December 5, 2018 / 1:02 PM / 6 days ago

New JBS CEO to boost margins, sees large potential in U.S. market

FILE PHOTO: The logo of Brazilian meatpacker JBS SA is seen in the city of Jundiai, Brazil June 1, 2017. Picture taken June 1, 2017. REUTERS/Paulo Whitaker - RC125C784000/File Photo

SAO PAULO (Reuters) - JBS SA’s (JBSS3.SA) newly appointed chief executive said on Wednesday he will seek to boost the Brazilian meatpacker’s profit margins and sees a large potential for growth in the United States’ market for processed products.

Gilberto Tomazoni, named to succeed company founder Jose Batista Sobrinho as CEO late on Tuesday, said listing its U.S. operations remains a priority and will be done at an “appropriate time.”

The management change, including the appointment of new Chief Financial Officer Guilherme Cavalcanti, was cheered by investors, who pushed shares up by as much as 5 percent in early trading in Sao Paulo.

Analysts Leandro Fontanesi and Rafael Sommer, from Brazilian investment bank Bradesco BBI, said Tomazoni was already seen as the most important executive in the company when he held the position of vice president for global operations. “It is a natural step for the company,” they said, adding that the appointment would boost plans for the U.S. listing in 2019.

Tomazoni said in a call with analysts on Wednesday that expanding distribution of products with higher value to some external markets would be one way to boost profit margins, which “are not bad at the moment, but could improve.”

In that area, he said the U.S. market presented one of the largest opportunities for the company, considering the potential for selling more processed products there.

The new CEO said his appointment would also be an opportunity for the company to progress on governance and compliance issues. His rise in the firm happened while its main controlling shareholders, the Batista brothers Joesley and Wesley, were facing a large corruption investigation.

Tomazoni said the company also plans to boost its distribution capacity in Asia, a region seen as promising for export expansion.

JBS announced on Nov. 6 an agreement with China’s e-commerce giant, Alibaba, to sell some of its meat products in the country using the Chinese company’s platform.

Reporting by Alberto Alerigi; Writing by Marcelo Teixeira; Editing by Christian Plumb and Jonathan Oatis

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