September 28, 2015 — 8:00 PM MDT Updated on September 29, 2015 — 2:14 PM MDT
Employees work at a JBS SA meat processing plant.
Photographer: Diego Giudice/Bloomberg
- Global beef king now makes more money on derivatives than meat
- Strategy costs 4 billion reais a year, twice JBS’s 2014 profit
Tucked away in an industrial neighborhood in Sao Paulo, six members of JBS SA’s sprawling meatpacking empire are making a fortune on the collapse in Brazil’s currency. The group may only account for 0.003 percent of JBS’s 215,000-strong workforce, but it’s on track this year to generate more profit than the beef, poultry and pork operations combined.
The risk-management team, as the group is called, has been mounting one of the largest currency-hedging positions for any non-financial company in the country. And with the real down 35 percent against the dollar this year, Credit Suisse estimates JBS’s profit from derivatives will swell to 15 billion reais ($3.65 billion) for the full year. The strategy, while paying off now, isn’t without risk. Had the meatpacker been caught on the wrong side of the trade, the losses could have wiped out most of its cash holdings, financial documents show.
JBS is best known to the outside world as the company that gobbled up Pilgrim’s Pride as part of a $20 billion acquisition spree, but inside Brazil’s financial circles, those currency bets have earned it another nickname: The hedge fund that sells meat. What stands out about JBS’s derivatives position isn’t just the size