JBS almost doubles profit

JBS almost doubles profit

- JBS credits beef businesses in Brazil and Canada. - Pilgrim's revenues up, but more improvement possible. - Beef demand in emerging

JBS S.A. has reported almost doubling net profit for its first quarter from its opening quarter last year, attributing improved returns for its U.S. chicken company and increased sales in its South American operations.

The company reported a 22.0% increase in revenues, which it said was due mainly to an increase in beef volume in Brazil and initiation of chicken operations in Brazil, as well as commencement of beef operations in Canada and increased pricing for beef and chicken in the U.S.

The company said 74.0% of revenues were generated domestically in its local markets, and the remaining 26.0% of sales came from exports.

First-quarter financial results for JBS are shown in the Tables.

For its U.S. beef business, which includes its operations in Australia and Canada, JBS said first-quarter revenues improved 5.8% from last year because of increased pricing in both domestic and export markets and the launch of the Canadian beef business with the acquisition of XL Foods Inc. (Feedstuffs, Jan. 7 and Jan. 14).

The company said earnings, while improved from year ago, nevertheless were adversely affected by a decrease in cattle supplies and, therefore, high cattle prices.

However, JBS said it believes margins will recover through continued pricing actions, a better balance between cattle needs and supplies and a seasonal increased in beef demand in the second and third quarters.

JBS noted that, following regulatory approval and subsequent to the first quarter, it acquired XL's two plants in the U.S.: a beef cow plant in Omaha, Neb., with a capacity of 1,000 head per day and a fed cattle plant in Nampa, Ida., with a capacity of 1,100 head per day (Feedstuffs, April 15).

The facility in Nampa is closed, and the company said it has no plans to reopen it.

For its U.S. pork business, JBS said first-quarter revenues slipped 1.6% from year ago due to a decrease in pork exports, and earnings fell 16.1% due to the decreased exports and hog supplies that exceeded demand for pork.

For its U.S. chicken business, Pilgrim's Pride Corp., JBS said first-quarter revenues rose 7.8% on increased pricing of 8.3% and 15.8% in the U.S. and Mexico, respectively.

The company said earnings increased 13.2% on higher prices for chicken meat and parts, with income more than offsetting an increase in grain prices in the first quarter of $141.0 million from the year before.

JBS said chicken operations are improving significantly, but "management believes that it is possible to improve performance even more."

For its Mercosul business in South America, JBS said first-quarter revenues increased nearly 30% due to a 25.8% increase in cattle processed and increased beef pricing in domestic and export markets, the latter reflecting "strong demand" from emerging economies.

The company said earnings were up 10.4%, held back slightly due to expenses for a marketing campaign to promote the Friboi brand in Brazil.

JBS, headquartered in Sao Paulo, Brazil, is the world's largest beef processor and exporter and leather producer, with a major presence in the chicken and dairy businesses in Brazil.

In the U.S., JBS is the third-largest beef and pork processor and, through Pilgrim's, the second-largest chicken integrator.

The company reported 2012 revenues of 75.697 billion reals ($38.108 billion).

 

1. JBS earnings and sales*

 

-First quarter-

 

2013

2012

Sales (billion reals)

19.528

16.011

Earnings (million reals)

227.9

116.1

Earnings per share (reals)

0.08

0.04

Note: in U.S. dollars, JBS reported first-quarter earnings and sales of $112.0 million and $9.599 billion.

 

2. Number of head processed (million), JBS*

 

-First quarter-

 

2013

2012

Cattle

4.374

3.718

Hogs

3.519

3.307

Smalls

1.200

0.935

Note: Smalls are mostly lambs and do not include chickens.

 

3. JBS operating results*

 

-First quarter-

 

2013

2012

JBS USA Beef (million $)

Sales

4,315.2

4,078.8

Earnings

(25.1)

(45.4)

Head processed (million)

2.164

1.960

JBS USA Pork (million $)

Sales

842.0

855.4

Earnings

46.8

55.8

Head processed (million)

3,519.4

3,307.0

JBS USA Chicken (million $)

Sales

2,036.9

1,188.8

Earnings

117.7

104.0

JBS Mercosul (million reals)

Sales

4,969.6

3,827.4

Earnings

561.7

508.6

Head processed (million)

2,210.2

1,757.6

Notes: Mercosul head processed is cattle only. Operating earnings are expressed as earnings before taxes, depreciation and amortization.

*For the quarters ended March 31, 2013, and March 31, 2012.

 

Volume:85 Issue:21

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