JBS bullish on beef sales to China

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JBS bullish on beef sales to China

SAO PAULO JBS SA, the world's largest meatpacker, is bullish about the outlook for beef sales to Asian countries, mainly China, as per-capita beef consumption in the region remains low.

CEO Gilberto Tomazoni said JBS was in a good position to cater to the demand after having a conference call to discuss second-quarter results.

The rise in beef imports in Asia is due to the improvement in consumer purchasing power, Tomazoni said.

JBS exports beef from plants in Brazil, Australia and the United States.

The company also processes pork, chicken and fish products in multiple countries.

JBS reported a fall in net profit on Thursday, citing weakness of its U.S. beef and pork businesses.

Its hares were down 1.57 per cent to 30.72 reais in mid-morning trading on Friday.

Tomazoni said that the fall of margins in U.S. beef operations was almost entirely compensated by the other business units.

Net revenue was almost 8 per cent higher, at 92.2 billion reais for the last quarter, while operating margins remained in the double digits.

U.S. beef operations were affected by a lack of animal supply for processing, though beef exports from the United States are expected to be a record this year, according to Tomazoni.

Pork sales, on the other hand, are expected to reflect lower demand from China, where hog herds are growing again after an outbreak of African Swine Fever in 2018.

In Brazil, JBS' Seara division was able to increase prepared foods products prices, boosting profitability.

In a note to clients, Credit Suisse said Seara surprised even the most upbeat. Seara's 14.1 per cent operating margin was a record, according to analysts.

JBS executives said Seara's price went up as well as offset cost inflation, but also reflected a better product mix of sales.

Brazil has ongoing cash transfer programs that should boost food sales in JBS' home country, according to executives.