SÃO PAULO – JBS S.A., the world’s largest meat processor, ended fiscal 2019 with a record-setting financial performance driven by strong demand from China.
Net income in the fourth quarter ended Dec. 31, 2019, totaled 2.4 billion reals ($591 million), equal to R91¢ per share, up 332.4% from R$563.2 million, or R22¢ per share, in the same period a year ago. Net sales increased 20.7% to R$57.1 billion from R$47.3 billion.
The record-setting results were tempered by the looming coronavirus (COVID-19) pandemic, however. The performance would normally warrant a celebratory mood, said Gilberto Tomazoni, chief executive officer, during a March 26 conference call to discuss the results.
“But at the moment, celebrating is difficult,” he said.
“Our operation platform, we operate in four types of protein in four continents,” Tomazoni said. “We have a fantastic team; this is what will make the difference in the event of a challenge. The experience of the team will make the difference, and the marketing conditions have not changed.
“The global gap of protein because of ASF (African swine fever) is still there and a good sign from China that it’s recovering very fast.”
For 2019, ended Dec. 31, net income totaled R$6.1 billion ($1.5 billion) – the highest ever in the company's history – equal to R$2.28 per share, up 241% from R$25.2 million, or 1¢ per share, in the same period a year ago, JBS said. Net revenue for the period increased 12.6% to R$204.5 billion from R$181.7 billion.
JBS’ Seara business reported fourth-quarter sales of R$3.1 billion, which represents an increase of 14.5%. Volumes increased 3.9% and prices increased 10.3%, the company said. In the Prepared Products category, volumes increased 8.1% and prices increased 8.9% for the period.
“Throughout 2019, more than 80 SKUs were launched, with highlights to the following lines: Seara Nature, that uses only natural ingredients without artificial preservatives; Seara Rotisserie, that brings convenience and products with clean label ingredients; Incrível Seara, that offers several products 100% plant-based as well as the expansion of Seara Gourmet, with products for indulgency moments,” the company said. “During this quarter, the Seara brand consolidated its leadership in the frozen food category with a 23.1% market share, 2 percentage points above the second brand.”
JBS Brazil, which includes leather and related businesses, posted net sales of R$32 billion in 2019, an increase of 15.9% in relation to 2018. In the fourth quarter, net sales were R$9.6 billion, 28.4% higher than the period a year ago.
Exports represented 46% of business unit sales in the quarter, JBS said. Net revenue increased 30.8%, reaching R$4.4 billion.
“This results from volumes 8.5% higher, boosted by an increase of 20.5% in prices,” the company said. “Although the contract renegotiations with Chinese customers pressured this quarter’s results, exports to China almost doubled in revenue, recording increases of 61% in volume and 23% in prices.
“It is important to highlight that JBS is developing sales and distribution channels in China through partnerships with large local players, such as WH Group.”
JBS’s pork business reported net sales of $5.9 billion in 2019, an increase of 4.3% in relation to 2018. EBITDA totaled $561.9 million, with EBITDA margin of 9.5% for the year. Net sales in the fourth quarter totaled $1.5 billion, an increase of 9.3% driven by higher prices and volumes of 5.1% and 4%, respectively.
“In 2019, the US pork industry export volumes increased 10% in relation to 2018, driven by the Chinese demand for pork, which accelerated significantly in the second half of the year,” said Guilherme Perboyre Cavalcanti, chief financial officer and investor relations officer. “In order to maximize export market opportunities, JBS USA Pork is in the process of eliminating the use of ractopamine from its supply chain.
“I think it’s worth mentioning that in March this year, China reduced its tariffs from 63% to 33%, a reduction of 30% in tariffs and it’s also the same 30% reduction in beef as well.”
JBS USA Beef, which includes Australia and Canada, reported net sales of $22.1 billion in 2019, an increase of 2.7% in relation to 2018, the company said. EBITDA totaled $1.9 billion in the full year, with an EBITDA margin of 8.8% compared to 8% in 2018.
“These results are a record annual performance for JBS USA Beef until now and reflect, among other reasons, the capacity of the business to deliver growth and operational excellence,” the company said.
In the fourth quarter, JBS USA Beef posted net sales $5.8 billion, an increase of 7.2% compared to the comparable year-ago period, driven by an increase of 3.7% in the volume of beef sold and 3.7% increase in the average price. EBITDA for the quarter totaled $580.3 million, with margin of 10%, compared to $393.7 million and margin of 7.3%.
“I would like to highlight Australia for the increase in beef and lamb, direct exports to China, which grew 80% in sales compared to the previous years,” Cavalcanti said.
Pilgrim's Pride Corp. net sales in 2019 totaled $11.4 billion, a 4.3% increase in relation to 2018. EBITDA was $973.7 million, with an EBITDA margin of 8.5%. Fourth-quarter net sales totaled $3.1 billion, a 15.3% increase over the period a year ago. EBITDA for the fourth quarter was $161.6 million, with a 5.3% margin.
“The US operating performance has continued to improve, driven by the partnership with the key customers and a relentless focus on executing and delivering the best results possible despite changes in market conditions,” Cavalcanti said. “The newly acquired operations in Europe had a strong start and its already generating positive EBITDA.
“In Mexico, weak market conditions of fourth quarter contributed to uncertainty in consumer spending and demand, specifically in traditional markets. But despite a difficult market environment in the fourth quarter, PPC Mexican business has continued to perform well operationally compared to the industry.”