JBS delivers strong 2017 full-year results, while emphasising transparency, compliance

Jon Condon, 29/03/2018

GLOBAL meat giant JBS shrugged off troubles last year in its Brazilian operations to deliver one of its best operational results in its history for the 2017 year.

Presenting its full-year financial results to the market this morning, JBS’s results benefited from its diverse operational presence across North and South America and Australia, and wide portfolio of products provided to more than 350,000 customers worldwide.

“We ended another year with solid, consistent results that demonstrate our capacity to overcome challenges,” global chief executive Jose Batista Sobrinho said. “The determination and discipline of our team were essential in achieving one of the best operational results in our history.”

The company’s 2017 adjusted net income across beef, pork chicken and value added divisions was R$2.1 billion, while reported net income was R$534 million, 129pc higher than 2016. Consolidated sales reached R$163 billion, with pre-tax earnings of R$13.4 billion – an increase of 19pc over the previous year.

Transparency, compliance focus

“We focus each and every day on achieving a standard of excellence in food safety and innovation, while providing the best service to our customers,” Mr Batista said.

“We also made important steps to improve transparency in 2017. We aim to establish an industry standard for compliance. To accomplish this, we established a compliance department that acts independently, reports directly to the board of directors and is led by the newly-appointed global head of compliance,” he said.

The company had also implemented the ‘Always Do it Right’ compliance program to consolidate all of its compliance initiatives. To ensure a culture of compliance was deeply-rooted in the company, JBS provided compliance and ethics training to all leadership, and established a new whistle-blower hotline.

In January of this year, Transparency International, a non-government organisation that analyses anti-corruption programs and the level of corporate transparency in the 100 largest Brazilian companies, provided JBS with an 8.1 ‘high score,’ versus a national Brazilian average score for all other companies of 5.7, the company reported.

“We believe that JBS’ commitment to sustainability will ensure the company’s future,” Mr Batista said.

This was reflected in progress achieved in projects addressing environmental preservation and in the external recognition of the company’s efforts, he said, including certification from CDP (Carbon Disclosure Project), a global entity dedicated to analysing climate change processes.

“Our programs to fight against deforestation and to manage water efficiently are the most developed in the sector,” he said. “We also created an Animal Well-Being Committee that has the responsibility to establish guidelines to prioritize the proper treatment of the animals under our care.”

Ended 2017 “Stronger and more united”

After a drama-plagued year involving food safety and corruption scandals and insider trading allegations which saw brother Wesley and Joesley Batista put in jail, the company said it ended 2017 “stronger and more united.”

“Over the past 65 years, there has not been a single day that was not a challenging day,” Mr Batista said. “Due to the efforts of our 235,000 team members, we have had the capacity to transform challenges into opportunities and overcome any obstacle in front of us,” he said.

The company’s USA Beef division, including operations in Australia and Canada, reported net revenue of US$21.66 billion for FY 2017 , an increase of 5.4pc compared with 2016. This performance was achieved, in part, as the result of volume and price increases in the US country operations. Pre-tax earnings in FY 2017 was US$1.308 billion, an increase of 177pc.

The strengthening of the North America economy, notably in the Unites States, and the continued reduction in unemployment contributed to an increase in demand in the US domestic market and an increase in beef prices in the region, the company said.

“Additionally, the increased availability of US cattle, coupled with stable production capacity also contributed to an increase in the industry’s margins,” the full year repot said.

It stressed that in 2017, JBS USA division exports significantly exceeded those reported in 2016, due to increased US volumes and higher margins.

“In addition to more favourable market conditions, improvements in operational efficiencies and a differentiated strategy of commercial relationships also contributed to the strong performance.”

Counter to the division’s overall performance, in Australia, the lack of availability of cattle affected local performance.

“Although Australian performance was positive in 2017, it was below that reported in 2016. On a positive note, JBS’s Primo Smallgoods business in Australia, which operates in the increasingly attractive prepared foods segment, produced encouragingly positive results,” the company reported.


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