JBS expects the planned return of Mexican cattle to the United States to ease the sharpest supply pressure on its North American beef business, opening a path to better margins in 2027 after another difficult quarter.
The protein giant reported an 18% year-on-year drop in adjusted EBITDA to $1.4 billion for April through June as tight U.S. cattle supplies and a chicken glut weighed on two of its largest businesses. The result matched the $1.4 billion consensus of 10 analyst estimates compiled by Koyfin.
Still, JBS executives said conditions in U.S. beef are beginning to improve. Wesley Batista Filho, chief executive officer of JBS USA and set to become JBS global CEO on Jan. 1, said market conditions could support better results in 2027.
Nearer term, the planned resumption of live-cattle imports from Mexico could materially improve animal availability. Under the U.S. Department of Agriculture’s timetable, U.S. processors should begin seeing additional supply in the first quarter of 2027, Batista Filho told The AgriBiz.
Live cattle from Mexico have been largely barred from the U.S. market for nearly two years as a sanitary measure to contain New World screwworm, a livestock parasite. Mexico-born animals historically accounted for 4% to 5% of U.S. slaughter.
Batista Filho said reopening the border addresses “the most acute part of the problem” for JBS’s U.S. beef operations. Three months earlier, when the move was still only a possibility, he called it “the most important thing that could happen to normalize supply.”
That could help the North American beef unit return to positive territory. Its second-quarter EBITDA margin was negative 1%.
Other medium-term signals are also improving. The U.S. cattle herd, at its lowest level in more than 70 years, has stopped shrinking, Batista Filho said.
Recent surveys indicating that producers are retaining more breeding animals suggest herd rebuilding has begun, although the process will take several years.
Chicken Glut
JBS also expects the chicken surplus that hurt Pilgrim’s Pride’s second-quarter results to ease.
Gilberto Tomazoni, JBS’s global CEO, said chick placements typically decline seasonally as chicken sales slow in the coming period. The U.S. industry had excess supply, especially in the large-bird segment that produces more commodity-oriented cuts, after mortality came in below expectations.
“Productivity was much higher than expected,” Tomazoni said. He attributed much of the change to fewer avian influenza cases, a trend also seen in Mexico, another important market for Pilgrim’s.
Tomazoni said the poultry industry should adjust after being caught off guard by the decline in mortality.
Pilgrim’s is also investing to reduce its exposure to the large-bird category, including converting plants to produce case-ready, tray-packed chicken for retailers.
“Consumers are eating out less and cooking more at home,” he said, describing the shift behind the conversions.
JBS reported a consolidated net loss of $102 million. Nonrecurring items included premiums paid to repurchase bonds and agribusiness receivables certificates (CRAs) — fixed-income securities backed by farm-sector cash flows — as well as expenses tied to antitrust settlements.
Excluding those effects, the company would have posted adjusted net income of $218 million.
This story was translated from the original Portuguese with the assistance of artificial intelligence and reviewed by The AgriBiz editorial staff.
