May 17, 2012

JBS SA concludes the first quarter at a net income of BRL116.1 million (US$58 million), a 21% drop from the same period last year, the firm revealed.

Despite the lower profit, JBS should generate an extra BRL3 billion (US$1.5 billion) in revenue this year via new properties acquired or leased in Brazil in recent months, President Wesley Batista told analysts.

JBS has bought or leased 12 new slaughterhouses in Brazil so far in 2012, boosting the company's cattle slaughter capacity to about 8,000 head per day. The company also leased assets earlier this month of poultry processor Doux Frangosul, with daily capacity of two million head.

Batista said of those new assets, cattle should generate an extra BRL3 billion and Frangosul's poultry some BRL1.5 billion, totaling BRL4.5 billion. About BRL3 billion of that should show on this year's balance sheets, he said. JBS' recent expansion efforts progressed on Tuesday, when creditors for Brazilian processor Independencia accepted JBS' buyout offer from April 23.

JBS' reported net profit for the quarter exceeded the BRL107 million average estimate that eight analysts had predicted within the last week in a survey by Thomson Reuters. The company's net sales increased 9.1% to BRL16 billion (US$8 billion), though the cost of goods sold also rose 10.6%.

EBITDA for the first quarter was BRL696.5 million (US$347.8 million), down 16.7% from Q1 last year. The EBITDA margin decreased from 5.7% to 4.4% over the same year period.

Through the first quarter, sales for JBS' USA Poultry operations totalled US$1.9 billion. Pilgrim's Pride reported a profit of US$396 million in Q1, following four straight quarters with losses.

The JBS Mercosul division expanded its EBITDA by BRL200 million (US$99.9 million) during the quarter, which helped offset the drop in income from the US pork division, JBS said in a statement.

"This result reflects the importance of diversification in geography and proteins for the company, seen through the balance of the consolidated results, which was made possible by the good performance of some business units at the same time other units faced difficulties," the company said.

JBS will be committed to expanding its operations in Brazil on a continuous basis, mainly in cattle, Batista said. The company's goal is to capitalise on a change in livestock cycle, which would ensure an increased cattle supply for the company in the coming years.