JBS posts flat Q4 profit on record sales but lower US beef margins

By Roberto Samora and Andre Romani

SAO PAULO, March 25 (Reuters) - Brazil's JBS JBS.N, the world's largest meatpacker, reported a near-flat fourth-quarter net profit on Wednesday, as record revenue was offset by tighter margins, particularly in its U.S. beef business.

The company, whose products include beef, poultry and pork, posted a net profit of $415 million for the October-December period, up 0.5% from a year earlier but slightly below the $428 million forecast by analysts polled by LSEG.

JBS said tighter cattle supplies in the United States have driven up livestock costs and squeezed margins in its North American beef division, its largest business by revenue.

Chief Executive Gilberto Tomazoni told Reuters the U.S. cattle supply outlook would remain challenging this year because of the current downturn in the livestock cycle. The company also faces a labor strike at a Colorado plant.

"We don't think there will be any significant change this year in U.S. cattle supply. It will continue to be a difficult year for us," he said, adding that strong customer demand could help offset some of the pressure.

NORTH AMERICAN BEEF STILL BETTER THAN EXPECTED

Analysts said despite the pressures on the business, the results from JBS' North American beef division were better than expected, including the year-over-year margin compression.

"This reflects resilient U.S. demand and disciplined cost management, even as cattle prices remained high," analysts at JPMorgan wrote.

Santander analysts said they believed tailwinds from derivatives contracts helped to offset elevated U.S. cattle prices, and noted beef demand remained strong despite higher prices.

JBS shares were little changed in after-hours trading. In a separate statement, the firm announced dividends of $1 per share.

JBS' total adjusted earnings before interest, tax, depreciation and amortization (EBITDA) fell 7% to $1.72 billion, but above analysts' forecasts of $1.56 billion. The adjusted EBITDA margin fell 1.8 percentage points to 7.4%.

Net revenue rose 15% to a record $23.06 billion, topping analysts' estimate of $22.38 billion, helped by record sales in its North American and Brazilian beef operations.

LOGISTICS COSTS AND CHINA'S MEASURES

Tomazoni said the U.S.-Israeli conflict with Iran had increased logistics costs, but he said trade flows remained open and the firm has not seen impacts on protein demand in the Persian Gulf. JBS' three factories in the Middle East are working normally, he added.

JBS, like other beef exporting companies, also faces restrictions in 2026 on expanding shipments to China, as the Asian country has implemented curbs, including quotas and tariffs, on beef imports from key supplier nations.

He said in Brazil's case, the country will have to place the volumes that do not go to China in other markets, adding domestic sales could partially offset the impact of the restrictions.