JBS posts Q2 loss citing chicken glut, tight US beef margins

US pork division saw a 15% annual drop in revenues
calendar icon 15 August 2023
clock icon 2 minute read

Brazilian meat company JBS SA on Monday reported a second-quarter loss citing the negative effects of an over-supplied global chicken market and tighter margins for its beef business in the United States, where it gets most of its sales, reported Reuters.

JBS reported a net loss of 263.6 million reais ($47.77 million), the second consecutive negative result in 2023.

The company's earnings before interest, tax, depreciation and amortization, a measure of operating income known as EBITDA, came in line with a consensus forecast of 4.47 billion reais ($888.46 million), but was down 57% on the year-ago period, when the company's operating and financial performance were strong.

In the quarter, JBS said its North American beef margins shrank from the same time a year ago, reflecting a reduction in the supply of livestock in the region. Citing USDA data, JBS said cattle prices rose 26% last quarter to $179/cwt while wholesale beef prices grew by 17% in the same period.

"For over the next few months, we see a scenario of greater balance in the supply of poultry with positive potential for prices," JBS said of the outlook for that market.

Its Pilgrims Pride division, which processes poultry in the United States, for example reported a 49% decline in EBITDA to 3.635 billion reais.

At the same time JBS' US pork division had a 15% annual drop in revenues, reflecting a 21% fall in wholesale pork prices due to excess supply, JBS said.

In Brazil, the company's beef division reported a 10% rise in revenue in dollar terms, as a result of higher volumes exported in the second quarter after a fall in the first quarter caused by a temporary Chinese ban on Brazilian beef products.

On the other hand, JBS' Seara prepared foods division in Brazil, which processes pork and poultry, had a 3.5% drop in revenue reflecting smaller export sales.

($1 = 4.9524 reais)

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