JBS reported financial results for the 2nd quarter of 2009. Net revenue increased 29.8% compared to the prior year quarter. Consolidated EBITDA increased 32.1% year-over-year and 81.5% compared to the previous quarter. The company gained market share in Brazil and expanded production capacity. JBS also applied to list shares on the IPO and BDR programs to access international capital markets for financing growth. Overall results showed improved profitability and margins across business units.
5. OUR STRATEGY
South America Fresh Products
Debt for South America
North America
Cooked Products
Working Minced Products
Australia Cured Products
Capital North America
European Union Ready to Eat
Products
Asia Case Ready
Equity to Australia
Russia Products
Finance Africa
Global Brands
Growth European Union
Middle East
Marketing
Investments
- High liquidity level. -
- Integrate the sales and
Integrate the sales and
- Access to raw material -
- High technology investments to
High technology investments to
- Debt equalized to cash distribution platform to serve
distribution platform to serve
supply globally. produce value added products.
produce value added products.
generation. efficiently, local and external
efficiently, local and external
- Leader in countries with -
- Increase value added products
Increase value added products
- Strong cash position. markets, small retailers, food
markets, small retailers, food portfolio.
portfolio.
- Access to international surplus production. processors, restaurants, and
processors, restaurants, and -
- Customized products to each
Customized products to each
- Scale. other customers globally.
other customers globally.
capital markets to finance market.
market.
- Leader in exports globally. -
- Sales force distributed over the
Sales force distributed over the
growth. -
- Convenience to consumers day
Convenience to consumers day
- Access to all meat markets. globe.
globe.
- Development of long term to day.
to day.
-
- Efficiency on selling the best
Efficiency on selling the best
financing plan. - Exchange of best practices. -
- Brand and Quality recognition
Brand and Quality recognition
product, to the best market,
product, to the best market,
- Use of export platform to - Efficiency cost gains. with the best price.
and leadership.
and leadership.
with the best price. - Marketing investments to be
grow. - Cost reduction - Cost reduction on sales and - Marketing investments to be
- Cost reduction on sales and present in consumer minds.
opportunities. transport. present in consumer minds.
- Hands-on working capital transport. - Margin improvements.
- Margin improvements. - Margin improvements. - Margin improvements.
management. - Margin improvements.
4
6. OUR STRATEGY
50%
12%
8%
4%
Consolidated
Cost Reduction, Average
Financial Experienced Risk
Productivity, EBITDA
Structure Management Management
Process Optimization Margin
Foundation 5
7. Global Market
Largest beef producers Largest beef consumers
Others Others
United States United States
31% 31%
21% 22%
Brazil EU-27
India 15% 15%
4% Mexico
4%
Argentina
Argentina
5% EU-27 Brazil
China 5% China
14% 13%
10% 10%
Largest beef exporters Largest beef importers
Others
25% Brazil United States
23% Others 19%
38%
Russia
16%
New Zealand
Australia
7%
19%
Canada
7% India South Korea
Japan
United States 4% EU-27
8% Mexico 10%
11% 8%
5%
6
Source: USDA 2009
8. Meats Consumption Per capita (including beef, pork
and poultry)
Recommended
140
consumption
120
121 80Kg/capita
100
88
Per capita consumption
80 82
80
(kg/capita)
69
62
60
48
42
40
20
0
S
d
7
o
ia
l
ld
na
i
ic
pe
U
az
-2
ss
or
hi
ex
EU
Ru
Br
lo
W
C
M
ve
De
Source: FAO
7
9. World Population Growth and Beef Consumption
(1960 – 2050)
140
10000
Population growth, a beef
consumption driver. 120
8000
Consumption (million tons)
100
Population (million)
6000 80
%
R 2,0
CAG 60
4000
40
2000
20
0 0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010* 2015* 2020* 2025* 2030* 2035* 2040* 2045* 2050*
Population - Developed countries Population - Developing countries Beef Consumption**
Source: UN (United Nations) and USDA
*UN Estimates
**Beef consumption trend considering CAGR of 2.0% (from 1960 to 2008)
8
11. USA Beef Exports
USA beef exports (1000 tons) USA exports destination in Tons
USA beef exports (1000 tons) USA exports destination in Tons
1400
Países Baixos
1200 1,145 Hong Kong
1%
1,022 Egito 2%
1000
1%
800 Outros
652 China 7% México
600 520 4% Japão
33%
11%
400 317 309 Vietnam
209 Canadá
200 13% Coréia do Sul
17%
11%
0
2003 2004 2005 2006 2007 2008 2009
Jan - May
Source: USDA Source: USDA – 2Q09
10
16. Highlights
• Net profit of R$172.7 million in the quarter.
• Net revenue increased 29.8% from R$7,129.5 million in 2Q08 to R$9,255.0 million in 2Q09.
• Consolidated EBITDA increased 32.1% in 2Q09 when compared with the same period last year,
from R$290.8 to R$384.0 million. When compared with the 1Q09, EBITDA increased 81.5%.
• “Market share” gain in JBS Brazil, from 14.9% in 1Q09 to 17.6% in 2Q09.
• Initiated the strategy to build a sustainable, direct and efficient global distribution platform of meat
and meat products both chilled and frozen.
• Positive operating cash flow generation of R$311.7 million in the quarter.
• Efficiency in managing working capital necessity.
• Expansion of harvesting capacity in Brazil with the inclusion of the 5 new facilities.
• Application for JBS USA IPO (Initial Public Offering) registration and BDR (Brazilian Depositary
Receipt) program.
4
15
19. Debt
• Considering the seasonality with the production increase in a high moment of high demand
for beef, the Company maintained its leverage on the same levels of the preview quarter.
• The Company has improved its net debt in comparison to the 1Q09. The short term debt
decreased 47% in 1Q09 to 39% in 2Q09 against the total debt.
Net Debt / EBITDA Pro Forma per Quarter Debt Profile
Net Debt = R$ 3,928MM 100%
= 2.6
EBITDA pro forma = R$ 1,482 MM
80%
2.8 2.6 *
50% 53%
2.3 2.5 61%
2.0 60%
40%
50% 47%
20% 39%
0%
2Q08 3Q08 4Q08 1Q09 2Q09 2Q08 1Q09 2Q09
Short term Long term
Source: JBS
Net Debt/ EBITDA EBITDA pro-forma
* LTM including Smithfield Beef pro-forma.
18
20. Availabilities
R $ Million 06/30/09 03/31/09 V ar.%
Net indebtednes s 3,927.7 4,173.8 -5.9%
Cas h and cas h equivalents 2,298.7 1,798.0 27.8%
Current 2,411.9 2,780.0 -13.2%
L ong term 3,814.5 3,191.8 19.5%
Gros s indebtednes s 6,226.4 5,971.8 4.3%
• Besides the cash and cash equivalents noted above, the US and Australia subsidiaries of the
Company has availabilities of approximately US$ 560 million under their existing credit
facilities that provide additional liquidity.
• Therefore the Company’s total liquidity including the availabilities under its credit facilities:
R$ Million 06/30/09
Additional availability 1,092.9
Cash and cash equivalents 2,298.7
Total Liquidity 3,391.6
19
21. Operacional Cash Flow
The Company generated positive operating cash flow of R$311.7 million in the quarter.
CAS H F L OW 2Q09
E B IT 296.6
tax es (34% ) -100.8
NOP L AT 195.7
Depreciation 87.4
Gros s Cas h F low 283.2
W orking Capital V ariation 316.5
CAP E X -288.0
Inv es tim ents 28.5
OP E R AT ING CAS H F L OW 311.7
20
22. Working Capital
JBS decreased its working capital necessity form 53 days in 1Q09 to 37 days in 2Q09, that
corresponds to the lowest working capital necessity of the sector, considering that the average of the
sector is 75 days. This reduction ensures the efficiency of the Company’s management in managing
its working capital.
1º Quarter 2009
Client’s order Product Client’s payment
to JBS Delivery to JBS
Production & Stock = 32 days CLIENT = 42 days
SUPPLYER = 21 days 53 days
Supplyer
WORKING CAPITAL &
payment
INTERESTS
2º Quarter 2009
Client’s order Product Client’s payment
to JBS Delivery to JBS
Production & Stock
CLIENT = 37 days
21 dias
SUPPLYER = 21 days 37 days
Supplyer
WORKING CAPITAL &
payment
INTERESTS
21
23. JBS Consolidated Gross Revenue Distribution
Revenue Distribution by Business Units 2Q09
Revenue Distribution by Business Units 2Q09 Revenue Distribution by Market 2Q09
Revenue Distribution by Market 2Q09
Italy
Australia Argentina
4%
11% 2%
Exports Brazil
Pork USA
26% 16%
13%
Domestic
Market
74% Beef USA
54%
Source: JBS Source: JBS
22
24. JBS Consolidated Exports Distribution
Exports Distribution 2Q09
Exports Distribution 2Q09
JBS Exports 2Q09
US$ 1,169.1 Million
Taiwan Others
2% Japan
China 14% 18%
4%
Hong Kong E.U.
5% 15%
South Korea
Africa and USA
Canada 6% Russia Mexico Middle East 9%
5% 7% 7% 8%
Source: JBS
23
25. Final Considerations
• The Company maintains its growth in Brazil reaching almost 18% market share, as
commented in previous presentations
• The operations in the US continue to generate synergies and reduce costs maintaining
margins regardless of the economic downturn
• The Company has already initiated the construction of it’s Global distribution network and
margins tend to improve as a result of it’s implementation.
• The direction of JBS continues to focus on a healthy balance sheet, generating positive
operational cash flow and maintaining the lowest leverage of the sector.
• JBS continues along the path of sustainability constantly improving controls in order to
guarantee the origin of its products.
• JBS presented a solid financial structure and went thru the crises maintaining its liquidity.
With the gradual recovery of global financial markets, global production and consumption,
JBS is ready to continue strategic expansion through new acquisitions to maintain a
competitive over its rivals.
24
28. DISCLAIMER
The forward-looking statements presented herein are subject to risks and uncertainties. These
statements are based on the beliefs and assumptions of our management, and on information
currently available to us.
Forward-looking statements are not guarantees of performance. They involve risks, uncertainties
and assumptions because they relate to future events and therefore depend on circumstances that
may or may not occur. Our future operating results, financial condition, strategies, market share
and values may differ materially from those expressed in or suggested by these forward-looking
statements. Many of the factors that will determine these results and values are beyond our
ability to control or predict.
Forward-looking statements also include information concerning our possible or assumed future
operating results, as well as statements preceded by, followed by, or including the words
''believes,'' ''may,'' ''will,'' ''continues,'' ''expects,'‘ ''anticipates,'' ''intends,'' ''plans,''
''estimates'' or similar expressions.
27