New JBS head wants a US IPO
- One day after being named CEO of JBS S.A., Gilberto Tomazoni told analysts on a Wednesday conference call that a U.S. initial public offering was on the top of his priority list. But Tomazoni did not share any timing details about an IPO, according to Meatingplace.
- "We want to have a capital structure that best represents the company's business. The listing in the U.S., at the appropriate time, remains on the list of priorities," the brand-new CEO said on the call.
- Tomazoni, the first non-family member to head the world's largest meat processing company, replaces José Batista Sobrinho, JBS' founder and head of the Batista family. Tomazoni has been with JBS since 2013 and previously was chief operating officer. The board also named Guilherme Cavalcanti chief financial officer for JBS S.A., effective Jan. 15, 2019.
Tomazoni could bring new blood and a better image to a family-owned company that has been tarnished by bribery, corruption and insider trading scandals. Since he has been seen as an operations specialist, observers say he may be able to help clear away past problems and also get JBS' U.S. operations ready to go public.
"This can be interpreted as another move away from the 'old guard,' who built the company but are nonetheless 'colored by' their connection to past misdeeds, to the 'new guard,' who can help burnish the company’s image as part of the process of ultimately preparing the company for a U.S. IPO," Ian McCall, managing partner with First Geneva Capital Partners, told Bloomberg.
Tomazoni told analysts on Wednesday that margins are good but could be improved, according to Meatingplace. He also said that adding shifts and enhancing operational productivity will help to boost organic growth moving forward.
"I believe that the specific focus on value-added products will have a significant impact on our margins," he said, noting that the company continues to invest in processed product lines through innovation and technology.
Tomazoni apparently didn't address with analysts the company's ongoing U.S. beef recall for possible salmonella contamination — which it expanded to more than 12 million pounds earlier this week — yet his appointment as CEO seemed to encourage the Brazilian market. Bloomberg reported JBS shares were up 5.2% in São Paulo. But he will still need to see that U.S.-based executives reassure consumers and customers that the contamination problem is being fixed. The last thing JBS needs right now is another scandal, especially with a possible IPO looming.
But just because he announced his goal for an IPO doesn't mean it will happen. JBS has previously signaled six times its intention to take operations public, but last fall it withdrew the latest planned IPO for the first half of this year due to the corruption investigations. Should an IPO actually come to pass, timing will be critical since the recall needs to be safely in the rear-view mirror and the market needs to be confident that JBS has moved on to better stability and profits. The new CEO will undoubtedly play a major role in rebuilding the company's reputation and bolstering its business.