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JBS Reports 3Q Loss on Currency Drop, Pilgrim’s Pride

JBS SA, the world’s largest beef producer, reported a loss in the third-quarter because of losses at its Pilgrim’s Pride unit and a weaker Brazilian real that increased the value of foreign debt.

Sao Paulo-based JBS posted a net loss of 67.5 million reais ($38.2 million) in the third quarter, or 2 centavos a share, from a profit of 143.4 million reais in the same period a year ago, or 6 centavos a share, according to a statement today. The company was expected to post a gain of 4 centavos a share excluding some items, according to the average of four analyst estimates compiled by Bloomberg.

JBS’s Pilgrim’s Pride unit reported on Oct. 28 a net loss of $162.5 million in the third quarter after chicken prices fell and feed-ingredient costs rose in the U.S. That compares with net income of $57.9 million a year earlier. JBS bought a majority stake in Pilgrim’s Pride in December 2009 for $800 million. The Brazilian real plunged 17 percent against the dollar in the third quarter.

“JBS continues to face some predicaments at its Pilgrim’s Pride unit,” Pedro Herrera, an analyst with HSBC Global Research, said in a note to clients before the earnings report. “And there is also the losses stemming from the currency.” He rates the stock “neutral.”

The company said third-quarter result had a negative impact of 439 million reais from the loss at Pilgrim’s Pride and foreign exchange variations, according to its earnings statement.

JBS posted a quarterly financial loss of 519.5 million reais after the Brazilian real’s slide against the dollar boosted the value of foreign debt in local currency in the quarter. This is booked as a loss under domestic accounting rules. A year ago, JBS had a financial loss of 363.1 million reais.

Sales rose 10.6 percent in the quarter to 15.6 billion reais, from 14.1 billion reais a year earlier. Australia and the U.S. account for about 75 percent of sales. JBS reported gross debt of 19.2 billion reais including Pilgrim’s Pride.

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