SÃO PAULO, Brazil – JBS S.A., the world’s largest meatpacker, reported first-quarter net income of 506.5 million reais ($138.0 million), a 43.5 percent increase over the year-ago quarter, beating analysts’ expectations.

Revenue for the first quarter was 39,783.2 million reais compared with 37,616.4 million reais reported in the first quarter of 2017. The company noted that approximately 77 percent of JBS global sales came from markets where the company operates while 23 percent of sales came from exports.

JBS also announced a normalization agreement with financial institutions in Brazil that will allow the company to refinance its debt. The agreement extends credit lines of 12.2 billion reais for 36 months as of July 2018. JBS will start paying on the principal between January 2019, and July 2021 when the agreement expires.

“The establishment of this normalization agreement demonstrates the trust that financial institutions have in the company’s management and contributes to a significant extension of the average maturity terms of our indebtedness, ensuring financial liquidity and the continuity of our solid operational performance,” José Batista Sobrinho, Global CEO of JBS, said in a statement.

For the quarter, earnings before interest and taxes (EBITDA) was 2.8 billion reais, 30.3 percent higher compared to the year-ago quarter with EBITDA margin increasing to 7.0 percent from 5.7 percent.

Net debt declined to 45,503.7 million reais in the first quarter from 47,806.0 million reported in the first quarter of 2017. JBS said the company reduced its leverage in the first quarter to 3.24 times the company’s annual EBITDA, compared with 4.23 reported a year ago.

On a business unit basis, net revenue at its poultry subsidiary, Seara, declined 2.7 percent to 3,974.5 million, on increased supplies of chicken meat in the Brazilian market, the company said. Chicken prices dropped 9.1 percent, while processed products category posted an increase of 1.9 percent. Gross profit at Seara was 584.9 million reais, down from 606.1 million reais reported in the year-ago quarter.

JBS Brazil also reported a decline in net revenue for the first quarter. The segment posted net revenue of 5,919.9 million reais in the most recent quarter, down 4.7 percent due to lower volumes resulting from the sale of JBS assets in Argentina, Paraguay and Uruguay. JBS agreed to sell its beef operations in Argentina, Paraguay and Uruguay to Pul Argentina SA, Frigomerc SA and Pulsa SA, respectively, for a total of US$300 million. The companies are controlled by Minerva S.A.

“In order to mitigate the impacts of an adverse scenario in the Brazilian beef sector, the company has been investing in the development of a portfolio of higher value-added beef products, as well as in commercial partnerships with key-customers in both domestic and export markets,” the company explained. “Leather operations are signaling improvements and the outlook for this segment is positive.”

JBS Brazil reported gross profit of 772.1 million reais compared with 935.4 million reais reported in the first quarter of 2017.

Net revenue at JBS USA Beef (including Australia and Canada) climbed 2.9 percent in the first quarter, driven by higher volume and revenues in domestic and export markets served by JBS beef operations.

“JBS beef operations in North America grew both in volume and revenues in the domestic and export markets, boosted by the company’s focus on product diversification and customer segmentation, by the improvement in the US economy and by increasing demand in the international market,” the company said.

In Australia, beef operations improved over the previous year, but tight supplies of beef cattle continue to weigh on the business. Rain in the first quarter impacted delivery of cattle to processing facilities.

“Primo Smallgoods, the market leader, stood out for the operational improvements and better yields in its prepared foods operations, positively contributing to the company’s performance in that country,” JBS said.

Gross profit at JBS USA Beef was US$319.8 million, compared with US$183.4 million reported in the year-ago quarter.

JBS USA Pork recorded a 5 percent increase in net revenue which totaled US$1,446.2 million in the first quarter of 2018, driven by strong growth in export volumes and revenue coupled with higher volumes sold in the domestic market.

“JBS USA pork continues to increase volumes and its portfolio of higher value-added products in the domestic market associated to commercial partnerships with relevant customers,” the company added.

Gross profit in the segment was US$178.8 million in the first quarter compared with US$165.0 million reported a year ago.

At Pilgrim’s Pride Corp. (PPC), net sales for the first quarter were $2.75 billion, up 10.8 percent (or an increase of 35.9 percent if excluding the Moy Park numbers from last year), compared with $2.48 billion reported in the year-ago quarter.

JBS said increases in prepared foods volumes and average sales prices, including significant growth in production of organic products, drove results.

“Acquisitions and strategic investments made by PPC have been adding value to its operations and contributing to increase the differentiation of its product portfolio, strengthening partnerships with key-customers and improving margin profile,” the company said.

1 Brazilian Real = 0.27 US Dollar