SÃU PAULO, BRAZIL – In the fiscal second quarter of 2021, a consolidated revenue of R$85.6 billion ($16.4 billion) for all JBS S.A. subsidiaries represented an increase of 26.7% compared to the same period in 2020. Business unit highlights included JBS Brazil, Seara and Pilgrims Pride Corp. (PPC) which registered revenue growth of 46%, 39.8% and 26.6%, respectively. In the last 12 months, consolidated revenue reached R$307 billion ($57 billion).
Net income for 2Q21 increased 29.7% from Q2 2020 to R$4.4 billion, representing earnings per share of R$1.75. Excluding the impact of provisions for legal settlements in the United States, adjusted net income would have been R$5.7 billion, 68.9% higher compared to 2Q20.
“Our long-term strategy is already under way, and it is also visible in our investments for deepening both geographical and portfolio diversification,” said Gilberto Tomazoni, global chief executive officer . “We have prioritized investments in our brands and added-value products by accelerating the expansion of Seara in Brazil, the new Italian specialty meats plant in the United States, the acquisition of the Meats and Meals businesses of Kerry Consumer Foods in the United Kingdom and Ireland, and Rivalea in Australia.
“It can also be seen in the investment in diversifying proteins, like plant-based and aquaculture, following the acquisition of Vivera in Europe, the creation of Planterra in the United States, the advancement of the Incrível brand in Brazil, and the proposed acquisition of Huon Aquaculture in Australia,” he said.
Relative to Q2 2020, adjusted EBITDA was up 10.3% at R$11.7 billion ($2.24 billion), highlighted by Pilgrim’s Pride and JBS USA Beef with an increase of 125.3% and 13.0% in EBITDA respectively. Adjusted EBITDA margin for the quarter was 13.7%. In the last 12 months, adjusted EBITDA reached R$33.6 billion ($6.3 billion), with EBITDA margin of 10.9%.
Cashflow for operations was down 49.3% for this year’s second quarter at R$5.8 billion. An increase in accounts receivable due to higher average sales price in all units, coupled with growth in the volume of exports, particularly from Brazil and slowness in the country’s ports heavily impacted the reduction in cash flow from operating activities. Free cash flow, after investments and net interest, was R$3.2 billion.
In 2Q21, JBS used R$4 billion in investment activities including purchase of property, plants and equipment (capital expenditures) totaling R$2 billion and the acquisition of subsidiaries totaling R$2.1 billion.
The Seara business unit saw net revenue increase 39.8% in 2Q21 to R$8.9 billion, the result of higher volumes (21.8%) and higher prices (14.8%). Domestic market sales represented 47% of business revenues for a total of R$4.2 billion, a 45.8% increase from the same period in 2020. The prepared foods category remains a highlight across successive quarters posting growth of 4.7% in volume sold and 22.6% in prices.
JBS Brazil netted R$12.7 billion in revenue for Q2, up 46% over the same quarter a year ago. An increase of 17.3% in the number of animals processed boosted the second quarter increase. JBS continues to enter strategic partnerships with key customers in the domestic market. Despite a challenging scenario for beef consumption, initiatives with players such as Açougue Nota 10 and Cogue Gourmet contributed to the quarter´s performance, with the business reaching a net revenue of R$7.3 billion, 68.5% higher than 2Q20, with fresh beef posting an increase of 23.8% in volume sold and 34.6% in prices.
Export market revenue for JBS Brazil climbed 24.1% over 2Q20 to R$5.5 billion, mostly because of improved beef performance, which increased 41% in volume sold and 17% in average sale price.
EBITDA for JBS Brazil in 2Q21 totaled R$439.4 million, 63.4% lower than 2Q20, but 85.9% higher than 1Q21, with an EBITDA margin of 3.4%. Although this quarter’s results were better sequentially, they were impacted by increased production costs.
Considering IFRS, JBS USA Beef increased its net revenue 18.8% over 2Q20 to R$35.7 billion in 2Q21 with and an EBITDA of R$7.1 million, up 13% over 2Q20, with an EBITDA margin of 19.8% for the period. The results include a 1.8% appreciation of the average exchange rate (BRL versus USD), which went from R$5.39 to R$5.30 in the period.
As for the company’s US operations, net revenue was $6.7 billion, an increase of 20.9% compared to 2Q20, due to a 10.9% increase in volume sold and 9% increase in average sales price. EBITDA was a record $1.4 billion, with a margin of 20.7%.
“While it is true that market conditions in North America favored several of our businesses, our
focus at all times is on operational excellence,” Tomazoni said. “A constant across our business is the excellence with which we carry out our operations, focusing on people and foster a culture of ownership. And this operational excellence perseveres irrespective of market conditions.”
JBS USA Beef’s exports grew at a faster pace than the industry in the United States and Canada, with a gain in market share, and JBS USA has been improving the sales mix through value-added programs, achieving better export results.
For the plant-based protein segment, JBS USA completed the acquisition of Vivera EUR341 million. Vivera is a market leader and expands JBS USA’s global plant-based protein platform. In the United States, the company continues to develop new products and expand business with the OZO brand, currently distributed in more than 3,000 stores across the country.
From 2Q20 through 2Q21, JBS USA Beef continued to invest in its Hometown Strong social program by increasing the spend to $12 million, thus strengthening relationships with local communities where its beef processing plants are located. It will apply such funds exclusively to affordable housing projects.
JBS USA Pork reached net revenue of R$10.7 billion in 2Q21, 25.6% higher than the same period a year ago. EBITDA was R$853.9 million, a reduction of 19.2%, with EBITDA margin of 8.0%. These results include the impact of the 1.8% appreciation of the average exchange rate (BRL versus USD), which went from R$5.39 to R$5.30 in the period.
In US GAAP, net revenue was $2.0 billion, up 27.8% compared to 2Q20, due to a 26% increase in average sales price and a slight increase of 1.4% in volume sold. EBITDA was $159.6 million, with margin of 7.9%.
JBS USA Pork also opened a cold storage and distribution facility in Worthington, Iowa, with a 27.5 million lb capacity. The new distribution center will improve pork product quality and increase logistical efficiency for both domestic and international markets.
JBS USA Pork also increased investments in its Hometown Strong social program by $8 million to build stronger relationships in the communities that house its pork processing plants. JBS USA pork will apply the funds to affordable housing projects, as well.
The PPC business unit posted posted net revenue of R$19.2 billion in the 2Q21, a 26.6% increase in
comparison to 2Q20, and Adjusted EBITDA of R$2.5 billion, with EBITDA margin of 13.1%, considering results in IFRS and Reais. These results include a 1.8% impact of the average exchange rate (BRL vs USD), which was R$5.39 in 2Q20 and R$5.30 in 2Q21.
In US GAAP and US$, PPC net revenue in the 2Q21 was $3.6 billion, an increase of 28.8% over 2Q20. Adjusted EBITDA was $371.6 million with a 10.2% margin, which excludes the impact of an aggregate legal contingency accrual of $396 million in the United States.
PPC had a strong quarter in Mexico driven by balanced supply and demand, as well as continuous improvement to operations. In Europe PPC saw challenges caused by increased grain prices, but Moy Park still delivered efficient operations and agricultural performance. UK operations have also improved its margins from the same period last year.