by Roberto Samora
SAO PAULO (Reuters) – JBS assesses that investments made by the company in Brazil’s Seara and in the US pork division will elevate the importance of these units to another level, said the Global President of Operations of the world’s largest food company by revenue. obtained.
According to Wesley Batista Filho, investments in Seara –one of the highlights of the third quarter results– will increase the unit’s production capacity by around 20%. Results should be collected in 2023 and 2024.
“We made significant investments in Seara, which are now coming online and starting to produce, or finishing the last touches of the works… speaking of volume, we are increasing our capacity by around 20%, it is a relevant value that will change the level of company”, said Batista Filho, from the family of the founders.
According to him, the company’s poultry, pork and processed foods unit in Brazil will have the “most modern” industrial park with the investments made.
JBS had net income of 4 billion reais in the third quarter, down 47% compared to the same period last year, due to weaker performances mainly in the beef operations in North America, while the company’s business in Brazil contributed positively, especially Seara, whose operating cash generation measured by Ebitda jumped 80.9% in the quarter.
“The same thing (about the impact of investments) happens in the ‘pork’ unit in the United States”, he added, noting that the company is concluding two new factories.
“This will take the food business prepared within the ‘pork’ to another level as well”, commented the Executive, who recently assumed the new post.
JBS shares had a strong rise this Friday on B3, rising more than 8%, with analysts highlighting Seara’s good performance.
“JBSS3 is expected to outperform on Friday as Seara’s margin expansion boosted results…” Citi analysts said in a report, noting that the unit’s margin expansion was driven by an 11% pass-through of prices for processed foods in Brazil and higher export prices.
Seara’s margin dynamics should be sustained as corn and soybean costs decline, he added.
XP highlighted, “on the positive side”, the moment of poultry operations.
“Although the number came a little below our estimates, Seara’s adjusted Ebitda grew 81%…”.
FEATURED HARVEST
According to company executives in a conference call on quarterly results, the Brazilian operation Seara also presented gains due to improvements in points of sale and the diversification of the “mix” of products, which included launches.
They stated that “there was a lot” of price transfers by Seara due to cost increases.
According to the company, this should continue as investments aim to add value and focus on brands that have more strength to “continue to gain consumer preference”.
Analysts were also concerned about the lower margins of beef in the United States, which JBS considered as a “normalization” of the market after the best levels in history in 2021, according to the company’s global CEO, Gilberto Tomazoni.
The CEO, on the other hand, highlighted that the company is strong for its global diversification and also for the variety of proteins offered, and that the market should better evaluate the company’s action.
“Looking at our geographic and protein diversification, and considering the valuation of our company, I want to believe that the market has not yet understood the competitive advantage of our diversification, but I am glad that some analysts have already realized this…”, he commented.
In analysis, XP cited that the geographic and protein diversification of JBS will be increasingly a highlight in the coming quarters.
“As we mentioned earlier, we believe that the mergers and acquisitions carried out recently should favor the company, with a resilience rare to be found for a commodity player.”
(By Roberto Samora, with additional reporting by Paula Arend Laier)
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