SÃO PAULO, Brazil — Moody's Investors Service upgraded JBS S.A.'s ratings to Ba3 from B1 with stable outlook.

"The upgrade reflects the significant improvement in JBS's credit metrics over the last few quarters, mainly as a result of its focus on organic growth and deleveraging strategy, as well as good performance of its Brazilian beef operations," said Marianna Waltz, Moody's vice president.

The ratings agency noted that volatility in the protein industry — animal cycles and diseases, weather conditions and supply imbalances — present challenges to JBS. Also, factors such as "the unfavorable cattle cycle momentum" in the US will pressure the US beef market, which JBS's main operating segment. Despite improving supply and demand conditions with the closing of Cargill a slaughtering unit and easing export restrictions to Japan, Moody's still anticipates potential earnings pressure in the region.

But JBS's diversification also supports the company's upgraded ratings, according to Moody's. JBS is one of the world's largest protein producers with products including beef, chicken, pork, lamb and leather. The company has production facilities in five continents and exports products to more than 150 countries with no single country representing more than 15 percent of total export revenues, Moody's said. Positive results in high-performing segments can offset poor results in underperforming segment of the company, the ratings agency said.

"The stable outlook reflects our view that the company will remain focused on organic growth, remain committed to conservative liquidity management and make further progress in reducing its financial leverage and maintain liquidity at near current levels," Moody's said.