LatinFinance - July/August 2015 - 46

of around $76 million and serve nearly 75%
of the Colombian market for beverages,
dairies and conserves.
The group started growing in Latin
America in 1996, when it entered Bolivia
with the acquisition of dairy producer
Pil Andina. Today, the conglomerate has
operations across seven countries in Latin
America, including Puerto Rico, Argentina,
Colombia, Ecuador and Uruguay.
"The group has managed an effective
horizontal integration, entering in sectors
of massive consumption that show a
healthy growth," says Pizarro. LF

BEST EX-REGIONAL M&A STRATEGY

JBS
The Brazilian protein
firm is spending large as it
seeks rapid global expansion - but it can still show
restraint where it deems
necessary
Brazilian protein producer JBS stands out
among an acquisitive set of peers for sheer
volume in activity and its propensity for
spending on purchases while ultimately
plumping up margins. Purchases sealed in
the year ending 31 March 2014 comprise
Tyson Food's poultry business in Brazil and
Mexico for $575 million, two processing
plants from Ceu Azul Alimentos for $111
million, Brazilian operator Big Frango
Group for $171 million and, most recently,
Australasian processed meats company
Grupo Primo for $1.25 billion.
Despite the more than $2 billion spree,
the company has managed to keep ebitda
and net revenue in line or growing by
focusing on integrating its purchases and
making them more efficient. JBS, which
has operations in more than 20 countries
and exports to 150, grew net revenues to
120.5 billion reais ($38 billion) in 2014 from
92.9 billion reais in 2013. Ebitda grew to 11.1
billion reais, up 81% over the same period.
The work has paid off: Standard & Poor's
upgraded JBS by one notch to BB+, in May
this year, citing strong cash generation,
despite the recent acquisitions of Grupo
Primo and Tyson foods. Moody's had
raised its rating a notch to Ba2 in April.

46 LATINFINANCE.COM - July/August 2015

Slashing headcount, changing feeding
cycles, cutting operational costs and
reworking logistics has translated
into higher margins. "When we look
historically at JBS, we see that they are able
to integrate very large businesses in a very
efficient way and make the businesses even
more efficient in terms of management,"
says Erick Rodrigues, a Brazil-based
analyst at Moody's.
Ebitda margins on the poultry assets
acquired by JBS and integrated into JBS
Foods have been in the range of 13% to 15%,
up from the 7.8% achieved after the first
quarter of integration and the 5% to 6%
before the acquisitions, Rodrigues says. JBS
Foods operates brands Tekitos, Doriana
and Seara, the Brazilian food processor
acquired from peer Marfrig for 5.85 billion
reais in 2013.
While Seara pre-dates the Awards period,
it points to JBS' trajectory to becoming a
global food company and alludes to its
relevant ex-regional purchase of Grupo
Primo, Rodrigues said. Seara's strong brand
name and its connection with consumers
was a new frontier for JBS, which had
focused most of its business on protein
production, the other end of the meat
industry spectrum which is far less visible
and interactive with the retail market.
The latest manifestations of the
company's global push were agreements to
buy UK-based chicken producer unit Moy
Park for $1.5 billion from Marfrig in June,
and a series of pork production operations
in the US from Cargill Meats for $1.45
billion in July. The transactions, pending
regulatory approvals, mark the latest
purchases for a company that has made

ERICK RODRIGUES, MOODY'S

"ON THE COMMODITY
BUSINESS, YOU ARE
PRETTY MUCH
RELYING ON THE
INPUT COST AND THE
COMMODITIZED SALE
COST, AND BOTH ARE
VERY VOLATILE.
WHEN YOU HAVE A
PROCESSED BUSINESS
AND A BRAND
BUSINESS, THAT
CONNECTION WITH
CONSUMER MAKES
FOR A WHOLE
DIFFERENT DYNAMIC.
THIS WAS A VERY
IMPORTANT MOVE
FOR THEM"

JBS Exports By Region

JBS Exports Q1 2015 vs. Q1 2014
Others
Canada
South Korea

Q1 2015

Q1 2014

Russia
EU
US
Japan
Greater China
South America
Mexico
Africa and Middle East
0
Source: JBS Global

2

4

6

8

10

Percentage (%) of Total Exports

12

14

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