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JBS proposes record high dividends

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Company will propose 74% increase in dividend from 2020, in addition to looking to grow through acquisitions.

By Fabiana Batista

JBS SA, the world’s largest meat supplier, beat earnings estimates with record cash flow last year spurring the company to propose record high dividend payouts and expand with more acquisitions.

“We still have room to grow more through acquisitions and organically”, Chief Financial Officer Guilherme Cavalcanti said in an interview. “Our focus remains on expanding in processed foods in the regions where we already have production,” he said.

The growth comes after JBS already spent about 2 billion reais ($356 million) on acquisitions last year, including the purchase of margarine assets from Bunge Ltd in Brazil. The company also had cash enough to buyback shares and reduce net debt by 17% in dollar terms, Cavalcanti said. The acquisition outlook is alo supported by record low leverage, the Cavalcanti said.

In assembly on April 28, JBS will propose dividend payment of 2.5 billion reais, a 74% increase from 2020. Adjusted earnings before interest, taxes, depreciation and amortization came in at 7 billion reais, beating the average 6.73 billion reais among analysts tracked by Bloomberg.

Still, the pandemic is cutting into margins. In the fourth quarter, margins at JBS’s beef and poultry units in Brazil fell compared with the previous quarter, but the poultry business is still performing better than a year ago.

JBS USA, which includes operation in U.S., Canada, Australia, Mexico and Europe, also saw weaker margins in the quarter.

But the Biden administration’s economic stimulus package a fast advance of vaccination has created a favorable outlook, according to Cavalcanti. “Some regions will be more challenging in 2021, like Brazil and Australia while in North America and Europe, we see better perspective,” he said.

© 2021 Bloomberg L.P.
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