The world's largest meatpacker JBS SA reported net income of 422 million reais ($135.7 million) in the first quarter, below a consensus estimate of an 857 million reais net income, as it dealt with the effects of a food safety scandal in Brazil.
In a statement on Monday, JBS said earnings before interest, tax, depreciation and amortization (EBITDA), a gauge of operating profitability, slumped 31 percent to 2.140 billion reais.
The company said the effects of the investigation would not be lasting, and did not make any provisions related to it.
Still, JBS posted a 14.3 percent drop in net revenue to 37.6 billion reais due to weakness at its Seara and JBS Mercosul divisions. A stronger Brazilian currency also affected the revenue line, the company said.
JBS said 26 percent of global sales came from export markets in the first quarter.
The food safety scandal involved sanitation inspectors and companies accused of conspiring to sell rancid products, falsifying export documents or failing to inspect meat-packing plants.
In April, JBS put workers on leave at 10 out of 36 cattle slaughtering units in a bid to adjust capacity after the investigation broke in March.
The scandal that rocked the domestic industry caused importers to temporarily stop buying Brazilian meats.
"The company does not anticipate a relevant impact on the operations, and therefore did not make any provisions," it said in relation to the food safety probe, one of many circling the company in the past few months.
In a new probe unveiled Friday, JBS was implicated in alleged fraud related to loans it received from state development bank BNDES.
JBS denies any wrongdoing.
In its financial statement, JBS said it has yet to gain access to a court decision related to the latest probe, which barred management to make significant changes at the company during the investigation of the BNDES investments in JBS.
($1 = 3.1094 reais)