The world’s biggest meat processor, JBS, has reported mixed trading results for the third quarter ended September 30, with pre-tax earnings across the company down 18 percent and net income down 74 percent, in year-on year comparisons.
The company ended the third quarter with net revenue of R$41.2 billion, pre-tax earnings of R$3.1 billion and net income of R$887.1m (US$258.4 million), it reported to the market this morning.
The company’s US Beef division, including Australian operations, was one of the better performing JBS business units in the third quarter.
The US beef division reported a 6.8pc decrease in net revenue to US$5.4 billion, due to a reduction in beef sales prices in the American market. But this price reduction stimulated demand in the US domestic market, and the unit’s pre-tax earnings increased 37.1pc to US$270m in the third quarter. JBS US also increased its US beef exports by 32.5pc year-on-year, due to strong demand from Asian markets and greater cattle supply.
In Australia, however, beef processing operations continued to be impacted by the low availability of cattle, resulting in a reduction of 20pc year-on-year in the number of cattle processed by JBS, impacting mainly on Australian export volumes.
The worst of the third quarter financial impact was seen in JBS’s South American operations and value-added division, Seara.
JBS Mercosul (South American operations) reported a 5pc reduction in revenue, while its pre-tax earnings fell 47pc to BRL339 million (US$98.7m).
The Seara value-added foods division reported an 8.6pc drop in revenue, and pre-tax earnings fell by 67.8pc to BRL334.8m (US$9.5m).
“In our operations in South America we faced a challenging quarter, especially in Brazil, due to the strong Real currency, which impacted the profitability of our exports, as well as the relevant increase in grain prices,” JBS global chief executive Wesley Batista told the market.
“However we believe that the most challenging period for our businesses in South America is over and we should see the recovery of the profitability in the next quarters. In our international operations, we are optimistic and confident with the performance of all our business units in the coming quarters, especially in our beef business in the US,” Mr Batista said.
He said the company’s global production platform and the diversification of its product portfolio allowed it to mitigate challenging situations, while providing opportunity to pursue regional and/or segment opportunities.