UPDATE 2-Brazil's JBS says Seara unit improving, US beef division facing challenges

(Adds share reaction, Goldman's opinion)

By Ana Mano

SAO PAULO, March 27 (Reuters) - Brazilian meat-packer JBS SA expects margins of its Seara processed foods maker in Brazil to reach double digits in the first weeks of 2024, citing operational improvements designed to shore up the unit, executives said on Wednesday.

JBS, which released financial results on Tuesday that were below analysts expectations, said Seara and the U.S. beef division presented the biggest challenges for the company last year, when it lost about 1 billion reais ($200.57 million) compared with a 15.457 billion real annual profit ($3.10 billion) in 2022.

JBS shares dropped about 3% in early trading after the results, which were also negatively affected by global poultry oversupplies and high grain prices, especially in the first half of 2023.

"JBS reported what we view as good (Q4) results, tough high market expectations could drive a negative price reaction," Goldman Sachs told clients.

Goldman said JBS' fourth-quarter EBITDA was in line with its expectations, even as the U.S. beef division "printed negative profitability."

The weakness of the U.S. beef unit, the company's largest by sales, was offset by the results of Pilgrim's Pride and the strength of operations in Australia and the beef business in Brazil, Goldman noted.

"We remain constructive on the forward, and expect momentum to be supported by PPC, Australia, (the) U.S. pork (division) and Seara," Goldman analysts wrote.

In the United States, a lack of cattle supplies made the company's earnings before interest, tax, depreciation and amortization (EBITDA) negative in the fourth quarter of 2023 for that division.

JBS managers, who addressed analysts in a conference call to discuss results, said the U.S. beef segment will continue to face headwinds this year.

Regarding the Seara division, CEO Gilberto Tomazoni said it is poised to report double-digit margins as early as the first quarter as the company identified issues and is executing a plan to make industrial processes more efficient. ($1 = 4.9859 reais) (Reporting by Ana Mano; Editing by Andrew Heavens and Angus MacSwan)