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Financial News: JBS: U.S. Unit Should Boost Q3 Results, But

JBS: U.S. Unit Should Boost Q3 Results, But Company May Post Loss

11/13/2017 - 16:59:00 (RTTNews)

(RTTNews) - Brazilian meatpacker JBS is set to post stronger third-quarter results driven by the good performance of its United States operation, lower grain costs, and increasing domestic and external sales. However, JBS's decision to settle late tax payments in Brazil should lead to a loss in the period.

JBS announced on November 7 that it would join the tax repayment program, which should save R$ 1.1 billion in tax debts, but add a R$ 2.3 billion negative impact to the company's net result in the third quarter.

Excluding that impact, the average estimate pointed to a R$ 1.426 billion net income, up 61% from the third quarter of 2016.

Analysts did not release new forecasts after the company announced the tax deal effect, but taking into account the company's estimate about the impact, the adjusted market forecast for JBS's net result in the third quarter should be a loss of R$ 874 million.

JBS's EBITDA should increase 25%, to R$ 3.939 billion (excluding the tax deal effect), while revenue would rise 3%, to R$ 42.368 billion.

For Antonio Barreto and Thomas Budoya, analysts at Itaú BBA, JBS's U.S. operation should continue to bring positive news to the company's results. They point out that in the United States there was an increase in slaughtering and lower costs of livestock, in addition to higher prices for the company's products.

"Domestic meat prices increased 2% over the previous year, showing a robust consumer market in the United States," they said in a report.

J.P. Morgan's Pedro Leduc, Ian Luketic and Ulises Bolio believe that, in addition to better margins in the United States, a stronger-than-expected recovery in the Brazilian unit should take place.

Despite the figures regarding the third quarter of 2017, the Brazilian company's future remains uncertain due to the possible consequences of its executives' involvement in several corruption cases in Brazil.

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