JBS SA CEO Wesley Batista said that he expects profit margins from its U.S. poultry division to improve in the fourth quarter of 2013 due to a bumper corn harvest that will bring down feed costs. Residual high costs for corn and other feeds would likely continue in the third quarter for Pilgrim's Pride, the company's U.S. poultry unit, but then start to fall in the fourth quarter, helping profit margins, reports Reuters.
Company margins from Swift and Smithfield Beef, its beef businesses in the United States, would likely remain stable, he said, adding that cattle production costs are less responsive to swings in corn prices than poultry.
The company does not publish details of its profit margins in its earnings reports. On Wednesday night JBS said its second-quarter net earnings doubled to 338.5 million reais from a year ago but still missed market expectations.
JBS struggled with high feed costs in late 2012 and early 2013 due to drought in the U.S. and South American farm belts, but bumper harvests are bringing down the price of grains again.
"JBS is at a moment where we will begin to benefit from the fruits of what we planted," Batista said, adding that he expected earnings per share to continue to improve through the end of 2013.