By Ana Mano and Roberto Samora
SAO PAULO (Reuters) – JBS, the world’s largest meatpacker, reported a nearly 78% annual increase in net profit driven by its poultry and pork businesses in Brazil and the U.S., and said on Tuesday the global trade war has so far had little impact on its business.
Its net profit rose to 2.92 billion reais ($521 million) in the first quarter from 1.64 billion reais a year earlier.
In a financial statement, JBS said earnings before interest, tax, depreciation and amortization, a measure of operating income known as EBITDA, came in at 8.92 billion reais, above the 8.77 billion reais forecast by analysts.
JBS said it had a strong quarter in a seasonally weaker period of the year, when winter affects consumption in the Northern Hemisphere and sales tend to slow compared with the end-of-year holiday weeks.
The company’s net profit rose 21.2% from the previous quarter.
“Quarter after quarter, our results prove that we made the right choices in building and managing our global multi-protein platform,” Gilberto Tomazoni, global CEO of JBS, said in a statement.
In an interview, he said the company would continue to benefit from its diversified production base, which includes Brazil, Australia and the U.S., adding that the impact on its operations from the global tariff war had so far been “insignificant.”
JBS’ Seara processed foods division in Brazil and its U.S.-controlled Pilgrim’s Pride, which processes chicken, reported record high EBITDA margins for the period, the company said.
Net revenue rose 28% to 114.1 billion reais in the first quarter from the same quarter last year but was down 2.2% from the fourth quarter.
As expected, JBS’s North America beef business continued to reel from a severe cattle shortage in the United States. While that division reported net revenue of 37.5 billion reais, a 36% annual increase, operating earnings slid to a loss of 587.2 million reais.
In Brazil, rising cattle prices are also a concern because it can mean margin compression down the road, Genial Investimentos said in a note to clients before results were released.
Other potential risks for JBS include an escalation of the global trade war, which might impact commodities exports out of the U.S. and result in a potential oversupply of chicken and or pork in the U.S., according to Goldman Sachs.
Tomazoni told Reuters potential pork and chicken oversupply in the U.S. is not a concern in the short term.
China remained a key market for JBS, taking about 23% of the company’s $4.9 billion in exports last quarter.
Sao Paulo-based JBS is very close to listing its shares on the New York Stock Exchange, with trading slated to begin next month if minority shareholders give their approval for the plan in 10 days’ time.
(Reporting by Ana Mano; Editing by Leslie Adler, Lisa Shumaker and Sonali Paul)
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