Subject to shareholder and regulatory approval, JBS SA intends to transfer its business outside of Brazil and Seara Alimentos Ltda (Seara) to JBS Foods International. Once the reorganisation is complete, JBS SA will be renamed JBS Brasil.
The 125,000 team members based in Brazil will remain under the leadership of the existing management and will continue their growth strategies in the Brazilian market.
The company also plans to register JBS Foods International for trading on the New York Stock Exchange (NYSE).
JBS SA shareholders may exchange their shares for those in JBS Food International, and if at least 50% of JBS SA shares are exchanged, it will become a non-wholly-owned subsidiary of JBS Foods International.
The proposed reorganisation has already been submitted to the Brazilian Takeover Panel (CAF) which has confirmed that it complies with its Fundamental Principles and with the requirements imposed by CAF regulation.
The aim of the restructure is to “strengthen its leading position in the global food industry and increase the company’s competitiveness, creating value for its shareholders”.
“The proposed reorganisation is a natural step in the continuing development of JBS as a leading Brazilian company in the global food industry,” said Wesley Batista, chief executive officer of the global business.
“We have carefully considered various strategic alternatives to enhance the value of our company and we believe that the proposed reorganisation offers the greatest potential to deliver long-term value to our stakeholders.”
First-quarter results
The company reported net revenue of R$43.9 billion in the first quarter of 2016, an increase of 29.8% over the same period in 2015. Gross profit was R$4.8bn in the period. Its EBITDA was R$2.1bn, 22.5% lower than 1Q15, with an EBITDA margin of 4.9%. Net income was negative in R$2.7bn, impacted by the result of the FX protection of the Company.
JBS SA saw its US division underperform during the quarter. The JBS USA Beef business unit was impacted by a reduction in cattle prices compared to those they had been previously valued at; low availability of cattle for slaughter in Australia as a result of adverse climate conditions; and an increase in the value of the Australian dollar versus the US dollar.
Batista was optimistic for the year ahead. “Our focus on operational efficiency, in the development of our brands, in the expansion of our portfolio of value-added products, in the increase of our client base, allied with the expectation of better market conditions in our sector, keeps us confident that we will be capable of delivering good results in the coming quarters and thus fulfil our goals for 2016.”