JBS NY Listing Struggle

JBS, the Brazilian meat giant, faces challenges in the US, affecting profits and delaying its NY listing plans.

JBS Struggles with U.S. Market Challenges and Delays NY Listing Plans

JBS SA, the Brazilian meat giant, which is facing some challenges both in its home market and across the United States. According to the company’s management, these headwinds are due to the pressure on beef margins in the U.S. and the slow normalization of pork margins.

Just recently, JBS reported a decrease in profit and EBITDA, a key measure of operating income, at 5.40 billion reais, causing shares to dip by as much as 3.7% during early trading in Sao Paulo.

The company attributes these financial setbacks to struggling beef margins in the U.S., a recovering U.S. pork division, and an oversupply of chicken globally. JP Morgan noted that JBS’ EBITDA fell 11% below their estimate and 2% below consensus, though it also highlighted better-than-expected free cash flow generation.

JBS Bolsters Seara Division Amid Global Chicken Surplus, Maintains Growth Plans Despite U.S. Beef Challenges

Despite these challenges, JBS is taking steps to enhance the performance of its processed foods division, Seara, in Brazil. They’ve made significant investments to expand its capacity, aiming to combat a global surplus of chicken and increased competition in certain product categories. While the recovery of Seara is slower than anticipated, the recent expansion is expected to lead to stronger margins in the future.

JBS remains committed to its plans to increase Seara’s pork and chicken production by 10% this year and another 10% in the next. However, the U.S. beef division faces challenges with a shortage of cattle for slaughtering in the fourth quarter of this year and into 2024.

JBS Expects Strong Q4 Cash Generation Amid Favorable Market Factors, Faces Delay in NY Listing Plans

On a more positive note, the company anticipates robust cash generation in the fourth quarter, thanks to lower grain prices and deferred livestock payments, as stated by CFO Guilherme Cavalcanti.

Meanwhile, JBS’ plans to list its shares in New York have hit a snag due to a request from American Depositary Receipt holders to vote on the proposal, as CEO Gilberto Tomazoni revealed. This dual listing in New York and São Paulo presents some obstacles to tapping into capital markets for short-term business expansion, although Tomazoni did not provide a timeline for the deal’s conclusion, as it is still under scrutiny by the Securities and Exchange Commission (SEC).

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