JBS SA, the world’s largest meat supplier, expects profits at its largest unit to remain tight as cattle availability in the US is seen shrinking further through next year.
Profit margins at JBS’s North American beef operation will remain at “low single-digit” levels, with ranchers expected to withhold females as part of the efforts to replenish the herd, Wesley Batista Filho, the unit’s head, said Tuesday in an earnings call with analysts.
The Sao Paulo-based company on Monday reported quarterly earnings that missed some analysts estimates.
Read More: World’s Top Meat Supplier Posts Second-Straight Quarterly Loss
Shrinking cattle herds in the US and higher prices of the grain used as feed have made it more costly to produce meat. Meanwhile, producers are also struggling with an abundance of chicken and pork as consumer demand retreats from levels seen during the pandemic.
Still, JBS’s pork and chicken businesses are poised to recover more quickly than beef, with early signs of a much-needed supply slowdown and a recent drop in feed costs. The brighter outlook was echoed by Miguel Gularte, CEO of rival BRF SA, who on Monday said the worst of the chicken supply glut is “being overcome”.
It’s not all bad for beef — increasing availability of cattle for slaughter in Brazil and Australia should boost beef margins in both countries, JBS said.
JBS shares rose 2.3% as of 11:12 a.m. in Sao Paulo.
--With assistance from Dayanne Sousa.
Author: Gerson Freitas Jr.
