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In the first quarter, logistics problems led to increased
inventory in the United States, which also hampered U.S. ports, increasing
costs for the business unit, which is the company's largest.
Still, China is seen as a long-term beef importer due to its
low per capita consumption levels, JBS said.
JBS posted a first-quarter profit that beat expectations in
spite of higher global grain prices and lower pork exports to China, with the
U.S. beef and poultry business performing well.
Shares rose by 1.7% in early trading in São Paulo but later
pared nearly all gains at 35.76 reais.
Citi analysts reiterated a buy rating on the stock and
increased their target price to 50 reais per share after the quarterly results.
Credit Suisse analysts said they remain positive on JBS’s
investment case, as they believe "operating momentum will remain solid in
the coming quarters."
However, Credit Suisse sees gradually declining cattle
availability in the United States putting pressure on fat steer prices.
That should be offset by strong U.S. demand for beef,
specially as Americans kick off barbecue season, they said.
Despite double-digit sales growth across all business units
in the first quarter, JBS acknowledged a challenging situation in its home
market Brazil.
In the South American country, where the 12-month inflation
rate was 12.1% as of April, demand for beef is at historically low levels due
to high unemployment and the economic downturn.
|Source: Online/SZK
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