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Despite steady trade flows, JBS anticipates a drop in exports as coronavirus worsens

27 March 2020

Meat packing giant JBS has said that the current pandemic could lead to container shortages, port disruptions and other logistical challenges.

According to Reuters, despite the potential challenges, JBS expects trade flows to remain steady due to strong demand from China.

In a conference call to discuss earnings results on 26 March, JBS executives said its export operations had not been hit by any disruptions like those that have affected frozen container cargoes arriving in China in recent weeks.

They said JBS is banking on its long-term relationships with shipping providers to keep exports flowing.

This month, China cut import tariffs on three types of meat by 30 percent, with beef duties lowered to 12 percent.

CEO Gilberto Tomazoni said while it is too early to gauge the longer-term impact of coronavirus on food sales and logistics, market fundamentals have not changed, citing meat demand in China after a swine fever disrupted local supplies leading to lower import tariffs.

Tomazoni said JBS is not cutting investment plans and the priority is to continue to produce food and keep jobs.

In the United States, JBS's meat production rose in the past week as consumers rushed to stock up on food, but production levels will return to normal going forward, executives said.

On Wednesday JBS reported its fourth-quarter net profit soared 332 percent over the prior-year period. Fourth-quarter net profit totaled 2.43 billion reais ($482.5 million).

JBS shares rose as much as 7 percent when the market opened after the strong financial results, but later trimmed gains to a high of almost 3 percent.

In a note to clients on Thursday, Credit Suisse analysts said they are positive on JBS given its "defensive mix of products, a leading position in the global protein market coupled with wider geographical diversification and stronger balance sheet situation."

Credit Suisse said JBS will benefit in the short term from stronger demand for meat sales at supermarkets as widespread lockdowns close restaurants and drag on food service demand.

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