In the face of declining U.S. pork prices, beef margins, and a global chicken glut, JBS SA, the world’s leading meatpacker, announces an 86% drop in Q3 net income compared to the previous year. Get the details on the financial challenges impacting the industry giant.
JBS SA Reports Sharp Q3 Profit Drop Amidst Challenging Meat Market Conditions
In the latest financial report from JBS SA, the world’s largest meatpacker. Their third-quarter net income took a staggering 86% plunge compared to the previous year, landing at approximately 573 million reais, or $116.63 million in U.S. dollars.
This disappointing performance fell short of the LSEG consensus forecast, which had predicted 724 million reais. To put things into perspective, it’s a far cry from the whopping 4 billion reais they raked in during the third quarter of 2022.
In their financial statement, JBS pointed out that their adjusted earnings before interest, tax, depreciation, and amortization, often referred to as EBITDA, stood at 5.40 billion reais. This figure managed to surpass consensus estimates, which were pegged at 5.15 billion reais.
JBS felt the pinch across its major business divisions, with net revenues plummeting to 91.4 billion reais, marking a 7.6% drop compared to the previous year.
JBS Grapples with U.S. Market Challenges: Beef Margins Plunge, Beef Exports Drop 19%, and Pork Faces Price Pressures
In the United States, their largest market in terms of sales revenue, JBS faced significant challenges. Beef margins took a sharp hit due to reduced cattle herds, which limited the availability of animals for slaughter and drove up costs. This predicament mirrored the situation faced by rival Tyson Foods.
According to JBS, U.S. beef exports experienced a 19% year-on-year decline through the end of September. This decline can be attributed to supply constraints combined with decreased Asian demand. The three primary destinations for U.S. beef exports remained South Korea, Japan, and China, as per the USDA.
On the pork front in the U.S., wholesale prices dropped by approximately 7% during the quarter compared to the previous year. Companies in the industry made efforts to reduce stock levels, according to JBS. However, there was a silver lining in the international market, as the company reported a 12% increase in pork exports, particularly to Mexico and Canada, from January to September.
Seara Processed Foods Division Faces Tough Times: Revenues Plummet by 13.3% Due to Global Chicken Oversupply, Despite Increased Sales Volumes
Turning our attention to their local division, Seara processed foods, revenues took a significant hit, declining by 13.3% year-on-year to 10.2 billion reais. This drop was largely attributed to a persistent global oversupply of chicken, which adversely affected export sales.
Seara’s exports in dollars dipped by 14% compared to the same quarter in the previous year, primarily due to lower export prices in the currency. However, this setback was partially mitigated by an increase in the volumes sold by the division, as noted by JBS.
In conclusion, JBS SA faced a challenging quarter, with declining profits across key sectors and market pressures impacting their bottom line. We will continue to monitor the situation as the world’s largest meatpacker navigates these turbulent waters.