Dive Brief:
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JBS S.A. is charting a “path of margin recovery” for 2024 with an emphasis on turning around its underperforming beef in the U.S., executives with the meat giant said Tuesday.
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As grain prices level out, JBS plans to capitalize on cattle cycle upswings in Brazil and Australia to offset supply issues in the U.S., CEO Gilberto Tomazoni said in a recent earnings call.
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JBS Beef North America's profitability suffered last year from high cattle prices amid livestock shortages. Rapid price fluctuations also hurt profits as JBS relies on future cattle contracts for short-term risk management.
Dive Insight:
Last year, meatpackers navigated a long stretch of global protein oversupply and high grain prices that adversely affected earnings. Even though conditions are improving, JBS reported a net profit of $16.7 million in the fourth quarter of 2023 that fell short of analyst expectations.
The company’s chicken and pork businesses faced persistent pressures on production costs throughout the year, but lower grain prices are starting to help margins, according to the report. JBS is also seeing improvements within its USA Beef and Seara businesses after identifying issues and taking actions to correct their courses.
“We remain confident in our long-term strategy,” Tomazoni said. “We will continue to reinforce our diversified platform by geography and by protein style, investing in strong brands, value-added products and strategic partnership with our customers. This set of actions is crucial for creating better margin and reducing volatility.”
The adjustments come as the Brazil-based company files new registration documents for investors regarding its plan to list shares on the New York Stock Exchange. CFO Guilherme Cavalcanti said it's still possible for the company to list shares this year, though the timeline depends on approval from the Securities and Exchange Commission.
JBS reported revenue of $72.9 billion in fiscal 2023, about in line with the previous year. However, the company posted a net loss of $199 million during the 12-month period due to market and operational challenges. That is down from a $3 billion profit in fiscal 2022.
“JBS has demonstrated resilience and strength over its 70 years. The company’s diversified platform, commitment to excellence, innovation and sustainability, focus on people and culture, and the impending dual listing in Brazil and the United States put the company in a unique position to embark on a new cycle of accelerated growth and shareholder returns,” Tomazoni said.
