JBS Reports Profit After Year-Ago Loss as Beef Margins Widen

JBS SA (JBSS3), the world’s largest beef producer, posted a second-quarter profit after last year’s loss amid improved Brazilian beef margins and a stronger U.S. dollar that boosted gains from overseas operations in local currency.

Net income of 169.5 million reais ($83.6 million) compares with a loss of 180.8 million reais a year ago, the Sao Paulo- based company said in a regulatory filing yesterday. The average adjusted profit estimate of five analysts tracked by Bloomberg was 253.9 million reais.

Earnings before items represented 5.5 percent of sales, up from 4 percent a year ago, after margins at its Mercosur beef unit improved on lower cattle prices. Cattle prices in Brazil, which accounts for about a quarter of sales, fell 7.2 percent, on average, in the period, the University of Sao Paulo’s Cepea crop-research agency said on its website.

Pilgrim’s Pride (PPC), the company’s U.S. unit, “showed a material recovery in profitability,” which translated into better results, Ricardo Boiati, an analyst with Banco Bradesco SA (BBDC4), said in a Aug. 7 note to clients. He rates the stock market perform, which means the stock is expected to perform in the range of 10 percent above or below the main Bovespa stock index.

The Brazilian real’s 9.1 percent slide against the U.S. dollar in the quarter boosted the value of overseas assets in local currency, which is booked as a gain under the country’s accounting rules. Overseas units, including the U.S. and Australia, represent about 75 percent of sales.

JBS’s financial loss of 389.4 million reais in the quarter fell from 590.9 million reais a year ago.

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

Mario Sergio Lima in Brasilia at mlima11@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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