JBS profits rise but headwind intensifies

By Oscar Rousseau

- Last updated on GMT

JBS brand Seara saw export revenue drop by 5% thanks to rising cost of raw materials
JBS brand Seara saw export revenue drop by 5% thanks to rising cost of raw materials

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Brazilian meat business JBS posted increased net revenue for the second quarter of 2016, but said it faced “significant cost increases” in raw materials, particularly in Brazil.

The company – which claims to be the world’s largest meat processor – saw global revenue rise to R$43.7bn ($13.9bn) in the second quarter of the year, jumping up 12.3% when compared to Q2 2015.

Net income during the period was R$1.5bn ($477m), which JBS​ claimed was a strong “improvement​” when compared against income during the same period in 2015 and the first quarter of 2016.

However, the cost of raw materials soared and this was felt particularly by Brazilian subsidiary Seara Foods, which saw the cost of corn rise by more than 100% when compared the second quarter of 2015.

Price increase talk

JBS said Seara’s net sales increased by 3.3% as volume and value sales prices increased by 1.3% and 1.9% respectively. But this did little to “mitigate​” the escalating costs of raw materials in Brazil, JBS reported. Export revenue dropped by 5.3% when compared to Q2 2015 due to poor prices in the international meat buying arena, and the company said it may increase prices to remain competitive.

We are facing different opportunities and challenges in each region where we operate, which reinforces the relevance and the successful strategy to diversify in various markets and segments,​” said Wesley Batista, president and CEO of JBS.

We have a highly engaged and qualified team working with optimism, energy and confidence, investing in the strengthening of our brands and towards the sustainable development of our business.​”

JBS owns some of the most recognisable meat brands in the world, including Seara, Pilgrim’s Pride, Moy Park, Doriana, Prima and Friboi.

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