JBS revealed it had delayed, but not ditched, plans for a
long-awaited flotation of a Dutch-based subsidiary, despite investigations
hanging over the group and Brazil's food industry - into which police announced
a fresh probe.
Wesley Batista, the chief executive of the Brazil-based meat
giant, said that a US flotation of a portfolio of the group's foreign operations
as JBS Foods International in the first half of 2017, as has long been muted, "is
not realistic any more".
He cited as cause for the delay "these things going on",
amid mass of external investigations into Brazil's food sector, some of which encompass
the group, the world's top meatpacker.
Mr Batista and his brother Joesley, the JBS chairman, were revealed
on Friday by court documents to be facing questions by police investigating alleged
fraud on loans to the group by BNDES, Brazil's state development bank.
JBS has denied any wrongdoing over the matter, as it has a
separate investigation into investments by state-run pension funds which has
targeted executives including Joesley Batista.
The company too is among dozens of meat processors probed in
the high-profile Operation Weak Flesh investigation announced in March into
claims of bribery of food safety officials.
Brazilian police on Tuesday unveiled two further investigations
into the food industry – one into whether some companies received favourable
inspection procedures, and a second into improper protection of operators.
'We are going to see
However, Wesley Batista added that the group had not ruled
out an IPO of JBS Foods International - aimed to include a range of foreign
businesses and Brazilian poultry unit Seara – during the second half of 2017.
"We are going to see a window for the second part of this
year," he told investors.
"The intention to list JBS is to create value for our
shareholders. So the timing is going to be timing that investors do not have any
doubt about what is going on.
"If the market is there, if investors feel comfortable, yes
we are going to be ready and prepared.
"We are going to be looking to the market to decide the
right time to go."
The current market has been viewed by many observers as an
opportune one for floating meat groups, given a robust rating that investors
are giving to the sector, amid a series of takeovers.
Last month, Tyson Foods bought AdvancePierre at a multiple
pegged by Bradesco at 14 times earnings before interest, tax, depreciation and
Bradesco in January, using a multiple of 6.0 times ebitda, valued
JBS Foods International at some R$75bn, equivalent to about $24bn at current
Brazil-based Marfrig Global Foods, one of JBS's closest
rivals, last week revealed it had "confidentially" registered its
Pennsylvania-based Keystone Foods division for stockmarket flotation in the US.
Mr Batista was speaking after JBS unveiled earnings of R$422.3m
for the January-to-March quarter – a sharp improvement on the R$2.74bn loss a
year before, but well below the R$857m-result that investors had expected.
Revenues fell 14.3% to R$37.6m, a decline reflecting in part
a strengthening in the real, which hit the competitiveness of Brazilian exports,
besides cutting the contribution in real terms from foreign operations.
With the real strengthening to an average of R$3.14 per $1
for the quarter, from R$3.91 in the same period of last year, sales prices of
exports from the South American operations dropped by 16.4%.
"We started 2017 performing well in our international business
units, boosted by strong demand in the markets where we operate," Mr Batista
"Our operations in South America, on the other hand, continued
to face a challenging scenario, mainly due to the strong appreciation of the real
against the US dollar."
JBS shares stood 7.6% lower at R$9.97 in afternoon deals in