JBS reports Q4 loss of $72.8M

by Erica Shaffer
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SÃO PAULO – JBS SA, the world’s largest meat packer, posted a fourth-quarter loss of R$275.1 million ($72.8 million) compared to R$618.8 million reported in the year-ago quarter.

The company attributed the result to “derivative results which include expenses related to the company’s instruments to protect its balance sheet” from foreign currency variations. Companies can use derivatives to minimize risk associated with changes in foreign exchange rates and commodity prices. The value of the Brazilian real has plunged recently, making it the world’s worst-performing major currency, according to published reports.

For the year, JBS SA reported net income of R$4.6 billion ($1.2 billion), a 127.9 percent gain over 2014. Consolidated sales for the year totaled R$163 billion, a 35 percent increase compared to 2014.

Wesley Batista, JBS SA
Wesley Batista, JBS global CEO

“Our global production platform, unique in the market, combined with our relentless pursuit of operational excellence, permitted us to register good results during 2015,” Wesley Batista, JBS global CEO, said in a statement. “It was a notable year for JBS as we evolved significantly in our strategy. We strengthened our operations in key food-producing regions globally and diversified our portfolio, adding significantly more value to our products, under our reputable and well-known brands.”

On a segment basis, net income at Pilgrim’s Pride Corp. (PPC), the poultry unit of JBS SA, plunged 62.2 percent to $63.1 million in the fourth quarter due to lower prices for chicken and lower export volume.

“Despite the headwinds, PPC team managed to deliver margins that are above periods when prices were at similar levels,” JBS said in its earnings statement. “The case-ready and small bird operations continued to deliver strong results in spite of challenges in the export markets, while the weakest chicken cutout in the past five years continued to impact the big birds segment of the business, as well as Pilgrim’s Mexico operations.”

JBS said PPC management has identified $185 million in operational improvements for 2016, which the company expects “will increase operational efficiencies, enhance relationships with key companies and expand its prepared products portfolio.”

JBS USA Beef, which includes Australia and Canada, reported net sales decline of 11.4 percent to total $5.25 billion. Headwinds for the unit included lower availability of cattle and heifer retention for herd expansion, a stronger dollar and higher imports of beef. In Australia, supplies of cattle gradually declined which led to reduced volume sold. Foreign exchange variation impacted prices, JBS said.

Sales at JBS’s pork unit advanced 12.8 percent in the fourth quarter to total $1.1 billion. The company attributed the result to incremental sales from its newly acquired Cargill Pork assets. Pork exports to South Korea and Mexico improved during the quarter, pushing volumes 40.9 percent higher, the company said.

“Management of JBS USA Pork business is positive with the perspective to capture synergies related to the integration of the recently acquired pork operations,” JBS said. “Synergies should surpass the initial estimated amount of $75 million.”

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