JBS profit skyrockets in q4 to R$ 2.4 billion

JBS, the world's largest meat processor, published on Wednesday (25) net income of R$ 2.43 billion for the fourth quarter of last year, a jump from about R$ 560 million obtained a year earlier than analysts expected. In 2019, net income was R$ 6.1 billion, compared to gains of only R$ 25 million in 2018. The performance was supported by strong demand from China, which expanded food imports after the African swine fever epidemic that hit its herd. The average expectation of analysts for the profit of JBS, which owns brands such as Seara and Swift, was R$ 2.19 billion, according to data from Refinitiv. Company executives said JBS has the right structure to overcome the uncertainties generated by the coronavirus pandemic. JBS has managed to reduce debt over the past year and has no need to raise additional capital, Financial Vice President Guilherme Cavalcanti told Reuters. The company expects to save about 100 million reais in interest payments by 2020, the executive said. "He was very happy to have lengthened the debt at the right time," Cavalcanti said. JBS ended 2019 with a drop in leverage. The net debt-to-Ebitda ratio closed the year 2.16 times in Reais compared to 3.18 times in 2018. In dollars, leverage fell from 3.01 times to 2.13 times. Chief Executive Gilberto Tomazoni said Chinese demand will remain high as the impacts generated by swine fever persist in the country's food chain. In addition, the executive cited that Chinese cities are reducing traffic restrictions related to coronavirus, which should be positive for demand. Tomazoni said JBS is ready to address the impacts of the pandemic because of its diversified production base. "Depending on the size of the ship, the waves will swing more or less," the executive said. Plans to list the group's international business shares in the United States remain a priority for JBS, but the timing is uncertain given the turbulence generated by Covid-19 in the financial market, Tomazoni said. JBS posted earnings before interest, taxes, depreciation and amortization of R$5.67 billion in the last three months of last year. Almost 21% increase in revenue The company increased almost 21% in net revenue for the period, to R$ 57 billion. In 2019, net revenue was R$ 204.5 billion, the largest ever recorded in the company's history. In the cattle division in Brazil, JBS recorded sales growth of almost 100% to China, with volumes advancing 61% and average prices growing 23%, reflecting strong demand from the Asian country. The Seara division of processed foods had net revenues of R$ 5.7 billion, up almost 24% over the fourth quarter of 2018, thanks to still heated demand in Brazil and in markets abroad. In 2019, JBS pig shipment volumes to China from the United States rose 10 percent. Pilgrim's Pride, a U.S. company controlled by the Brazilian group that sells chicken meat products, rose about 25% in net revenue for the fourth quarter, totaling R$ 12.6 billion.