It should work to set the output format to jpg. See 
https://documentation.magnolia-cms.com/display/DOCS45/Imaging+module#Imagingmodule-Inputandoutputformat.
 If it's not working then I would double check that the variation is indeed 
being applied to the image. In Magnolia 5.4 you can browse the imaging 
workspace very easily to verify it. 

HTH
Rich

-- 
Context is everything: 
http://forum.magnolia-cms.com/forum/thread.html?threadId=dffc4f1a-922c-40e3-9b8e-ff616ef90759


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