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01/11 16:24
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong financial performance, strategic investments, and optimistic guidance. Positive developments include the reopening of key export markets, increased shareholder returns, and robust financial health. However, concerns about beef market volatility and cautious management responses temper the outlook. The positive sentiment from the call suggests a likely stock price increase of 2% to 8%.
Net Income $581 million, reflecting a solid sustainable performance. This was achieved despite challenges in the U.S. cattle cycle, marked by high prices and tight supply.
Net Sales $22.6 billion, a record for the third quarter of 2025, driven by growth across all business units.
Adjusted EBITDA (IFRS) $1.8 billion, representing a margin of 8.1% in the quarter. This was a decrease of $319 million year-over-year, influenced by the U.S. beef cycle, avian flu in Seara, and higher cattle costs in JBS Brazil.
Adjusted EBITDA (U.S. GAAP) $1.6 billion, representing a margin of 7.2% in the quarter.
Free Cash Flow $383 million, a decrease of $612 million compared to Q3 2024, mainly due to a $319 million decrease in adjusted EBITDA, a $226 million increase in capital expenditures, and a $258 million increase in working capital.
Return on Equity 24%, reflecting strong performance over the last 12 months.
Return on Invested Capital 17%, showcasing efficient capital utilization.
Leverage 2.39x, an increase due to a $319 million decline in the last 12 months' EBITDA and a $362 million share buyback payment.
High-protein ready meals: Launched as part of Seara's product portfolio, focusing on innovation and value creation.
Dedicated Air Fryer portfolio: Developed to cater to specific consumer needs, showcasing innovation.
Partnership with Netflix: Initiative to bring the brand closer to consumers, emphasizing value creation.
Global protein demand: Continues to rise, positioning JBS to capture growth with a balanced portfolio and solid execution.
Geographic diversification: Australia played a key role in diversifying geographic exposure and balancing protein results.
Record net sales: Achieved $22.6 billion in Q3 2025, reflecting growth across all business units.
Operational efficiency: Maintained healthy margins in Seara through disciplined commercial strategy and effective mix management.
Leverage ratio: Ended the period with a leverage of 2.39x, aligned with long-term targets.
Share buyback program: Completed a $600 million program, representing efficient use of cash.
Debt issuance in Brazilian capital markets: Raised $570 million with a 40-year tranche, achieving the longest maturity in the market.
Cattle Cycle in the U.S.: The company is navigating a challenging cattle cycle in the U.S., marked by historically high prices and tight supply. While domestic demand remains resilient, higher cattle costs are not being fully offset by elevated cutout values, impacting profitability.
Export Restrictions: Seara's operations are still impacted by restrictions on exports to Europe and China, which, although recently lifted, have affected performance in the period.
Supply Constraints in Pork: While lower grain costs and steady demand have created a positive environment for the pork business, supply constraints continue to limit overall market growth.
Higher Livestock Prices: The increase in livestock prices has led to higher revenues and costs, impacting working capital and cash flow.
Avian Flu Impact: The avian flu has negatively affected Seara's operations, contributing to a reduction in adjusted EBITDA.
Higher Capital Expenditures: An increase in capital expenditures, particularly growth CapEx, has impacted free cash flow and is expected to continue influencing financials in 2025 and 2026.
Interest and Leasing Expenses: Interest expenses of $1.15 billion and leasing expenses of $500 million are expected for both 2025 and 2026, adding to financial burdens.
Working Capital Challenges: Working capital is expected to increase due to higher prices, sales volumes, and livestock costs, which are influenced by variables outside the company's control, such as grain and livestock prices.
Global protein demand: Global protein demand continues to rise, and JBS is prepared to capture this growth with a balanced portfolio, solid execution, and a long-term perspective.
Capital expenditures: Capital expenditures are expected to be $2 billion in 2025 and $2 billion in 2026, including maintenance CapEx. The 2026 budget is still to be approved.
Working capital: Working capital is expected to increase to $1.3 billion in 2025 and $700 million in 2026. The 2025 increase is related to higher prices, higher sales volumes, increased cost of livestock, and fulfilling the pipeline of organic expansions. The 2026 working capital depends on variables not in control of the company, like grains and livestock prices.
Legal settlements: Legal settlements are projected to be $400 million in 2025.
Biological assets: Biological assets are projected to be $650 million in both 2025 and 2026.
Interest expenses: Interest expenses are projected to be $1.15 billion in 2025 and $1.15 billion in 2026.
Leasing expenses: Leasing expenses are projected to be $500 million for 2025 and 2026.
Debt issuance: The company completed a debt issuance in Brazilian capital markets, raising approximately $570 million, with 2/3 placed in a 40-year tranche. Pro forma average debt maturity reached 15.4 years with an average cost of 5.6% per year.
Leverage: Leverage is expected to end the year below 2.5x, even with the share buyback program, dividends paid, and expansion CapEx.
Dividends Paid: $1.2 billion dividends paid in 2025.
Share Buyback Program: Completion of a $600 million share buyback program in 2025.
Share Buyback Payment: $362 million paid in share buyback during Q3 2025.
The earnings call highlights strong financial performance, strategic investments, and optimistic guidance. Positive developments include the reopening of key export markets, increased shareholder returns, and robust financial health. However, concerns about beef market volatility and cautious management responses temper the outlook. The positive sentiment from the call suggests a likely stock price increase of 2% to 8%.
The earnings call summary suggests mixed signals: strong performance in Australia and positive outlooks in Brazil and the chicken business, but challenges in U.S. beef margins and unclear management responses on key issues. The Q&A reveals concerns about market volatility and tariffs, yet optimism remains in certain segments. The lack of a new partnership or significant guidance changes maintains a neutral sentiment, with no clear catalysts for strong positive or negative movement.
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