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Steak-Loving Japan Seen Propelling JBS Profits

May 21, 2013

May 20 (Bloomberg) -- JBS SA, the world’s biggest beef producer, is counting on steak-hungry consumers in Japan and other Asian nations to help propel total exports past $10 billion for the first time this year.

"I’m very optimistic about Japan," Chief Executive Officer Wesley Batista, 43, said about the nation that is the world’s third-largest beef importer. "We’re increasing export volumes and the variety of products we ship," he said in an interview at the company’s headquarters in Sao Paulo.

JBS, whose sales to Asia jumped 30 percent in the first quarter from a year earlier, is boosting shipments after Japan eased import curbs and China became its biggest market. Soaring demand from Asia, the destination for about a third of JBS’s beef, pork and poultry exports, may help cut debt after Batista’s brother, former CEO Joesley Batista, embarked on a $2.3 billion acquisition spree that turned the family business into a $10 billion company.

The meat provider’s 17 percent return in the past month makes it the best performer among the world’s five biggest meatpackers by market value, data compiled by Bloomberg show. It’s trading at about 11 times its estimated 2013 earnings, compared with a ratio of 24 for BRF SA, Brazil’s biggest food- processing company, and 19 for Marfrig Alimentos SA, the second largest.

JBS rose 1.5 percent to 6.98 reais at 3:37 p.m. in Sao Paulo.


Plant Ramp-Up

The company, which produces about 13 percent of the world’s beef, took over four slaughterhouses in Brazil this year, along with two in the U.S. and a pair in Canada. This will help boost profit as JBS steps up output, Batista said.

"As the ramp-up at new plants matures, we’ll see margins improving across the continent," said Batista, who succeeded his younger brother in 2011 after the company increased sales 13-fold following 11 acquisitions.

First-quarter net income doubled from a year earlier to 227.9 million reais ($112 million), JBS said on May 14. The result was in line with the 231 million-real average of five analysts’ estimates compiled by Bloomberg.

Wesley Batista’s biggest purchase so far has been the $132 million takeover of Brazilian meatpacker Independencia SA in January, compared with his brother’s acquisitions of global rivals from Swift & Co. to Greely, Colorado-based Pilgrim’s Pride Corp.


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