In This Article:
Release Date: May 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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JBS SA (JBSAY) reported a strong first quarter of 2025 with net sales increasing by 8.5% in US dollars and net profit jumping 50.5%.
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The company is advancing its dual listing of shares in both Brazil and the United States, which is expected to enhance international visibility and attract new investors.
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The poultry and pork businesses in Brazil and the United States delivered standout performances, with record first-quarter EBITDA margins of 19.8% and 14.8%, respectively.
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JBS USA achieved a strong performance with higher sales volume and an EBITDA margin of 12.5%, supported by a strategy of geographic and protein diversification.
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The company's leverage ratio improved significantly, decreasing from 3.66 times to 1.99 times year-over-year, indicating strong financial management.
Negative Points
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Operating cash flow recorded a negative result of $285 million, and free cash flow was negative by $970 million, impacted by increased tax payments and working capital.
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The US beef business faces challenges due to ongoing margin pressure and high cattle prices, with expectations of a difficult year ahead.
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The company is dealing with trade disruptions and tariffs, particularly affecting exports to China, which could impact margins by 1 to 1.5 percentage points.
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Working capital consumption was high due to inventory rebuilds at higher raw material prices, creating uncertainty about future cash flow generation.
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The dual listing process is subject to shareholder approval, and there is uncertainty about the outcome of the voting, which could impact the company's strategic plans.
Q & A Highlights
Q: How do you feel about the upcoming vote on the dual listing, and what feedback have you received from investors? A: (Guillerme Cabaca, Global CFO) We don't have access to votes until closer to the General Assembly, so we are unsure how many passive funds will follow proxy recommendations. We continue to stress the importance of voting to shareholders and engage with them to ensure participation.
Q: What are the current challenges and expectations for the US beef business, particularly regarding tariffs and cattle prices? A: (Wesley Batistafio, CEO of JBS USA) 2025 is expected to be more challenging than 2024 due to high cattle prices and export headwinds. We see signs of herd rebuilding, which is encouraging, but the impact of tariffs on exports, particularly hides, is significant. We anticipate a challenging Q2 but remain confident in our diversification strategy to stabilize margins.