JBS May Sell U.S. Plants, Offices to Reduce Debt

(Corrects story originally published on Nov. 16 to remove reference to office location in second paragraph.)

JBS SA (JBSS3), which became the world’s biggest beef producer through 10 acquisitions since 2008, said it’s not interested in bidding on plants being divested by BRF - Brasil Foods SA (BRFS3) and may instead sell U.S. assets to cut debt.

JBS, based in Sao Paulo, may sell idled plants in the U.S. and office buildings that previously belonged to Pilgrim’s Pride, Chief Executive Officer Wesley Batista told analysts today on an earnings conference call. JBS doesn’t expect the divestments to be “material,” Batista said.

JBS, also the world’s second-largest poultry producer and the U.S.’s biggest pork company, is seeking to reduce debt after net debt rose in the third quarter to four times earnings before interest, depreciation and amortization, or Ebitda, from 2.9 times in the year-earlier period.

The company closed 10 plants in Brazil between August and September, including four leather plants, three slaughterhouses and three deboning plants, it said Nov. 14.

Brazil’s regulator, known as Cade, ordered Brasil Foods in July to sell some assets and stop using certain brands to gain approval for its $3.8 billion acquisition of Sadia SA. It has to sell 10 food-processing plants, 12 other brands, eight distribution centers and four pork and chicken slaughterhouses.

Pilgrim’s Pride Losses

JBS said Nov. 14 it had a third-quarter net loss of 67.5 million reais ($38.2 million), or 2 centavos a share, compared with a profit of 143.4 million reais, or 6 centavos, in the same period a year ago. Analysts forecast a gain of 4 centavos a share, excluding some items, according to the average of four estimates compiled by Bloomberg.

JBS missed analysts’ estimates because of losses at its Pilgrim’s Pride unit and a weaker Brazilian real that boosted the value of its foreign debt in local currency terms. Pilgrim’s is not likely to become profitable this quarter, Batista said.

Brazil’s real slumped 17 percent in the quarter, the worst performer against the dollar of the 16 most-traded currencies tracked by Bloomberg.

JBS rose 5.4 percent to 5.69 reais at 5:08 p.m. in Sao Paulo.

To contact the reporter on this story: Lucia Kassai in Sao Paulo at lkassai@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net

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