S. chicken unit Pilgrims Pride Corp. reversed a year-ago loss despite a sharp rise in corn prices in the period thanks to cost reduction measures. Brazil’s currency, the real, was also 14 percent weaker in September than a year earlier, boosting U.S. revenues in local terms.
Earnings before interest, tax, depreciation and amortization, a gauge of operating profit known as EBITDA, rose 75 percent from a year ago to 1.38 billion reais in the quarter, in line with analysts’ estimates.
JBS said in a separate filing that its board of directors had approved the incorporation of subsidiary Cascavel Couros, a leather processing factory, and said it expected annual savings of $10 million through resulting tax gains and cost reductions.