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JBS (JBSS3) Posts R.45 Billion Loss in Q1, But Rebounds in 2023 – Money Times

JBS (JBSS3) Posts R$1.45 Billion Loss in Q1, But Rebounds in 2023 – Money Times

JBS reports it ended the quarter with 9 billion riyals in cash, with $3.2 billion available in revolving lines of credit (Photo: REUTERS/Shannon Stapleton)

a JBS (JBSS3)On Thursday, the largest meat producing company in the world announced a net loss of 1.45 billion riyals in the first quarter, compared to a profit of 5.14 billion riyals in the same period last year, with lower profit margins in all of its main business units due to the rise in grain. Prices and oversupply of proteins, especially chicken and Piglet.

But that difficult situation is a thing of the past, with the first quarter deemed a “breakthrough” by JBS’s global CEO, Gilberto Tomazoni. He said that the 2023 scenario is more positive, in light of the already recorded decline in feed raw material prices, in addition to the increase in meat demand in the coming quarters of the year. we that it China.

“The reality is that the result of this first quarter does not represent the potential of our business, let alone what we expect from the result of the year… The first quarter of 2023 is an exceptional case and a point outside the curve…,” Tomazoni said. Reuters.

He added, “As I look forward, and I actually look forward to the second quarter, we envision a gradual recovery in our margins, and that’s really true.”

The Brazilian company, a global food giant that derives most of its revenue from North America, reported a 78.6% drop in adjusted earnings before interest, tax, depreciation and amortization (Ebitda), to 2.16 billion reais.

Ebitda’s adjusted margin was 2.5%, down 8.6 percentage points compared to the same period last year, when the company had the best first quarter in its history, and operations in the United States posted strong domestic and foreign demand growth for poultry. And steak.

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Tomazoni said that the company’s net revenue for the period from January to March 2023 was the second highest ever recorded for the first quarter, with a total of 86.7 billion riyals, noting that the company’s global and diversified platform for proteins will also cooperate to resume good results.

In the first quarter, JBS’ US beef operations, the company’s largest by revenue, continued to suffer from a “cattle cycle shift,” which reduced the supply of animals for slaughter. In this scenario, the company said, live cattle prices remained at high levels, rising 16% year-on-year, while wholesale meat prices rose only 2%.

In the BrazilThe company’s beef unit suffered a ban from China on the country between February and March, due to an atypical case of “mad cow” disease. The ban is now lifted.

“Specifically looking at Brazil, the resumption of beef to China will have a strong impact on business now,” the executive said, noting that the company has a Brazilian unit qualified to export to the Chinese recently, which will give additional strength.

In the US, he said, the beef steak should benefit from grilling season, in the second and third quarters, which usually generates more demand.

He also indicated that the recovery of the Chinese economy, which is important for all proteins, but mainly for livestock, is another positive factor expected for this year.

Cash and debt

The company reported negative cash flow from operating activities in the first quarter of R$3 billion, “explained by the challenging scenario in this period.”

The free cash flow, after adding fixed assets, and interest paid and received, was negative by R$ 6 billion, in a period in which there is, seasonally, the property of increasing cash consumption, due to the concentration of payments from livestock and pork suppliers, and the rebuilding of stocks, especially in grains, According to the company’s CFO, Guilherme Cavalcanti.

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Net debt increased to R$83.7 billion at the end of the first quarter, compared to R$79.17 billion in the fourth quarter, mainly due to consumption of working capital, capital expenditures, as well as accrued interest.

The leverage has increased to 3.14 times, compared to 2.29 times at the end of last year.

JBS, on the other hand, reported that it ended the quarter with 9 billion riyals in cash, with $3.2 billion available in revolving lines of credit.

Thus, the total availability of the company is RO 25 billion, the company said.