Dive Brief:
- JBS reported lower profits for the second quarter after financial expenses increased by more than twice the amount from the same quarter in 2014. Sales, however, ticked up year over year.
- "Strong growth" in EBITDA came from JBS Foods, JBS's domestic pork, poultry, and processed foods arm, in addition to its U.S. beef and chicken segments. Sales and EBITDA from U.S. pork dropped due to decreased selling prices.
- During the quarter, JBS announced that it would acquire Cargill Inc's U.S. pork business for $1.45 billion.
Dive Insight:
JBS wasn't the only U.S. pork producer to struggle with decreased selling prices. Smithfield Foods, the world's largest hog producer, also dealt with decreased profit margins for pork, which led to a 27% decrease in overall quarterly profits, as reported in its second quarter earnings earlier this week.
Both companies have been impacted by the increase in hog supplies amid a comeback from the porcine epidemic diarrhea virus, which killed millions of baby pigs. The higher supply of pork means lower prices for restaurants and food processors, which cuts into profits for companies like JBS and Smithfield.