U.S. Bank, JBS partnership ensures global expansion
Sept. 13, 2011
by Elizabeth Hund, U.S. Bank Food Industries
SÃO PAULO, Brazil – JBS S.A., the world’s largest beef producer, has been rapidly growing over the last half decade, acquiring major players in the global beef, pork and poultry sectors.
This protein powerhouse closed out 2010 with a market cap of about $11 billion, an improving debt profile and greater liquidity, leaving little doubt that future growth will be on the horizon, both organically and through acquisitions. Its focus on reducing costs and developing an efficient and diversified global production platform has been a key part of the firm’s corporate strategy.
“We look at positioning our company to be competitive in its in-house costs,” says Jerry O’Callaghan, Director of Investor Relations for JBS. “So we look at countries that have scale, and where we can have significant cost reductions to be competitive within our business. This is why we’ve grown the production platform in the US because we think it’s very competitive in global terms today.”
As the Brazilian currency, the real, has strengthened against the US dollar in recent years, JBS was able to leverage financing from Brazil's national development bank, BNDES, and start buying key assets in the US. However, the firm has also benefited from US financial institutions, like U.S. Bank, which provides financing products and services that support the company’s expanding export business.
“We’ve developed a very strong relationship with U.S. Bank, enabling us to grow our export sales, particularly in Asia,” says Dennis Roerty, Treasurer of Greeley, Colo.-based JBS USA. “They are specialists in the sector that we operate in, with a keen understanding of how the supply chain and the export markets work.”
Elizabeth Hund, senior vice president for Food Industries at U.S. Bank, agrees that understanding both the US and global market is a key factor in helping agribusinesses like JBS USA continue to expand.
“The US is the largest agricultural market in the world and U.S. Bank has the ability to be a full- service provider to both domestic and international firms involved in agriculture and ag-processing,” says Hund. “We understand the key risk factors that firms face when they compete in the global market.”
If their recent history is any indication, JBS should find plenty of opportunities for continued growth around the globe. The United Nations projects that world population will increase 41 percent by 2050, to 8.9 billion people, with nearly all of this growth in developing countries. Driven by population growth and rapidly rising incomes in developing countries, meat’s share of calories will rise significantly.
Elizabeth L. Hund is senior vice president and division head of U.S. Bank Food Industries. Hund is a member of the USDA marketing advisory board, a member of the Farm Foundation and a fellow of the California Agriculture Leadership Program. For more information please contact Cathy Lester, U.S. Bank Food Industries, at 303-585-8924.