SÃO PAULO, Brazil – Challenges in the market for beef along with foreign exchange hedging weighed on first-quarter results for JBS SA.

The company reported a net loss of R$2.76 billion ($789.08 million) in the first quarter of fiscal 2016, compared to net income of R$1.39 billion ($401.31 million) in the first three months of 2015.

Wesley Batista, CEO of the Global Business, said challenges in the JBS USA Beef business weighed on results, but that the issues the business faced in the first quarter were not recurring. In a conference call with analysts on May 12, he also addressed the company’s foreign exchange hedging strategy. The company lost R$5.8 billion ($1.7 billion).

Batista said that despite the negative impact in the first quarter, the strategy of being fully hedged worked well because otherwise JBS would have lost an additional R$4.8 billion ($1.4 billion). “…so we were able to protect our results by R$4.8 billion,” he said. “So, we again, even though [there] was an impact in this quarter we believe that the strategy worked well.”

Revenues for the quarter advanced 29.8 percent to R$43.91 billion ($12.64 billion) from R$33.82 billion ($9.74 billion) reported in the first quarter of 2015.

EBITDA for the quarter dropped 22.5 percent to R$2.14 billion ($615.20 million) from R$2.76 billion ($793.98 million) compared to a year ago.

On a segment basis, JBS USA Beef reported a 10.4 percent decline in net revenues to $4.65 billion from $5.2 billion for the first three months of 2016. The company said results were impacted by declines in the number of cattle processed in Australia along with lower prices for fresh beef in domestic and international markets.

“…And parallel to that we’ve had an appreciation of the Australia dollar against the US dollar and seeing as 75 percent-plus of our revenues in Australia come from exports and the increase in the value of the local currency is a cap on margins, Jerry O’Callaghan, CFO, said in a call with analysts.

“We also had mark-to-market position associated with cattle purchases in the US and in Canada. We had a decline in cattle prices in the first quarter of 2016 and so this mark-to-market position was quite relevant in the first quarter. And we also had as a result of a decline in cattle prices, a reduction in the prices are fresh beef in the domestic and in the international market.”

Net revenues in the JBS USA Pork businesses advanced 64.8 percent to $1.256 billion in the first quarter of 2016 compared to $762 million in the year-ago quarter. The company’s acquisition of Cargill Pork provided tailwinds for the segment.