Brazilian meat producer, JBS, is considering to offer shares in a newly created processed foods and poultry spinoff to raise $1.4 billion required to pay down debt.
JBS is regarded as the world’s largest protein producer with major installations and distribution centers in ten nations. The company has extensive broiler production assets including a 75% shareholding in Pilgrim’s Pride Corporation in the US and Seara in Brazil, purchased from Marfrig Alimentos for close to $2.7 billion in 2013.
JBS has a market capitalization of $10.5 billion. Sales for the quarter ending December 31st attained $39.4 billion generating a net income of $63 million. For the quarter ending December 31st 2013, the JBS balance sheet showed long term debt of $10.1 billion which increased by 6% from the end of the previous quarter. For the trailing 12 months, JBS achieved a 1% profit margin and a 4.4% operating margin. Returns on assets and equity were respectively 4.3% and 5.0%.
Challenges facing JBS and other producers in Brazil include fluctuation in the value of their currency, a retraction from investment in emerging markets and a downturn in the economy of China, the largest trading partner of Brazil.
It is not intended that the share issue will be offered in the immediate future and timing will be influenced by market conditions.