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With
Smithfield Beef Group and National Beef Packing Co. under
its belt, JBS S.A. now accounts for some 30 percent of the
U.S. market's total beef processing capacity, and its acquisitions
have consolidated the U.S. beef industry.
However, although aware of the continuing excess of slaughter
capacity, JBS President and CEO Joesley Batista said the
company has no immediate plans to reduce capacity.
"We do not have a specific idea about shutting down plants,"
Batista said. "What I can tell you is we are very confident
that after these acquisitions, we will be able to become
more efficient, more profitable, and we will do whatever
necessary to produce good results."
While explaining to press and investors the Brazilian behemoth's
head-spinning, $1.3 billion acquisition of Smithfield Beef
Group, National Beef and Australian beef processor Tasman
Group (See JBS
S.A. buys Smithfield Beef Group, Australia's Tasman Group
on Meatingplace.com , March 5, 2008.),
Batista indicated his firm put a stranglehold on the U.S.
beef industry.
Capacity maximus
Batista pointed out that after buying Greeley, Colo.-based
Swift and Co. in May last year, JBS executed a strategy
to maximize capacity utilization, increasing total daily
slaughter from 14,000 head of cattle to 19,000 head of cattle
— and "That's the main reason the market was so tough."
Unfavorable market conditions, including the combination
of tight cattle supplies and excess slaughter capacity,
have made the U.S. beef processing industry a buyer's market
— especially for cash-laden JBS, already the world's largest
beef processor — and forced challenged beef operations such
as National Beef and Smithfield to sell.
"If you look at our track record, what we have been doing
for the last 20 years is buying companies without profitability
to make them profitable," Batista said, noting that the
focus for the next two years will be integrating its new
holdings, identifying opportunities to raise margins and
cutting costs.
Batista said JBS is intent on not only turning around its
new holdings but also turning around the entire U.S. market.
He cited Tyson Foods' closure of its Emporia, Kan., slaughter
operations in saying, "The market is already getting better."
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