Brazil's JBS reports steep Q1 loss as forex swings hurt bottom line

Brazilian meatpacker JBS SA on Thursday reported a steep 6 billion reais ($1.03 billion) net loss in the first quarter largely due to foreign exchange impact and warned the COVID-19 pandemic may affect results going forward.
calendar icon 15 May 2020
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Excluding foreign exchange effects, the company's net profit would have been 803 million reais. In the first quarter of 2019, JBS recorded a net profit of about 1 billion reais, reported Reuters.

As overall meat sales remained strong both in domestic and export markets despite the global health scare, the company reported a 27 percent rise in net revenues to 56.5 billion reais in the quarter.

In the first quarter, international sales of JBS' pork division grew 56 percent by volume, driven by rising exports to China after the Asian country started to recover from the effects of COVID-19.

On the other hand JBS said the Pilgrim's Pride division in the United States was impacted by a sudden change in consumer demand both in the retail and food service channels as the health crisis hit.

"The most 'commoditized' side of the business was particularly volatile in the quarter and the market remained challenging compared to 2019," JBS said referring to Pilgrims.

Globally, the effects of the pandemic will possibly continue to disrupt the business, capital markets and economies worldwide for some time, in JBS' view.

The U.S. beef unit reported net revenue of $5.2 billion in the quarter, an increase of 3.1 percent compared to the same year-ago quarter, driven by a 4.2 percent increase in volume sold. This offset the 1.1 percent reduction in the average price of beef, JBS said.

In Brazil, where JBS is headquartered, the company furloughed beef plant workers between March 19 and April 9 in response to pandemic, without saying how many sites were affected.

The company said the impact from the closure of its Passo Fundo poultry plant, as well as that of other measures to weather market volatility during the health crisis, will be better assessed in coming quarters.

($1 = 5.8160 reais)

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