JBS may leave Argentina
Brazilian meatpacker JBS may be on the verge of leaving Argentina, having already closed five or its six slaughterhouses in the country. CEO Wesley Batista said that the difficult business environment and further losses are a factor, reports MarketWatch
"We've been leaving Argentina over time, if you look at the size of our operation there compared with what it is today," Batista said in a conference call to discuss fourth-quarter earnings. Argentina now represents less than 1% of JBS's total revenue, he said.
JBS's Argentine subsidiary, Swift, has closed five of its six slaughterhouses in Argentina, the last one as recently as February. The remaining slaughterhouse, in Rosario, is the company's largest in Argentina, and Swift also has a meat-processing plant.
JBS said Argentina was particularly challenging because of government restrictions on exports and large salary increases associated with high inflation. Even shutting down has costs, given severance payments required to workers at closed plants.
"It's not easy to close plants in Argentina but we've gone from six to one there," Batista said. "If anyone in Argentina wants to help the system become easier to operate in, that would be very welcome."
Argentina's broader beef sector suffered last year from a 9% drop in the number of animals slaughtered nationwide, as ranchers rebuilt cattle herds decimated by a 2009 drought. The country's beef exports plunged.
JBS is therefore sitting tight with one slaughterhouse in hopes that it can still break even in Argentina and eventually become profitable again in "a year or two or three," Batista said. The firm believes it's possible to avoid further losses.
"It's a country that obviously has a lot of potential in agriculture and livestock, and it has a name in the beef business in the whole world," he said. "But there's one thing: We're not going to let ourselves lose money there any longer."