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JBS Leads Ibovespa Losses After Fourth-Quarter Earnings Miss

JBS SA (JBSS3), the world’s biggest beef producer, led losses among major Brazilian stocks after reporting earnings that missed analysts’ estimates.

The shares dropped 5 percent to 7.48 reais at the close of trading in Sao Paulo, the biggest one-day slump in five weeks. The stock was the worst performer on the Ibovespa (IBOV) stock benchmark, which climbed 0.4 percent.

JBS posted adjusted net income of 140.7 million reais ($61.1 million) for the fourth quarter, compared with the average forecast of 464.8 million reais, according to data compiled by Bloomberg. The acquisition of Marfrig Alimentos SA’s former unit Seara, completed in October, may be weighing on JBS’s profitability, Banco BTG Pactual SA said.

“Seara is a key risk,” analysts Thiago Duarte and Enrico Grimaldi of BTG Pactual wrote in a research note to clients. “Looking ahead to 2014, we believe investors will focus on JBS’s ability to further deleverage its balance sheet after absorbing Seara, where we believe most of the execution risk lies going forward.”

Chief Executive Officer Wesley Batista told reporters in New York today that he is “confident” that Seara will report strong figures this year as JBS works to integrate the newly acquired company into its business.

JBS’s net debt was 23.7 billion reais at the end of the fourth quarter, a 6 percent increase from three months earlier.

The meatpacker also said it agreed to pay 103.5 million reais for poultry producer Frinal SA in Brazil’s southern state of Rio Grande do Sul.

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net Dennis Fitzgerald, Bradley Keoun

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