In a press release dated May 14th JBS SA (JBSAY) announced results for the 1st quarter ending March 31st. JBS SA, a multinational based in Brazil is the holding Company for beef and pork packing companies in the U.S and owns approximately 75 percent of Pilgrim’s Pride Corp. with operations in Mexico, Northern Ireland and the EU.
The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as US$ x 1,000 except EPS. Conversion R$5.9=US$1)
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1st Quarter Ending March 31st.
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2020
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2019
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Difference (%)
|
|
Sales:
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$9,573,119
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$7,520,338
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+27.3
|
|
Gross profit:
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$1,233,000
|
$989,237
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+24.7
|
|
Operating income:
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$387,810
|
$288,741
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+34.3
|
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Pre-tax Income
Net Income
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($1,150,202)
($997,812)
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$59,031
$198,040
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Neg.
Neg.
|
|
Diluted earnings per share:
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($0.38)
|
$0.07
|
Neg.
|
|
Gross Margin (%)
|
12.8
|
13.2
|
-3.0
|
|
Operating Margin (%)
|
4.1
|
3.9
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+5.1
|
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Profit Margin (%)
|
Neg.
|
2.6
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Neg.
|
|
Long-term Debt:
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$12,058,051
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$8,989,423
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+34.1
|
|
12 Months Trailing:
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|
|
|
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Return on Assets (%)
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6.9
|
|
|
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Return on Equity (%)
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21.4
|
|
|
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Operating Margin (%)
|
0
|
|
|
|
Profit Margin (%)
|
3.0
|
|
|
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Total Assets
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$25,984,915
|
$21,413,455
|
+21.4
|
|
Market Capitalization
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$10,234,000
|
|
|
52-Week Range in Share Price: $4.43 to $16.31 50-day Moving average $8.12
Market Close Thursday, May 14th $8.62 Close post-release Friday, May15th $7.97
Forward P/E 9.6 Beta 0.3
EBITDA as a percentage of revenue generated by subsidiaries in Q1 2020:-
Seara Brazil: Chicken, meats and frozen foods = 16.9
JBS Brazil: Beef, leather = 4.1
JBS USA: Beef. = 4.8
JBS USA: Pork = 5.0
Pilgrim’s Pride: USA, Mexico and EU. Chicken and pork in UK =8.3.
JBS SA derived 76 percent of Q1 2020 revenue from the three U.S subsidiaries. PPC represented 24 percent of JBS SA Q1 2020 revenue.
In commenting on the performance of the PPC subsidiary Gilberto Tomazoni stated:- “Considering results posted net revenue of $2.3 billion, a 33.5% growth in comparison to Q1 of 2019 and an EBITDA of $186 million, 1.1% higher than the same quarter of last year, with an EBITDA margin of 8.3%. These results include a 15% impact of the average foreign exchange rate (BRL vs USD), which was 3.8 in Q1 2019 and 4.46 in Q1 2020 (May 19th 5.9)
In U.S. GAAP and net revenue totaled $3.1 billion, 12.9% higher than Q1 2019, and EBITDA was $165.5 million, 19% lower than the same period of last year, while EBITDA margin was 5.4%.
In the USA, the market tracked normal seasonality initially during Q1 before wider implementation of travel and movement restrictions due to Covid-19 disrupted retail and foodservice channel demand. The large-bird deboning market was especially volatile during the quarter and remained challenging compared to 2019. Operationally however, PPC continued to improve its relative performance versus the industry across all its business units. PPC also adapted quickly to the change in channel demand by shifting the mix of its production capabilities, supported by its close partnerships with key customers, a strong focus in execution by PPC team members, the geographical diversity of its footprint, and its presence across all bird-size categories.
In Mexico, revenue was stable. Market environment during Q1 was difficult as weak macro conditions persisted longer than expected, contributing to uncertainties in consumer spending. Prices, especially in the traditional markets, were below seasonal expectations before rebounding to reach normal levels by the end of the quarter. The PPC increased share of non-commodity products, strong execution, and growth in prepared foods have helped to partially offset the weakness.
In Europe, the legacy operations once again delivered robust results in Q1, maintaining the trend achieved in the last three quarters of 2019. Revenue in the quarter was in-line with last year while operating income significantly improved year on year. The newly acquired European operations also performed well and continued to generate positive EBITDA. The increase in performance was driven by robust demand at retail, in addition to continuing strength in pork exports especially to China, as well as the initial implementations of operational improvements and synergy capturing.