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Brazil meatpacker JBS profit triples on strong exports, hedging

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Brazil meatpacker JBS profit triples on strong exports, hedging

Brazil meatpacker JBS profit triples on strong exports, hedging
November 12
11:46 2015

Brazil’s JBS SA , the world’s largest beef exporter, said on Thursday that third-quarter net profit more than tripled from a year earlier thanks to gains in currency hedging and strong exports.

JBS earned 3.44 billion reais ($914 million) in the three months ending Sept 30, compared with 1.1 billion reais a year earlier, beating analysts expectations of a profit of 3.24 billion reais.

JBS’s adjusted earnings before interest, taxes, depreciation and amortization – a measure of cash flow known as EBITDA – totaled 3.83 billion reais in the quarter, missing the 4.17 billion reais expected in a Reuters poll.

The bulk of JBS’s profit came from a 2.7-billion-real net financial gain. The 9.5 billion reais of non-cash earnings from derivatives more than totally covered a 6.1-billion-real currency-exchange loss.

In the second quarter, JBS posted profit of just 80 million reais due to expenses related to currency hedging.

The result came as Brazil’s worst recession in a generation had a strong impact on demand for beef and poultry sales at JBS’s main Brazilian units, JBS Foods and JBS Mercosur. Beef demand by weight fell 13.1 percent from a year ago and 8.7 percent from the previous quarter in Brazil.

Some of that was made up by stronger demand for poultry, which rose 25 percent from a year earlier but fell 8.4 percent from the second quarter.

Weakness in Brazil was made up for by higher prices and bigger exports. Poultry and pork exports were up 36 percent from a year ago. Beef exports rose 3.2 percent from a year ago and 29 percent from the previous quarter.

On July 1, JBS said it was buying Cargill Inc’s U.S. pork business for $1.45 billion and said it received regulatory approval on Oct 30. The deal would expand its position as one of the largest and most powerful meat companies in the United States. ($1 = 3.7617 Brazilian reais)

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