NEW YORK – JBS SA, the world’s largest meatpacker, lost R$5.8 billion ($1.7 billion) during the first three months of 2016 due to foreign currency exchange volatility. Wesley Batista, CEO of the Global Business, said it could have been worse.

But Fitch Ratings said the company’s plans to spin off its international business may be key to reducing JBS’s exposure to foreign currency volatility in the future. JBS SA intends to create a new company called JBS Foods International that will be listed on the New York Stock Exchange and on BM&F Bovespa.

“For the past year, JBS SA has been implementing an aggressive and expensive hedging policy to cover its US debt exposure,” the ratings agency said in an analysis. “The result of JBS’s hedging has been volatile — positive R$10.6 billion at fiscal year-end 2015 due to the depreciation of the USD against the BRL, but negative R$5.8 billion during the first quarter of 2016 due to the weakening of the dollar. During the last five quarters, the exchange variation has had a negative impact on the company of about R$7.3 billion and the hedge has been positive for a total amount of R$4.8 billion.”

Fitch noted that one goal of the proposed reorganization and listing JBS Foods International on the NYSE is to lower the company’s cost of capital. “The new structure should be able to reduce its earnings volatility, if the company reduces its use of derivatives for balance sheet hedging,” the ratings agency said.