SÃO PAULO ­– JBS S.A., the world’s largest meat processor, finished its first quarter starting to feel the impact the coronavirus (COVID-19) pandemic is having on the meat industry and its supply chain.

Net income in the first quarter ended March 31, 2020, totaled 803.2 million reals, down 26.9% from R$1.1 billion in the same period a year ago. Net sales increased 27.3% to R$56.5 billion from $44.4 billion in Q1 2019.

“In March, the last month of the quarter, we felt the first impacts of the pandemic on our sales, with reduced demand in the foodservice channel and increased demand in retail,” said Gilberto Tomazoni, chief executive officer of JBS Global. “Our team reacted quickly, migrating volume from one channel to the other. This demand migration took place in virtually all markets where we operate, with the only difference being the intensity and duration of the change. We are starting to see a recovery in foodservice demand in several markets.

“JBS was able to deliver solid operating performance in the first quarter due to the experience of our leadership team and our relentless focus on what we can control during times of extreme volatility. Net revenue was R$56.5 billion, while EBITDA reached R$3.9 billion, with a 6.9% margin.”

Despite the impact of the pandemic on the company’s sales and the meat industry as a whole, JBS reported strong export volumes in the first quarter from its US sector. The company reported increases of 10.5%, 7.9%, and 39.9% in beef, chicken and pork, respectively. Import destinations included Japan, South Korea, Mexico and China.

“In particular, the reduction of Chinese export tariffs across the proteins in the beginning of March, as well as our ractopamine-free hog supply, were important drivers in increased exports to that country, as the impacts of ASF (African swine fever) remain a reality,” Tomazoni said.

“Exports from the Brazilian protein sector also had a strong quarter, with beef, chicken and pork sales growing 5.2%, 9.5% and 33.7% respectively, over the same period of the previous year, with the main highlight being China. JBS played an important part in this growth of exports given that our company has the largest number of protein plants in Brazil certified for export to China, with a total of 25 plants.”

JBS USA Pork net revenue was $1.5 billion in 1Q20, an 11.3% increase compared to Q1 2019, due to a 6.1% growth in average prices and 4.9% in volumes sold for the period, according to the company. 

“Results in 1Q20 reflect the good supply of hogs in the United States and the solid pork demand in the domestic and international markets, as well as the strong operational performance of this business unit,” the company said. “As previously announced, JBS USA Pork completely eliminated the use of ractopamine from its supply chain, and therefore no longer has barriers to export its pork products to several countries, such as China and Europe, which considerably expands the export market for this business unit.”

JBS USA Pork exports grew 56% in volume in relation to the year prior.

Plumrose USA continues to expand its presence in the prepared food segment in the United States. In April, it began construction on a new pre-cooked and cooked bacon plant in Moberly, Mo., with a capacity of 24 million lbs per year. The plant is set to open in 2021.

JBS USA Beef net revenue was $5.2 billion, an increase of 3.1% compared to Q1 2019.

After the end of the quarter, JBS USA finalized its acquisition of Memphis, Tenn.-based Empire Packing. The deal included Empire’s case-ready production facilities and Ledbetter branded retail products. Empire is comprised of five processing facilities located in Cincinnati; Denver; Mason, Ohio; Memphis, Tenn.; and Olympia, Wash.

JBS’ Pilgrim’s Pride Corp. (PPC) reported a net revenue of $3.1 billion, 12.9% higher than Q1 2019.

“In the USA, the market tracked normal seasonality initially during Q1 before wider implementations of travel and movement restrictions due to COVID-19 disrupted retail and foodservice channel demand,” the company said. “Operationally however, PPC continued to improve its relative performance versus the industry across all its business units.

“PPC also adapted quickly to the change in channel demand by shifting the mix of its production capabilities, supported by its close partnerships with key customers, strong focus in execution by PPC’s team members, the geographical diversity of its footprint, and its presence across all bird size categories.”

On May 11, JBS S.A. announced the donation of R$700 million ($121 million) to help fight the coronavirus in the communities where its employees live and work around the world. R$400 million will go toward efforts in Brazil, with R$300 million going abroad, mostly to JBS communities in the United States.

“JBS is dedicated to doing our best in this challenging environment and to continuing to safely operate our more than 400 production units and offices worldwide,” Tomazoni said. “Our culture of operational excellence, experienced team, global presence, diversified production and product platform, and our more than 275,000 customers provide us with a clear opportunity to be a part of the solution to this global pandemic.

“When this is over, we will move on knowing that we have done our best to protect the health and safety of our team members, that we have fulfilled our mission to feed the world during the most challenging moment of our generation, and that we have stood side-by-side with society when we were needed most.”