SÃO PAULO – Focusing on operational excellence while maintaining a diverse product mix and distribution based on growing its value-added product offerings, JBS SA announced the company’s fiscal 2019 Q1 results were highlighted by higher net revenues, at $44.4 billion reals ($11.12 billion), an 11.5 percent increase over the same period last year, and net income of 1.09 billion reals ($273 billion).

The company announced that across all its business units, net revenues increased as did the company’s gross profit, which totaled 5.8 billion reals, up 13.3 percent with gross margin reported at 13.2 percent.

Adjusted net revenues of JBS USA’s beef and Pilgrim’s Pride business units were slightly lower in Q1 compared to the same period last year. Its beef segment reported revenues of $5.01 billion, down 1 percent from the same period last year while the Pilgrim’s revenues of $2.72 billion were 0.8 percent lower than in Q1 of 2018. Pork revenues, however, declined 8.9 percent from last year, from $1.47 billion in 2018 to $1.34 billion this year.

While extreme weather events in the US that occurred in the quarter and challenged delivery and slaughter at some facilities, JBS stated the supply and demand for beef are strong, “which indicates the continuation of a positive and growing margins scenario for upcoming quarters.”

Despite the company’s beef operations in Australia facing climate challenges in the quarter it reported improved performance, according to JBS. “JBS Australia exports posted an impressive growth, with Asia, notably China and South Korea, being the main highlight,” according to the company.

The global impact of African Swine Fever (ASF) is a consideration for all pork companies, including JBS. As pork supplies in the US increased during the quarter, lower exports hindered domestic pricing and margins for the company compared to the same period last year. While increases in US pork supplies continued, ASF spreading across Europe and China pushed live hog prices higher. “Management continues to closely monitor the events related to ASF in Asia and believes that the environment for global trade of pork and potentially other animal proteins may change,” JBS said, “with the magnitude of the impacts from the disease in the Chinese hog herd still to be confirmed.”

As for its poultry business, pricing variations played a role in various markets. In the US, Q1 reflected a rebound from “a challenging period in 2018,” according to JBS. It attributed the improvement to feature activities achieving normalized seasonal levels in retail and foodservice and recovery in domestic commodity prices of poultry. In Mexico, lower revenues were attributed to lower sales prices (down 9.4 percent) and decreased poultry demand with a glut of pork on the market. “Nevertheless, management believes chicken demand will continue to grow in-line with historical rates longer term,” the company said.

In Europe, Pilgrim’s business was impacted by an increase in production costs despite cost-cutting efforts and price adjustments. According to JBS, “Management expects a gradual improvement as prices are adjusted based on key customer’s contracts.”

“Our business model and the strength of our strategy, focused on people, operational excellence and high-quality products, give us confidence for this year’s upcoming quarters,” said Gilberto Tomazoni, JBS Global CEO. “JBS is well prepared and has every condition to continue growing amidst market opportunities. In line with this objective, we move forward acting ethically and responsibly throughout the whole value chain, while investing in efforts that promote increasingly more transparency, sustainability and efficiency.”