USA – JBS, one of the world’s leading meat processing companies, has booked a loss in the year’s second quarter dented by lower sales from its domestic operations and its major stakes in Australia and USA.
According to Gilberto Tomazoni, the company posted a net loss of US$53.2 million for the three months to the end of June, compared to a profit of US$803.2 million a year earlier.
“JBS’s net sales fell by 3.6% to US$18.1 billion due to the slumping sales in its pork division, Australian business and its US-based group, Pilgrim’s Pride,” Tomazoni said.
“The lower sales, combined with a 4% increase in the cost of goods sold and higher debt expenses, pressured JBS’s bottom line.”
However, looking at JBS’s adjusted EBITDA margin for the second quarter which stood at 5%, Tomazoni said the company was seeing progress. A year ago, its adjusted EBITDA margin was 11.2%. In the first quarter of 2023, that metric stood at 2.5%.
“Although the global context remains challenging for the protein sector, we have confidence that we have started a gradual recovery of our margins. However, our promising prospects for 2023 have begun to materialize,” he said.
Tomazoni added that JBS had reacted to an increased global supply of chicken and tighter margins in the US beef business by looking to improve the efficiency of its operations in Brazil and the US.
“These initiatives have already started to affect our operations, as shown by the improvement of our margins, reinforcing our belief that we should focus on what we control to achieve superior financial performance in challenging scenarios like the current one for the global protein industry,” he said.
“In the coming months, we also see a scenario of a more balanced poultry supply, with potential positive impacts on sector prices, and we are already capturing the decrease in corn prices in our cost structure, a situation that also benefits our pork business.”
Meanwhile, JBS SA expects profits at its largest unit to remain tight as cattle availability in the US shrinking further through next year.
Profit margins at JBS’s North American beef operation will remain at low single-digit levels, with ranchers expected to withhold females as part of the efforts to replenish the herd.
Shrinking cattle herds in the US and higher prices of the grain used as feed have made it more costly to produce meat.
Meanwhile, producers are also struggling with an abundance of chicken and pork as consumer demand retreats from levels seen during the pandemic.
Still, JBS’s pork and chicken businesses are poised to recover more quickly than beef, with early signs of a much-needed supply slowdown and a recent drop in feed costs.
The brighter outlook was echoed by Miguel Gularte, CEO of rival BRF SA, who on Monday said the worst of the chicken supply glut is being overcome.
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