JBS Q4 profit surges on higher revenues

by Erica Shaffer
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SÃO PAULO, Brazil – Higher revenues and debt reduction provided strong tailwinds for JBS SA's fourth quarter earnings results.

The company reported net income of R$618.8 million ($198.6 million), up from R140.7 million ($60.8 million) in the comparable year-ago quarter. Revenues for the quarter totaled R$34.3 billion ($11 billion), up 26 percent compared to R2.72 billion ($1.18 billion) reported a year ago.

“JBS had great victories and achievements in 2014,” said Wesley Batista, CEO. “We continued to harvest from the transformational movements that we performed in the last few years in order to transform our Company into a multinational of Brazilian origin. We feel certain that the timing of the relevant investments made by us could not have been better or more opportunistic. Today, these investments bring excellent results to our company. We are confident that we built a unique global production platform, efficient and well positioned in countries that provide the most competitive environment to produce food products.”

On a segment basis, JBS USA Beef reported $5.92 billion in net revenues for the quarter, an increase of 23.2 percent over the fourth quarter in 2013. The company attributed results to price increases in domestic and international markets which offset volume declines in both markets.

Net sales for the unit in 2014 totaled $21.6 billion, an increase of 16.1 percent compared to 2013.

“Annual results demonstrate initiatives adopted by the company and implemented during the year, the company said in its earnings statement. “The US beef operation was reorganized, splitting the management of the fed cattle business and the regional business. This initiative provided more agility in decision making and flexibility to adjust the business according to market conditions. In addition, there was reduction in production costs, product mix and sales chain rationing, as well as investments in innovation and efficiency gains.”

Higher prices and export volume drove fourth quarter earnings in the JBS USA Pork segment. Net revenue in the quarter totaled $964.0 million, up 6.5 percent compared to the year-ago quarter.
Net income at Pilgrim's Pride climbed 17 percent to total $167.2 million for the quarter. Full year net income was $711.7 million.

“In the United States, we have a well-adjusted operation where we had an expressive result during last year,” Batista said. “Pilgrim’s Pride, our chicken business in the US, performed really well in 2014, as a result of a management committed to reduced production costs, high levels of productivity and rationalization of its sales mix.”

JBS Mercosul posted net revenue of R$7.54 billion ($2.42 billion) in the fourth quarter, up 19.5 percent compared to a year ago. Higher fresh beef prices in domestic and international markets partially offset higher prices for cattle, the company said.

“Currently, we have a very well structured and competitive production platform in Brazil,” Batista said. “In the other Mercosul countries where we operate, we have seen herd growth in Paraguay, with good perspectives to increase our participation in that market. Results from Uruguay have been very positive and the country enjoys privileged access to several markets. In Argentina, we stabilized our operations and significantly increased our market share of branded value added products.”

JBS Foods reported net revenue of R$3.65 billion ($1.12 billion) for the quarter.

“We achieved satisfactory results at the JBS Foods unit, one year after its creation,” Batista noted. “During this period, we implemented the necessary operational adjustments. We captured synergies, reformulated products, launched new products and initiated a broad marketing campaign, focusing on the Seara brand, with an emphasis on healthy products of superior quality, offering convenience and practicality to consumers.”

The company also benefited from reduced debt-service costs of 8.6 percent. JBS SA reduced its debt to R$25.16 billion ($8.1 billion) from R$25.8 billion ($8.27 billion). He added that the company remains focused on deleveraging the company and improving the company’s risk profile. Meanwhile, the company maintains a comfortable liquidity and a strong cash position.

“We feel confident that the market has an increasing better perception of our business and our strategy,” Batista said. “Our results for 2014 show that we are going in the right direction. In 2015, we will prioritize organic growth and focus on all aspects of improving our financial metrics, thus creating incremental value for our shareholders.”
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