* Sees leverage ratio coming down to 2.5 times EBITDA
* Adjusted net income beats estimates in Reuters poll
* Investment seen at a maximum 1.2 bln reais this year
(Adds quote, background, share performance throughout)
By Fabiola Gomes
SAO PAULO, March 14 Brazil's JBS SA
is opting to invest more cautiously this year as the world's No.
1 meatpacker seeks to protect profits and scale down debt amid a
challenging beef market, Chief Executive Officer Wesley Batista
said on Thursday.
JBS plans capital expenditures of up to 1.2 billion reais
($609 million), Batista told analysts in a conference call to
discuss fourth-quarter earnings. Last year, the company
earmarked 1.6 billion reais for investments, way above the 900
million to 1 billion reais originally budgeted for capital
Batista pledged to further reduce JBS's high debt levels and
prioritize cash generation as a way to shore up confidence in
the company's growth strategy. Net debt fell to the equivalent
of 3.4 times earnings before interest, tax, depreciation and
amortization (EBITDA) in the fourth quarter and could reach as
low as 2.5 times of EBITDA by year-end, he noted.
"In general, compared to 2012, we are confident that in 2013
we will generate more cash and reduce leverage," Batista said.
JBS posted a fourth-quarter profit of 66.4 million reais
($33.85 million) on Wednesday. Adjusted net income, which
excludes goodwill amortization expenses related to takeovers,
ended up above estimates by a Thomson Reuters poll of analysts
Shares rose 2.3 percent as fourth-quarter earnings showed
some resilience in the company's top line despite the
challenging outlook for meatpackers, analysts said. While
results underscored both strong sales and favorable costs trends
in JBS's Mercosur beef division, it unmasked problems at the
While cattle costs in Brazil remain flat on an annual basis,
retail beef prices have been falling more sharply than expected
throughout this year. The short term outlook for JBS USA Beef is
not promising either as the size of the U.S. herd approaches
record lows and cattle prices trend higher.
The company, a one-time family butcher, plans to improve
cash-flow in 2013, after it resumed last year an aggressive
takeover strategy that has helped propel it to the top of the
global beef industry but increases its debt.
($1 = 1.97 Brazilian reais)
(Additional reporting and writing by Caroline Stauffer; Editing
by Gerald E. McCormick, Guillermo Parra-Bernal)