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Brazil's JBS: chicken sales drop while beef remains strong

14 November 2018

BRAZIL, 13 November 2018 (Reuters) - Brazil-based food company JBS SA on Tuesday posted a narrower than expected quarterly loss on the back of a strong performance by its Seara processed foods and Brazil beef divisions, and resilience in certain of its US operations

Seara booked net sales of 4.9 billion reals last quarter, a 9 percent rise from a year earlier, as a result of higher sales prices both domestically and in export markets, JBS said in a securities filing.

Consolidated net revenue grew by 20 percent to 49.4 billion reals, thanks partly to a hefty increase in Brazilian beef sales, JBS said.

Analysts on average had expected JBS to lose about 905 million reals during the quarter, according to IBES data from Refinitiv. The company posted a narrower 133.5 million loss, the Tuesday filing showed.

In the United States, a strong economy has boosted beef consumption and increasing production is supported by demand both domestically and abroad, JBS said about one of its important business divisions.

The company's US pork segment, on the other hand, is suffering from a supply increase which has negatively impacted sales prices in the local market.

Currently, Americans are substituting chicken with other meats as President Donald Trump's trade wars reduce US pork exports to China and Mexico. As a result, JBS reported some weakness in at Pilgrim's Pride Corporation subsidiary, which was impacted by lower prices in the United States and Mexico.

"We believe short term the chicken business in the US is likely to remain under pressure, while we see no signs of weakness in the beef business," Barclays analysts Benjamin Theurer and Antonio Hernandez said in a recent research note to clients.

The world's largest meat packer also said earnings before interest, tax, depreciation and amortisation, a measure of operating profit known as EBITDA, was 4.4 billion reals last quarter, above expectations for 4.03 billion reals.

($1 = 3.8031 reals)

Reporting by Ana Mano in São Paulo Editing by Matthew Lewis and Tom Brown

Source: Reuters





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