NEW YORK – Analysts at Bloomberg forecast that JBS SA will post the highest quarterly profit since 2008.
Net income for the third quarter is forecast at 331.8 million reais ($164 million) compared to a loss of 67.5 million reais ($33.3 million) a year ago, Bloomberg said. The 19 percent gain would make JBS the third best performing stock among meatpackers, putting the company behind Minerva SA and Marfrig Alimentos SA, according to Bloomberg.
JBS has largely avoided the burden of surging feed prices because the company’s herds are mostly grass-fed and do not rely on corn. On Sept. 28, corn futures were up the daily trading limit on a USDA report of lower-than-expected domestic inventories. December corn futures gained 40 cents to close at roughly $7.56 a bushel.
While the company's profit outlook is brighter surging prices for corn and soybeans prompted Fitch Ratings to revise the rating outlook for JBS S.A. and several other Brazilian food companies. Fitch revised the rating outlook for JBS to negative from stable on concerns that drought conditions have caused sharp increases in international corn and soybean prices at a time when the company is facing weak ratings.
Fitch said that approximately 30 percent of JBS's revenue is related to corn-fed animals. While JBS is not integrated in hog production, its cost of goods sold (mostly live hogs) is bound to increase, according to the ratings agency. This and other market factors will keep the company from generating free cash flow and reducing its debt.
JBS is expected to release its next earnings report on Nov. 13.