JBS Earnings Beat. Rising Beef Prices and Tight Supply Are in Focus.

JBS shares have only been trading on the New York Stock Exchange since June. (Chet Strange/Bloomberg)

Key Points

• JBS is expected to report $21.9 billion in revenue and $564 million in net income for the third quarter.
• JBS’s North America beef business experienced over $300 million in losses in the second quarter due to high cattle costs.
• Pilgrim’s Pride, JBS’s chicken producer, saw a 4.3% increase in net revenue and a 4.6% rise in adjusted earnings before interest and taxes in the second quarter.

JBS, the world’s largest meatpacker, posted stronger-than-expected earnings, boosted by strong poultry demand even as rising cattle prices weighed on its results.

For the three months ended in September, JBS posted net revenue of $22.6 billion, up 13% from a year ago. Earnings came in at 52 cents per share, down 16% from the same period last year.

Both the top and bottom line beat analyst expectations. Analysts polled by FactSet had expected JBS to post $21.9 billion in total revenue and 50 cents in earnings per share.

JBS shares have only been trading on the New York Stock Exchange since June after a two-year slog through regulatory filings, shareholder votes, and public sparring with activists. The stock made its debut in the U.S. at $13.65 per share; it traded at $13.14 as of Thursday’s close.

JBS stock gained 0.6% in after-hour trading on Thursday.

The Brazilian meatpacking giant has a major presence in the U.S. The company posted more than $77 billion in total sales last year, pocketing roughly $2 billion in net profit. More than half of that top line was generated in North America.

Its U.S. arm runs nine beef plants, five pork plants and dozens of prepared-foods sites. It’s the largest beef processor in the U.S., the second-largest pork supplier, and the majority owner of American chicken producer Pilgrim’s Pride .

Pilgrim’s Pride remains strong thanks to resilient U.S. demand for poultry amid high beef prices. In the third quarter, the segment’s net revenue was 3.8% higher from a year ago, although adjusted operating income declined 6%. Still, Pilgrim’s Pride had the highest margin among all JBS segments.

JBS’ North America beef business, on the other hand, faced pressure as dry weather pushed ranchers to scale back the size of their herd. Despite a 14.8% growth in net sales due to high beef prices, the segment posted $95 million losses due to even higher cattle costs.

Last week, President Donald Trump called on the Department of Justice to investigate meatpacking companies, accusing them of colluding to push up beef prices. Meatpackers have denied any wrongdoing in the past. Trade group Meat Institute said beef processors welcome a “fact-based discussion about beef affordability.”

JBS shares have traded on Brazil’s São Paulo Stock Exchange for almost two decades. Since Brazilian law doesn’t allow domestically incorporated companies to list primary shares abroad, JBS created a Dutch holding company to have its primary listing in the U.S. Brazilian investors could access the shares through depositary receipts in local trading.

Write to Evie Liu at evie.liu@barrons.com