3Q07 Conference Call Presentation
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3Q07 Conference Call Presentation Presentation Transcript

  • 1. Conference Call Results 3Q07 November 8, 2007
  • 2. Presenters Joesley Mendonça Batista CEO José Paulo Macedo Investor Relations Director André Gustavo Menezes Investor Relations Manager 1
  • 3. Period Overview We concluded the acquisition of Swift Foods Company, now JBS USA, making JBS the world’s largest beef producer ; world s During these first 120 days of management, we continued to implement our strategy, centered on recovering of the operating and financial performance of JBS USA beef division: implementation of a second shift at the Greeley plant, increasing the volume of cattle slaughtered; intense focus on costs reductions and improvement of the operating efficiency on yields/processes; Pork division and Australia continue to operate according to our estimates; In the US beef division, we remain confident with the results generated from the initiatives implemented thus far, despite the industry’s current scenario and pressure on margins in the US; We continue to focus on growth and consolidation of our position in the Mercosur region: continued investments in the expansion of the slaughtering capacity of our plants in Brazil and the acquisition of meatpacker Col Car in the province of Cordoba, Argentina; We started operations of the expanded frozen and cooked beef unit in Andradina and of a new container terminal for exports in Cubatão both in the Cubatão, state of São Paulo, Brazil; In Brazil, we focused on the maintenance of profitability levels rather than expansion on sales volume, given the pressure on raw materials costs during volume the quarter. 2
  • 4. 3Q07 Results – JBS S.A. (excluding JBS USA) Q ( g ) Total Net Revenue (R$ million) 16.9% 3,572.8 6.5% 12.3% 3,056.6 1,234.6 1,315.5 1,171.2 3Q06 3Q07 2Q07 9M06 9M07 Total Volume (‘000 tons) 21.0% 941.5 15.9% 1.4% 778.3 281.7 326.6 322.2 3Q06 3Q07 2Q07 9M06 9M07 Average Sales Price (R$/Kg) -8.0% 10.8% -3.4% 3 4% 4.38 4.03 3.93 3.64 3.79 3Q06 3Q07 2Q07 9M06 9M07 3
  • 5. 3Q07 Results – JBS S.A. (excluding JBS USA) Domestic Market Net Revenue – Domestic Market (R$ million) 30.6% 1,459.7 40.4% 4.8% 1,117.8 511.6 487.9 364.4 3Q06 3Q07 2Q07 9M06 9M07 Volume – Domestic Market (‘000 tons) 23.8% 614.7 29.2% 2.7% 496.6 166.8 215.6 210.0 3Q06 3Q07 2Q07 9M06 9M07 Average Sales Price – Domestic Market (R$/Kg) 8.6% 2.1% 5.5% 2.18 2.37 2.32 2.25 2.37 3Q06 3Q07 2Q07 9M06 9M07 4
  • 6. 3Q07 Results – JBS S.A. (excluding JBS USA) Exports Net Revenue – Exports (R$ million) 9.0% 2,113.2 -7.6% 1,938.8 17.7% 870.2 803.9 683.3 3Q06 3Q07 2Q07 9M06 9M07 Volume – Exports (‘000 tons) -3.4% 16.0% 326.8 -1.0% 281.7 114.9 111.0 112.2 3Q06 3Q07 2Q07 9M06 9M07 Average Sales Price – Exports (per kilogram) -4.4% 18.9% -6.0% 8.3% 23.0% 23 0% 7.57 7 57 7.24 7 24 6.88 2.6% 2 6% 6.09 6.47 3.49 3.78 3.07 3.15 3.23 Q 3Q06 3Q07 Q 3Q06 Q 3Q07 Q 2Q07 Q 2Q07 Q 9M06 9M07 9M06 9M07 (R$) (R$) (US$) (US$) (R$) (US$) (R$) (R$) (US$) (US$) 5
  • 7. During the quarter, price increases reflected pressure on raw material costs... 150 140 130 120 110 100 90 Rear Price Forequarter Price Ribs de-boning Price Arroba Price 6
  • 8. We focused on the maintenance of profitability levels rather than on the expansion on sales volume... EBITDA and EBITDA Margin Net Debt/EBITDA* EBITDA Margin (%) 493,3 3,6x 430,5 430 5 3,3x 33 3,1x 13,8% 14,1% 14,1% 13,8% 2,8x 13,1% 2,6x 2,2x 2,3x 170,3 171,9 1 19 165,2 3Q06 3Q07 2Q07 9M06 9M07 2002 2003 2004 2005 2006 2Q07 3Q07 * Consolidated 7
  • 9. Swift – EBITDA by Division EBITDA by Division (In thousands of US$) 2003 2004 2005 2006 2007 SWIFT Beef 71,201 44,656 (65,132) (97,082) (19,592) SWIFT Pork 75,532 132,619 122,091 73,336 70,309 AUSTRALIA 60,324 42,891 106,044 29,465 45,553 OTHERS (2,733) (45) (18) - - TOTAL 204,324 , 220,121 , 162,985 , 5,719 , 96,270 , EBITDA Margin 2.52% 2.33% 1.69% 0.06% 1.01% Source: S&C Holdo 3, Inc. – SEC Filings 8
  • 10. Swift – Pre-Acquisition Status Pre Acquisition EBITDA Margin (%) Pre Acquisition Pre-Acquisition Status The US beef division had been Comparable companies operating with margins 2% lower Swift Beef than the industry; 3,7% Stated cattle slaughtering capacity in the US was 17,200 head/day; 2,8% Greeley plant with a slaughtering capacity for 6,000 head/day in 2 shifts was only operating 1 shift, 1,3% slaughtering 3,400 head/day; 1,0% 1,1% 1 1% 0,8% 0,4% Considering 2 shifts and the optimization of 3 other plants, -0,4% effective total slaughtering capacity is 20,500 head/day; 20 500 -1,2% On the acquisition date, the division -1,7% was slaughtering 14,500 head/day; Therefore, it was operating at 70% capacity; 2003 2004 2005 2006 2007 With a low focus on cost reductions and efficiencies in the production Source: SEC Filings process. 9
  • 11. We began a second shift at the Greeley plant, where 1,100 new employees have been hired 1 100 hired, increasing the volume of cattle slaughtered... Average cattle slaughtered/Day 20,000 18,500 18 500 16,389 15,015 15 015 15,289 14,506 Jun Jul Aug Sep Oct Nov Dec JBS Swift B f USA T t l S ift Beef Total 10
  • 12. We have redefined the company’s organizational structure, structure eliminating overlapping positions and reducing management levels... Eliminated positions Savings US$ Beef Division 87 4,500,000 Pork Division 8 400,000 Corporate 93 8,400,000 Total: 188 13,300,000 …resulting in an annual savings of resulting approximately US$ 13 million in operating and administrative expenses 11
  • 13. Great part of the planned initiatives have already b l d been i implemented... l t d IMPLEMENTED ACTIONS Elimination of 188 positions – US$13.3 million/year Reduction in annual insurance costs through renegotiation of existing premiums and deductibles, maintaining all insurance policies required for the adequate continuity of the business – US$ 8.0 million; Elimination of annual costs with outsourced services from professionals and consultants – US$12.1 million/year; Reduction costs with materials, t R d ti t ith t i l traveling and administrative expenses – US$1 5 li d d i i t ti US$1.5 million/year; Increase in volume and greater dilution of fixed costs at the p g plants - additional revenue of US$1.3 billion/year; …which already generate a reduction of the normalized cost per head of approximately US$40 against the quarter ended in May and US$28, compared to the FY2007, reducing the “gap” with the US beef industry 12
  • 14. 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. 13
  • 15. Thank you 14