JBS expects stronger US beef results in 2027 after missing profit estimates

By Roberto Samora and Andre Romani

SAO PAULO, Nov 9 (Reuters) - Brazil's JBS , the world's largest meatpacker, said on Monday it expects a better year for its US beef business in 2027 as cattle imports from Mexico recover and industry overcapacity eases, after the company missed third-quarter profit estimates.

JBS and its rivals have been squeezed by a prolonged US cattle shortage that has driven beef prices near record highs. Herds were thinned by years of drought and high feed costs, while the suspension of Mexican cattle imports tightened supplies further.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) fell 36% from a year earlier to $1.18 billion in the July-September quarter, below the $1.32 billion forecast in an LSEG poll of analysts.

'A MUCH BETTER' 2027 FOR US BEEF BUSINESS

Chief Executive Gilberto Tomazoni told Reuters the company faced "a very challenging quarter," with oversupply hurting its pork and chicken businesses.

Still, JBS said its North American beef division, which accounts for about one-third of group revenue, improved margins from a year earlier despite tight cattle supplies that have battered profitability across the US meatpacking sector.

The company said the resumption of Mexican cattle imports and industry-wide cuts in processing capacity helped results. JBS announced the closure of two US plants in June and combined local management teams to improve efficiency.

Those steps helped the US beef unit return to a positive EBITDA margin of 0.3% under US GAAP accounting standards after several quarters in negative territory.

"The United States should have a much better year in 2027 than in 2026," said Wesley Batista Filho, who heads JBS's US operations and is due to become global CEO in January.

He said conditions should improve mainly because cattle imports from Mexico into the United States are expected to recover to around 1 million head a year, close to historical levels.

REVENUE SLIGHTLY UP, A NEW ACQUISITION

JBS's total revenue rose less than 1% to $22.74 billion, below the $22.82 billion expected by analysts. Net profit fell more than 70% to $164 million, also missing the $256 million consensus forecast.

JBS's Brazilian beef business was hurt by lower export volumes to China after the country's quota was filled, while cattle prices in Brazil rose.

In poultry, US producer Pilgrim's Pride, which JBS controls and has offered to buy outright, reported weaker-than-expected results in October. By contrast, Brazilian unit Seara posted strong export performance, helped by higher prices and volumes.

In a separate statement, JBS said it had agreed to buy personal care products maker Flora from its controlling shareholder J&F in a deal valued at $542 million, including debt. The equity portion will be paid with Class A treasury shares.

JBS said the transaction should be neutral for its leverage ratio. Net debt to adjusted EBITDA rose to 3.54 times in the quarter, due to weaker operating results.