JBS SA Q3 profits tumble

by Erica Shaffer
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JBS
The company took a $706 million charge as part of a tax debt refinancing program.
 
SÃO PAULO, Brazil – JBS SA reported a 64 percent decline in net income for the third quarter ended Sept. 30.

Unaudited net income for the period was 323 million reais ($98 million), down from 887 million reais ($269 million) reported in the third quarter of 2016. Revenue for the quarter was 5.4 billion reais, down from 6.8 billion reais in the year-ago period.

JBS announced a charge of 2.3 billion reais in the third quarter as part of the company’s participation in the Special Tax Regularization Program (PERT), which is a tax debt refinancing program. Excluding the charge, net income for the quarter was 1.9 billion reais.

Earnings before interest, taxes, depreciation and amortization (EBITDA) totaled 4.3 billion reais, a gain of 10.5 percent in the quarter, compared to a 7.6 percent gain reported a year ago.

“We achieved excellent results driven by strong performance in our international operations and solid improvement in our Seara business,” Gilberto Tomazoni, global COO, said in a statement. “EBITDA increased 37.4 percent year-on-year to a record R$4.3 billion, and EBITDA margins grew 286 basis points to 10.5 percent. An impressive improvement in free cash flow for the quarter, the majority of which was generated by operations, helped increase our liquidity and significantly reduce our leverage. Our total liquidity at the end of the quarter was greater than our short-term debt.”

In a statement, the company noted that its earnings release would not be accompanied by an independent auditor’s report. “…the conclusion of the auditing process and the issuance of the independent auditor’s report depend on the results of the investigation related to the facts of the leniency agreement signed between J&F and the Federal Public Prosecutor’s Office. Such internal investigation is currently in progress and the company is monitoring its evolution and taking all the necessary measures for its conclusion to occur as soon as possible.”

JBS added that financial statements from JBS USA — which includes Canada and Australia — Pilgrim’s Pride Corp. and Moy Park, have been regularly audited by independent auditors. Net revenues from these units account for 75 percent of JBS SA’s consolidated revenues.

This is the first earnings release since the arrests of brothers Wesley and Joesley Batista, major stakeholders in JBS SA. The brothers remain in a São Paulo penitentiary awaiting trial for insider trading and manipulation of the stock market. Federal prosecutors allege that the brothers minimized their financial losses — spurred by news of a plea deal — by buying and selling millions of JBS shares before giving evidence to prosecutors as part of the plea agreement.

1 Brazilian real = 0.30 US dollar

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