JBS SA swings to Q1 profit

by Erica Shaffer
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 JBS
Revenues declined 14.3 percent on lower sales at Seara and Mercosul. 
 
SÃO PAULO, Brazil – JBS SA, the world’s largest meat packer, reported a net profit during the first quarter of 2017, reversing the negative results from the year-ago period.

For the quarter ended March 31, 2017, JBS reported net income of R$422.3 million, or R$0.15 per share, compared to a loss of R$2,741.2 million reported in the first quarter of 2016.

Net revenue for the quarter declined 14.3 percent to R$37,616.4 million, compared to R$43,911.9 million reported a year ago. The company attributed the decline in sales to net revenue reduction at Seara and JBS Mercosul of 4.7 percent and 11.1 percent respectively in addition to the appreciation of the real against the US dollar.

“We started 2017 performing well in our international business units, boosted by strong demand in the markets where we operate,” Wesley Batista, Global CEO of JBS, said in a statement. “Our operations in South America, on the other hand, continued to face a challenging scenario, mainly due to the strong appreciation of the real against the US dollar, which was R$3.91 in 1Q16 and R$3.14 in 1Q17, impacting the profitability of our exports from Brazil.

“Our global production platform, product diversification, continuous investments in innovation and constant focus on cost control and efficiency, allowed us to mitigate the effects from a challenging scenario in South America with good results from our international operations,” he added.

Seara posted net sales of R$4,085.2 million in the first quarter, down 4.7 percent compared to the year-ago period due to an appreciation of 24.4 percent of the real against the US dollar, JBS said.

Volumes grew in the domestic market, particularly in the Prepared Foods category. Average sales prices were lower due to consumers choosing lower-priced items and a change in the mix of categories.

“At the end of this quarter, Seara reached a base of 152,000 customers in the domestic market, an increase of 3,000 this year,” JBS noted, “which supports its execution strategy and consumer preference. Exports, on the other hand, aligned with market conditions saw a 5.0 percent volume decline and lower prices due to the appreciation of the real in the quarter.”

Net revenues at JBS Mercosul dropped 11.1 percent to R$6,211.4 million in the first quarter due to a 4.7 percent decline in sales prices in the domestic market and 16.4 percent in the export market, the company said.

Net revenues from JBS USA Beef, which includes Australia and Canada, advanced 5.8 percent to $4,919.6 million on higher sales volumes in domestic and international markets.

JBS USA Pork posted net revenues of $1,396.9 million in the first quarter, which represents an 11.2 percent increase. The company said more hogs were processed during the period and higher sales prices in international and domestic markets helped results.

Pilgrim’s Pride Corp. reported net revenues of $2,020.5 million. JBS said net revenues from US operations increased by 4.0 percent over the year-ago quarter mainly from the inclusion of net revenues from GNP Company, which JBS acquired in January, along with higher sales prices for poultry. In Mexico, net sales eased 2.9 percent due to foreign currency effects during the period.

Moy Park, the company’s Europe unit, reported net revenues of £370.4 million in the first quarter, a gain of 6.6 percent mainly from a 24.9 percent increase in fresh poultry domestic volumes, that partially was offset by lower sales prices in the same segment, JBS said.

Moy Park also posted volume and revenue growth during the first quarter, mainly due to a positive performance of the fresh poultry segment, and to a larger operational capacity.

“Management remains focused on cost control, strong customer relationships and on its culture of constant innovation providing a secure platform for future performance,” the company said.

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