NOBULL: JBS to open six new beef plants in Brazil in 2013 | Reuters — Preparing to flood U.S. market?

JBS to open six new beef plants in Brazil in 2013

Wed Nov 14, 2012 7:41am EST

SAO PAULO Nov 14 (Reuters) – Brazil’s JBS SA, the world’s biggest integrated meats producer, will open six new slaughterhouses that will increase beef production capacity in the coming months in Brazil by 15 percent, a company executive said on Wednesday.

The new plants will add processing capacity of 1.2 million head of cattle by July 2013, Jerry O’Callaghan, head of investor relations, said on a conference call to discuss the company’s third-quarter earnings.

As the plants get into full swing at the end of 2013, they will be able to process up to 2 million head a year.

Separately, JBS posted a quarterly profit of 367 million reais ($178 million) late Tuesday, driven by its strong beef business in Brazil and recovering U.S. poultry operations.

Brazil’s grass-fed beef industry is hoping to gain market share as other global beef producers, such as the United States, Europe and Australia, reduce the reproductive potential of their herds as they struggle with the high cost of feeds after the recent drought in the United States farm belt.

Wesley Batista, the JBS chief executive, said the company was quickly reducing its leverage, or debt to earnings, with the improving reproductive cycle of the Brazilian cattle herd and a weaker Brazilian real against the dollar.

"The cost of raising an animal in the United States is twice the cost of raising an animal in Brazil. So, they are reducing the size of their herd," Batista said, adding that the outlook for Brazilian beef production was extremely positive.

Company shares rose 3 percent in early trade in Sao Paulo. (Reporting by Reese Ewing; Additional reporting by Fabiola Gomes; Editing by Jeffrey Benkoe)