Exhibit 99.3

JBS S.A.

Unaudited condensed consolidated interim financial information

As of and for the three-month period ended March 31, 2024

 

Unaudited condensed consolidated interim statements of financial position In thousands of United States dollar - US$  

	Note	March 31, 2024		December 31, 2023
ASSETS
CURRENT ASSETS
Cash and cash equivalents	3		3,297,993		4,569,517
Margin cash	3		169,139		132,461
Trade accounts receivable	4		3,338,473		3,390,856
Inventories	5		5,244,747		5,101,230
Biological assets	6		1,718,788		1,712,153
Recoverable taxes	7		892,301		919,120
Derivative assets			43,273		87,795
Other current assets			327,779		323,194
TOTAL CURRENT ASSETS			15,032,493		16,236,326
NON-CURRENT ASSETS
Recoverable taxes	7		1,748,070		1,744,275
Biological assets	6		517,072		531,477
Related party receivables	8		116,709		118,554
Deferred income taxes	9		750,021		774,861
Derivative assets			50,963		81,940
Other non-current assets			325,211		319,226
			3,508,046		3,570,333
Investments in equity-accounted investees			45,982		56,601
Property, plant and equipment	10		12,711,930		12,918,249
Right of use assets	11		1,688,672		1,705,710
Intangible assets	12		1,928,398		1,985,595
Goodwill	13		5,979,670		6,105,020
TOTAL NON-CURRENT ASSETS			25,862,698		26,341,508
TOTAL ASSETS			40,895,191		42,577,834

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

 

2

Unaudited condensed consolidated interim statements of financial position In thousands of United States dollar - US$

	Note		March 31, 2024			December 31, 2023
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Trade accounts payable		14		4,596,201			5,257,053
Supply chain finance		14		943,423			948,066
Loans and financing		15		763,446			891,570
Income taxes		16		105,426			83,247
Other taxes payable		16		137,431			144,002
Payroll and social charges		17		1,209,409			1,297,181
Lease liabilities		11		346,869			352,627
Dividends payable				388			400
Provisions for legal proceedings		18		202,040			197,440
Derivative liabilities				91,558			144,251
Other current liabilities				536,997			581,123
TOTAL CURRENT LIABILITIES				8,933,188			9,896,960
NON-CURRENT LIABILITIES
Loans and financings		15		18,569,566			19,107,567
Income and other taxes payable		16		90,437			94,368
Payroll and social charges		17		461,816			490,503
Lease liabilities		11		1,477,009			1,488,600
Deferred income taxes		9		1,325,487			1,360,257
Provisions for legal proceedings		18		304,325			315,953
Other non-current liabilities				108,628			115,840
TOTAL NON-CURRENT LIABILITIES				22,337,268			22,973,088
EQUITY		19
Share capital - common shares				13,177,841			13,177,841
Capital reserve				(182,094	)		(186,009	)
Other reserves				(36,705	)		(36,413	)
Profit reserves				3,623,632			3,623,632
Accumulated other comprehensive loss				(8,020,675	)		(7,554,007	)
Retained loss				332,619			—
Attributable to company shareholders				8,894,618			9,025,044
Attributable to non-controlling interest				730,117			682,742
TOTAL EQUITY				9,624,735			9,707,786
TOTAL LIABILITIES AND EQUITY				40,895,191			42,577,834

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

 

3

Unaudited condensed consolidated interim statements of income
for the three-month period ended March 31, 2024 and 2023 In thousands of United States dollar - US$ (except for earnings per share) 

	Note	2024			2023
NET REVENUE	20		17,998,712			16,687,244
Cost of sales	24		(15,640,402	)		(15,221,461	)
GROSS PROFIT			2,358,310			1,465,783
Selling expenses	24		(1,105,121	)		(1,111,788	)
General and administrative expenses	24		(528,961	)		(514,153	)
Other income			21,207			81,948
Other expenses			(22,509	)		(39,067	)
NET OPERATING EXPENSES			(1,635,384	)		(1,583,060	)
OPERATING PROFIT (LOSS)			722,926			(117,277	)
Finance income	21		168,224			121,563
Finance expense	21		(516,969	)		(420,738	)
NET FINANCE EXPENSE			(348,745	)		(299,175	)
Share of profit of equity-accounted investees, net of tax			(6,532	)		2,776
PROFIT (LOSS) BEFORE TAXES			367,649			(413,676	)
Current income taxes	9		(3,810	)		(6,707	)
Deferred income taxes	9		1,017			145,193
TOTAL INCOME TAXES			(2,793	)		138,486
NET INCOME (LOSS)			364,856			(275,190	)
ATTRIBUTABLE TO:
Company shareholders			332,327			(279,637	)
Non-controlling interest			32,529			4,447
			364,856			(275,190	)
Basic and diluted earnings (loss) per share - common shares (US$)	22		0.15			(0.13	)

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

 

4

Unaudited condensed consolidated interim statements of comprehensive income
for three-month period ended March 31, 2024 and 2023 In thousands of United States dollar - US$

	2024			2023
Net income (loss)		364,856			(275,190	)
Other comprehensive income
Items that are or may be subsequently reclassified to statement of income:
Gain (loss) on net investment in foreign operations		(52,929	)		314,365
Gain (loss) on foreign currency translation adjustments		(193,485	)		(129,830	)
Gain on cash flow hedge		448			1,229
Deferred income tax on gain on cash flow hedge		(114	)		(418	)
Valuation adjustments to equity in subsidiaries		(208,982	)		2,063
Items that will not be reclassified to statement of income:
Gains associated with pension and other postretirement benefit obligations		4,453			4,649
Income tax on gain associated with pension and other postretirement benefit obligations		(1,130	)		(677	)
Total other comprehensive income (loss)		(451,739	)		191,381
Comprehensive Income (loss)		(86,883	)		(83,809	)
Total comprehensive income (loss) attributable to:
Company shareholders		(134,307	)		(78,096	)
Non-controlling interest		47,424			(5,713	)
		(86,883	)		(83,809	)

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

 

5

Unaudited condensed consolidated interim statements of changes in equity
for three-month period ended March 31, 2024 and 2023 In thousands of United States dollar - US$

			Capital reserves										Profit reserves						Other comprehensive income
	Share capital		Premium on issue of shares		Capital transaction (1)			Stock options		Other reserves			Legal		Investments statutory		Tax-incentive reserve		VAE			FCTA			Retained earnings (loss)			Total			Non-controlling interest			Total equity
BALANCE ON JANUARY 1, 2023		13,177,841		36,321		(239,584	)		10,145		(35,177	)		603,603		2,928,754		767,354		61,690			(8,410,771	)		—			8,900,176			645,970			9,546,146
Net income (loss)		—		—		—			—		—			—		—		—		—			—			(279,637	)		(279,637	)		4,447			(275,190	)
Loss on foreign currency translation adjustments (4)		—		—		—			—		—			—		—		—		—			314,365			—			314,365			—			314,365
Gain on net investment in foreign operations (2)		—		—		—			—		—			—		—		—		—			(118,974	)		—			(118,974	)		(10,856	)		(129,830	)
Gain on cash flow hedge, net of tax (5)		—		—		—			—		—			—		—		—		811			—			—			811			—			811
Valuation adjustments to equity in subsidiaries (3)		—		—		—			—		—			—		—		—		2,063			—			—			2,063			696			2,759
Gain associated with pension and other postretirement benefit obligations, net of tax		—		—		—			—		—			—		—		—		3,276			—			—			3,276			—			3,276
Total comprehensive income (loss)		—		—		—			—		—			—		—		—		6,150			195,391			(279,637	)		(78,096	)		(5,713	)		(83,809	)
Share-based compensation		—		—		1,202			—		—			—		—		—		—			—			—			1,202			250			1,452
Realization of other reserves		—		—		—			—		(301	)		—		—		—		—			—			301			—			—			—
Dividends to non-controlling interest		—		—		—			—		—			—		—		—		—			—			—			—			(2,333	)		(2,333	)
Others		—		—		—			—		—			—		—		—		—			—			—			—			(3	)		(3	)
BALANCE ON MARCH 31, 2023		13,177,841		36,321		(238,382	)		10,145		(35,478	)		603,603		2,928,754		767,354		67,840			(8,215,380	)		(279,336	)		8,823,282			638,171			9,461,453
BALANCE ON JANUARY 1, 2024		13,177,841		36,321		(232,475	)		10,145		(36,413	)		603,603		2,232,528		787,501		60,443			(7,614,450	)		—			9,025,044			682,742			9,707,786
Net income		—		—		—			—		—			—		—		—		—			—			332,327			332,327			32,529			364,856
Gain (loss) on foreign currency translation adjustments		—		—		—			—		—			—		—		—		—			(207,831	)					(207,831	)		14,312			(193,519	)
Gain on net investment in foreign operations (2)		—		—		—			—		—			—		—		—		—			(52,929	)		—			(52,929	)		—			(52,929	)
Gain on cash flow hedge, net of tax		—		—		—			—		—			—		—		—		334			—			—			334			—			334
Valuation adjustments to equity in subsidiaries		—		—		—			—		—			—		—		—		(208,982	)		—			—			(208,982	)		—			(208,982	)
Gain associated with pension and other postretirement benefit obligations, net of tax		—		—		—			—		—			—		—		—		2,740			—			—			2,740			583			3,323
Total comprehensive income (loss)		—		—		—			—		—			—		—		—		(205,908	)		(260,760	)		332,327			(134,341	)		47,424			(86,917	)
Share-based compensation		—		—		3,916			—		—			—		—		—		—			—			—			3,916			829			4,745
Realization of other reserves		—		—		—			—		(292	)		—		—		—		—			—			292			—			—			—
Dividends to non-controlling interest		—		—		—			—		—			—		—		—		—			—			—			—			(784	)		(784	)
Others		—		—		—			—		—			—		—		—		—			—			—			—			(94	)		(94	)
BALANCE ON MARCH 31, 2024		13,177,841		36,321		(228,559	)		10,145		(36,705	)		603,603		2,232,528		787,501		(145,465	)		(7,875,210	)		332,619			8,894,619			730,117			9,624,736

⁽¹⁾ Refers to the purchase of PPC treasury shares and share-based payment expenses incurred by subsidiaries.

⁽²⁾ Foreign Currency Translation Adjustments (FCTA) and exchange variation in subsidiaries.

⁽³⁾ Valuation Adjustments to Equity (VAE) arising from derivative financial instruments.

⁽⁴⁾ Refers to the net investment on foreign operations of intercompany balances between JBS S.A. and its indirect subsidiaries JBS Luxembourg S.à.r.l. and JBS Investments Luxembourg S.à.r.l.. Thus, since the balances are an extension of that entity’s investment, they are considered as equity instruments.

⁽⁵⁾ Refers to the hedge accounting in the indirect subsidiary Seara Alimentos.

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

 

6

Unaudited condensed consolidated interim statements of cash flows
for three-month period ended March 31, 2024 and 2023 In thousands of United States dollar - US$

		Three-month period ended March 31,
	Note	2024			2023
Cash flows from operating activities
Net income (loss)			364,856			(275,188	)
Adjustments for:
Depreciation and amortization	6, 11, 12 and 13		544,505			499,138
Expected credit losses	4		4,570			4,482
Share of profit of equity-accounted investees			6,532			(2,776	)
Gain on sales of assets			(5,259	)		(10,686	)
Tax expense	9		2,793			(138,486	)
Net finance expense	21		348,745			299,175
Share-based compensation			4,745			1,452
Provisions for legal proceedings	18		14,305			20,791
Impairment of goodwill and property, plant and equipment			—			20,697
Net realizable value inventory adjustments	5		(8,955	)		(1,964	)
DOJ (Department of Justice) and antitrust agreements	18		4,691			13,700
Fair value adjustment of biological assets	6		(115,894	)		87,191
			1,165,634			517,526
Changes in assets and liabilities:
Trade accounts receivable			46,912			200,430
Inventories			(220,504	)		(113,936	)
Recoverable taxes			(65,995	)		(75,092	)
Other current and non-current assets			(67,676	)		37,419
Biological assets			(63,247	)		(133,856	)
Trade accounts payable and supply chain finance			(631,835	)		(917,201	)
Taxes paid in installments			(12,664	)		(12,633	)
Other current and non-current liabilities			(98,005	)		(77,881	)
DOJ and Antitrust agreements payment			(90	)		—
Income taxes paid			(27,992	)		(10,516	)
Changes in operating assets and liabilities			(1,141,096	)		(1,103,266	)
Cash provided (used in) by operating activities			24,538			(585,740	)
Interest paid			(327,465	)		(316,055	)
Interest received			67,512			54,921
Net cash flows provided (used in) by operating activities			(235,415	)		(846,874	)
Cash flows from investing activities
Purchases of property, plant and equipment			(284,131	)		(330,776	)
Purchases and disposals of intangible assets	12		(2,372	)		(2,005	)
Proceeds from sale of property, plant and equipment			11,988			13,931
Additional investments in equity-accounted investees			—			—
Acquisitions, net of cash acquired			(1,468	)		889
Dividends received			3,028			1,444
Related party transactions			260			250
Others			—			1,599
Cash used in investing activities			(272,695	)		(314,668	)
Cash flows from financing activities
Proceeds from loans and financing			70,431			987,082
Payments of loans and financing			(668,692	)		(495,054	)
Derivative instruments received (settled)			(7,464	)		17,297
Margin cash			13,138			7,358
Dividends paid			—			—
Dividends paid to non-controlling interest			(784	)		(2,333	)
Purchase of PPC treasury shares			—			—
Purchase of treasury shares			—			—
Sales of treasury shares			—			—
Payments of leasing contracts			(105,829	)		(105,970	)
Cash provided (used in) by financing activities			(699,200	)		408,380
Effect of exchange rate changes on cash and cash equivalents			38,813			(8,708	)
Net change in cash and cash equivalents			(1,168,497	)		(761,870	)
Cash and cash equivalents beginning of period			4,466,490			2,526,431
Cash and cash equivalents at the end of period			3,297,993			1,764,561

Non-cash transactions:
	Note	2024		2023
Non-cash additions to right of use assets and lease liabilities	11		148,398		109,383
Capitalized interest	10		11,023		(22,848	)
Transfer of property, plant and equipment			—		4,715

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

 

7

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

1 Background information

1.1 Reporting entity

JBS S.A (“JBS” or the “Company”), is a corporation with its headquarters office in Brazil, at Avenue Marginal Direita do Tietê, n^o. 500, Vila Jaguara, in the City of São Paulo, and is controlled by J&F Investimentos S.A. Unaudited condensed consolidated interim financial information comprise the Company and its subsidiaries (collectively, the ‘Group’) as of and for the three-month periods ended March 31, 2024 and 2023, that were authorized by the Board of Directors on May 14, 2024. The Group has its shares publicly traded and listed on the “Novo Mercado” segment of the Sao Paulo Stock Exchange (B3 - Brasil, Bolsa e Balcão) under the ticker symbol “JBSS3”. In addition, American Depository Receipts related to shares issued by JBS are also publicly traded in the United States of America under the symbol “JBSAY”.

The Group operates in the processing of animal protein, such as beef, pork, lamb and chicken, and operates in the production of convenience foods and other products. In addition, it sells leather, hygiene and cleaning products, collagen, metal packaging, biodiesel, among others. The Group has a broad portfolio of brands including Seara, Doriana, Pilgrim’s, Moy Park, Primo, Adaptable Meals, Ozo, Friboi, Maturatta and Swift.

The unaudited condensed consolidated interim financial information includes the Group’s operations in Brazil as well as the activities of its subsidiaries.

1.2 Main events that occurred during the period:

1.2.1 New York Civil complaint: On February 28, 2024, the New York Attorney General’s Office filed a civil complaint in the state Supreme Court against the indirect subsidiaries JBS USA Food Company and JBS USA Food Company Holdings. The claim assumes that consumers were misled by statements by the Company that assured commitment to reducing greenhouse gas emissions and striving to achieve Net Zero by 2040. The complaint seeks disgorgement of profits, civil penalties, attorney’s fees and other relief. Based on the opinion of the Company’s legal advisors, we are confident that we will be successful in our defense strategy.

1.2.2 Registration of debts with the Securities Exchange Commission (SEC): On March 27, 2024, the Group filed with the securities commission of the United States of America, the Securities and Exchange Commission (“SEC”) the Offer to Exchange the 13 existing series of debt securities (“Old Bonds”), not registered at the SEC, for new registered debt securities (“New Bonds”).

1.3 Seasonality:

Demand for chicken is relatively stable throughout the year in the United States, Europe and Brazil, but there are seasonal variations in the sales volume of some specific products at certain times of the year, such as: Christmas, New Year and Easter. Demand in the United States beef industry is highest in the second and third quarters, due to favorable weather conditions for outdoor activities. In Australia, the beef industry faces a drop in slaughter in the fourth quarter, as the rainy season affects cattle’s availability and transport. In Brazil, beef sales do not fluctuate significantly during the year. The pork industry in The United States and Australia have peaks in demand in the first and fourth quarters, due to the supply of pork and the holidays, which stimulate the consumption of certain pork products, with no fluctuation in pork numbers in other locations.

2 Basis of preparation

The unaudited condensed consolidated interim financial information as of and for the three-month period ended March 31, 2024 have been prepared in accordance with IAS 34 Interim Financial Reporting, as issued by International Accounting Standards Board (IASB), and should be read in conjunction with the Group´s last annual consolidated financial statements as of and for the year ended December 31, 2023 (“last annual financial statements”). They do not include all the information required for a complete set of financial statements prepared in accordance with IFRS Standards. However, selected explanatory notes are included to describe events and transactions that are significant to an understanding of the changes in the Group´s financial position and performance since the last annual financial statements.

 

8

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

In preparing these unaudited condensed consolidated interim financial statements, Management has made judgments and estimates that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual financial statements, which were authorized by the Board of Directors on May 14, 2024.

2.1 New standards, amendments and interpretations that are not yet effective

a. Standards, amendments and interpretations recently issued and adopted by the Group

Amendments to IAS 7 and IFRS 7 - Supplier Finance Arrangements

Effective for periods beginning on or after January 1, 2024 but not required for any interim period presented within the annual reporting period, the changes aim to increase transparency and comparability of financial information in supplier finance arrangements, which involve financing suppliers through a financial institution. Companies will be required to disclose the terms and conditions of transactions with suppliers, the effects of these arrangements on liabilities and cash flows, and on the exposure to liquidity risk related to these arrangements. The Group is monitoring the changes and will adjust the disclosure in the explanatory notes according to the standard’s requirements by the year-end’s financial statements.

IAS 12 - Income Taxes

As of January 1, 2024, the changes to the International Tax Reform - Pillar Two Model Rules aim to address tax issues related to the creation of a global system of minimum taxation for multinational companies, as disclosed in note 10 - Income tax and social contribution.

b. New standards, amendments and interpretations that are not yet effective

IAS 21 - Lack of exchangeability

Starting from January 1, 2025, this amendment establishes accounting requirements for situations where a functional currency cannot be converted into other currencies. In such cases, the Group must use the most recent observable exchange rate to translate the results and financial position of foreign operations into its presentation currency. The entity should also disclose this exchange rate, the date it was observed, and the reasons why the currency is non-exchangeable. The Group is monitoring the changes, and so far, no impacts have been identified.

 

9

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

3 Cash and cash equivalents and margin cash

Cash and cash equivalents	March 31, 2024		December 31, 2023
Cash on hand and at banks		1,220,044		1,830,814
CDB (bank certificates of deposit) and National Treasury Bills (Tesouro Selic) (1)		2,077,949		2,738,703
		3,297,993		4,569,517

⁽¹⁾ CDBs are held at financial institutions and earn interest based on floating rates and are pegged to the Brazilian overnight interbank lending rate (Certificado de Depósito Interbancário - CDI). Tesouro Selic are bonds purchased from financial institutions having conditions and characteristics that are similar to CDB’s.

Margin Cash

The Group is required to maintain cash balances with a broker as collateral for exchange-traded futures contracts. These balances are classified as restricted cash as they are not available for use by the Company to fund daily operations. The balance of restricted cash also includes investments in Treasury Bills, as required by the broker, to offset the obligation to return cash collateral. The treasury bills hedge inflation (or deflation) risk when held to maturity. The cash is redeemable when the contracts are settled, therefore they are not considered as cash and cash equivalents.

Margin cash	March 31, 2024		December 31, 2023
Margin cash (Restricted cash)		81,064		18,191
Investments in Treasury Bills		88,075		114,270
		169,139		132,461

The availability of revolving credit facilities in the United States was US$2.9 billion as of March 31, 2024 (US$2.9 billion as of March 31, 2023). In Brazil, the availability of revolving credit facilities was US$450,000 as of March 31, 2024 (US$450,000 as of March 31, 2023).

4 Trade accounts receivable

	March 31, 2024			December 31, 2023
Current receivables
Domestic sales		1,824,449			1,920,310
Foreign sales		934,083			852,566
Subtotal		2,758,532			2,772,876
Overdue receivables:
From 1 to 30 days		421,266			397,753
From 31 to 60 days		47,221			93,175
From 61 to 90 days		25,736			29,490
Above 90 days		174,962			188,300
Expected credit losses		(84,749	)		(84,913	)
Present value adjustment (1)		(4,495	)		(5,825	)
Subtotal		579,941			617,980
Trade accounts receivable, net		3,338,473			3,390,856

⁽¹⁾ The Group discounts its receivables to present value using interest rates directly related to customer credit profiles. The monthly interest used to calculate the present value of outstanding receivables on March 31, 2024 were, mostly in Brazil, 1.0% per transaction (1.3% per transaction on March 31, 2023). Realization of the present value adjustment is recognized as deduction item to sales revenue.

 

10

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

The Group carry out credit assignment transactions with financial institutions, which these institutions acquire credits held against certain third-party customers in the domestic and foreign markets. The assignment transactions are negotiated with a permanent transfer of the risks and benefits to the financial institutions - described within Note 8 - Related party transactions.

Within trade accounts receivable, the diversity of the portfolio significantly reduces overall credit risk. To further mitigate credit risk, parameters have been put in place when credit is provided to customers such as requiring minimum financial ratios, analyzing the operational health of customers, and reviewing references from credit monitoring entities.

The Group does not have any customer that represents more than 10% of its trade receivables or revenues.

Expected credit losses are estimated based on an analysis of the age of the receivable balances and the client’s current credit rating status. The Group writes-off accounts receivables when it becomes apparent, based upon age or customer circumstances, that such amounts will not be collected. The resulting bad debt expense is recognized in the statement of income within “Selling Expenses”.

Changes in expected credit losses:

	March 31, 2024		March 31, 2023
Balance at the beginning of the period	(84,913	)	(82,636	)
Additions	(4,570	)	(4,482	)
Write-offs/Reversals	2,392		10,131
Exchange rate variation	2,342		(3,411	)
Balance at the end of the period	(84,749	)	(80,398	)

5 Inventories

	March 31, 2024		December 31, 2023
Finished products		3,258,284		3,096,459
Work in process		534,055		586,036
Raw materials		780,394		759,035
Supplies		672,014		659,700
		5,244,747		5,101,230

Changes in the realizable value of inventories is recognized in the financial statements as “Cost of sales” and is presented below:

	March 31, 2024			March 31, 2023
Balance at the beginning of the period		(53,219	)		(59,525	)
Additions		(12,623	)		(28,874	)
Write-off		21,579			30,838
Exchange rate variation		(3,136	)		520
Balance at the end of the period		(47,399	)		(57,041	)

 

11

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

6 Biological assets

Changes in biological assets:

	Current						Non-current
	March 31, 2024			March 31, 2023			March 31, 2024			March 31, 2023
Balance at the beginning of the period	1,712,153			1,861,106			531,477			501,958
Business combination (1)		—			(22,598	)		—			—
Increase by reproduction (born) and cost to reach maturity		2,830,036			3,093,137			342,017			217,835
Reduction for slaughter, sale or consumption		(3,125,593	)		(3,288,027	)		(17,890	)		(17,768	)
Purchases		105,124			126,853			59,545			41,168
Decrease by death		(126,563	)		(34,453	)		(3,429	)		(4,888	)
Fair value adjustments		115,894			(87,191	)		—			—
Reclassification from non-current to current		235,038			80,092			(235,038	)		(80,092	)
Exchange rate variation		(27,301	)		17,467			(4,747	)		3,981
Amortization		—			—			(154,863	)		(137,567	)
Balance at the end of the period		1,718,788			1,746,386			517,072			524,627

⁽¹⁾ Refers to the business combination adjustment of the acquisition of TriOak acquired for the year ended 2022 financial year.

7 Recoverable taxes

Recoverable taxes as of March 31, 2024 and December 31, 2023 was comprised of the following:

	March 31, 2024		December 31, 2023
Value-added tax on sales and services – ICMS / IVA / VAT / GST		917,588		919,634
Social contribution on billings - PIS and COFINS		461,696		502,397
Withholding income tax - IRRF / IRPJ		1,218,800		1,196,502
Excise tax – IPI		20,682		22,004
Reintegra		8,425		8,905
Other		13,180		13,953
		2,640,371		2,663,395
Current		892,301		919,120
Non-current		1,748,070		1,744,275
		2,640,371		2,663,395

8 Related party transactions

The main balances and transactions between related parties are presented and described below. Amounts charged include borrowing costs, interest and management fees, when applicable.

Related party receivables

	March 31, 2024		December 31, 2023
Credit with related party (1)		116,709		118,554
		116,709		118,554

⁽¹⁾ Refers to the agreement entered into between JBS S.A. and J&F Investimentos S.A. and certain former executives of the Group, which represents the definitive settlement of the dispute subject to Arbitration CAM n° 186/21, whereby J&F agreed to pay the total updated amount of US$ 116,355, to be paid in accordance with the terms and conditions specified in the agreement.

 

12

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

Other financial transactions in the Company

The Company entered into an assignment agreement with Banco Original S.A, direct subsidiary of the parent Group J&F, pursuant to which Banco Original S.A. acquires trade accounts receivables of certain or our customers in Brazil and abroad. The assignments are at the face value of the receivable less the discount applied by Banco Original through a transfer without recourse to JBS S.A. of all of the associated risks and benefits of such trade accounts receivables. For the three-month period ended March 31, 2024, the Group incurred in a loss from the sale of the receivables of US$32,363 (US$19,380 for the three-month period ended March 31, 2023), recognized as financial expenses.

As of March 31, 2024, the Company held investments with Banco Original, of US$883,301 (US$833,301 as of December 31, 2023), recognized as cash and cash equivalents. The cash investments and cash equivalents have similar rates of return as CDIs (Certificado de Depósito Interbancário). For the three-month period ended March 31, 2024, the Company earned interest from these investments of US$9,448 (US$982 for the three-month period ended March 31, 2023), recognized as financial income.

The Group is the sponsor of Institute J&F, a youth-directed business school, whose goal is to educate future leaders by offering free, high-quality education. During the for the three-month period ended 31, 2024, the Company made donations of US$9,068 (US$2,654 for the three-month period ended March 31, 2023), recognized as general and administrative expenses.

The Company has commitments to purchase cattle for future delivery signed with certain suppliers, including the related party JBJ, guaranteeing the acquisition of cattle for a fixed price, or to be fixed, with no cash effect on the Group until the cattle are delivered. Based on these future delivery contracts, as of March 31, 2024, the Company has commitment agreements in the amount of US$80,540 (US$61,926 as of December 31, 2023).

No expense for doubtful accounts or bad debts relating to related-party transactions were recorded during the three-month period ended March 31, 2024.

Remuneration of key management

The Group’s key management is comprised of its executive officers and members of the Board of Directors. The aggregate amount of compensation received by the Group’s key management during the three-month period ended March 31, 2024 and 2023 was:

	2024		2023
Salaries and wages		1,720		1,955
Variable cash compensation		16,599		18,481
		18,319		20,436

The Chief Executive Officer, the Administrative and Control Officer, the Chief Financial Officer and the Executive Officer are employed under the Brazilian employment contract regime referred to as CLT (Consolidation of Labor Laws), which sets legal prerogatives for employee benefits.

Except for those described above, the Board of Directors members are not party to any employment contract or any other contracts for additional employee benefits such as post-employment benefits, other long-term benefits or termination benefits that do not conform to Brazilian Labor Law.

9 Income taxes

a. Composition of deferred tax income and social contribution

	March 31, 2024			December 31, 2023
Deferred income taxes assets		750,021			774,861
Deferred income taxes liabilities		(1,325,487	)		(1,360,257	)
		(575,466	)		(585,396	)

 

13

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

	Balance at January 1, 2024			Income statement			Exchange variation			Other Adjustments (1)			Balance at March 31, 2024
Tax losses and negative basis of social contribution		840,172			(30,277	)		(18,087	)		—			791,808
Expected credit losses on trade accounts receivable		38,086			2,133			(720	)		—			39,499
Provisions for contingencies		78,840			977			43,282			—			123,099
Present value adjustment		7,648			1,450			(250	)		—			8,848
Tax credits		23,685			(24	)		—			(24	)		23,637
Labor accident accruals		7,927			(477	)		(1	)		—			7,449
Pension plan		11,956			(433	)		10			(1,117	)		10,416
Trade accounts payable accrual		277,512			9,059			(47,813	)		—			238,758
Non-deductible interest		211,958			9,435			1			—			221,394
Right of use assets		25,417			815			(524	)		—			25,708
Goodwill amortization		(851,840	)		(4,359	)		23,530			—			(832,669	)
Present value adjustment - Trade accounts payable		(6,064	)		1,962			171			—			(3,931	)
Business combinations		(444,250	)		4,077			1,291			—			(438,882	)
Inventory valuation		(207,085	)		5,609			(2	)		—			(201,478	)
Hedge operations (2)		(25,364	)		15,158			658			(174	)		(9,722	)
Realization of other reserves		(115,640	)		751			3,579			—			(111,310	)
Accelerated depreciation and amortization		(514,285	)		6,668			—			—			(507,617	)
Other temporary differences		55,931			(21,507	)		5,103			—			39,527
Deferred taxes, net		(585,396	)		1,017			10,228			(1,315	)		(575,466	)

	Balance at January 1, 2023			Income statement			Exchange variation			Other Adjustment (1)			Balance at March 31, 2023
Tax losses and negative basis of social contribution		649,164			158,249			12,313			—			819,726
Expected credit losses on trade accounts receivable		31,572			(1,990	)		575			—			30,157
Provisions for contingencies		94,153			(9,154	)		1,286			—			86,285
Present value adjustment		11,326			(1,667	)		268			—			9,927
Tax credits		13,196			(984	)		1			7			12,220
Rules for Animal Farming - Foreign Subsidiaries		—			—			—			—			—
Labor accident accruals		6,139			402			—			—			6,541
Pension plan		10,485			1,020			(13	)		(578	)		10,914
Trade accounts payable accrual		284,235			(19,583	)		1,908			—			266,560
Non-deductible interest		76,563			7,503			—			—			84,066
Right of use assets		22,583			8,555			318			—			31,456
Goodwill amortization		(785,958	)		(2,791	)		(19,020	)		—			(807,769	)
Present value adjustment - Trade accounts payable		(8,105	)		653			(205	)		—			(7,657	)
Business combinations		(441,428	)		(772	)		(1,043	)		—			(443,243	)
Inventory valuation		(109,703	)		(50,739	)		1			—			(160,441	)
Customer returns accruals - Foreign subsidiaries		—			—			—			—			—
Hedge operations		8,209			3,054			316			1,069			12,648
Realization of other reserves		(110,379	)		746			(2,967	)		—			(112,600	)
Accelerated depreciation and amortization		(586,839	)		51,139			—			—			(535,700	)
Other temporary differences - liabilities		77,595			1,552			(936	)		1,967			80,178
Deferred taxes, net		(757,192	)		145,193			(7,198	)		2,465			(616,732	)

⁽¹⁾ Changes in the deferred tax statement of financial position accounts that do not directly impact income statement accounts, are shown in the column Other Adjustments. These adjustments refer mainly to: the direct subsidiary Brazservice Ltda. incorporated into the Company; deferred taxes on cash flow hedge transactions recognized in other comprehensive income, carried out by the subsidiary Seara Alimentos; and, gains associated with pension and other postretirement benefit obligations in the United States of America; and impacts related to the acquisitions of the King´s Company in Italy and Rivalea in Australia.

⁽²⁾ Hedge and hedge accounting operations are demonstrated in Note 25 - Risk management and financial.

 

14

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

b. Reconciliation of income tax and social contribution expense:

	2024			2023
Profit before taxes (PBT)		367,649			(413,676	)
Brazilian statutory corporate tax rate		(34	)%		(34	)%
Expected tax benefit (expense)		(125,001	)		140,650
Adjustments to reconcile taxable income tax expense (benefit):
Share of profit of equity-accounted investees		(2,220	)		944
Non-taxable tax benefits (1)		53,148			133,309
Difference of tax rates on taxable income from foreign subsidiaries		35,314			(17,879	)
Transfer pricing adjustments		(2,507	)		(1,473	)
Profits taxed by foreign jurisdictions (2)		29,750			(84,323	)
Deferred income tax not recognized		(10,695	)		(75,549	)
Non-taxable interest - Foreign subsidiaries		6,145			33,427
Donations and social programs (3)		(2,099	)		(2,416	)
SELIC interest on tax credits		735			1,010
Other permanent differences		14,637			10,786
Current and deferred income tax benefit (expense)		(2,793	)		138,486
Current income tax		(3,810	)		(6,707	)
Deferred income tax		1,017			145,193
		(2,793	)		138,486
Effective income tax rate		(0.76	)%		33.48	%

Additional information: analysis of the variation in the effective rate:

⁽¹⁾ The Company and its subsidiaries have subsidies granted by state governments, as presumed credit, in accordance with the regulations of each State. The appropriate values of this tax incentive as revenue in the result are excluded in the calculation of taxes on profit, when the requirements set out in current legislation are met. During the three-month period ended March 31, 2024, the Company and its subsidiaries recorded the amount of government subsidies in the amount of US$155 million, all of which were presumed credit, excluded from their income tax and social contribution calculation basis.

The exclusion of this tax benefit from the income tax and social contribution calculation base on net income reflected a tax gain in 2024 of US$53 million referring to the presumed credit.

On June 12, 2023, when considering Repetitive Topic 1182, the STJ understood that the requirement of IRPJ and CSLL on amounts related to ICMS tax incentives, other than those granted in the form of presumed credits, is undue, as long as the requirements of the article 30 of Law No. 12,973/14, and it is certain that the Company recorded the profit reserve referred to in the legislation. Law No. 14,789/23 changed the investment subsidy regime for tax purposes and revoked article 30 of Law No. 12,973/14 and its effects are being fulfilled by the Company for the year 2024, except in relation to presumed ICMS credits, whose taxation was ruled out by the unified understanding of the STJ Panels that deal with tax matters in the judgment of ERESP 1.517.492/PR.

⁽²⁾ According to Law No. 12,973/14, the income from foreign subsidiaries must be taxed at the Brazilian statutory tax rate of 34%, and the income tax paid abroad by these subsidiaries may be used to compensate income taxes to be paid in Brazil. The results obtained from foreign subsidiaries are subject to taxation by the countries where they are based, according to applicable rates and legislation (profits taxed by-foreign jurisdictions included in the reconciliation of income tax and social contribution expense). The Group analyzes the results of each subsidiary for the application of its income tax legislation, in order to respect the treaties signed by Brazil and avoid double taxation.

⁽³⁾ Refers to the donations, as described in Note 24 – Expenses by nature.

 

15

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

Global Minimum Tax:

Starting January 1st, 2024, the rules of Pillar II came into effect in various countries, impacting multinational companies operating in those jurisdictions.

The Group, being subject to these global Pillar II norms, applies the relief from deferred tax accounting introduced by International Tax Reform - Pillar Two Model Rules (Amendments to IAS12), as well as the estimation of additional tax payments related to income tax due to measurement uncertainties and impacts.

10 Property, plant and equipment

Changes in property, plant and equipment:

	Balance at January 1, 2024		Additions net of transfers (1)			Disposals			Depreciation			Exchange rate variation			Balance at March 31, 2024
Buildings		4,305,145		110,120			(2,341	)		(63,822	)		(71,906	)		4,277,196
Land		1,209,739		12,612			(720	)		—			(26,803	)		1,194,828
Machinery and equipment		4,310,590		175,963			(1,417	)		(154,084	)		(62,193	)		4,268,859
Facilities		764,036		40,822			(9	)		(12,881	)		(23,136	)		768,832
Computer equipment		166,291		16,915			(39	)		(12,204	)		(1,405	)		169,558
Vehicles (land and air)		272,663		11,993			(1,953	)		(11,247	)		(7,134	)		264,322
Construction in progress		1,636,719		(100,116	)		(196	)		—			(32,892	)		1,503,515
Other		253,006		23,439			(54	)		(9,635	)		(1,936	)		264,820
		12,918,189		291,748			(6,729	)		(263,873	)		(227,405	)		12,711,930

	Balance at January 1, 2023		Additions net of transfers (1)			Disposals			Depreciation			Exchange rate variation		Balance at March 31, 2023
Buildings		3,779,963		262,199			(1,390	)		(61,295	)		43,445		4,022,922
Land		1,056,590		817			(31	)		—			14,338		1,071,714
Machinery and equipment		3,832,826		345,775			(16,234	)		(143,522	)		37,368		4,056,213
Facilities		575,290		109,856			(6	)		(10,073	)		17,752		692,819
Computer equipment		116,263		8,446			(316	)		(9,211	)		1,257		116,439
Vehicles (land and air)		214,898		32,471			(2,094	)		(9,724	)		2,483		238,034
Construction in progress		2,124,483		(414,078	)		—			—			22,156		1,732,561
Other		215,050		8,138			(8,587	)		(8,619	)		2,129		208,111
		11,915,363		353,624			(28,658	)		(242,444	)		140,928		12,138,813

⁽¹⁾ Additions for each category includes transfers from construction in progress during the period.

For the three-month period ended March 31, 2024, the amount of capitalized interest added to construction in progress and included in additions was US$11,023 (US$22,848 for the three-month period ended March 31, 2023).

Annually, the Group tests the recoverability of its assets that were identified as having any indicator of impairment using the concept of value in use through discounted cash flow models). The tests for recoverability of assets are applied at the end of each fiscal year on December 31, follow by indications of impairment during the year.

11 Leases

The Group uses the optional exemption to not recognize a right of use asset and lease liability for short term (less than 12 months) and low value leases. The average discount rate used for measuring lease liabilities was 8.22% for the three-month period ended March 31, 2024 (5.85% at December 31, 2023).

 

16

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

11.1 Right of use asset

Changes in the right of use asset:

	Balance at January 1, 2024		Additions		Terminated contracts			Amortization			Exchange rate variation			Balance at March 31, 2024
Growing facilities		805,370		39,189		(21,452	)		(41,007	)		(12,619	)		769,481
Buildings		532,104		74,357		(13,562	)		(22,445	)		(11,840	)		558,614
Vehicles (land)		223,720		14,966		(77	)		(18,676	)		(1,909	)		218,024
Machinery and equipment		90,101		17,667		(1,637	)		(11,044	)		(1,581	)		93,506
Operating plants		19,695		589		—			(1,480	)		(572	)		18,232
Land		19,186		171		—			(648	)		(654	)		18,055
Computer equipment		15,534		57		—			(2,369	)		(462	)		12,760
		1,705,710		146,996		(36,728	)		(97,669	)		(29,637	)		1,688,672

	Balance at January 1, 2023		Additions		Terminated contracts			Amortization			Exchange rate variation			Balance at March 31, 2023
Growing facilities		823,989		30,867		(7,291	)		(39,397	)		9,655		817,823
Buildings		426,996		50,891		(1,303	)		(18,362	)		5,230		463,452
Vehicles (land)		201,655		16,581		(810	)		(19,138	)		(305	)	197,983
Machinery and equipment		104,890		5,966		(77	)		(13,004	)		737		98,512
Operating plants		18,706		3,470		—			(1,514	)		519		21,181
Land		19,641		166		—			(619	)		(55	)	19,133
Computer equipment		9,216		—		(55	)		(996	)		226		8,391
		1,605,093		107,941		(9,536	)		(93,030	)		16,007		1,626,475

11.2 Lease liabilities

	March 31, 2024			December 31, 2023
Undiscounted lease payments		2,242,241			2,262,433
Present value adjustment		(418,363	)		(421,206	)
		1,823,878			1,841,227
Breakdown:
Current liabilities		346,869			352,627
Non-current liabilities		1,477,009			1,488,600
		1,823,878			1,841,227

Changes in the lease liability:

	Balance at January 1, 2024		Additions		Interest accrual		Payments			Terminated contracts			Exchange rate variation			Balance at March 31, 2024
Lease liability		1,841,227		148,398		25,543		(117,779	)		(40,026	)		(33,485	)		1,823,878

	Balance at January 1, 2023		Additions		Interest accrual		Payments			Terminated contracts			Exchange rate variation		Balance at March 31, 2023
Lease liability		1,721,833		109,383		22,876		(116,783	)		(8,426	)		17,939		1,746,822

⁽¹⁾ Refers to Rivalea’s, which was acquired during the first quarter of 2022.

 

17

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

The non-current portion of the lease liability schedule is as follows:

	March 31, 2024
2025		286,045
2026		244,701
2027		192,841
2028		149,118
2029		131,527
Maturities after 2029		803,043
Total Future Minimum Lease Payments		1,807,275
Less: Imputed Interest		(330,266	)
Present Value of Lease Liabilities		1,477,009

12 Intangible assets

Changes in intangible assets:

	Balance at January 1, 2024		Additions		Amortization			Exchange rate variation			Balance at March 31, 2024
Amortizing:
Trademarks		341,183		203		(7,546	)		(6,811	)		327,029
Software		24,941		1,789		(1,218	)		(759	)		24,753
Customer relationships		486,166		—		(18,315	)		(3,012	)		464,839
Supplier contracts		28,077		—		(959	)		(565	)		26,553
Others		1,044		17		(62	)		(16	)		983
Non-amortizing:
Trademarks		1,092,793		364		—			(20,167	)		1,072,990
Water rights		11,391		—		—			(140	)		11,251
		1,985,595		2,373		(28,100	)		(31,470	)		1,928,398

	Balance at January 1, 2023		Additions		Disposals			Amortization			Exchange rate variation			Balance at March 31, 2023
Amortizing:
Trademarks		315,912		—		—			(5,566	)		(10,670	)		299,676
Software		21,079		2,044		(56	)		(1,190	)		538			22,415
Customer relationships		549,705		—		—			(18,334	)		3,192			534,563
Supplier contracts		30,509		—		—			(941	)		492			30,060
Others		833		25		(28	)		(68	)		1			763
Non-amortizing:
Trademarks		1,050,106		21		—			—			24,404			1,074,531
Water rights		11,347		—		—			—			(36	)		11,311
		1,979,491		2,090		(84	)		(26,099	)		17,921			1,973,319

13 Goodwill

Goodwill represents the positive difference between consideration paid to purchase a business and the net fair value of identifiable assets and liabilities of the acquired entity. Goodwill is recognized as an asset and included in “Goodwill” in the Statement of Financial Position. Goodwill is related to an expectation of future earnings of the acquired subsidiary after assets and liabilities are combined with the Group and cost savings resulting from synergies expected to be achieved upon the integration of the acquired business.

 

18

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

Changes in goodwill:

	March 31, 2024			March 31, 2023
Balance at the beginning of the period		6,105,020			5,828,691
Business combinations adjustments (1)		—			20,062
Exchange rate variation		(125,350	)		77,938
Balance at the end of the period		5,979,670			5,926,691

⁽¹⁾ Refers to the business combination adjustment in TriOak.

CGUs	March 31, 2024		December 31, 2023
Brazil Beef		1,815,365		1,873,448
Seara		743,268		766,970
Moy Park		770,490		777,583
USA Pork		694,534		694,534
Australia Meat		268,954		280,915
Australia Smallgoods		297,373		310,598
Pilgrim’s Food Masters (PFM)		332,256		336,683
Others CGUs without significant goodwill		1,057,430		1,064,289
Total		5,979,670		6,105,020

For the three-month period ended March 31, 2024 and 2023 there were no indicators of impairment of goodwill within any CGU.

14 Trade accounts payable

	March 31, 2024			December 31, 2023
Domestic:
Commodities		1,328,789			1,761,470
Materials and services		2,972,678			3,123,140
Finished products		36,999			38,061
Present value adjustment		(11,588	)		(19,642	)
		4,326,878			4,903,029
Foreign:
Commodities		7,203			31,354
Materials and services		260,119			320,691
Finished products		2,001			1,979
		269,323			354,024
Total trade accounts payable		4,596,201			5,257,053
Supplier finance arrangements (1)
Domestic		936,149			940,344
Foreign		7,274			7,722
Total supplier finance arrangements		943,423			948,066
Total		5,539,624			6,205,119

⁽¹⁾ The Company and its indirect subsidiary Seara Alimentos carry out transactions with financial institutions that allow the suppliers to anticipate their receivables in the domestic market. These transactions do not extend payment terms beyond the normal terms with other suppliers. In addition, this operation did not bring any other cost to the Group and all financial costs of the operation are the responsibility of the suppliers.

The Group has commitments to purchase cattle for future delivery signed with certain suppliers, in which the Group guarantees the acquisition of cattle for a fixed price, or to be fixed, with no cash effect on the Group until the cattle are delivered. Based on these future delivery contracts, JBJ has already advanced this operation with the banks under the supply chain finance method. As of March 31, 2024, the amount of this transaction was US$101,946 (US$61,926 at December 31, 2023), this operation is recognized as supply chain finance.

 

19

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

15 Loans and financing

	Average annual					Payment terms /	Current				Non-current
Type	interest rate			Currency	Index	non-current debt	March 31, 2024		December 31, 2023		March 31, 2024		December 31, 2023
Foreign currency
ACC - Advances on exchange contracts		8.40	%	USD	—	2024		—		52,158		—		—
Prepayment		7.38	%	USD	SOFR	2024 - 27		—		5,531		—		174,346
FINIMP – Import Financing		6.48	%	USD e EUR	Euribor	2025		18,010		31,291		250		647
White Stripe credit facility		8.45	%	USD e CAD	—	—		—		2,892		—		—
Working capital - Dollar		8.97	%	USD	SOFR	2024 - 30		364		362		2,474		2,553
CRA - Agribusiness Credit Receivable Certificates		4.92	%	USD	—	2028		907		442		38,452		38,464
Scott credit facilities		2.20	%	USD	—	2023		—		—		—		1,815
Others		7.70	%	USD	—	2024		4,574		—		—		—
								23,855		92,676		41,176		217,825
Local currency
FINAME (1)		5.98	%	BRL	—	2024 - 25		314		478		—		6
Prepayment (2)		8.22	%	GBP, USD	BoE, SOFR	2024 - 25		13,908		54,906		—		60,000
Notes 2.50% JBS Lux 2027		2.50	%	USD	—	2027		5,278		11,542		987,245		986,220
Notes 5.13% JBS Lux 2028		5.13	%	USD	—	2028		7,688		19,219		886,929		886,398
Notes 6.5% JBS Lux 2029		6.50	%	USD	—	2029		2,337		1,084		77,889		77,885
Notes 3.00% JBS Lux 2029		3.00	%	USD	—	2029		2,950		7,458		586,883		586,210
Notes 5.50% JBS Lux 2030		5.50	%	USD	—	2030		14,514		31,910		1,240,037		1,239,931
Notes 3.75% JBS Lux 2031		3.75	%	USD	—	2031		6,250		1,563		488,543		495,338
Notes 3.00% JBS Lux 2032		3.00	%	USD	—	2032		11,333		3,833		981,127		980,341
Notes 3.63% JBS Fin 2032		3.63	%	USD	—	2032		7,653		16,729		954,286		984,472
Notes 5.75% JBS Lux 2033		5.75	%	USD	—	2033		58,938		29,469		2,002,076		2,001,095
Notes 6.75% JBS Lux 2034		6.75	%	USD	—	2034		4,800		30,900		1,576,781		1,576,065
Notes 4.38% JBS Lux 2052		4.38	%	USD	—	2052		6,453		16,309		887,351		887,237
Notes 6.50% JBS Lux 2052		6.50	%	USD	—	2052		33,583		8,396		1,525,512		1,527,284
Notes 7.25% JBS Lux 2053		7.25	%	USD	—	2053		34,800		18,669		883,494		883,214
Notes 4.25% PPC 2031		4.25	%	USD	—	2031		19,597		8,972		984,937		984,404
Notes 3.50% PPC 2032		3.50	%	USD	—	2032		2,625		10,500		891,451		891,184
Notes 6.25% PPC 2033		6.25	%	USD	—	2033		15,625		43,924		984,443		984,018
Notes 6.88% PPC 2034		6.88	%	USD	—	2034		16,137		7,639		484,941		484,577
Working capital - Reais		17.45	%	BRL	TJLP	2024 - 28		—		5,081		—		16,331
Working capital - Euros		3.10	%	EUR	Euribor	2024 - 28		16,167		17,249		9,897		10,186
Export credit note		14.20	%	BRL	CDI	2024 - 30		1,011		2,913		1,703		214,735
CDC - Direct Consumer Credit		15.97	%	BRL	—	2024 - 28		21,989		21,296		6,995		9,020
Livestock financing - Pre		10.73	%	BRL	—	2024		239,549		242,928		—		—
CRA - Agribusiness Receivables Certificate		10.38	%	BRL	CDI e IPCA	2024 - 37		155,843		149,060		1,984,697		2,013,297
Credit line - Scott		7.69	%	USD, EUR	—	2025		—		20,087		—		529
Credit line - Beardstown Pace		3.65	%	USD	—	2050		—		6,689		—		64,700
JBS Australia Confinement Agreement		2.76	%	AUD	—	2028		—		993		—		34,053
Others		4.68	%	Diversos	Diversos	2031		40,249		9,098		101,173		11,012
Total								739,591		798,894		18,528,390		18,889,742
								763,446		891,570		18,569,566		19,107,567

⁽¹⁾ FINAME - Government Agency for Machinery and Equipment Financing

⁽²⁾ FINEP - Research and projects financing

 

20

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

Average annual interest rate: Refers to the weighted average nominal cost of interest at the reporting date. The loans and financings are fixed by a fixed rate or indexed to rates: CDI, TJLP (the Brazilian government’s long-term interest rate), LIBOR and EURIBOR, among others.

The availability of revolving credit facilities for JBS USA was US$2,9 billion as of March 31, 2024 (US$2,9 billion as of December 31, 2023). In Brazil, the availability of revolving credit facilities was US$450,000 (US$450,000 at December 31, 2023).

The non-current portion of the principal payment schedule of loans and financing is as follows:

Maturity	March 31, 2024
2025		20,230
2026		15,385
2027		1,084,544
2028		1,099,124
2029		705,998
Maturities after 2029		15,644,285
		18,569,566

15.1 Guarantees and contractual restrictions (“covenants”)

The Group was in compliance with all of its financial debt covenants restrictions for the three-month period ended March 31, 2024.

The Company, together with its indirect subsidiaries JBS Global Luxembourg S.à.r.l., JBS Holding Luxembourg S.à r.l., JBS USA Holding Lux S.à r.l. and JBS Global Meat Holdings Pty. Limited, are guarantors of certain senior notes listed with the U.S. Securities and Exchange Commission.

16 Income and other taxes payable

Income and other taxes payable are comprised of the following:

	March 31, 2024		December 31, 2023
Taxes payable in installments		63,336		67,980
PIS / COFINS tax payable		27,247		32,835
ICMS / VAT / GST tax payable		36,475		35,335
Withholding income taxes		16,236		10,527
Others		84,574		91,693
Subtotal		227,868		238,370
Income taxes payable		105,426		83,247
Total		333,294		321,617
Breakdown:
Current liabilities		242,857		227,249
Non-current liabilities		90,437		94,368
		333,294		321,617

 

21

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

17 Payroll and social charges

Payroll and social charges are comprised of the following:

	March 31, 2024		December 31, 2023
Social charges in installments		463,894		489,520
Bonus and vacation along with related social charges		696,040		736,138
Salaries and related social charges		446,888		503,400
Others		64,403		58,626
		1,671,225		1,787,684
Breakdown:
Current liabilities		1,209,409		1,297,181
Non-current liabilities		461,816		490,503
		1,671,225		1,787,684

Labor taxes payable in installments: In December 2022, the Federal Supreme Court (STF) in a decision favorable to the Direct Action of Unconstitutionality (ADI No. 4,395), declared that the subrogation of the collection of social security contributions was unconstitutional, referring to the Assistance Fund for Rural Workers (FUNRURAL) to slaughterhouses, consumer companies, consignees or product-acquiring cooperatives. As of March 31, 2024 the Company and its subsidiaries have recorded a provision of US$328,249 (US$353,000 as of December 31, 2023) under the heading “Social Charges Installments” related to FUNRURAL installments. Since 2018 to date, the Company and its subsidiaries settled the FUNRURAL payments installment in the total amount of US$260,198 in cash or through compensation of federal taxes recoverable.

18 Provisions for legal proceedings

The Group is party to several lawsuits arising in the ordinary course of business for which provisions are recognized for these deemed probable based on estimated costs determined by management as follow:

	March 31, 2024		December 31, 2023
Labor		104,030		108,004
Civil		275,631		270,989
Tax and Social Security		126,704		134,400
Total		506,365		513,393

Breakdown:

	March 31, 2024		December 31, 2023
Current liabilities		202,040		197,440
Non-current liabilities		304,325		315,953
		506,365		513,393

 

22

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

Changes in provisions:

	Balance at January 1, 2024		Additions, reversals and changes in estimates			Payments			Indexation		Exchange rate variation			Balance at March 31, 2024
Labor		108,004		12,882			(15,520	)		2,009		(3,345	)		104,030
Civil		270,989		10,645			(5,965	)		2,225		(2,263	)		275,631
Tax and social security		134,400		(4,634	)		(276	)		1,355		(4,141	)		126,704
Total		513,393		18,893			(21,761	)		5,589		(9,749	)		506,365

	Balance at January 1, 2023		Additions, reversals and changes in estimates		Payments			Indexation		Exchange rate variation		Balance at March 31, 2023
Labor		99,270		11,015		(13,545	)		3,106		2,689		102,535
Civil		222,800		21,143		(4,323	)		3,985		1,473		245,078
Tax and social security		105,420		2,332		(89	)		5,176		3,005		115,844
Total		427,490		34,490		(17,957	)		12,267		7,167		463,457

JBS USA Food Company

US litigation

Between June 28, 2018 and July 23, 2018, a series of purported class action lawsuits were filed against JBS USA, a number of other pork producers, and Agri Stats, Inc. in the U.S. District Court for the District of Minnesota (the “Minnesota Court”) on behalf of direct and indirect purchasers of pork alleging violations of federal and state antitrust, unfair competition, unjust enrichment, deceptive trade practice, and consumer protection laws, which were consolidated and styled as In re Pork Antitrust Litigation, Case No. 0:18- cv-01776 (the “Pork Antitrust Litigation”). JBS USA has entered into agreements to settle all claims made by the three certified classes, for an aggregate total of $57.3 million, each of which has received final approval from the Minnesota Court. JBS USA continues to defend itself against the direct action plaintiffs, as well as parties that have opted out of the class settlements (collectively, the “Pork Opt Outs”). JBS USA will seek reasonable settlements where they are available. To date, JBS USA has accrued $80.3 million to cover negotiated settlements with various Pork Opt Outs. JBS USA has recognized these settlement expenses within general and administrative expenses in the Consolidated statement of income.

Between April 23, 2019 and June 18, 2020, a series of purported class action lawsuits were filed against JBS USA, Swift Beef Company, JBS Packerland, Inc., JBS S.A., and certain other beef processors in Minnesota Court, each alleging, among other things, violations of the Sherman Antitrust Act, which were coordinated in the Minnesota Court for pre-trial purposes and styled as In re Cattle and Beef Antitrust Litigation, Case No. 0:20-cv-1319 (the “Beef Antitrust Litigation”). Between February 18, 2022 and March 24, 2022, two purported class action lawsuits were filed in Canada against JBS USA, Swift Beef Company, JBS Packerland, Inc., JBS Food Canada ULC (“JBS Canada”), and a number of other beef processors alleging similar claims to those in the Beef Antitrust Litigation. JBS USA has settled with two of the purported classes in the Beef Antitrust Litigation, for an aggregate total of US$77.0 million, each of which has received final approval from the Minnesota Court. The Company continues to defend against the remaining classes in Minnesota Court and Canada, direct-action plaintiffs, and parties that have opted out of the class settlements (collectively, the “Beef Opt Outs”). The Company will seek reasonable settlements where they are available. To date JBS USA has recognized $25.6 million to cover negotiated settlements with various Beef Opt Outs which is recognized within general and administrative expenses in the Consolidated statement of income.

 

23

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

On November 11, 2022, a purported class action lawsuit was filed against JBS USA and a number of other meatpackers as well as Webber, Meng, Sahl & Company and Agri Stats, Inc. in the U.S. District Court for the District of Colorado (“the Colorado Court”). The plaintiffs allege that the defendants conspired to fix and depress the compensation paid to pork and beef plant workers in violation of the Sherman Act and seek damages from January 1, 2014 to the present. JBS USA agreed to settle all claims made by the purported class for $55.0 million, which is subject to approval by the Colorado Court. JBS USA recognizes these settlement expenses within general and administrative expense in the Consolidated statement of profit or loss.

On February 28, 2024, the Attorney General of the State of New York filed a civil complaint against our subsidiaries, JBS USA Food Company and JBS USA Food Company Holdings, in the Supreme Court of the State of New York, County of New York, alleging that consumers in New York were misled by statements in which we expressed our goal of reducing greenhouse gas emissions and striving to achieve Net Zero by 2040. The complaint seeks an injunction, disgorgement of profits, civil penalties, attorney’s fees and other relief. The Company believes it has substantial defenses to this action, and intends to vigorously defend this matter.

US state matters

On June 29, 2021 and October 25, 2021, the Attorneys General of New Mexico and Alaska, respectively, filed complaints against JBS USA based on allegations similar to those asserted in the Pork Antitrust Litigation. JBS USA has answered both of the complaints and continues to litigate.

US federal matters

On December 23, 2020 and October 29, 2021, JBS USA received civil investigative demands (“CIDs”) from the U.S. Department of Justice (“DOJ”) related to the fed cattle and beef packing industry. JBS USA cooperated with the DOJ in producing documents and information pursuant to the CIDs. The Attorneys General for multiple states participated in the investigation and coordinated with the DOJ.

Tax claims and proceedings

During 2017, the Australian Tax Office (“ATO”) opened a review of JBS Australia Pty. Ltd. for income tax years 2015 through 2017 in connection with a corporate reorganization. On September 30, 2020, the ATO issued a tax assessment for income tax year 2015 for an immaterial amount while it continues to investigate tax years 2016 and 2017. No loss has been recorded for the amounts considered in the assessment at this time.

Pilgrim’s Pride Corporation

US litigation

Between September 2, 2016 and October 13, 2016, a series of federal class action lawsuits were filed with the U.S. District Court for the Northern District of Illinois (the “Illinois Court”) against PPC and other defendants by and on behalf of direct and indirect purchasers of broiler chickens alleging violations of antitrust and unfair competition laws and styled as In re Broiler Chicken Antitrust Litigation, Case No. 1:16-cv-08637 (the “Broiler Antitrust Litigation”). The complaints seek, among other relief, treble damages for an alleged conspiracy among defendants to reduce output and increase prices of broiler chickens from the period of January 2008 to the present. PPC has entered into agreements to settle all claims made by the three certified classes for an aggregate total of $195.5 million, each of which has received final approval from the Illinois Court. PPC continues to defend itself against the direct-action plaintiffs as well as parties that have opted out of the class settlements (collectively, the “Broiler Opt Outs”). PPC will seek reasonable settlements where they are available. To date, PPC has accrued an expense of $537.4 million to cover settlements with various Broiler Opt Outs. PPC recognized these settlements with various Broiler Opt Outs. JBS USA recognized these settlement expenses within general and administrative expense in the Consolidated statement of income.

Between August 30, 2019 and October 16, 2019, a series of purported class action lawsuits were filed in the U.S. District Court for the District of Maryland (the “Maryland Court”) against PPC and a number of other chicken producers, as well as Webber, Meng, Sahl & Company and Agri Stats, styled as Jien, et al. v. Perdue Farms, Inc., et al., No. 19-cv-02521. The plaintiffs are a putative class of poultry processing plant production and maintenance workers (the “Poultry Workers Class”) and allege that the defendants conspired to fix and depress the compensation paid to Poultry Workers Class in violation of the Sherman Antitrust Act. PPC entered into an agreement to settle all claims made by the Poultry Workers Class for $29.0 million, though the agreement is still subject to final approval by the Maryland Court. PPC recognizes these settlement expenses within selling, general and administrative expense in the Consolidated statement of income.

 

24

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

On January 27, 2017, a purported class action on behalf of broiler chicken farmers was brought against PPC and other chicken producers in the U.S. District Court for the Eastern District of Oklahoma (the “Oklahoma Court”) alleging, among other things, a conspiracy to reduce competition for grower services and depress the price paid to growers. The complaint was consolidated with several subsequently filed consolidated amended class action complaints and styled as In re Broiler Chicken Grower Litigation, Case No. CIV-17-033. PPC continues to litigate against the putative class plaintiffs.

On October 20, 2016, Patrick Hogan, acting on behalf of himself and a putative class of certain PPC stockholders, filed a class action complaint in the U.S. District Court for the District of Colorado (the “Colorado Court”) against PPC and its named executive officers styled as Hogan v. Pilgrim’s Pride Corporation, et al., No. 16-CV-02611 (the “Hogan Litigation”). The complaint alleges, among other things, that PPC’s Securities and Exchange Commission (“SEC”) filings contained statements that were rendered materially false and misleading. PPC continues to litigate against the putative class plaintiffs.

US state matters

From February 21, 2017 through May 4, 2021, the Attorneys General for multiple U.S. states have issued civil investigative demands (“CIDs”). The CIDs request, among other things, data and information related to the acquisition and processing of broiler chickens and the sale of chicken products. PPC is cooperating with the Attorneys General in these states in producing documents pursuant to the CIDs.

On September 1, 2020, February 22, 2021, and October 28, 2021, the Attorneys General in New Mexico (State of New Mexico v. Koch Foods, et al., D-101-CV-2020-01891), Alaska (State of Alaska v. Agri Stats, Inc., et al., 3AN-21-04632), and Washington (State of Washington v. Tyson Foods Inc., et al., 21-2-14174-5), respectively, filed complaints against PPC and others based on allegations similar to those asserted in the Broiler Antitrust Litigation. PPC will seek reasonable settlements where they are available. To date PPC has recognized $17.2 million to cover settlements with these states in general and administrative expenses in the Consolidated statement of income. The State of Washington claim was paid in the second quarter of 2023, leaving an accrual of $6.2 million as of March 31, 2024 for remaining state claims.

US federal matters

On February 9, 2022, PPC learned that the DOJ opened a civil investigation into human resources antitrust matters, and on October 6, 2022, PPC learned that the DOJ opened a civil investigation into grower contracts and payment practices and on October 2, 2023, received a CID requesting information from PPC. PPC is cooperating with the DOJ in its investigations and CID. The DOJ has informed PPC that it is likely to file a civil complaint pursuant to at least one of these investigations.

Tax claims and proceedings

During 2014 and 2015, the Mexican Tax Administration Service (“SAT”) opened a review of PPC Mexico with regard to tax years 2009 and 2010. In both instances, the SAT claims that controlled company status did not exist for certain subsidiaries because PPC Mexico did not own 50% of the shares in voting rights of Incubadora Hidalgo, S. de R.L de C.V. and Comercializadora de Carnes de México S. de R.L de C.V. (both in 2009) and Pilgrim’s Pride, S. de R.L. de C.V. (in 2010). PPC Mexico appealed the opinion, and on January 31, 2023, the appeal as to tax year 2009 was dismissed by the Mexico Supreme Court. Accordingly, PPC paid $25.9 million for tax year 2009. The opinion for tax year 2010 is still under appeal. Accordingly, PPC has an accrual of $17.6 million as of March 31, 2024 with regard to the tax year 2010.

On May 12, 2022, the SAT issued tax assessments against Pilgrim’s Pride, S. de R.L. de C.V. and Provemex Holdings, LLC in connection with PPC’s acquisition of Tyson de México. Following the acquisition, PPC re-domiciled Provemex Holdings, LLC from the US to Mexico. The tax authorities claim that Provemex Holdings, LLC was a Mexican entity at the time of the acquisition and, as a result, was obligated to pay taxes on the sale. The Mexican subsidiaries of PPC filed a petition to nullify these assessments which is still pending. Amounts under appeal are approximately $298.2 million for each of the two tax assessments. No expenses have been recorded for these amounts at this time.

 

25

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

19 Equity

a. Share capital: Share capital on March 31, 2024 and December 31, 2023 was US$13,177,841, represented by 2,218,116,370 common shares, having no nominal value and there were no changes in the three-month period ended March 31, 2024.

b. Profit reserve:

b1. Treasury shares: Treasury shares include shares repurchased by the Group. As of March 31, 2024, the Group had no balance in treasury shares.

c. Non-controlling interest: Material non-controlling interest as of March 31, 2024 consisted of the 17.5% (17.5% as of December 31, 2023), of PPC common stock not owned by JBS USA. JBS USA’s voting rights in PPC are limited to 82.5% as of March 31, 2024 (82.5% as of December 31, 2023) of the total. The profit allocated to the PPC non-controlling interest was US$31,066 and US$4,531 for the three-month period ended March 31, 2024 and 2023, respectively. The accumulated non-controlling interest in PPC was US$700,719 as of March 31, 2024 (US$728,551 as of December 31, 2023). For the three-month period ended March 31, 2024, purchase of treasury stock by PPC was nil (nil for the three-month period ended March 31, 2023). Below are the PPC total net sales, net income, cash provided by operations, total assets and total liabilities for the periods indicated.

	Three-month period ended March 31,
	2024		2023
Net Revenue		4,361,934		4,165,628
Net Income		174,421		5,187
Net cash provided by operating activities		271,027		(161,704	)

	March 31, 2024		December 31, 2023
Total assets		9,768,340		9,810,361
Total liabilities		6,273,962		6,465,784

20 Net revenue

	Three-month period ended March 31,
	2024		2023
Domestic sales		13,472,484		12,819,945
Export sales		4,526,228		3,867,298
NET REVENUE		17,998,712		16,687,243

 

26

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

20.1 Contract balances

Customer contract liabilities relate to payments received in advance of satisfying the performance obligation under the contract. Moreover, a contract liability is recognized when the Group has an obligation to transfer products to a customer from whom the consideration has already been received. The recognition of the contractual liability occurs at the time when the consideration is received and settled. The Group recognizes revenue upon fulfilling the related performance obligation. Contract liabilities are presented as advances from customers in the statement of financial position.

The following table provides information about trade accounts receivable and contract liabilities from contracts with customers:

	Note	March 31, 2024			December 31, 2023
Trade accounts receivable	4		3,338,473			3,390,856
Contract liabilities			(184,301	)		(324,598	)
Total customer contract revenue			3,154,172			3,066,258

21 Net finance expense

	2024			2023
Exchange rate variation		77,887			53,938
Fair value adjustments on derivatives		(76,094	)		(14,728	)
Interest expense (1)		(419,717	)		(395,145	)
Interest income (2)		90,337			67,625
Bank fees and others		(21,158	)		(10,865	)
		(348,745	)		(299,175	)
Finance income		168,224			121,563
Finance expense		(516,969	)		(420,738	)
		(348,745	)		(299,175	)

⁽¹⁾ For the three-month period ended March 31, 2024, the amount of US$300,708 (US$280,654 for the three-month period ended March 31, 2023) refers to interest expenses from loans and financings.

⁽²⁾ For the three-month period ended March 31, 2024, the amount of US$27,775 (US$17,464 for the three-month period ended March 31, 2023) refers to interest income from short-term investments.

22 Earnings (loss) per share

Basic and diluted: There was no change in the assumptions for calculating earnings per share - basic in relation to the financial statements for the year ended December 31,

2023.

	2024		2023
Net income attributable to Company shareholders		332,327		(279,637	)
Weighted average common shares		2,218,116		2,218,116
Weighted average - common shares outstanding		2,218,116		2,218,116
Basic and diluted earnings (loss) per share - (US$)		0.15		(0.13	)

 

27

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

23 Operating segments

The Group’s Management has defined operating segments based on the reports that are used to make strategic decisions, analyzed by the Chief Operating Decision Maker (CODM) - our Chief Executive Officer (CEO), there are seven reportable segments: Brazil, Seara, Beef North America, Pork USA, Pilgrim’s Pride, Australia and Others. The segment operating profit or loss is evaluated by the CODM, based on Adjusted EBITDA.

Adjusted EBITDA consists of all the items of profit and loss that compose the Group’s profit before taxes, applying the same accounting policies as described in these unaudited condensed financial statements, except for the following adjustments as further described below: exclusion of share of profit of equity accounted investees, net of tax; exclusion of financial income and financial expenses; exclusion of depreciation and amortization expenses; exclusion of expenses with antitrust agreements described in note 19; exclusion of donations and social programs expenses; and exclusion of restructuring and exclusion of certain other operating income (expense), net.

Brazil: this segment includes all the operating activities from the Group, mainly represented by slaughter facilities, cold storage and meat processing, fat, feed and production of beef by-products such as leather, collagen and other products produced in Brazil. Revenues are generated from the sale of products predominantly to restaurant chains, food processing companies, distributors, supermarket chains, wholesale supermarket and other significant food chains.

Seara: this segment includes all the operating activities of Seara and its subsidiaries, mainly represented by chicken and pork processing, production and commercialization of food products and value-added products. Revenues are generated from the sale of products predominantly to restaurant chains, food processing companies, distributors, supermarket chains, wholesale supermarket and other significant food chains.

Beef North America: this segment includes JBS USA beef processing operations in North America and the plant-based businesses in Europe. Beef also sells by-products to the variety meat, feed processing, fertilizer, automotive and pet food industries and also produces value-added meat products including toppings for pizzas. Finally, Sampco LLC imports processed meats and other foods such as canned fish, fruits and vegetables to the US and Vivera produces and sells plant-based protein products in Europe.

Pork USA: this segment includes JBS USA’s pork operations, including Swift Prepared Foods. Revenues are generated from the sale of products predominantly to retailers of fresh pork including trimmed cuts such as loins, roasts, chops, butts, picnics and ribs. Other pork products, including hams, bellies and trimmings, are sold predominantly to further processors who, in turn, manufacture bacon, sausage, and deli and luncheon meats. In addition, revenues are generated from the sale of case ready products, including the recently acquired TriOak business. As a complement to our pork processing business, we also conduct business through our hog production operations, including four hog farms and five feed mills, from which, JBS Lux will source live hogs for its pork processing operations.

Pilgrim’s Pride: this segment includes PPC’s operations, including Moy Park, Tulip and Pilgrim’s Consumer Foods as well, mainly represented by chicken processing, production and commercialization of food products and prepared foods in the United States of America, Mexico, United Kingdom and France. The fresh chicken products consist of refrigerated (non-frozen) whole or cut-up chicken, either pre-marinated or non-marinated, and pre-packaged chicken in various combinations of freshly refrigerated, whole chickens and chicken parts. The prepared chicken products include portion-controlled breast fillets, tenderloins and strips, delicatessen products, salads, formed nuggets and patties and bone-in chicken parts. These products are sold either refrigerated or frozen and may be fully cooked, partially cooked or raw. In addition, these products are breaded or non-breaded and either pre-marinated or non-marinated. The segment also generates revenue from the sale of prepared pork products through PPL, a subsidiary acquired by PPC in October 2019. The segment includes PPC’s PFM subsidiary, acquired in September 2021, and generates revenues from branded and private label meats, meat snacks, food-to-go products, and ethnic chilled and frozen ready meals.

 

28

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

Australia: Our Australia segment includes our fresh, frozen, value-added and branded beef, lamb, pork and fish products in Australia and New Zealand. The majority of our beef revenues from our operations in Australia are generated from the sale of fresh beef products (including fresh and frozen chuck cuts, rib cuts, loin cuts, round cuts, thin meats, ground beef, offal and other products). We also sell value-added and branded beef products (including frozen cooked and pre-cooked beef, corned cooked beef, beef cubes and consumer-ready products, such as hamburgers and sausages). We also operate lamb, pork, and fish, processing facilities in Australia and New Zealand, including the recently acquired Huon and Rivalea businesses. JBS Australia also generates revenues through their cattle hoteling business. We sell these products in the countries where we operate our facilities, which we classify as domestic sales, and elsewhere, which we classify as export sales.

Others: includes certain operations not directly attributable to the primary segments, such as corporate expenses, international leather operations and other operations in Europe.

There are no revenues arising out of transactions with any single customer that represents 5% or more of the total revenues.

The Group manages its loans and financing and income taxes at the corporate level and not by segment.

The information by operational segment are as follows:

	2024
	Brazil		Seara		Beef North America			Pork USA		Pilgrim’s Pride		Australia		Others		Total reportable segments		Elimination (*)			Total
Net revenue		2,873,896		2,083,097		5,581,099			1,910,351		4,358,111		1,446,364		164,638		18,417,556		(418,844	)		17,998,712
Adjusted EBITDA(1)		129,885		240,658		(9,812	)		313,296		500,647		123,968		14		1,298,656		(679	)		1,297,977

	2023
	Brazil		Seara		Beef North America		Pork USA		Pilgrim’s Pride		Australia			Others			Total reportable segments		Elimination (*)			Total
Net revenue		2,348,510		1,988,515		5,266,389		1,808,150		4,162,125		1,394,705			244,559			17,212,953		(525,709	)		16,687,244
Adjusted EBITDA(1)		57,092		28,290		22,300		44,600		268,700		(3,400	)		(734	)		416,848		(580	)		416,268

^(*) Includes intercompany and intersegment transactions.

⁽¹⁾ The Adjusted EBITDA is reconciled with the consolidated operating profit, as follows below:

	2024		2023
Operating profit		722,926		(117,276	)
Depreciation and amortization		544,506		499,138
Antitrust agreements(1)		4,692		13,700
Donations and social programs(2)		9,795		2,731
Impairment of assets		—		20,827
Restructuring(3)		16,017		10,206
Other operating income (expense), net(4)		41		(13,058	)
Total Adjusted EBITDA		1,297,977		416,268
Reversal of elimination		679		580
Total Adjusted EBITDA for reportable segments		1,298,656		416,848

⁽¹⁾ Refers to the Agreements entered by JBS USA and its subsidiaries as described in Note 18 – Provisions for legal proceedings.

⁽²⁾ Refers to the donations, as described in Note 24 – Expenses by nature.

⁽³⁾ Refers to the project implementation of multiple restructuring initiatives mainly in the indirect subsidiary Pilgrim’s Pride Corporation (PPC).

⁽⁴⁾ Refers to several adjustments basically in JBS USA’s jurisdiction such as third-party advisory expenses related to acquisitions, marketing of social programs, insurance recovery, among others.

 

29

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

Below is net revenue and total assets based on geography, presented for supplemental information.

	2024
	North and Central America (2)		South America		Australia		Europe		Others		Total reportable segments		Intercompany elimination (1)			Total
Net revenue		10,568,490		5,022,690		1,316,695		1,463,041		81,009		18,451,925		(453,213	)		17,998,712
Total assets		19,285,425		16,548,046		3,764,222		5,294,969		2,091,759		46,984,421		(6,098,120	)		40,886,301

	2023
	North and Central America (2)		South America		Australia		Europe		Others		Total reportable segments		Intercompany elimination (1)			Total
Net revenue		9,867,473		3,995,511		1,394,705		1,429,812		60,794		16,748,295		(61,051	)		16,687,244
Total assets		18,715,608		16,842,979		3,587,066		5,048,453		1,990,060		46,184,166		(5,610,185	)		40,573,981

⁽¹⁾ Includes intercompany and intersegment transactions.

⁽²⁾ Including the holdings located in Europe that are part of the North American operation.

24 Expenses by nature

Expenses by nature are disclosed as follows:

	2024			2023
Cost of sales
Cost of inventories, raw materials and production inputs		(13,136,414	)		(12,996,665	)
Salaries and benefits		(2,023,083	)		(1,789,839	)
Depreciation and amortization		(480,905	)		(434,957	)
		(15,640,402	)		(15,221,461	)
Selling
Freight and selling expenses		(917,491	)		(944,268	)
Salaries and benefits		(79,599	)		(69,293	)
Depreciation and amortization		(13,697	)		(16,633	)
Advertising and marketing		(76,637	)		(76,255	)
Net impairment losses (recovery)		(2,441	)		5,372
Commissions		(15,256	)		(10,711	)
		(1,105,121	)		(1,111,788	)
General and administrative
Salaries and benefits		(307,946	)		(280,913	)
Fees, services held and general expenses		(156,626	)		(169,260	)
Depreciation and amortization		(49,902	)		(47,549	)
DOJ and Antitrust agreements		(4,692	)		(13,700	)
Donations and social programs (1)		(9,795	)		(2,731	)
		(528,961	)		(514,153	)

⁽¹⁾ Refers to donations made to Instituto J&F regarding improvements on school’s building, the social program “Fazer o Bem Faz Bem” created by the Company to support actions for social transformation where the Company is present and donations to Fundo JBS Pela Amazônia.

For the three-month period ended March 31, 2024, the Company incurred expenses with internal research and development, in the amount of US$7,291 (US$8,263 for the Three-month period ended March 31, 2023).

For the three-month period ended March 31, 2024 and 2023, other income (expenses) includes gain (losses) of sale of assets, insurance recovery, asset impairment expenses, restructuring expenses, among others.

 

30

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

25 Risk management and financial instruments

Financial instruments:

Financial instruments are recognized in the unaudited condensed consolidated financial statements as follows:

	Note	March 31, 2024			December 31, 2023
Assets
Fair value through profit or loss (1)
Financial investments	3		1,968,416			2,642,258
National treasury bills	3		197,608			210,716
Derivative assets			94,236			169,736
Amortized cost (2)
Cash at banks	3		1,220,044			1,830,814
Margin cash	3		81,064			18,191
Trade accounts receivable	4		3,338,473			3,390,856
Related party receivables	8		116,709			118,554
Total			7,016,550			8,381,125
Liabilities
Amortized cost
Loans and financing	15		(19,333,012	)		(19,999,137	)
Trade accounts payable and supply chain finance	14		(5,539,624	)		(6,205,119	)
Lease			(1,823,878	)		(1,841,227	)
Other financial liabilities (3)			(101,906	)		(104,043	)
Fair value through profit or loss
Derivative liabilities			(91,558	)		(144,251	)
Total			(26,889,978	)		(28,293,777	)

⁽¹⁾ CDBs are updated at the contractual rate but have a short-term and the counterparties are financial institutions, and their carrying amount is approximate to fair value; (ii) national treasury bill are measured at fair value.

⁽²⁾ Loans and receivables are classified as amortized cost; (ii) the trade accounts receivable are short-term and net of expected losses.

⁽³⁾ Balances refer to commitments with third parties for investment.

Fair value of assets and liabilities through profit or loss: The Group determine fair value measurements in accordance with the hierarchical levels that reflect the significance of the inputs used in the measurement, with the exception of those maturing in the short term, equity instruments without an active market and contracts with discretionary characteristics that the fair value cannot be measured reliably, according to the following levels:

Level 1 - Quoted prices in active markets (unadjusted) for identical assets or liabilities;

Level 2 - Inputs other than Level 1, in which prices are quoted for similar assets and liabilities, either directly by obtaining prices in active markets or indirectly through valuation techniques that use data from active markets;

Level 3 - Inputs used for fair value calculations which are not derived from an active market. The Group do not have any financial instruments that utilize significant level 3 inputs.

	March 31, 2024						December 31, 2023
	Level 1		Level 2		Total		Level 1		Level 2		Total
Financial assets
Financial investments		—		1,968,416		1,968,416		206,650		2,435,608		2,642,258
National treasury bills		197,608		—		197,608		210,716		—		210,716
Derivative assets		—		94,236		94,236		—		169,736		169,736
Financial liabilities
Derivative liabilities		—		91,558		91,558		—		144,251		144,251

 

31

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

Fair value of assets and liabilities carried at amortized cost: The fair value of the Notes, are estimated using the closing sale price of these securities informed by a financial newswire on March 31, 2024 and December 31, 2023, considering there is an active market for these financial instruments. The book value of the remaining fixed-rate loans approximates fair value since the interest rate market, the Group’s credit quality, and other market factors have not significantly changed since entering into the loans. The book value of variable-rate loans and financings approximates fair value given the interest rates adjust for changes in market conditions and the quality of the Group’s credit rating has not substantially changed. For all other financial assets and liabilities, book value approximates fair value due to the short duration of the instruments. The following details the estimated fair value of the notes:

	March 31, 2024							December 31, 2023
Description	Principal		Price (% of the Principal)			Fair value		Principal		Price (% of the Principal)			Fair value
Notes 2.50% JBS Lux 2027		1,000,000		92.25	%		922,450		1,000,000		92.10	%		920,960
Notes 5.13% JBS Lux 2028		899,740		98.51	%		886,289		900,000		99.66	%		896,931
Notes 3.00% JBS Lux 2029		600,000		88.62	%		531,726		600,000		88.24	%		529,440
Notes 6.5% JBS Lux 2029		77,973		101.08	%		78,818		77,973		99.27	%		77,406
Notes 5.5% JBS Lux 2030		1,249,685		98.65	%		1,232,764		1,250,000		98.55	%		1,231,875
Notes 3.75% JBS Lux 2031		493,000		86.83	%		428,047		500,000		86.45	%		432,250
Notes 3.00% JBS Lux 2032		1,000,000		81.61	%		816,070		1,000,000		81.66	%		816,560
Notes 3.625% JBS Lux 2032		969,100		85.59	%		829,414		1,000,000		85.60	%		856,030
Notes 5.75% JBS Lux 2033		2,049,668		98.63	%		2,021,547		2,050,000		99.35	%		2,036,736
Notes 6.75% JBS Lux 2034		1,600,000		105.12	%		1,681,968		1,600,000		105.27	%		1,684,368
Notes 4.375% JBS Lux 2052		900,000		72.81	%		655,254		900,000		74.36	%		669,204
Notes 6.50% JBS Lux 2052		1,548,000		99.05	%		1,533,217		1,550,000		100.71	%		1,560,989
Notes 7.25% JBS Lux 2053		900,000		107.28	%		965,520		900,000		109.34	%		984,060
Notes 4.25% PPC 2031		1,000,000		90.14	%		901,410		1,000,000		90.27	%		902,650
Notes 3.5% PPC 2032		900,000		84.96	%		764,658		900,000		84.47	%		760,203
Notes 6.25% PPC 2033		1,000,000		102.44	%		1,024,370		1,000,000		102.90	%		1,029,020
Notes 6.875% PPC 2034		500,001		106.82	%		534,086		499,999		108.05	%		540,230
		16,687,167					15,807,608		16,727,972					15,928,912

Risk management:

The Group during the regular course of its operations is exposed to a variety of financial risks that include the effects of changes in market prices, (including foreign exchange, interest rate risk and commodity price risk), credit risk and liquidity risk. Such risks are fully disclosed in the last annual financial statements. There were no changes in the nature of these risks in the current period.

Below are the risks and operations to which the Group is exposed and a sensitivity analysis for each type of risk, consisting in the presentation of the effects in the finance income (expense), net, when subjected to possible changes, of 25% to 50%, in the relevant variables for each risk. For each probable scenario, the Group utilizes the Value at Risk Methodology (VaR),for the confidence interval (C.I.) of 99% and a horizon of one day.

 

32

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

a. Interest rate risk

The quantitative data referring to the risk of exposure to the Group’s interest rates on March 31, 2024 and December 31, 2023, are in accordance with the Financial and Commodity Risk Management Policy of the Group and are representative of the exposure incurred during the period. The main exposure to financial risks as of March 31, 2024 and December 31, 2023 are shown below:

	March 31, 2024			December 31, 2023
Net exposure to the CDI rate:
CRA - Agribusiness Credit Receivable Certificates		(57,402	)		(60,676	)
Credit note - export		(2,715	)		(217,648	)
Rural - Credit note - Prefixed		(669	)		(1,208	)
Related party transactions		1,333			624
CDB-DI (Bank certificates of deposit)		1,336,519			943,526
Margin cash		112,579			31,566
Subtotal		1,389,645			696,184
Derivatives (Swap)		(1,414,454	)		(1,427,374	)
Total		(24,809	)		(731,190	)
Net exposure to the IPCA rate:
Treasury bills		—			27,716
CRA - Agribusiness Credit Receivable Certificates		(2,083,138	)		(2,101,681	)
Margin cash		61,244			51,751
Related party transactions		116,354			117,930
Subtotal		(1,905,540	)		(1,904,284	)
Derivatives (Swap)		1,379,753			1,423,667
Total		(525,787	)		(480,617	)
Assets exposure to the CPI rate:
Margin cash		49,471			49,144
Total		49,471			49,144
Liabilities exposure to the SOFR rate:
Prepayment		—			(280,971	)
Prepayment - exchange agreement		(2,838	)		(2,915	)
Total		(2,838	)		(283,886	)
Liabilities exposure to the TJLP rate:
Working Capital		49,471			(771	)
Total		49,471			(771	)

Sensitivity analysis as of March 31, 2024:

					Scenario (I) VaR 99% C.I. 1 day						Scenario (II) Interest rate variation - 50%						Scenario (III) Interest rate variation - 100%
Contracts exposure	Risk	Current scenario			Rate			Effect on income			Rate			Effect on income			Rate			Effect on income
CDI	Decrease		10.65	%		10.69	%		(10	)		15.98	%		(1,311	)		21.30	%		(2,622	)
									(10	)					(1,311	)					(2,622	)

						Scenario (I) VaR 99% C.I. 1 day						Scenario (II) Interest rate variation - 25%						Scenario (III) Interest rate variation - 50%
Contracts exposure	Risk		Current scenario			Rate			Effect on income			Rate			Effect on income			Rate			Effect on income
IPCA		Increase		4.50	%		4.51	%		(54	)		5.63	%		(5,777	)		6.75	%		(11,554	)
CPI		Decrease		3.20	%		3.19	%		(3	)		2.40	%		(399	)		1.60	%		(799	)
SOFR		Increase		5.34	%		5.34	%		—			6.68	%		(38	)		8.01	%		(77	)
										(57	)					(6,214	)					(12,430	)

 

33

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

			March 31, 2024									December 31, 2023
Instrument	Risk factor	Maturity	Notional	Fair value (Asset) - US$		Fair value (Liability) - US$			Fair value			Notional		Fair value (Asset) - US$		Fair value (Liability) - US$			Fair value
	CDI	2024	176,134	187,951		(188,516		)	(565		)	181,769		189,067		(189,571		)	(504		)
	IPCA	—	107,589		141,738		(110,891	)		30,846			111,031		142,472		(111,625	)		30,847
	IPCA	2027	77,459		92,950		(84,900	)		8,050			79,937		94,520		(85,402	)		9,118
	IPCA	2028	88,467		106,675		(99,430	)		7,245			91,298		108,777		(100,034	)		8,743
Swap	IPCA	2030	280,213		341,357		(326,374	)		14,983			289,179		350,639		(328,591	)		22,048
	IPCA	2031	278,793		323,136		(322,754	)		382			288,874		333,981		(326,029	)		7,952
	IPCA	2032	85,098		100,595		(105,050	)		(4,456	)		87,821		103,620		(105,459	)		(1,839	)
	IPCA	2036	18,241		22,445		(24,512	)		(2,068	)		18,824		23,487		(24,650	)		(1,163	)
	IPCA	2037	204,657		250,857		(262,918	)		(12,062	)		214,822		266,169		(267,639	)		(1,470	)
			1,316,651		1,567,704		(1,525,345	)		42,355			1,363,555		1,612,732		(1,539,000	)		73,732

b. Exchange rate risk

Below are presented the risks related to the most significant exchange rates fluctuation given the relevance of these currencies in the Group’s operations and the stress analysis scenarios and VaR to measure the total exposure as well as the cash flow risk with B3 and the Chicago Mercantile Exchange. The Group discloses these exposures considering the fluctuations of an exchange rate in particular towards the functional currency of each subsidiary.

	USD						EUR						GBP						MXN						AUD
	March 31, 2024			December 31, 2023			March 31, 2024			December 31, 2023			March 31, 2024			December 31, 2023			March 31, 2024			December 31, 2023			March 31, 2024			December 31, 2023
OPERATING
Cash and cash equivalents		1,251,586			1,570,813			51,232			68,154			16,347			20,102			357,408			271,503			—			42
Trade accounts receivable		926,401			579,651			141,307			147,839			58,672			49,743			136,190			134,113			449			241
Sales orders		1,018,925			916,595			105,509			73,564			181,685			217,509			—			—			—			—
Trade accounts payable		(144,686	)		(174,781	)		(85,244	)		(74,963	)		(14,436	)		(15,846	)		(321,529	)		(267,433	)		(190	)		(320	)
Purchase orders		(70,076	)		(56,710	)		(20,448	)		(18,012	)		—			—			—			—			—			—
Subtotal		2,982,150			2,835,568			192,356			196,582			242,268			271,508			172,069			138,183			259			(37	)
FINANCIAL
Margin cash		—			—			—			—			—			—			—			—			—			—
Advances to customers		(3,292	)		(111,368	)		(557	)		(12,621	)		(95	)		(511	)		—			—			—			—
Loans and financing		(63,741	)		(306,798	)		(1,143	)		(3,218	)		(13,908	)		—			—			—			—			—
Subtotal		(67,033	)		(418,166	)		(1,700	)		(15,839	)		(14,003	)		(511	)		—			—			—			—
Subtotal		2,915,117			2,417,402			190,656			180,743			228,265			270,997			172,069			138,183			259			(37	)
Total exposure		2,915,117			2,417,402			190,656			180,743			228,265			270,997			172,069			138,183			259			(37	)
DERIVATIVES
Future contracts		(80,599	)		(250,788	)		(158,441	)		(137,070	)		(43,840	)		(44,142	)		—			—			—			—
Deliverable Forwards (DF´s)		(857,989	)		(398,024	)		53,952			67,303			(12,785	)		(14,369	)		97			—			2,665			2,846
Non-Deliverable Forwards (NDF´s)		(1,822,085	)		(1,306,760	)		(1,285	)		5,071			(81,888	)		(97,124	)		—			—			—			—
Total derivatives		(2,760,673	)		(1,955,572	)		(105,774	)		(64,696	)		(138,513	)		(155,635	)		97			—			2,665			2,846
NET EXPOSURE		154,444			461,830			84,882			116,047			89,752			115,362			172,166			138,183			2,924			2,809
Net debt in foreign subsidiaries (1)		(15,031,910	)		(14,775,198	)		—			—			—			—			—			—			—			—

⁽¹⁾ The Group includes the net debt of foreign subsidiaries in the disclosure of economic hedging exposure. Although these debts do not generate foreign exchange gains or losses (since they are foreign debts and in the functional currency of each respective country), they are translated to Brazilian Real in the consolidation, impacting the equity as exchange variation of investment, influencing the consolidated debt of the Group, and consequently the leverage indicators.

 

34

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

b1 Sensitivity analysis and derivative financial instruments breakdown:

b1.1 US Dollar (amounts in thousands of US$):

		Current		Scenario (i) VaR 99% C.I. 1 day					Scenario (ii) Interest rate variation - 25%					Scenario (iii) Interest rate variation - 50%
Exposure of US$	Risk	exchange rate		Exchange rate		Effect on income			Exchange rate		Effect on income			Exchange rate		Effect on income
Operating	Appreciation		4.9962		4.9220		(44,669	)		3.7472		(752,044	)		2.4981		(1,504,088	)
Financial	Depreciation		4.9962		4.9220		(6,979	)		3.7472		(117,490	)		2.4981		(234,981	)
Derivatives	Depreciation		4.9962		4.9220		41,352			3.7472		696,192			2.4981		1,392,383

		Current		Scenario (i) VaR 99% C.I. 1 day					Scenario (ii) Interest rate variation - 25%					Scenario (iii) Interest rate variation - 50%
Exposure of US$	Risk	exchange rate		Exchange rate		Effect on equity			Exchange rate		Effect on equity			Exchange rate		Effect on equity
Net debt in foreign subsidiaries	Depreciation		4.9962		5.0704		(223,213	)		6.2453		(3,757,977	)		7.4943		(7,515,955	)

			March 31, 2024									December 31, 2023
Instrument	Risk factor	Nature	Quantity			Notional (US$)			Fair value			Quantity		Notional (US$)			Fair value
Future Contract	American dollar	Short		(5,290	)		(80,599	)		(1,827	)		52,199		(250,788	)		(2,078	)

			March 31, 2024									December 31, 2023
Instrument	Risk factor	Nature	Notional (USD)			Notional (US$)			Fair value			Notional (USD)			Notional (US$)			Fair value
Deliverable Forwards	American dollar	Short		(857,989	)		(857,989	)		341			(398,024	)		(398,024	)		29,150
Non-Deliverable Forwards	American dollar	Short		(1,822,085	)		(1,822,085	)		(15,780	)		(1,306,760	)		(1,306,760	)		13,975

b1.2 € - EURO (amounts in thousands of US$):

				Scenario (i) VaR 99% C.I. 1 day					Scenario (ii) Interest rate variation - 25%					Scenario (iii) Interest rate variation - 50%
Exposure of US$	Risk	Current exchange		Exchange rate		Effect on income			Exchange rate		Effect on income			Exchange rate		Effect on income
Operating	Appreciation		5.3979		5.3221		(2,724	)		4.0484		(48,509	)		2.6990		(97,018	)
Financial	Depreciation		5.3979		5.3221		131			4.0484		2,324			2.6990		4,649
Derivatives	Depreciation		5.3979		5.3221		1,498			4.0484		26,674			2.6990		53,349

			March 31, 2024								December 31, 2023
Instrument	Risk factor	Nature	Notional (EUR)			Notional (US$)			Fair value		Notional (EUR)			Notional (US$)		Fair value
Future Contract	Euro	Long		(2,171	)		(158,441	)		522		(1,157	)		5,071		513
Deliverable Forwards	Euro	Short		9,995			53,952			118		12,576			67,303		(1,885	)
Non-Deliverable Forwards	Euro	Long		(238	)		(1,285	)		5		947			5,071		(652	)

 

35

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

b1.3 £ - British Pound (amounts in thousands of US$):

				Scenario (i) VaR 99% C.I. 1 day					Scenario (ii) Interest rate variation - 25%					Scenario (iii) Interest rate variation - 50%
Exposure of US$	Risk	Current exchange		Exchange rate		Effect on income			Exchange rate		Effect on income			Exchange rate		Effect on income
Operating	Appreciation		6.3122		6.2206		(3,546	)		4.7342		(61,096	)		3.1561		(122,191	)
Financial	Depreciation		6.3122		6.2206		205			4.7134		3,531			3.1423		7,063
Derivatives	Depreciation		6.3122		6.2206		2,027			4.7342		34,931			3.1561		69,861

			March 31, 2024									December 31, 2023
Instrument	Risk factor	Nature	Notional (GBP)			Notional (US$)			Fair value			Notional (GBP)			Notional (US$)			Fair value
Deliverable Forwards	British pound	Short		(2,026	)		(12,785	)		15			(2,333	)		(14,369	)		202
Non-Deliverable Forwards	British pound	Short		(12,973	)		(81,888	)		(1,090	)		(15,771	)		(97,124	)		(579	)

b1.4 MXN - Mexican Peso (amounts in thousands of US$):

				Scenario (i) VaR 99% C.I. 1 day					Scenario (ii) Interest rate variation - 25%					Scenario (iii) Interest rate variation - 50%
Exposure of US$	Risk	Current exchange rate		Exchange rate		Effect on income			Exchange rate		Effect on income			Exchange rate		Effect on income
Operating	Appreciation		0.3008		0.2970		(2,181	)		0.2256		(43,393	)		0.1504		(86,785	)
Derivatives	Appreciation		0.3008		0.2970		(1	)		0.2256		(24	)		0.1504		(49	)

March 31, 2024

December 31, 2023

Instrument

Risk factor

Nature

Notional (MXN)

Notional (US$)

Fair value

Notional (MXN)

Notional (US$)

Fair value

Deliverable Forwards

Mexican peso

Short

322

97

—

—

—

—

b1.5 AUD - Australian Dollar (amounts in thousands of US$):

				Scenario (i) VaR 99% C.I. 1 day					Scenario (ii) Interest rate variation - 25%					Scenario (iii) Interest rate variation - 50%
Exposure of US$	Risk	Current exchange rate		Exchange rate		Effect on income			Exchange rate		Effect on income			Exchange rate		Effect on income
Operating	Appreciation		3.2600		3.2133		(4	)		2.4450		(65	)		1.6300		(131	)
Derivatives	Appreciation		3.2600		3.2133		(39	)		2.4450		(672	)		1.6300		(1,344	)

March 31, 2024

December 31, 2023

Instrument

Risk factor

Nature

Notional (AUD)

Notional (US$)

Fair value

Notional (AUD)

Notional (US$)

Fair value

Deliverable Forwards

Australian dollar

Short

817

2,665

6

865

2,846

(1

)

 

36

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

c. Commodity price risk

The Group operates globally (the entire livestock protein chain and related business) and during the regular course of its operations is exposed to price fluctuations in feeder cattle, live cattle, lean hogs, corn, soybeans, and energy, especially in the North American, Australian and Brazilian markets. Commodity markets are characterized by volatility arising from external factors including climate, supply levels, transportation costs, agricultural policies and storage costs, among others. The Risk Management Department is responsible for mapping the exposures to commodity prices of the Group and proposing strategies to the Risk Management Committee, in order to mitigate such exposures.

c1. Position balance in commodities (cattle) contracts of JBS S.A.:

Exposure in Commodities (Cattle)	March 31, 2024			December 31, 2023
DERIVATIVES
Future contracts		(15	)		(101	)
NET EXPOSURE		(15	)		(101	)

Sensitivity analysis as of March 31, 2024:

		Current		Scenario (i) VaR 99% C.I. 1 day					Scenario (ii) @ Variation - 25%					Scenario (ii) @ Variation - 50%
Exposure	Risk	price (USD per head)		Price		Effect on income			Price		Effect on income			Price		Effect on income
Derivatives	Appreciation		46		48		(1	)		58		(4	)		70		(8	)

Derivatives financial instruments breakdown:

			March 31, 2024								December 31, 2023
Instrument	Risk factor	Nature	Quantity			Notional			Fair value		Quantity			Notional			Fair value
Future Contracts	Commodities (Cattle)	Long		(1	)		(15	)		—		(6	)		(101	)		—

c2. Position balance in commodities (grain) derivatives financial instruments of Seara Alimentos:

EXPOSURE in Commodities (Grain)	March 31, 2024		December 31, 2023
OPERATING
Purchase orders		67,959		114,097
Subtotal		67,959		114,097
DERIVATIVES
Future contracts		49,326		—
Subtotal		49,326		—
NET EXPOSURE		117,285		114,097

Sensitivity analysis as of March 31, 2024:

		Scenario (i) VaR 99% C.I. 1 day						Scenario (ii) Price variation - 25%						Scenario (ii) Price variation - 50%
Exposure	Risk	Price (USD per tonne)			Effect on income			Price			Effect on income			Price			Effect on income
Operating	Depreciation		(1.95	)%		(1,336	)		(25	)%		(17,138	)		(50	)%		(34,276	)
Derivatives	Depreciation		(1.95	)%		(970	)		(25	)%		(12,439	)		(50	)%		(24,878	)

 

37

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

Derivatives financial instruments breakdown:

March 31, 2024

December 31, 2023

Instrument

Risk factor

Nature

Quantity

Notional

Fair value

Quantity

Notional

Fair value

Future contracts

Commodities (Grains)

Short

9,067

49,326

603

—

—

—

c3. Hedge accounting of Seara Alimentos:

The derivative financial instruments designated for the three-month period ended March 31, 2024, as hedge accounting, according to the Cash Flow method, to protect the operating results in relation to the price of commodities are:

Hedge accounting - Derivative instruments	Risk factor	Quantity		Notional		Fair value
Future contracts	Commodities		9,067		49,326		602

c3.1. Hedge accounting:

The Group applies hedge accounting for grain purchases by the subsidiary Seara Alimentos, aiming at bringing stability to the results. The designation of these instruments is based on the guidelines outlined in the Financial and Commodity Risk Management Policy defined by the Risk Management Committee and approved by the Board of Directors.

Financial instruments designated for hedge accounting were classified as cash flow hedge. The effective amount of the instrument’s gain or loss is recognized under “Other comprehensive income (expense)” and the ineffective amount under “Financial income (expense), net”, and the accumulated gains and losses are reclassified to profit and loss or to the balance sheet when the object is recognized, adjusting the item in which the hedged object was recorded.

In these hedge relationships, the main sources of ineffectiveness are the effect of the counterparties and the Group’s own credit risk on the fair value of the forward foreign exchange contracts, which is not reflected in the change in the fair value of the hedged cash flows attributable to the change in exchange rates; changes in commodities prices; and changes in the timing of the hedged transactions.

Below are the effects on the statement of income, after the adoption of hedge accounting:

Statements of income:	March 31, 2024			March 31, 2023
Cost of sales before hedge accounting adoption		(1,823,704	)		(1,926,368	)
Derivatives operating income (loss)		1,375			12,137
Currency		(11	)		10,128
Commodities		1,386			2,009
Cost of sales with hedge accounting		(1,822,329	)		(1,914,231	)
Financial income (expense), net excluding derivatives		(15,043	)		35,137
Derivatives financial income (expense), net		(27,666	)		(7,616	)
Currency		(2,895	)		—
Commodities		(7,857	)		(6,935	)
Interest		(16,914	)		(681	)
Financial income (expense), net		(42,709	)		27,521

 

38

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

Below are the effects on other comprehensive income (expense), after the adoption of hedge accounting:

Statements of other comprehensive income (expense):	March 31, 2024			March 31, 2023
Financial instruments designated as hedge accounting:		(31	)		(6,700	)
Currency		—			(170	)
Commodities		(31	)		(6,530	)
Gain on cash flow hedge		507			1,229
Deferred income tax on hedge accounting					(418	)
Total of other comprehensive income (expense)		507			811

Hedge cash flow movement	December 31, 2023			OCI			March 31, 2024
Hedge accounting operations at the parent company		(510	)		502			(8	)
(-) IR/CS		173			(171	)		2
Impact of Hedge Operations on Subsidiaries		(337	)		331			(6	)

Below are the effects on the statement of financial position, after the adoption of hedge accounting:

Statement of financial position:	March 31, 2024			December 31, 2023
Derivative (liabilities)/assets		603			—
Financial instruments designated as hedge accounting:
Commodities		603			—
Derivative (liabilities)/assets		(8,606	)		4,473
Financial instruments not designated as hedge accounting:
Exchange		(8,041	)		4,977
Interest		(565	)		(504	)
Other comprehensive income (expense)		(31	)		(550	)
Currency		—			39
Commodities		(31	)		(589	)
Inventories		347			6,577
Currency		(3	)		136
Commodities		350			6,441

 

39

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

Open amounts in statement of financial position of derivative assets and liabilities:

	March 31, 2024		December 31, 2023
Assets:
Not designated as hedge accounting		603		—
Interest		—		—
Current assets		603		4,977
Non-current assets		—		—
(Liabilities):
Designated as hedge accounting		727		750
Interest		727		750
Current liabilities		—		—
Not designated as hedge accounting		8,606		504
Commodities		8,041		—
Interest		565		504

c4. Position balance in commodities derivatives financial instruments of JBS USA:

Exposure in Commodities	March 31, 2024			December 31, 2023
OPERATIONAL
Firm contracts of cattle purchase		2,905,370			3,230,355
Subtotal		2,905,370			3,230,355
DERIVATIVES
Deliverable Forwards		(1,252,844	)		389,130
Subtotal		(1,252,844	)		389,130
NET EXPOSURE		1,652,526			3,619,485

Sensitivity analysis as of March 31, 2024:

		Scenario (i) VaR 99% I.C. 1 day						Scenario (ii) Price variation - 25%						Scenario (iii) Price variation - 50%
Exposure	Risk	Price (USD per head)			Effect on income			Price			Effect on income			Price			Effect on income
Operating	Depreciation		(1.93	)%		(56,475	)		(25.00	)%		(732,682	)		(50.00	)%		(1,465,363	)
Derivatives	Appreciation		(1.93	)%		24,353			(25.00	)%		315,945			(50.00	)%		631,889

 

40

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

Derivatives financial instruments breakdown:

			March 31, 2024									December 31, 2023
Instrument	Risk factor	Nature	Notional (USD)			Notional (R$)			Fair value			Notional (USD)		Notional (R$)		Fair value
Deliverable Forwards	Commodities (Cattle)	Short		(250,759	)		(1,252,844	)		(17,404	)		80,377		389,130		(1,982	)

d. Credit risk

The information about the exposure to weighted average loss rate, gross carrying amount, expected credit loss recognized in profit or loss and credit-impaired on financial assets were as follows:

	Weighted average loss rate			Gross carrying amount		Expected credit loss
March 31, 2024
Cash and cash equivalents		—			3,297,993		—
Margin cash		—			169,139		—
Trade accounts receivable		(2.54	)%		3,338,473		(84,749	)
Related party receivables		—			116,709		—
		—			6,922,314		(84,749	)

e. Liquidity risk

The table below shows the contractual obligation amounts from financial liabilities of the Group according to their maturities:

	March 31, 2024										December 31, 2023
	Less than 1 year		Between 1 and 3 years		Between 4 and 5 years		More than 5 years		Total		Less than 1 year			Between 1 and 3 years		Between 4 and 5 years		More than 5 years		Total
Trade accounts payable and supply chain finance		5,539,624		—		—		—		5,539,624		6,205,119			—		—		—		6,205,119
Loans and financing		763,446		20,230		1,099,929		17,449,408		19,333,013		891,570			171,228		1,212,538		17,723,802		19,999,138
Estimated interest on loans and financing (1)		1,251,713		873,248		1,770,972		7,105,114		11,001,047		1,362,896			1,052,488		1,910,116		7,390,262		11,715,762
Derivatives liabilities (assets)		91,558		—		—		—		91,558		144,251			—		—		—		144,251
Payments of leases		346,869		233,786		357,606		885,617		1,823,878		(2,796	)		293,444		442,272		1,108,307		1,841,227
Other liabilities		42,111		59,795		—		—		101,906		21,162			20,914		—		61,967		104,043

⁽¹⁾ Includes interest on all loans and financing outstanding. Payments are estimated for variable rate debt based on effective interest rates for the three-month period ended March 31, 2024 and for the year ended December 31, 2023. Payments in foreign currencies are estimated using the March 31, 2024 and December 31, 2023 exchange rates.

The Group has future commitment for purchase of grains and cattle whose balances for the three-month period ended March 31, 2024 is US$36,3 billion (December 31, 2023 is US$35,6 billion).

The Group has securities pledged as collateral for derivative transactions with the commodities and futures whose balance for the three-month period ended March 31, 2024 is US$34,426 (US$13,575 at December 31, 2023). This guarantee exceeds the amount of the collateral.

The indirect subsidiary JBS USA and its subsidiaries, has securities pledged as collateral for derivative transactions with the commodities and futures whose balance for the three-month period at March 31, 2024 is US$122,866 (US$67,335 at December 31, 2023). This guarantee exceeds the amount of the collateral.

 

41

Notes to unaudited condensed consolidated interim financial information
for the three-month period ended March 31, 2024 and 2023 (Expressed in thousands of United States dollar)

Also, the direct subsidiary Seara Alimentos has securities pledged as collateral for derivative transactions with the commodities and futures whose balance for the three-month period ended March 31, 2024 is US$17,258 (US$51,751 in December 31, 2023). This guarantee exceeds the amount of the collateral.

A future breach of covenant may require the Group to repay the loan earlier than indicated in the above table.

The interest payments on variable interest rate loans and bond issues in the table above reflect market forward interest rates at the reporting date and these amounts may change as market interest rates change. The future cash flows on derivative instruments may be different from the amount in the above table as interest rates and exchange rates or the relevant conditions underlying the derivative change. Except for these financial liabilities, it is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.

e. Risks linked to climate change and the sustainability strategy

In view the Group’s operations, there is inherent exposure to risks related to climate change. Certain Group assets, which are mainly biological assets that can be measured at fair value, may be impacted by climate change and are considered in the preparation process of these financial statements.

For the three-month period ended March 31, 2024, Management considered as main risk the data and assumptions highlighted below:

(i) possible impacts on the determination of fair value in biological assets due to the effects of climate change, such as temperature rise, scarcity of water resources, may impact some assumptions used in accounting estimates related to the Group’s biological assets, as follows:

● losses of biological assets due to heat waves and droughts which occur with greater frequency and intensity;

● reduction in the expected growth of our biological assets due to natural disasters, fires, pandemics or changes in rainfall patterns; and

● interruption in the production chain due to adverse weather events, causing power outages, fuel shortages, disruption of transportation channels, among other things.

(ii) structural changes and their impacts on the business, such as:

● regulatory and legal: regulation and legislation arising from Brazilian and/or international authorities that encourage the transition to a low-carbon economy and/or with greater biodiversity and that increase the risk of litigation and/or commercial restrictions related to the alleged contribution, even if indirect, for the intensification of climate change;

● reputational: related to customers’ perceptions and the society in general regarding the positive or negative contribution of an organization to a low carbon economy.

26 Subsequent events

a. In reference to the floods that occurred in Rio Grande do Sul, the Company is monitoring the evolution, development and potential impacts on its operations. Our poultry and swine units in Rio Grande do Sul were not significantly impacted by the rains and are operating. The initial impacts suffered in these units were a consequence of the flood and logistical disruption in the region.

The Company is providing support to the families and our employees affected by the tragedy through the donation of food, emergency items and the payment of the 13th salary to employees in Rio Grande do Sul.

b. On May 13, 2024, the Company announced settlements for early redemption of CRA debts due in April of 2028, December of 2031 and December of 2036 and the extraordinary amortization of the series due in November of 2027, totaling the approximate amount of $380,000 to be settled in May of 2024.

* * * * *

 

42