SÃO PAULO – Facing plenty of challenges domestically and across the globe, JBS S.A. reported ending the second fiscal quarter of 2022 with “consistent” results with growth in net revenue and positive margin.
“Despite revenue growth in all categories, the prepared foods category was the highlight, with an increase of 19% in average sales price and 5% in volume,” JBS said. “This performance is the result of investments in quality and innovation made by Seara in recent years, in addition to the intensive work with the objective of increasing brand preference and solidifying leadership in several categories.”
In the fiscal second quarter, ended June 30, 2022, JBS S.A. posted net income of 3.95 billion reals ($772.34 million), which was nearly 10% less than the 4.38 billion reals ($856.42 million) reported during the same period last year. Net revenue for the quarter increased by 7.7% to 92.2 billion reals ($18.02 billion) compared to 85.62 billion reals ($16.73 billion). The company’s gross profit for the quarter was reported at 16.18 billion reals ($3.16 billion), down from $16.48 billion reals ($3.22 billion) during the second quarter of fiscal 2021.
JBS’ North American Beef segment (which no longer includes results from JBS Australia) reported net revenue of 27.17 billion reals during the quarter, down about 4.6% from last year’s same quarter of 28.47 billion reals. The company said that despite extreme weather conditions that put off the start of grilling season in the United States, demand for the quarter was strong and revenue growth was significant, but profit was challenged by other market conditions.
“The rise in cattle prices, above the expected level, pressured margins in the period when compared to the previous year,” JBS said.
Export demand for US beef also buoyed the segment’s performance with volume increases reported of 7.4%. JBS pointed out that China continues to be the most important export market, and demand for US beef continues to be robust so far in 2022.
Net revenues for the company’s US pork business unit slipped during the quarter by just over 3% to 10.38 billion reals compared to 10.72 billion during the same period last year. Production of pork during the quarter declined slightly due in part to limited availability of hogs for slaughter; however, domestic demand served to offset that challenge. With overall export volumes of US pork decreasing in some key markets, including Asia and Canada, demand from Mexico and Colombia was a bright spot. The pork segment faced supply challenges and rising input costs in the quarter but benefitted from higher sales in its prepared foods segment.
“The cost of live animals, as well as the increase in operating costs, partially pressured the results,” said JBS. “On the other hand, strong demand sustained prices at high levels, despite being lower when compared to the same period in 2021.
“For JBS, the pork business in the USA grew in both revenue and margins in the annual comparison, due to a better sales mix of value-added products, which continues to add relevant results for the Company, and the optimization of live animal supply sources – integrated production, contracts and spot purchases.”
The company highlighted the production increase at its subsidiary, Swift Prepared Foods during the quarter, where sales grew by nearly 9% while increasing its market share with its branded bacon and lunch meat products. Swift is anticipating even more growth in its business with the addition of an Italian meats plant being built in Columbia, Mo., which is expected to be operational by January 2023. Swift also recently cut the ribbon on a new bacon processing plant in Greeley, Colo.
The company’s net revenue in its Pilgrim’s Pride poultry business unit increased by more than 18%, to 22.77 billion reals compared to 19.24 billion in the second quarter of fiscal 2021. The company pointed out that production costs during the quarter have been challenging due largely to rising feed cost, despite corn prices that have declined by nearly 10%. Meanwhile animal disease, political conflicts and lagging production issues continue to be a headwind in the segment.
“It is worth noting that the world supply of chicken has been limited by avian influenza in North America and Europe, lower productivity due to poultry genetics and the conflict between Ukraine and Russia,” JBS said.