SÃO PAULO, BRAZIL – Despite margins in its North America beef business reporting a rare decline that contributed to lower net income, JBS SA reported significantly higher revenues in its latest quarterly report. The company attributed the higher quarterly revenues to increased sales prices of 20%, while volume was 2% higher.
“In 3Q22, the higher production cost was offset by price pass throughs, combined with a better mix of markets, channels and products, in addition to management´s focus on operational efficiency and innovation,” the company said.
For the fiscal third quarter ended Sept. 30, 2022, JBS SA reported a net income decline of 47.1%, dipping to 4.01 billion reals ($754.58 million), or 1.81 reals ($0.19) per share of the common stock, from 7.59 ($1.43 billion) billion reals, or 3.01 reals ($0.57) per share of the common stock during the same period last year. Net revenue for the quarter was 98.92 billion reals ($18.68 billion) in Q3 of fiscal 2022 compared to 92.63 billion reals ($17.50 billion), an increase of 6.8% over last year’s third quarter.
JBS Beef North America reported revenue of 29.15 billion reals ($5.51 billion) a decrease of nearly 5% from the same quarter in fiscal 2021. Adjusted earnings in the segment slipped 67.5% to 2.52 billion reals ($476.32 million) compared to last year. Strong performance in the company’s beef business in other countries offset the market volatility seen in the United States.
“As the US beef business margin normalizes, we observe a strengthening of the segment in the Brazilian and Australian markets,” said Gilberto Tomazoni, chief executive officer with JBS.
The company said the forecasted inventory of cattle in the United States indicated strong supplies in the short term but decreasing herd sizes are expected in the months to come.
“Considering this scenario, live cattle prices remained at high levels during the quarter, increasing 15% y/y in 3Q22,” the company said. “In the period, the US beef industry produced the same volume as in the prior quarter, but 2.4% more beef than a year ago, as the labor tightness improved. Wholesale beef prices declined sequentially, incentivizing retailers to promote beef sales and promotions are likely to accelerate going forward.”
Besides price increases, the company attributed overall higher revenue numbers to growth in its Pilgrim’s Pride subsidiary as well as its JBS Australia and Seara poultry business units. Pilgrim’s reported net revenue of 23.44 billion reals ($4.42 billion), up 17.2% compared last year’s 20 billion reals ($3.78 billion).
“Our Brazil and US poultry businesses outperformed expectations with strong exports to Asia and the Middle East, with an emphasis on convenience and the strengthening of key customer relationships in each market,” Tomazoni said.
JBS Australia revenue for the quarter was 8.74 billion reals ($1.65 billion), a jump of 19.5% over last year’s 7.31 billion reals ($1.38), while Seara net revenue was 11.77 billion reals ($2.23 billion), a 22.3% bump up from the 9.62 billion reals ($1.82 billion) in last year’s third quarter.
JBS USA Pork reported 2% higher net revenue for the 2022 third quarter at 11.15 billion reals ($2.11 billion) compared to 10.94 billion reals ($2.07 billion) during the same quarter last year. The company said fewer hogs on the market domestically, which increased the cost of the animals and compounded the impact of feed prices that increased by 40% along with higher labor and logistics costs.
Higher volumes of value-added products from the Swift Prepared Foods business also helped bolster net revenue in the USA Pork segment. Swift’s margin was up 56% in Q3 of this year compared to the same quarter last year as production and performance at the company’s two bacon plants exceeded expectations.
“The Company also invested in a plant in Swanton, Vt., to produce a new category of sous-vide products through the Savora brand,” JBS said of its Prepared Foods business. “Additionally, the construction plan of the first specialty Italian meats plant in North America, located in Columbia, Mo., is making rapid progress, with operations expected to begin in January 2023.”
Approximately 28% of the company’s sales were made to export markets with 72% of sales being made domestically where the company operates. Net profit for the quarter was reported at 4.01 reals ($745.35 million), which exceeded analysts’ profit expectations of 3.75 billion reals ($709.55 million).