Wesley Batista is likely to take a little less heat from his mother from now on.
The 40-year-old chief executive of the world’s biggest meat producer, Brazil’s JBS, says his mother is always complaining that the family business was buying too many companies in its zeal to expand.
“My mom for years has been saying, ‘You’re expanding again? Why? You don’t spend any time at home. We don’t need more. We lead simple lives,’” Batista, who took the reins from his younger brother Joesley in February, said with a chuckle.
Batista may not have totally shaken acquisition fever – he says expansion is in JBS’s DNA – but he is easing off the deals for now while the company focuses on getting the most out of the flurry of takeovers it made in recent years.
That may be good news to shareholders, as well as his mom.
Speaking at the Reuters Latin American Investment Summit in Sao Paulo, Batista said that JBS – which just a decade ago was a little-known meat packer in rural Brazil – had reached a critical mass and was entering a new phase.
JBS is now focused on maximizing profit for shareholders, ending a six-year expansion that left some investors wondering whether it had grown too big, too fast.
“It’s now time for JBS to start reaping what it has sown,” Batista said, adding that the big costs of integrating takeovers were over and that the company was well positioned for a global economic recovery.
In a rare interview, Batista defended the company’s shopping spree in recent years, calling the takeovers “fantastic opportunities” that gave JBS a major footprint in the United States, the world’s most important meat market.
Fol lowing more than 14 major acquisitions in the last six years – including U.S. rivals Swift, Smithfield Beef, Pilgrim’s Pride and local meat packer Bertin – JBS has now reached a size that allows for efficiency of scale, he said.
Batista also said the company in 2010 spent 400 million to 500 million reais (US$245 million to 306 million) to integrate new acquisitions. Although it will continue “fine tuning,” such costs will be more in the range of 10 million reais ($6 million) a year going forward.
Batista has his work cut out for him. With annual revenue now topping $33 billion, JBS recently posted a fourth-quarter loss of $325 million recently mainly due to costs of integrating Pilgrim’s and Bertin and postponing a U.S. share offering.
The company recently exited a partnership with Italian firm Cremonini, and is struggling with money-losing plants in Argentina that have been hurt by government price caps and export limits. Earlier this year, JBS also failed to win a bidding war for U.S.-based SaraLee Corp.
Despite the focus on getting its house in order, Batista stressed that JBS would not turn its back on a good opportunity for another acquisition.
“It’s part of our DNA to expand. It’s in the blood,” he said, much to his mother’s chagrin.
The fourth of six siblings, Batista quit high school at 17 to manage a small meat packing plant in the farming town of Luziania that his father, a former butcher, bought in 1988. The plant slaughtered 40 head of cattle a day.
He is the last of the three brothers to run the company, with Junior and Joesley preceding him. Batista had been running JBS’s U.S. division until his brother Joesley stepped back to be chairman of the board.
Today, JBS slaughters millions of cattle a year and roughly 70 per cent of its revenue comes from its U.S. operations. Batista sees JBS’s presence in the U.S. market as essential to being a global meats company.
He expects the U.S. economy to return to growth more robustly than the current consensus and sees the potential for the country to become more competitive globally.
“With the size of the deficit, the dollar is going to continue weakening for a long time. It’s not temporary,” Batista said. “In 10 to 20 years, the United States will return to competing with the emerging markets in the production of commodities, in all areas.”
Batista, who speaks Portuguese with an unmistakable country accent from rural Brazil, said meat-packing is a business that lives or dies in the details. It has been 20 years since he worked on the cutting floor but what he learned in his youth has helped him improve profit margins at the company’s plants.
“My father is a butcher, so we learned as kids,” Batista said. “In our business, you better know the details. Any scrap of beef left on the bone can add up to millions. Imagine, we slaughter 15 million head of cattle a year.”
Down to earth and casual, Batista has adapted as quickly to the boardroom as he did working the feedlots or the cutting floors. But he still enjoys the trappings that come with the power of his post, commuting by helicopter in Sao Paulo to avoid traffic jams.
Batista said he used to go down on the floor in some of the U.S. plants, watch the cutters and step in and show them how to trim just a little more flesh from the bone.
– WESLEY BATISTA