JBS SA (JBSS3.SA), the world’s largest meatpacker, posted an almost 10% drop in net profits, to $766 million, driven by the relative weakness of its U.S. beef and pork units in the second quarter, according to an earnings statement on Thursday.
Still, it beat analysts forecasts.
JBS reported a 4.6% fall in revenue for its U.S. beef division, which is normally the company’s cash cow, while earnings before interest, tax, depreciation and amortization, a measure of operating profitability known as EBITDA, slumped 55% compared with the same year-ago quarter.
U.S meat processors are now reeling from the effects of lower cattle availability in North America, where a drought is leading ranchers to terminate animals rather than sending them for processing.
In the second quarter, overall U.S. pork exports fell 17.7% due to a drop in demand from China, Japan and Canada, JBS said citing USDA data.
As such, results for its U.S. pork division were affected, with JBS sales for that unit dropping 3.2% on an annual basis, to 10.3 billion reais.
JBS’ Pilgrims Pride (PPC.O) poultry united, however, provided a silver lining in the United States, as its chicken sales rose by 18.3% to 22.7 billion reais.
In Brazil, likewise, JBS’ Seara processed foods division did well.
Seara sells about 47% of its output in Brazil, and that business brought in 5 billion reais ($969.24 million) last quarter, 20% more than a year ago, JBS said.
To fend off cost inflation, Seara was able to raise prepared products prices by 19% on average, while increasing sales volumes by 5%.
At the same time, Seara’s export sales reached $1.1 billion, a 27.9% rise from the same quarter a year ago.
In Brazil, JBS beef products sales rose by almost 11% to 14.1 billion reais, in spite of a 12% fall in cattle processing because China temporarily halted imports from a large plant.
($1 = 5.1587 reais)