Brazil's JBS shares fall after Q4 results

By Ana Mano

SAO PAULO, March 26 (Reuters) - Shares in the world's largest meatpacker JBS JBSS3.SA rose but pared their gains as investors digested its first-quarter results, which were broadly above most analysts' expectations in relation to U.S. beef margins and the performance of the company's Seara processed food division in Brazil.

Shares rose as much as 2.38% but were later 3.29% down at 39.40 reais in early afternoon trade.

In a call with analysts to discuss results, JBS managers said cattle remains expensive in the U.S. But while the operating environment is challenging, management sees room to improve that division's margins by one to 1.5 percentage points in the next few quarters.

JBS posted a sharp rise in net profit in the fourth quarter of 2024. Aside from the resilience of its U.S. beef business, highlights included high margins for its processed food sales in Brazil and debt reduction and strong free cash generation for 2024.

"All-in, we think the quarter was positive, which should support the stock's recent rally," Leonardo Alencar, equity analyst at XP Investimentos, said in a note to clients.

To analysts, the company said it sees strong demand for proteins across all regions and expects to continue expanding, including through acquisitions.

CFO Guilherme Cavalcanti, who emphasized JBS' ability to reduce debt through cash generation in 2024, said the company could pay higher dividends this year if no "opportunistic" acquisitions arise.

Regarding plans for a primary share listing in New York, CEO Gilberto Tomazoni said he expects the process to be concluded by the end of the year. He cautioned, however, that JBS has no control over approval of the plan, which depends on the U.S. Securities and Exchange Commission and shareholders to proceed.

For Genial Investimentos' analysts, it was too early to predict if the SEC will approve the U.S. listing, which is expected to help the company close the valuation gap with peers like Tyson Foods TSN.N.

If the dual listing does not take place in the next six months, the recent JBS stock rally "tends to be reversed almost entirely," Genial's analyst Igor Guedes wrote.

Asked about U.S. tariffs against countries such as Mexico and Canada, management said it was difficult to assess their impact because variables keep changing.

Director-at-large Wesley Mendonça Batista Filho said a better assessment could be made after April 2, noting trade measures already announced by the Trump administration did not affect JBS' first-quarter performance.