August 19, 2011

JBS faces half-year loss

Brazilian meat giant JBS announced on Wednesday (Aug 16) a half-year loss after its US operations experienced problems that caused it to hit bottom line between April and June this year.

JBS, which filed net income of BRL147 million (US$91.4 million) in the first three months of 2011, reported a half-year loss of BRL33.8 million (US$21 million) amid challenges at its US poultry business.

Last month, US poultry processor Pilgrim's Pride, in which JBS owns a majority stake, booked a second-quarter net loss of US$128.1 million (US$76.7 million). It said record-high feed costs, weak consumer demand and an oversupply of chicken had hit the business. Pilgrim's Pride also announced the closure of a site in Dallas in a bid to improve efficiency.

JBS also said the under-performance of its US poultry business and the weak performance of its beef operations had hit its EBITDA in the second quarter of 2011, which fell 41.2% to BRL587.7 million (US$365.6 million).

However, JBS insisted the combined first-half EBITDA of its beef and pork units in the US was up 12.1% at US$503.3 million.

The company's net revenues increased 14.1% during the first six months of 2011 to BRL6.43 billion (US$4 billion). Second-quarter net revenue was up 3.6% at BRL14.6 billion (US$9.1 billion).

JBS said all its business units saw sales rise on an organic basis during the quarter when measured in local currencies. It said the growth reflected an overall increase in average prices and strong demand in emerging markets.