JBS financial results for the third quarter of 2020 once again validate the company's strategy, JBS global chief executive officer Gilberto Tomazoni said upon revealing that net income during the quarter was 3.133 billion reals ($581.2 million), a 778% increase from 357 million reals in the third quarter of 2019.
Despite a challenging scenario due to impacts from the global COVID-19 pandemic, Tomazoni said the company was able to generate revenues of 70.1 billion reals as well as reduce its leverage to 1.60x, the lowest in JBS history.
“The long-term fundamentals of our industry remain solid, and we are well positioned to face the challenge of sustainably feeding a growing population that will increase its demand for high-quality protein. We may face occasional short-term imbalances in supply and demand in any given region in which we operate, but this does not alter the overall positive trends,” Tomazoni noted.
The company’s geographical diversification, coupled with its diverse product portfolio across multiple proteins, will help reduce short-term volatility and provide more consistent results over the long term, he added.
JBS USA Beef posted third-quarter net revenue of 28.8 billion reals, a 28.7% year-over-year increase. The company said production in the U.S. and Canada increased in relation to the second quarter of 2020, and volumes returned to pre-COVID-19 levels.
The company said ongoing favorable demand contributed to an increase in beef prices during the third quarter, and the cattle supply remained ample. "An increase in the number of animals processed drove finished cattle prices to a higher level when compared to same period of last year,” JBS said.
Additionally, JBS said North American beef exports grew in the third quarter versus the second quarter not only in volume but also in quality and product diversity, increasing the contribution to results.
JBS USA Pork recorded net revenue of 7.7 billion reals, a 28.0% year-over-year increase.
“This unit posted a solid performance in the quarter as a result of its business strategy and operation efficiency,” the company said. “The greater focus and investments in value-added products, in operational improvements and also in the establishment and maintenance of relevant commercial partnerships in the domestic and export markets have differentiated the unit's performance.”
During the quarter, JBS said pork production returned to pre-COVID-19 levels, offsetting the lower volume produced in the second quarter of 2020, which was affected by a temporary suspension of one pork facility and the lower production pace due to the pandemic.
The higher pork supply during the period was absorbed by domestic and export market demand, which maintained low pork inventory levels. The cutout increased in each month of the quarter, with prices at the end of the quarter surpassing prices during the same period last year. Additionally, the price of live hogs recovered from their lowest level of the year in June, although JBS said prices were still below year-ago levels.
Pork exports continued to exceed the levels of last year, the company said, with China as the main destination, followed by Mexico and Canada.
Plumrose continues to focus on organic growth, investing in increasing its production lines and in greenfield projects.
Pilgrim’s Pride Corp. posted net revenue of 16.5 billion reals, 50% growth versus the third quarter of 2019.
The company said U.S. demand continues to recover, with volumes stronger than a year ago for retail and the quick-service restaurant business, although volatility and challenging conditions still exist in commodity segments. Pilgrim’s Pride "continues to improve its relative performance across all business units and continues to adapt quickly to changes in channel demand by adjusting the mix of its production capabilities, supported by its close partnerships with key customers, strong focus in execution by ... team members, the geographical diversity of its footprint and its presence across all bird size categories,” JBS said.
The company added that construction of a new precooked and cooked bacon facility in Missouri that started in April is moving ahead as expected and should start operations in 2021 with the capacity to produce 24 million lb. per year.
Additionally, Plumrose is working on its announced plan to build a new state-of-the-art facility for ready-to-eat Italian meats and charcuterie, with investments estimated at $200 million.
During the third-quarter earnings call, Tomazoni also said the company is expanding 12 of its plants in Brazil in an effort to double production capacity by 2024.
Tomazoni commented on some of the social commitments JBS has made, particularly those relating to the COVID-19 pandemic.
“We believe we are on the right path, both in terms of our financial performance and our commitment to society. JBS understands that no company is truly prosperous without a serious commitment to social responsibility,” he said.
The company reportedly has invested more than $520 million in enhanced safety measures to keep team members safe and to support local communities during the pandemic.
In Brazil, JBS has constructed two permanent hospitals, expanded 15 public health clinics, distributed 15,000 items of medical equipment, provided 88 ambulances and contributed more than 550,000 food baskets to those in need.
In the U.S. and Canada, the company has invested $50 million through its Hometown Strong program to fight hunger, support long-term infrastructure needs and assist COVID-19 relief efforts in local towns and communities.
Meanwhile, JBS said it continues to innovate to address changes in consumption patterns and to anticipate new food trends.
In Brazil, Seara developed the Incrível line of plant-based products, which reproduce the flavor and texture of meat. In the U.S., startup Planterra Foods was created to develop a vegetable protein used in the company’s OZO product line, a nutritious and tasty option for plant-based food enthusiasts.
Additionally, Tomazoni said the company is building on its robust and transparent governance system.