GLOBAL red and white meat processor JBS has this morning reported second quarter net revenue of A$17.9 billion up 12.3pc on the same quarter last year, with pre-tax earnings of A$1.19 billion, 19pc lower than last year.
Net income for global operations was A$615 million, a significant improvement relative to the previous quarter and this time last year.
Results were mixed across the company’s South American, value-added, and US beef, pork and chicken divisions.
“We are facing different opportunities and challenges in each region where we operate, which reinforces the relevance and the successful strategy to diversify in various markets and segments,” global chief executive Wesley Batista said.
The JBS US Beef division, including operations in Australia and Canada, recorded net sales back 12.2pc year-on-year, due to a decline in prices in the US domestic and international markets, partially offset by an increase of 5.2pc of volume sold in the US domestic market. EBITDA was US$27 million, a reduction of 88pc compared to same period last year.
The gradual increase in cattle availability in the US and consequently a reduction in its price contributed to a decrease in beef prices, which helped to boost demand in the US domestic market.
In the US operations, results were impacted in the regional business, due to lower seasonal availability of cows, and higher production costs related to the initial phase of operation at the recently expanded plant in Hyrum, Utah. In Australia, cattle prices remained elevated due to strong cow and heifer retention which had contributed to compressed margins, the company said.
The JBS US division made additional investments to increase capacity of consumer ready products.
JBS’s South American operations recorded net sales of A$2.95 billion, stable compared with the same quarter last year.
During the quarter, volumes were redirected from the South American domestic markets towards exports, which increased 6.9pc in fresh beef and 14pc in processed products.
In the domestic market, the reduction in volumes contributed to an increase of 16.7pc in beef prices. Pre-tax earnings expanded of 21oc over 2Q15.
“In comparison with the second quarter last year, there was an improvement in demand in international markets for South American beef, but relative the first quarter this year, the business performance was impacted by the appreciation of the Brazilian currency.
JBS also noted the recent development with the recent opening of the US market to fresh Brazilian beef. Currently the largest beef importer globally, JBS already had a strong presence in the US market associated with its production facilities, meat sales offices and distribution centres.
“This represents a new frontier for the export of fresh Brazilian beef, not only to the US but to other markets that follow the same standards,” JBS said.
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