GLOBAL meat processor JBS posted second-quarter net profits of 3.38 billion reais (US$629 million) – much higher than analysts’ estimates – on the back of strong performance in its beef and pork divisions in the US and Brazil.
Despite the disruptions at some of JBS’s US and Brazilian production facilities due to coronavirus, results from the world’s largest meat-packer for the quarter ended 30 June surprised many.
Consolidated net revenue increased by 33pc to 67.58 billion reais. The company said all business units covering beef, pork chicken and value-added proteins had increased sales in Brazilian reais over the previous quarter.
JBS highlighted strong Brazilian beef exports to China, which increased 53pc in the second quarter compared with the same period a year ago.
Adjusted earnings before interest, taxes, depreciation and amortisation, rose by 106pc from the same period last year to 10.5 billion reias.
The impact of COVID-19 on the animal protein industry was clearly evident, however, especially in North America. In April, JBS temporarily closed three US beef production units. Countering this, demand for beef in the US remained was strong, positively impacting the price of meat.
Australian operations suffered less of an impact from COVID in the quarter. The volume of cattle slaughtered grew in relation to the previous quarter, but cattle availability continued to be a challenge, the company said.
The coronavirus pandemic had changed consumers’ buying habits and product preferences, JBS said. Shoppers were buying more over the internet, and were increasing purchases of comfort foods, healthier foods and easy-to-cook meals.
The changes were an opportunity for the company to innovate, JBS said.
Revenue in the JBS USA Beef division, which includes operations in Australia and Canada, rose 36pc compared to the same period last year in Brazilan reais, but declined 1pc in US$ terms to $5.6 billion as volume declined.
“This quarter once again demonstrated JBS’s resilience,” JBS global chief executive Gilberto Tomazoni told shareholders.
“Our diversified geographic and protein production platform, focus on the health and safety of our workforce, and the dedication of team members around the world, has enabled JBS to face the challenges and volatility that the pandemic has imposed on companies worldwide,” he said.
“During a period of so many challenges, we have once again demonstrated our resilient capacity for adaptation under difficult circumstances, and our ability to carry out the company’s strategies and objectives.”
Under COVID, consumers had changed their behaviour, consumption and buying habits, Mr Tomazoni said.
“Retail, and especially e-commerce, grew exponentially. This presents a competitive opportunity for the company, given our strong culture of innovation. We have developed and launched many new products in response to changing consumer trends.”
JBS was now actively participating in the plant protein market in virtually all regions in which it operates, he said. In the US, it had created the Planterra company, which had already launched the OZO brand to compete in the plant-based market. In Brazil, the JBS’s Seara value-added division was the plant protein market leader with its Incrível brand.
“As the plant-based market continues to grow each year, we are well positioned to be among the leaders in this segment,” Mr Tomazoni said.
“The pandemic has accelerated value added trends. Increased interest in easy-to-cook, quick-to-prepare, healthy, and indulgence foods, as well as e-commerce purchases, have created important growth opportunities that have the potential to accelerate business transformations,” he said.
“Despite the pandemic, business fundamentals have not changed. The world will have 9.7 billion people in 2050, who will consume 70pc more protein.”
In the US and Canada, beef production volumes decreased as a result of the enhanced safety measures and protocols implemented by the company. These actions, including the removal of vulnerable populations with full pay and benefits – representing about 10pc of the workforce, decreasing line speeds to allow for more physical distancing, erecting physical barriers on production floors, and staggering shifts, starts and breaks, among other safety measures, increased the company’s ability to prevent the potential spread of COVID among the workforce.
On the other hand, beef demand in the US market remained strong, creating a momentary imbalance in supply and demand, which impacted beef prices.
The Australian operations had less impact from COVID-19 in 2Q20. Australia’s Primo Foods’ further processing operation remains focused on diversifying its portfolio with innovative products, mainly in the snacking and ready-to-eat segments.
In the first half of 2020 alone, Primo Foods launched 15 new products under the Primo, Smokeman Brothers and Stackers brands with great success in Australia and New Zealand.