Dive overview:
- What JBS saw was Net loss of $53.2 million The world’s largest meat processor reported Tuesday that sales fell in the second quarter due to market challenges affecting its pork, beef and poultry divisions.
- Net sales were $18.1 billion for the three months ended June 30, down 3.6% year-on-year as a glut of poultry drove down global prices and reduced US cattle availability tightened beef margins. became. JBS also pointed out that a glut of pork in the US led to price declines in the quarter.
- “While the global situation remains challenging for the protein sector, we are confident that: slowly starting to recover CEO Gilberto Tomasoni said at the earnings call.meat processor Tyson Foods Smithfield Foods also fell victim to unfavorable conditions, announcing consecutive quarterly losses and cost-cutting efforts this year.
Dive Insight:
Meat supply volatility has wreaked havoc on pricing, with processors struggling to navigate prices that are either too high or too low, depending on the sector.
A combination of high feed costs and low pork prices has eroded US farmers’ profits this year, hitting meat processors hard. In contrast, prolonged drought has reduced cattle numbers, raising beef prices and operating costs. Meanwhile, prices on the international market are falling due to a global oversupply of chicken.
JBS struggled in the second quarter with declining prices in each segment, with lower sales in its Brazil, Europe, Australia and US business segments.
Pilgrims Pride Corporation, JBS’ poultry subsidiary, said sales fell 7% to $4.3 billion amid volatile U.S. poultry prices and improved profit margins from the beginning of the year. Gross profit fell 59% year-over-year to $278.4 million.
JBS USA Pork’s sales fell 16% to $1.8 billion in the quarter due to lower prices. Prices plummeted due to a glut of U.S. pork. But domestic production is down 21% year-on-year, and inventory levels are trending downward, JBS said in its earnings report. Gross profit fell 87% to $26.9 million.
JBS Beef North America stands out as the only segment with year-over-year sales growth. The division’s sales of $5.8 billion were up 5% as reduced supplies kept live cattle prices high, resulting in higher costs and lower margins. Gross profit fell 82% to $116.8 million.
Despite the challenges, Tomazzoni said in a message to investors that JBS’s efforts to improve efficiency are already having a positive effect, adding: “Profitability has doubled compared to the first quarter. It happened,’ he said.
“In the future, we see scenarios where the supply balance in poultry could become more balanced, which could have a positive impact on prices in the sector,” he said. “We are also beginning to reflect lower grain prices in our cost structure, benefiting our poultry and pork businesses around the world.”
In June, JBS announced plans to list its shares in both Brazil and the United States. increase the market value of the companyto attract more investors and expand investment capacity.
