“We see Brazil fully prepared to meet European requirements. Exports have not been suspended and we are very confident that Brazil will reach an agreement with the European Union”, said the global CEO of JBS, Gilberto Tomazoni, during an earnings call this Wednesday (13).
The European Union released to the country this Tuesday (12) the list of products of animal origin, such as meat, for the European market.
At the same event, the global CFO and director of investor relations at JBS, Guilherme Cavalcanti, stated that “the market could be between 1% and 1.5% worse than last year”.
Meat in Brazil
In Brazil, Tomazoni linked the recent rise in cattle prices to export quotas to China. “Everyone as much as possible to achieve participation in this quota”, he stated.
According to the executive, prices have started to fall in recent weeks and new accommodation is expected after the Chinese quota is filled, which the company believes could occur by the end of June.
“When the quota is reached, the price of cattle must fall to accommodate and understand where Brazil will place 100 thousand tons per month. We see this as something normal,” he said.
JBS also stated that, even with higher cattle and meat prices in Brazil, demand remains strong. The company assesses that a possible drop in prices after the end of quotas could favor sales in the domestic market.
Tomazoni also stated that the company is prepared to allocate production to other consumers and manage stocks.
Geographic diversification
The company’s executives highlighted the geographic and protein diversification strategy as a way to reduce the impacts of sector cycles. “If we only had beef in the US, we would be in a complicated situation, but we have diversification,” said Tomazoni. According to him, these cycles are considered normal for the business.
Regarding the impacts of the war in the Middle East, which began at the end of February, the executive said that there was an increase in logistics costs due to the use of trucks. “But volume demand remains strong, and the extra cost ends up being absorbed by the market,” he said.
Regarding a possible reduction in beef import tariffs by the United States, Cavalcanti stated that the measure could complement the supply of the North American market, especially in premium products.
According to him, US consumers prioritize meat with higher marbling and heavier cattle.
“The more premium part would be complementary, and that is not what we are focused on producing in the US at the moment,” said the executive.
The company also reported that demand remains strong in the main markets served by JBS’ Australian operations, such as Japan and the United States. According to the company, Australia is well positioned to meet the growth in global demand and is experiencing the best climate scenario in the last three years.
In the area of mergers and acquisitions, Tomazoni said that the company continues to evaluate opportunities, but remains focused on cash generation. “It is part of our routine to constantly look for M&A opportunities [fusões e aquisições]but at the moment we are focused on cash generation”, he stated.
According to him, the company recently started projects in Paraguay and Oman, but “we have no new projects in the pipeline at the moment”.
