August 23, 2023

 

Australia's strong cattle supply benefits global protein giant JBS

 

As the US beef industry grapples with constrained livestock supply and surging cattle prices, global protein leader JBS finds support in Australia's thriving cattle supply, with analysts told of the positive impact of Australia's role in the company's global diversification strategy across geographic regions and protein types, Beef Central reported.

 

Gilberto Tomazoni, JBS's global chief executive officer, said that Australia exemplifies the favourable outcomes derived from JBS's diversification strategy. He shared that JBS Australia's second-quarter figures underscore the benefits accrued from increased cattle supply, manifesting in improved regional margins.

 

Guilherme Cavalcanti, JBS' chief financial officer, said that despite a drop in consolidated net revenue when compared annually, JBS's pre-tax profit margin within its Australian operations rose notably to 8.6%, as per US GAAP reporting terms. This upswing was attributed to a more favourable cycle that facilitated a lower purchase price of live cattle due to their augmented availability.

 

Tomazoni highlighted the holistic approach the company is taking, combining investments in value-added products, strong brands, and geographic diversification to foster growth. He posited that JBS's diversified global platform's competitive edge has yet to be fully acknowledged by the market. Tomazoni underscored the significance of the company's dual-listing proposal on the NY Stock Exchange, which is seen as a transformative step toward unlocking new avenues for growth.

 

Addressing analysts' inquiries, Tomazoni expounded on Australia and Brazil's position within their cattle rebuilding cycles. He noted that both countries are at the commencement of their respective cycles, marked by growth. Tomazoni revealed the progression in Australia's operations, from a three-day workweek to a five-day week and plans for a second shift, reflecting favourable conditions for the next two years.

 

Batista elaborated on the US beef business, emphasising that the supply situation would play a crucial role in activity and profitability. He noted a tight supply perspective, projecting a constriction in cattle supply that might extend into 2024.

 

The impact of China's economic slowdown on protein prices was another topic of discussion. Tomazoni cited short-term market fluctuations influenced by factors like the COVID-19 lockdown's end and Brazilian meat shipments. He underscored China's long-term growth prospects in the protein market, driven by structural demand.

 

Cavalcanti shared a remarkable rise in China's per capita annual beef consumption, from 4kg to 7.8kg over five years, indicating an evolving appetite for protein.

 

As JBS navigates the intricate dynamics of global protein markets, Australia's thriving cattle supply and strategic diversification strategies position the company to weather industry challenges and pursue sustainable growth.

 

-      Beef Central