JBS records the highest quarterly net revenue in its history of R$ 98.9 billion
22 | 11 | 2022
JBS, the world’s largest food company, ended the third quarter of 2022 with record net revenue of R$ 98.9 billion. The company closed the third quarter with a net income of R$ 4 billion, in line with the figure recorded in 2Q22.
“The performance was possible thanks to the continuous strength and resilience of our globally diversified multi-protein platform which has attenuated the natural cycles of our businesses while maintaining a healthy cash flow that has allowed the companies to reinvest in their growth and generate shareholder returns in the short term”, points out Gilberto Tomazoni, CEO of JBS.
For the first nine months of the year, the Company’s global invoicing stood at R$ 281.9 billion. This resilience is evident even against a globally challenging scenario, with the reduction in demand in important regions as a result of lower disposable income affected by rising inflation.
“Our poultry business in Brazil and the USA exceeded expectations thanks to strong growth in exports to Asia and the Middle East, with the emphasis on convenience and the strengthening of the relationships with key clients in each market. As the beef cattle business in the USA heads towards the normalization of margins, we believe we will see this segment strengthens in the Brazilian and Australian markets, says Tomazoni.
Variation in the leadership role between the businesses
Pilgrim’s Pride continued to show an important growth rate, with net revenue of R$ 23.4 billion in the third quarter of 2022, driven especially by the growth in demand from the US retail sector for value-added products and fast delivery ready-to-serve dishes. The margin of the business in the period stood at 12.6%.
At Seara, the margin reached 15.1%, sustained by the strength of the overseas market which saw the company consolidate its position as Brazil’s largest poultry exporter in accumulated terms for the year and the quarter. Noteworthy is the strong growth of the poultry segment in the period, with volumes expanding by 12.5% year-over-year. In Brazil, according to Kantar, the Seara brand showed record household penetration while repeat purchases continue to grow. Thus, in the third quarter of 2022, the company recorded net revenue of R$ 11.8 billion, growth of 10.2% in the quarterly comparison.
JBS Brazil, the umbrella company for beef cattle business here, achieved R$ 16.2 billion of net revenue, growth of 15.1% in comparison with the revenue obtained in the second quarter of 2022, registering a margin of 5.1% This improvement can be put down to the improvement in the general business conditions in Brazil, with higher availability of raw materials and the results from key client loyalty actions for the business, especially through the Friboi+ program that grew by 42% in the volume commercialized in the quarter.
At JBS Australia, net revenue grew by 6% in comparison with the second quarter, to R$ 8.7 billion, with an EBITDA margin of 5.6%. The availability of cattle is beginning to show signs of improvement and the trend is that the upturn in the cycle will occur in 2023. In addition, Huon Aquaculture has been performing above the expectations for the business, with consistent double-digit margins and extensive room to grow on the back of JBS know-how in the local retail sector.
Progress in the ESG Agenda
JBS continued to push ahead in the third quarter of 2022 by adopting measures to achieve the objective of being Net Zero by 2040. In August, JBS Novos Negócios launched a new business unit, Genu-in, which uses beef cattle hides in the production of collagen peptides for the nutraceutical industry and gelatin for the food industry. During the period, Seara also announced it was expanding its refrigerated electric truck fleet from 19 to 200 vehicles.
In July, Pilgrims UK announced investments of £ 10 million in sustainability projects over the next 12 months. The actions include the conclusion of the transition to LED lighting and switching to more energy-efficient equipment alternatives by replacing natural gas boilers with heat pumps and the optimization of the refrigeration systems. The company already has local solar and wind energy projects at many of its premises and is now extending these to the remainder of its plants throughout the United Kingdom as a whole, which will help to reduce annual carbon emissions by 11,000 tons.
At the end of September, JBS announced the arrival of Jason Weller as its first Chief Sustainability Officer (CSO). He will be in charge of overseeing the Company’s ESG strategy at the global level, sharing best practices with the emphasis on developing the science-based targets plan of JBS for meeting its commitment to being Net Zero by 2040.
To strengthen its corporate governance, the Company announced in August that Michael Koenig had been appointed Global Ethics and Compliance Officer – prior to this, he had held the same position at Pilgrim’s since August of last year. Besides the appointment of Koenig, JBS also created the Global Compliance Executive Committee in June 2022 with the aim of helping to create a more uniform and consistent compliance program at every unit of the Company around the world, including Pilgrim’s.
Strict financial management guarantees the company’s stability
At an economically challenging time, strict financial management has shown itself to be a differentiating feature that guarantees the soundness of JBS. The Company’s leverage remained under control, ending the quarter at 1,76x in US dollars and 1,81x in Reais. The company has successfully altered its indebtedness profile by extending its liabilities and lowering the average cost of its debt by reducing interest expense.
In this respect, the company took the following steps during the quarter: (i) issuance of US$2.5 billion in Senior Notes, (ii) payment in full of the Term Loan B, reducing the debt with real guarantees from 15% to 4%; (iii) early payment of 6.75% 2028 and 6.50% 2029 bonds; and (vi) issuing Certificates of Agribusiness Receivables (CRA) of approximately R$1.6 billion.
These initiatives have been accelerated since JBS consolidated its Full Investment Grade status, having been rated investment grade by S&P, Moody’s and Fitch, the leading market agencies. “With these liability management initiatives we have extended the average term of the debt from 6.2 years in the third quarter of 2021, to 10 years in 2022”, points out Gilberto Tomazoni.
Escrito por: Oxigenweb