Brazilian meat processor JBS said on Tuesday that its net profit for the first quarter fell 56% compared with the prior year, a result the company attributed largely to operational difficulties in North America. The firm recorded $221 million in net income for the January-March period, below the $236 million forecast from analysts polled by LSEG.
In its earnings report, JBS pointed to challenges within its North American portfolio, which includes JBS Beef North America and poultry subsidiary Pilgrim's Pride, as a counterweight to better performance in Brazil. The firm highlighted high livestock prices in the United States combined with low cattle availability as a factor that compressed margins during the quarter. It also flagged weather-related problems and temporary plant stoppages that affected poultry production.
"In the U.S. cycle, business remains tough, and the first quarter is always a challenging period," Chief Executive Gilberto Tomazoni said in an interview. "This quarter was worse than last year due to cyclical conditions."
North American beef operations account for roughly one third of JBS's net sales. The company reported consolidated net sales of $21.61 billion for the quarter, an increase of 11% from the year-ago period and slightly above the analyst projection of $21.29 billion.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) declined 26% year-on-year to $1.13 billion, coming in under analysts' expectations of $1.27 billion. The company said the decline in adjusted EBITDA reflects the mix of regional operational pressures and cost factors detailed in its report.
Below are distilled takeaways from the quarter and the primary operational challenges identified by the company.
- Net profit: $221 million in Q1, down 56% year-on-year and below LSEG consensus of $236 million.
- Net sales: $21.61 billion, up 11% year-on-year and above the $21.29 billion analyst estimate.
- Adjusted EBITDA: $1.13 billion, down 26% from a year earlier and under the $1.27 billion estimate.
JBS emphasized that the North American business environment remains challenging and cyclical conditions in the U.S. contributed to the weaker quarter. The company cited specific operational constraints - elevated livestock costs with low cattle availability, as well as weather and temporary stoppages affecting poultry output - as the proximate causes of margin pressure.