With its diversified geographic and protein production platform, and resulting business resilience, JBS has reported positive results for the past quarter.
An increase of almost 33% in the group’s net revenue is among the highlights of its performance for the second quarter ended June 30, 2020, identified by JBS.
The Brazil-based global animal protein group achieved a total revenue for the period of 67.6 billion real (BRL; US$12.4 billion). At BRL3.4 billion, net income was up 55% year-on-year. Compared to the previous year, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) more than doubled, and EBITDA margin was up by 5.5 percentage points to 15.5%.
Performance during the latest quarter once again demonstrated JBS’s resilience, according to Gilberto Tomazoni, JBS' global CEO. He highlighted the key nature of the firm’s diversified geographic and protein production platform to this resilience.
Higher revenue from all business divisions
Within the group, the highest net revenue of BRL30.1 billion was achieved by JBS USA Beef — 36% higher than for the same period of 2019. EBITDA was up 209% year-on-year at BRL6.2 billion, while there was an 11.6 percentage-point improvement in EBITDA margin at 21%.
In terms of improvement in net revenue, the best-performing group member was JBS USA Pork. At BRL8.5 billion, its net revenue was almost 40% higher year-on-year. A margin of more than 12% was achieved on an EBITDA of BRL1.1 billion, which was 154% above the previous year’s level.
JBS’s U.S.-based poultry business Pilgrim’s Pride turned in net revenue for the quarter of BRL15.2 billion. Despite a 37% year-on-year increase in revenue, this resulted in negative developments for both EBITDA and EBITDA margin. These were reported at BRL1.1 billion, and 7.4%, respectively.
At BRL8.7 billion, net revenue contributed by the JBS Brazil operation was 22% above last year. EBITDA was 223% higher at BRL1.1 billion, while EBITDA margin improved by 7.7 percentage points to 12.4%.
JBS’s Brazilian poultry business Seara also achieved EBITDA of BRL1.1 billion, which was 92% more than in the same period of 2019. At 16.9%, EBITDA margin was 5.8 percentage points higher year-on-year. The division’s net revenue was up by almost 26% at BRL6.4 billion.
JBS responds to the pandemic and changing markets
According to Tomazoni, JBS responded to the coronavirus (COVID-19) pandemic with a series of actions.
The first priority was the protection of its 240,000 employees, followed by the group’s commitment to producing food at a time when the world most needed it. As well as supporting its clients and suppliers, JBS worked to secure its financial position. Strict prevention and safety protocols were applied across all its sites, following guidance from renowned health experts and benchmark institutions. These protocols have been strictly adhered to by all JBS team members.
In addition, JBS reports establishing a BRL700-million (US$120-million) fund help combat the disease, and support long term community infrastructure.
Driven by a number of factors, consumers have changed their behavior, consumption and buying habits. Tomazoni highlighted that retail — and especially e-commerce — have recently grown exponentially.
These changes represent opportunities for JBS, he said. The CEO highlighted the firm’s active participation in the plant protein market in many of its operating regions. In the U.S., it created Planterra, a company that launched the OZO brand to compete in this market. In Brazil, Seara’s Incrivel brand is a leader in the plant protein market.
Also in Brazil, JBS has developed a business model with Swift stores. This has brought JBS closer to retail customers and final consumers, allowing the company to respond quicker to changes in consumer behavior.
Tomazoni highlighted that the pandemic accelerated trends such as interest in easy-to-cook, quick-to-prepare, healthy, and indulgent foods. Combined with growth in e-commerce purchasing, these trends create opportunities for JBS, the CEO said.
Progress in sustainability and environmental protection
The group’s commitment to eradicating deforestation across its supply chain is ongoing, confirmed Tomazoni. According to a recent independent audit, 100% of the firm’s cattle purchases met its own social and environmental criteria. In Brazil, all JBS cattle suppliers in the Amazon are monitored by satellite imagery and geo-referenced data. Of the 50,000 farms it monitors, 9,000 have been blocked as suppliers due to non-compliance with the firm’s Responsible Procurement Policy.
Further details on this progress is published by JBS in its sustainability report for 2019. The company reported meeting or even exceeding its goals for water, energy, and animal welfare.
Recent expansion plans and acquisitions
In line with its strategy to add value to its fresh meat portfolio, JBS concluded the acquisition of Empire Packing Company of the U.S. over the past quarter. According to Tomazoni, this acquisition places JBS USA among the top three case-ready operators in the country.
In Brazil, the CEO reports increasing partnerships with retailers, such as the Açougue Nota 10.
Following the group’s strategy to grow in the value-added and branded products segment in Europe, Pilgrims Pride acquired Tulip at the end of 2019.
In the U.S., JBS recently announced an investment of US$200 million in its Plumrose plant specializing in Italian meat products, and US$70 million in a bacon plant.
Further investments BRL8 billion have also been announced to expand Seara’s business in Brazil.
With annual slaughterings of around 3.5 billion birds, JBS is the world’s leading poultry producer, according to the WATT AgNet Top Poultry Companies Database. By 2018, JBS had become the world’s largest protein supplier, and second largest food company.
