(Bloomberg) – Chicken makes up for most of the increased quarterly profits as the world’s largest meat supplier faces losses in the U.S. beef business, JBS SA said.
Net income at the adjusted three months ended rose 78% from a year ago to 2.92 billion Reyas ($527 million), the Brazilian company said in a statement. By comparison, analysts compiled by Bloomberg estimates the actual average of 2.79 billion.
The results highlight how chicken becomes the lifeline for major meat suppliers, including Tyson Foods Inc. and Cargill Inc., as the United States has severely shortened the cost of cattle and removed profits from beef processing.
Before items such as interest and taxes in the first quarter, about 71% of JBS’s earnings came from its chicken operations in North America and Brazil, benefiting from cheaper feed costs and strong consumer demand. By comparison, 57% a year ago.
JBS CEO Gilberto Tomazoni said the chicken boom is not going away anytime soon. “We’ve seen very strong demand and I’ve seen a very positive year for chicken and pork,” he said in an interview Tuesday.
JBS said the company’s largest North American beef business lost $112.9 million in the first quarter as the price increase in meat it sells was offset by record beef costs. Nevertheless, JBS’s beef business in Brazil and Australia has increased profits from a year ago.
The company, based in Sao Paulo, is in the final stages of a long-term plan that trades stocks in New York after receiving a green light from U.S. regulators last month. Meat producers will vote on minority shareholders on May 23. JBS said the move will expand its capital opportunities and make use of equity more flexible as a source of funding.
JBS stock has soared 85% over the past year, hitting levels in April.
JBS’s free cash flow was RMB 5.4 billion in the first quarter, attributed to 3.1 billion reais a year ago, mainly due to higher taxes.
(Updated with CEO quotes in paragraph 5.)
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