Within the past two weeks Russia has approved 90 meat processing plants in Brazil for export to the country while banning shipments from the West. Wesley Batista, JBS’ chief executive states that it is believed that the company can increase sale to Russia by $600 to $800 million through its South American operations – for the second quarter of 2014 the entire group saw revenues of $250 million. At the same time JBS’ Australian and U.S. operations will likely not be noticeably affected by Russia’s ban as they ship little or no meat to the country. For the second quarter of 2014 from April to June, the group reported a surprising 25% drop in earnings which was attributed to an increase in currency hedging costs. For the group’s U.S. beef operation, earnings before interest, taxes, depreciation and amortization (ebitda) fell 33% year on year to $108.6 million as supplies continue to be tight. However, in the past 18 months, five U.S. meatpacking plants have closed which should help restore a measure of balance to the market.
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