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JBS Sees an Increased Demand After the Outbreak of African Fever in China

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General view of Brazilian meatpacker JBS SA in the city of Lapa, Parana state, Brazil, March 21, 2017. REUTERS/Ueslei Marcelino

 

JBS, the world’s largest beef processor, is poised to reap the benefits of additional demand from the outbreak of African swine fever in China that has reduced pork production.

In the first four months of the year, Australian beef sales to China rose 80 percent, JBS executives said on Tuesday during a teleconference on Q1 results.

“In Brazil, we are already seeing an increase in pork exports in both volume and price,” Chief Executive Gilberto Tomazoni told analysts.

The executive said he expects sales of all proteins, not just pork, to increase because of the virus.

The recent outbreak of the disease in China will boost the company’s cash flow generation in the coming quarters, analysts at Itaú Bank said in a note to clients.

Itaú believes that the disease could lead to JBS generating earnings before interest, taxes, depreciation amortization (Ebitda) of up to 21 billion reais in 2020.

At 11:30 am, JBS shares appreciated 4.9%, to 20.71 reais. The day before, the company reported that net profit more than doubled in the first quarter.

Total net revenue rose 11.5% in the period to 44.37 billion reais with help from its beef division in the United States and Pilgrim’s Pride.

In each of these divisions, net revenue rose more than 15%, JBS reported.