Earnings Results 1Q07
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  • 1. Agenda Página Conference Call 1Q07 Results April 26, 2007
  • 2. Presenters Wesley Mendonça Batista Executive Director of Operations Sérgio Longo Director of Finance and Investor Relations André Gustavo Menezes Investor Relations Manager 1
  • 3. An overview of JBS An overview of JBS We are: The world’s third largest beef producer in terms of slaughtering capacity; The largest beef producer and exporter in Latin America; The second largest exporter of fresh beef in the world in terms of revenues; The largest exporter of processed beef in the world; The leading beef seller in the domestic Brazilian market; Our products include fresh and chilled beef, processed beef and other beef by-products; We posted net revenues of R$4.0 billion in 2006, of which 61% from exports 2
  • 4. Our modern facilities are strategically located… ... to provide flexibility, geographic diversification and access to cattle supplies Asset Locations Overview Overview Asset Locations JBS owns 31 units: 24 slaughterhouses, including 9 processing plants Brazil AC 1 vegetables canning plant Slaughterhouse RO MT Slaughterhouse/Processing plant 1 beef canning plant Distribution center Canned vegetables plant GO MG 4 distribution centers Canned beef plant Container field MS RJ 1 container area JBS’ operational footprint SP Geographic diversification Head of cattle (in thousands) provides: 2.500 – 7.500 Argentina 7.500 – 12.500 12.500 – 17.500 Operational flexibility to 17.500 – 22.500 source from, and produce in, Over 22.500 different locations Lower transportation costs Natural hedge to disease risk 3
  • 5. For the 1Q07, JBS posted net revenues of R$1.1 billion, while our EBITDA grew by 28.4%, with a margin of 14.4%... R$ million 1Q07 1Q06 Var.% Net Sales Revenue 1.086,10 886,1 22,6% Domestic Market 460,2 384,6 19,6% Exports 626,0 501,5 24,8% Gross Profit 257,6 204,4 26,0% Gross Margin 23,7% 23,1% Net Income* 10,6 32,3 -67,0% Net Margin 1,0% 3,6% EBITDA 156,2 121,7 28,4% EBITDA Margin 14,4% 13,7% Sales Volumes (thousands of tons) Beef – Exports 103,6 76,2 35,9% Beef – Domestic Market 189,2 167,9 12,7% Total 292,7 244,1 19,9% (*) Net income decreased by 67.0% to R$10.6 million in the 1Q07, mainly due to non- recurrent expenses related to the Company’s initial public offering in the total amount of R$50.6 million 4
  • 6. In the domesctic market, net revenues grew by 19.6%... ...primarily due to a volume growth of 12.7% and an average sales price increase of 6.2% Beef – Domestic Market 1Q07 1Q06 Var. % Net Sales Revenue (R$ million) Fresh and Chilled Beef 312,4 267,4 16,8% Processed Beef 67,3 53,8 25,2% Others 80,5 63,4 26,9% TOTAL 460,2 384,6 19,6% Volume (thousands of tons) Fresh and Chilled Beef 138,5 122,6 12,9% Processed Beef 12,6 9,8 28,3% Others 38,1 35,5 7,4% TOTAL 189,2 167,9 12,7% Average Sales Price (R$/kg) Fresh and Chilled Beef 2,26 2,18 3,4% Processed Beef 5,34 5,47 -2,4% Others 2,11 1,79 18,2% TOTAL 2,43 2,29 6,2% 5
  • 7. Our export revenues grew by 24.8%... ...while our volume to international markets increased by 35.9% Beef Exports 1Q07 1Q06 Var. % Net Sales (R$ million) Fresh and Chilled Beef 436,3 322,7 35,2% Processed Beef 189,7 178,9 6,1% TOTAL 626,0 501,5 24,8% Volume (thousands of tons) Fresh and Chilled Beef 73,0 48,8 49,6% Processed Beef 30,5 27,4 11,6% TOTAL 103,6 76,2 35,9% Average Sales Prices (R$/kg) Fresh and Chilled Beef 5,97 6,61 -9,6% Processed Beef 6,21 6,54 -5,0% TOTAL 6,04 6,58 -8,2% Average Sales Prices (US$/kg) Fresh and Chilled Beef 2,83 3,01 -5,8% Processed Beef 2,95 2,97 -1,0% TOTAL 2,87 3,00 -4,3% 6
  • 8. Our operational results… R$ million 1Q07 V% 1Q06 V% Net Sales Revenue 1086,1 100,0% 886,1 100,0% Cost of Goods Sold (828,5) -76,3% (681,7) -76,9% Gross Margin 257,6 23,7% 204,4 23,1% Selling Expenses (99,9) -9,2% (77,6) -8,8% General and Administrative Expenses (20,6) -1,9% (23,2) -2,6% Net Financial Income (Expenses) (57,0) -5,2% (42,2) -4,8% Initial Public Offering Expenses (50,6) -4,7% 0,0 0,0% Operating Income 29,6 2,7% 61,5 6,9% Non Operating Income (Exepnses) 0,1 0,0% 0,1 0,0% Income Tax and Social Contribution (19,6) -1,8% (29,4) -3,3% Minority Interest 0,5 0,0% 0,0 0,0% Net Income 10,6 1,0% 32,3 3,6% 7
  • 9. During the quarter, JBS invested a total of R$213.3 million in the following projects… CAPEX CAPEX Increase of the production capacity of its processed beef plant located in Andradina, São Paulo from 30 tons to 100 tons per day; Increase of the production capacity of its plant located in Barra do Garça, Mato Grosso from 1,300 to 2,500 head of cattle slaughtered and deboned per day; Increase of the production capacity of its plant located in Campo Grande, Mato Grosso do Sul from 1,300 to 3,000 head of cattle slaughtered and deboned per day; Increase of the production capacity of its plant located in Vilhena, Rondônia, from 900 to 2,200 head of cattle slaughtered and deboned per day; Construction of a beef jerky production plant in Santo Antônio da Posse, São Paulo, which is currently in its final phase; Increase of the production capacity of its plant located in Barretos, São Paulo from 1,600 to 2,500 head of cattle slaughtered and deboned per day; Acquisition of new trucks to be used for product transportation; and Other investments such as acquisition of new equipment and maintenance of the Company’s facilities; 8
  • 10. …including acquisitions in Argentina and the United States RECENT EVENTS RECENT EVENTS Acquisition of a slaughtering plant in Berazategui, Buenos Aires, Argentina, still in the process of approval by the Argentine autorithies; Acquisition of 100% of the North American SB Holdings and its subsidiaries: - One of the largest processed beef distributors in the US market; - Investment: US$11.9 million; - Consolidated net revenues in 2006: US$55.7 million; The Company entrered into a joint venture to produce, market and distribute beef jerky and, through this joint venture, a total of US$30 million has been invested towards: - Acquisition of a company in the US (Pioneer) to produce, market and distribute beef jerky with sales in 2006 of approximately US$22 million; - Acquisiton of another US company (Double B) to produce, market and distribute beef-based products with sales of US$18 million; - The company is in the final phase of construction of a beef jerky production plant in Santo Antônio da Posse, São Paulo, whose operations are expected to begin in the first half of may 9
  • 11. Initial Public Offering Issuer JBS S.A. (“JBS”) Offering Local offering with international sales effort under Rule 144A/Reg-S Structure 200,000,000 Common Shares, representing 23.5% of JBS’ capital post- Offering Size offering (excluding Over-allotment Option) Share 75% primary / 25% secondary1 Composition Suggested R$8.00 per Common Share Pricing Range Listing Novo Mercado of Bovespa (ticker: JBSS3) Selling ZMF Fundo de Investimento em Participações (Batista family) Shareholder Green Shoe Up to 15% of the base offering (100% secondary) Lock-up Period 180 days for the Selling Shareholders, the Company and Management Use of Proceeds 70% capacity expansion investments and acquisition / 30% working capital Total Proceeds R$1.6 billion Joint Bookrunners 1 65% / 35% primary and secondary, respectively, if Over-allotment Option is fully exercised 2
  • 12. Safe Harbor We make forward-looking statements that 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 include statements regarding our intent, belief or current expectations or that of our directors or executive officers. Forward-looking statements also include information concerning our possible or assumed future results of operations, as well as statements preceded by, followed by, or that include the words ''believes,'' ''may,'' ''will,'' ''continues,'' ''expects,'‘ ''anticipates,'' ''intends,'' ''plans,'' ''estimates'' or similar expressions. 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 results and shareholder 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.
  • 13. Thank You