USA – The Brazilian food giant, JBS, has reported a more than 10% decline in the company’s shares after it posted a wider-than-expected first-quarter loss marking the first time the firm has faced difficulties in all countries where it operates.
According to the company’s CEO, Gilberto Tomazoni, the company indicated a loss of US$304.7m in the opening three months of the year, compared to a net income of US$934.2 million in the first quarter of 2022.
He noted that revenue fell by 4.6% to US$1.7 billion from five of its six divisions except Brazil-based Seara.
The CEO reassured investors, by saying the results do not reflect the management’s forecast for the business despite a tough outlook for its beef and pork business in the United States, where it gets most of its revenues.
“In the last 12 years, during which we already had a global platform, this is the first quarter that we have faced adversities in almost all countries where we operate; US beef business and Seara in particular,” he said.
“The first quarter is a weaker period for the global protein industry due to high input costs, persistent inflation, and supply and demand imbalances.”
Tomazoni admitted that the US beef arm saw high cattle prices hit margins, while its commercial and industrial performance fell below the company’s expectations.
On the other hand, he noted that Seara faced lower export prices and high grain expenses but currently the cost of the commodities is already showing more favorable results.
Brazil’s Seara business becomes one of the units Tomazoni sees recovering faster, citing operating adjustments and lower corn prices as likely improving margins for the processed food division in the short term.
“Brazil’s beef operations will also quickly benefit from the end of an export ban affecting shipments to China,” he added.
About JBS’s U.S. beef business, Tomazoni said that the business margins in the last quarter were eroded by tight cattle supplies, which increased the price of livestock.
He sought to provide reasons for optimism, arguing the rest of the year normally sees stronger demand in the US.
“We started 2023 facing many challenges, but our globally diversified platform continues to be a fortress. Operational management measures and a significant improvement in the outlook are already pointing to a more positive performance in line with our potential.”
According to Wesley Batista Filho, who recently took on the role of CEO of JBS USA, U.S. beef margins will stay “in the low single digits” until the beginning of 2024 because of low cattle availability.
However, as the industry reduces the slaughtering of female cows, cattle inventories may begin to improve this year, he noted.
For all the latest food industry news from Africa and the World, subscribe to our NEWSLETTER, follow us on Twitter and LinkedIn, like us on Facebook and subscribe to our YouTube channel.