Meat + Poultry - October 2016 - 108

G L O B A L O P E R AT I O N S

Since July, JBS has been
led by Wesley Batista.

"JBS doesn't
have the
same access
to capital as
other global
players."
- WESLEY BATISTA
(IN AN INTERVIEW WITH
BLOOMBERG NEWS)

108

Wesley Mendonça Batista. The 46-year-old took
the helm of the company's global operations
in 2011 and for four years before that was
president and CEO of JBS USA Holdings. In
that role, he oversaw the US market following
the 2007 acquisition of Swift & Company.
Also during his tenure the Smithfield Beef and
other beef businesses were acquired as was a
controlling interest in Pilgrim's Pride.
Before 2007, Batista spent 15 years as
COO of the company's operations in Brazil
and Argentina. It was during this period the
company became the largest beef producer and
exporter in Latin America.
In 2015, JBS SA's net income was 5,128.6
million reals (the exchange rate recently was
3.22 reals per dollar), up from 2,406.4 million in
2014 and 1,118.3 million in 2013. Net revenue
was 162,914.5 million reals in 2015, up from
120,469.7 million in 2014 and 92,902.8 million in
2013. Gross profit and operating profit steadily
improved during this period.
In the first three months of 2016, JBS SA
sustained a loss of 3,802.6 million reals, versus
a profit of 2,089.4 million in the same period
in 2015. Sales were 43,911.9 million reals, up
from 33,819 million. The loss was attributed in
large measure to a surge in the value of the real
- up 36 percent over the year. The currency
swing also represented a significant headwind
for the company in 2015. During this period, 85
percent of the company's revenues came from
sales outside of Brazil.
The company's long-term debt as of March 31
was 43,198 million reals (plus another 21 million
of current debt). The company said its financing

MEAT+ POULTRY | 10.16 | www.meatpoultry.com

strategy post-transaction will be to extend the
average maturity of outstanding debt and reduce
financing costs by "accessing lower-cost sources
of finance, including through the international
capital markets and export finance." Yield on
the company's long-term debt hovered around 7
percent recently, a level analysts said is likely to
decline following the restructuring.
The importance of financing as a driver of
the JBS restructuring decision was emphasized
by Wesley Batista.
"JBS doesn't have the same access to
capital as other global players," he said in a
recent interview with Bloomberg News. "We're
seeking a structure that better reflects the
company JBS has become."
The restructuring is taking place against
a backdrop of turmoil in Brazil and at JBS.
Enduring a severe recession, surging inflation
and rising interest rates, the country's political
leadership has been wracked by scandal.
Brazil's problems appear to have had
serious spillover effect at JBS.
Joesley Batista is among a group of
individuals who are subjects of a criminal
complaint filed by the federal prosecutor's
office in Brazil related to financial transactions.
The prospectus describes the proceeding as
"in its early stages" but warns of the possibility
the company's reputation may be adversely
affected. JBS is not a party to the complaint.
More recently, JBS has been accused of making
illegal political contributions, raising the
specter of the company being dragged more
deeply into Brazil's political morass.
Still, the market reacted ebulliently to news
of the restructuring plan. Shares of JBS jumped
in trading on the Brazilian exchange by about
25 percent the day the plan was announced,
lifting the company's market capitalization to
about $9 billion.
The prospectus offers a fairly deep look
into JBS consolidated operations around the
world. In the United States, JBS operates nine
beef processing plants (daily capacity, 27,455
head of cattle), five pork processing plants
(89,700) and 23 poultry plants (6,207,626). The
company's US corporate headquarters are in
Greeley, Colorado, about 60 miles north of
Denver. JBS SA headquarters are in Sao Paulo,
but the new business has been incorporated in
Dublin, Ireland. The company also leased office
space in New York City.
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