Brazilian meatpacker JBS sees demand rising after hog virus outbreak in China

SAO PAULO (Reuters) - JBS SA, the world’s largest meatpacker, is poised to reap the benefits from additional demand after an outbreak of African swine fever in China reduced pork output.

FILE PHOTO: Employees are seen at the Brazilian meatpacker JBS SA in the city of Lapa, Parana state, Brazil, March 21, 2017. REUTERS/Ueslei Marcelino/File Photo

In the first four months of the year, its Australian unit’s beef sales to China soared by 80%, JBS executives said on Tuesday during a conference call about first-quarter results.

“In Brazil, we are already seeing a rise in pork exports, both in terms of volume and price,” Chief Executive Officer Gilberto Tomazoni told analysts.

Executive said they expect sales of all proteins, not just pork, to increase due to the deadly hog virus.

The recent outbreak of the disease in China will boost the company’s cash-flow generation in the coming quarters, Itaú BBA analysts wrote in a note to clients.

Itaú believes the hog disease could lead JBS to generate earnings before interest, taxes, depreciation and amortization, a measure of operating income known as EBITDA, of as much as 21 billion reais ($5.3 billion) in 2020.

JBS shares rose 3.6% on Tuesday, a day after the firm reported that net profit soared nearly 116% in the quarter.

Overall net revenue rose 11.5% in the period to 44.37 billion reais on strength in its U.S. beef division and Pilgrim’s Pride Corp.

In each of those divisions, net revenues rose more than 15%, JBS reported.

($1 = 3.9766 reais)

Reporting by Ana Mano; Editing by Jeffrey Benkoe