JBS: profit drops 72% and debt weighs more. Cash got stuck in inventory
Revenue flat at US$22.7bn, but EBITDA down 36% and leverage up to 3.54x.
To save you time3
- How much did JBS earn?
- US$164 million attributable to shareholders, down 71.7% year on year.
- Did it sell less?
- No: revenue was flat at US$22.7bn. EBITDA fell (-35.6%, to US$1.18bn).
- Where did the cash go?
- Into working capital: Seara chicken inventory in Europe and beef bound for China in Q4. Free cash flow was negative US$167m.
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Quick read on JBS's quarter: same sales, much lower profit, and cash stuck in inventory.
The numbers
- Attributable profit: US$164 million, down 71.7%.
- Revenue: US$22.7 billion, roughly flat.
- Adjusted EBITDA: US$1.18 billion, down 35.6%.
- Free cash flow: negative US$167 million.
What jammed
The company itself explains: more working capital in Brazil, with Seara chicken inventory in Europe and beef earmarked for China in Q4. Money that left the cash box and turned into product in cold storage.
The debt
Net leverage rose to 3.54x, from 2.39x a year earlier. Over nine months, profit is down 82.4%.
My read
If that inventory turns into sales in Q4, some cash comes back. If not, leverage becomes the story. JBS also announced acquisitions, and with debt rising, the market will want to know how they'll be paid for.
