By Brazil Stock Guide – JBS (JBS; JBSS3) warned that 2026 will remain a tight year for the U.S. beef business as cattle supply stays historically constrained, but said the company is already moving through the final stretch of the cycle, expecting a structural recovery from 2027 onward. Executives stressed that the group’s diversified global footprint — from Australia’s strong cattle availability and margins to Brazil’s resilient beef demand, Seara’s export recovery, and stable performance in pork and poultry — is cushioning consolidated results despite elevated costs in North America.
U.S. Beef Cycle Nears the Bottom as Margins Stay Tight Through 2026
Wesley Batista Filho noted that the U.S. is experiencing the sharpest cattle shortage in years, with cow slaughter at just 545,000 head in Q3 versus nearly 1 million in 2022. Elevated cattle prices and volatility in cattle futures have increased hedging risk and kept fourth-quarter margins under pressure.
“This is naturally a tighter quarter, but we are close to the bottom of the cycle,” he said, adding that meaningful improvement will come only from 2027 as herd rebuilding accelerates. JBS anticipates another year of constrained supply in 2026, with profitability resembling 2025 levels before trending upward.
Australia, Brazil and Seara Provide Powerful Offsets to U.S. Beef
Australia remained one of the strongest contributors to the quarter, benefiting from healthier cattle availability, high global demand and a portfolio that exports 75% of its production. Tomazoni said 2026 should be “very strong” in the region, with improvements not only in beef but also in pork and salmon — the latter posting margins above 20% after resolving past disease challenges.
In Brazil, Friboi delivered another quarter of solid volumes in both domestic and export markets. JBS highlighted the strength of its Category Management 2.0 program, which has increased penetration and boosted total protein sales inside retail partners. Even with cattle supply expected to fall 3%–5% in 2026, availability remains well above pre-cycle levels, supporting stable domestic dynamics.
Seara Rebounds as China and Europe Reopen, Lifting Prices and Mix
One of the call’s strongest themes was the recovery of Seara after China and Europe lifted restrictions tied to avian influenza. The reopening restored access to premium breast markets in Europe and high-value wings and by-products in China, reducing pressure on secondary destinations and improving average export prices.
Domestic sales also strengthened: brand penetration, repurchase rates and processed-foods volumes all increased. The Rolândia plant is fully ramped, operating on double shift in breaded products and hot dogs, and JBS is already evaluating expansion as machines reach full capacity. The company expects Seara to post higher margins and stronger mix in 2026.
PPC and U.S. Chicken Navigate Lower Prices With a Balanced Portfolio
Pilgrim’s Pride posted a solid quarter even as U.S. chicken prices fell early in Q4. JBS said the big-bird segment weakened, but small and medium birds — as well as the prepared foods category — remained resilient. A shortage of new genetics and infrastructure constraints are keeping supply growth limited across the industry, supporting price recovery into 2026. Executives reiterated that PPC’s diversified portfolio shields margins from commodity swings.
U.S. Pork Shows Consistency Despite Industry Supply Constraints
The U.S. pork business delivered a sharp sequential improvement, contrasting with industry benchmarks. JBS attributes this to modern plants running double shifts, a growing prepared-foods portfolio and an integrated model that balances live production, procurement and cut-out-indexed purchases. Wesley described the pork division as “a very consistent business,” capable of maintaining stability even when hog margins fluctuate. The company expects more hog availability in 2026 if herd health improves.
Working Capital, Capex and the Company’s Financial Posture
CFO Guilherme Cavalcanti detailed the main drivers of working capital consumption in Q3: higher livestock prices, stronger revenues and increased grain costs. Volume growth contributed — Pilgrim’s Pride and JBS Brazil each grew around 3%, while Seara rose 8% — but price inflation was the largest factor. For 2026, the company forecasts working capital consumption of approximately US$700 million, though this could vary significantly depending on cattle, hog and grain prices.
JBS also completed a landmark CRA issuance in Brazil, including a 40-year tranche swapped at 6.2% in dollars — the longest ever in the local market. This pushed average debt maturity to 15.4 years at a cost of 5.6%. Leverage is 2.39x and expected to end 2025 below 2.5x even after buybacks and dividends.
On capex, the company confirmed that the major U.S. processed-foods expansions in Iowa — focused on sausage, ready-to-eat bacon and value-added pork — will begin contributing meaningfully only from 2027, with revenue potential of US$500 million to US$750 million and high double-digit margins.
Export Flows and Global Protein Demand Support the 2027 Upswing
The call also underscored the structural shift in global protein flows: as the U.S. exports less beef due to domestic shortages, Australia and Brazil capture additional share across Asia and the Middle East. Tomazoni said demand remains strong across beef, pork and chicken, helped by rising incomes and broader protein adoption in new generations — and even supported at the margin by GLP-1 drug usage. He reinforced that Brazil opened more than 100 new beef markets in the past two years, widening structural demand for 2026 and beyond.
Shareholder Returns, M&A and the Strategic Role of Diversification
JBS reiterated its soft guidance of returning around US$1 billion per year through dividends and buybacks, with decisions concentrated in the second half of each year depending on leverage. Cavalcanti noted that the dual-class NYSE listing gives the company new flexibility to pursue potential M&A in prepared foods if compelling opportunities arise.
Across the call, executives stressed that the global footprint allows the company to absorb regional cycles — the very dynamic that is supporting results during the U.S. cattle shortage. “This platform allows us to navigate cycles with discipline and resilience,” Tomazoni said.