Brazil's JBS to Be 'Selective' Regarding Share Buybacks, Acquisitions
The management of Brazilian meatpacker JBS SA JBSS3.SA said on Wednesday it "will be selective" in relation to launching share buyback programs and also regarding acquisitions given instability in international markets.
The company reported weaker fourth quarter results on Tuesday. JBS shares fell 3% at the start of trading in Sao Paulo as investors digested the news.
Speaking with analysts in a conference call, the managers of JBS, the world's biggest food company by sales, reiterated a belief that its shares are trading at multiple below peers. CEO Gilberto Tomazoni said this shows "the market does not understand" the benefits of the company's geographical diversification and wide protein portfolio.
The company sells beef, pork, chicken, fish and planted based products from factories distributed in North and South America, as well as Europe.
In the United States, where it derives most of its sales, weaker hog margins, excess chicken supplies and a tightening of the cattle cycle weighed on the company in the final quarter of the year, traditionally a strong one.
JBS reported a nearly 64% fall in net profits for the fourth quarter to 2.35 billion reais ($445.51 million), citing weakness in its U.S. beef operations as one of the main factors affecting results.
In addition, JBS said that the difficult market conditions that pressured its overall performance in the fourth quarter of 2022 remained in the first quarter of 2023.
The reopening of China after relaxation of strict lockdowns offers a silver lining, as do capacity expansions in Brazil at is Seara division, management said,
According to executive remarks, domestic demand for processed products in its home country is at "reasonable" levels, benefiting Seara and justifying capacity increases.
($1 = 5.2749 reais)
(Reporting by Ana ManoEditing by Steven Grattan)
