Steady meat trade flows to Asian markets also drive performance
Brazilian meatpacker JBS SA, which operates multiple food processing facilities in the United States, said its North American operations will continue to drive performance, reported Reuters.
Speaking at a conference call to discuss fourth-quarter results, management said JBS will benefit from strong US domestic demand for food products and steady meat trade flows to Asian markets, especially China.
JBS shares rose 2.5% in early trading after it said it earned $1.31 billion in the fourth quarter, beating analysts expectations.
In Brazil, where the company is headquartered, cost pressure will continue to weigh on the Seara division as meat processors scramble to buy corn used as feed.
The scarcity during the inter-harvest period for corn, which will last through the middle of the year, is compounded by the war in Ukraine, which has caused grain prices to spike globally, affecting operations across all geographies.
Seara, which processes pork and poultry, has been unable to pass higher costs onto consumers in Brazil, management said citing the weakness of Brazil’s economy. In the United States on the other hand, consumers have the purchasing power to continue buying, executives said.
Citing US Department of Agriculture data for 2022, JBS managers said beef and pork production will fall from the previous year in the United States, while poultry output will likely rise.
In the United States, where the company derives most of its revenue, the outlook for prices and margins remains positive. In Australia, herds are still recovering but the outlook is improving.
On Monday, JBS reported record sales last year on the back of the strength of its US business, which is also buoyed by strong trade ties with China.
Regarding acquisitions JBS made in 2021, the company said companies acquired are performing better than expected.