August, 2010
DisclaimerThe forward-looking statements presented herein are subject to risks and uncertainties. Thesestatements are base...
Agenda                  Company OverviewMarket Overview                        2Q10 Highlights                  Short Term...
Who We Are                                     Our Mission To be the best at what we set out to do, totally focused on our...
Corporate Structure                                                                                                       ...
Corporate Structure                                                                                                       ...
Shareholders                                   PROT - FIP                                     8.1%                        ...
Leading, Sizeable and Diversified Business Platform                    Beef           Chicken            Pork          Hid...
Our Strategy                                                                             Rationale                        ...
Distribution Platform with Access to Key Markets                                                     Growth 1             ...
Agenda                  Company OverviewMarket Overview                        2Q10 Highlights                  Short Term...
World Meat Consumption                                                       (million tons cwe)                           ...
Animal protein consumption growth in the last decade                                                                      ...
Beef Exports   Rising demand in emerging economies drove export volumes up in the semester both  in Brazil and in the US ...
Chicken Exports   Strong domestic demand in both Brazil and the US limited exports in the first  semester although it is ...
Agenda                  Company OverviewMarket Overview                        2Q10 Highlights                  Short Term...
Highlights for the 2nd Quarter 2010 Revenues increased 52.5% y-o-y and 12.5% to R$14,116.3 million   •   JBS USA increase...
JBS Consolidated Results                 Net Revenue (R$ million)                             EBITDA and EBITDA Margin (R$...
Performance by Business Units       JBS MERCOSUL                                 JBS USA Beef                             ...
Revenue Distribution by MarketRevenue Distribution by Market 2Q10                                   Revenue Distribution b...
EBITDA Distribution by Business Units                 2Q10                          1Q10Mercosul                 USA BEEF ...
JBS Consolidated Exports Distribution                                 JBS Exports 2Q10                                    ...
DebtWhile JBS leverage remained fairly constant in the quarter (at 3.0x LTM EBITDA), the liquidity of thebalance sheet im...
Agenda                  Company OverviewMarket Overview                        2Q10 Highlights                  Short Term...
A Closer look at synergies – Pilgrim’s Pride JBS already captured US$ 150 million in synergies with Pilgrim’s Pride acqui...
A Closer look at synergies – Bertin S.A. JBS already captured R$ 154 million in synergies due to the merger with Bertin o...
IR Contacts:            ir@jbs.com.br        +55 11 3144 4447        www.jbs.com.br/ir“In God We Trust, Nature We Respect”...
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Jbs presentation august v1

  1. 1. August, 2010
  2. 2. DisclaimerThe forward-looking statements presented herein are subject to risks and uncertainties. Thesestatements are based on the beliefs and assumptions of our management, and on informationcurrently 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 oncircumstances 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 suggestedby these forward-looking statements. Many of the factors that will determine these results andvalues are beyond our ability to control or predict.Forward-looking statements also include information concerning our possible or assumed futureoperating results, as well as statements preceded by, followed by, or including the wordsbelieves, may, will, continues, expects,‘ anticipates, intends, plans, estimates orsimilar expressions. 2
  3. 3. Agenda Company OverviewMarket Overview 2Q10 Highlights Short Term Outlook 3
  4. 4. Who We Are Our Mission To be the best at what we set out to do, totally focused on our business, ensuring the bestproducts and services for our customers, solidity for our suppliers, satisfactory profitability for our shareholders and the certainty of a better future for all our employees. Our Values Excellence Planning Determination Discipline Availability Openness Simplicity 4
  5. 5. Corporate Structure CEO President Joesley Batista Corporate Invetsidors Corporate Comercial and Finance CEO JBS Law Relations And Adm. New business Distribution DayryDirector Brazil MERCOSUL Hides Department Jeremiah Controler José Luis International GilsonMarcos Cunha Marco Roberto Francisco O’Callaghan / Eliseo Medeiros Offices Teixeira Bastos Bortolon Motta de Assis e Silva Guilherme Arruda Fernandes Marco Bichieri Mr. Marcos Mr. Francisco de Assis Mr. Jeremiah Mr. Eliseo Fernandez Mr. Marco Bortolon, has Mr. José Luiz Mr. Marco Bichieri, has Mr. Roberto Motta, has Mr. Gilson Teixeira, Bastos, Graduate e Silva, Director of the O’Callaghan, Has a Has a Business more than 10 years Medeiros, has a degree more than 24 years of more than 20 years in has more than 25 years from the Law Department. Has A Engineering Degree from Administration and experience in JBS. in Accounting and has experience in the Protein the Leather Industry. experience in Finance Mackenzie post graduated from the the University of Cork Accounting Degree from Initially started as the worked in the Beef Sector. Worked for more Was responsible for and Controler of University in University of Mackenzie. College in Ireland. the University Católica de manager of production Sector since1975. 14 than 20 years in Bertin. incorporating BMZ Hides business units of Bertin, Business Immigrated to Brazil in Pernambuco and a post and afterwards was year in Bertin and with the JBS Group. where he later served as Started working at JBSAdministration and 1979. Started working in graduate degree in promoted to be Chief started in JBS in 1997. a member of the Board in December of 2001 has a MBA in the Beef Sector in 1983 Business Administration Operating Officer of the January 2010 became for 5 years. and later became a Finance from San and in JBS in 1996 in from FGV. Started with Brazil Beef Division. the Director of New Francisco State member of the Executive order to develop the JBS in August 2005 and Business.University. Worked Board in January of Trade Area and eventually became in many financial 2007. eventually became the Director of Administration institutions in Investors Relations and Corporate Brazil, primarily in Officer. Governance. 8 years the Investment Mr. Guilherme Arruda Experience in Auditing, banking, Financial graduated in Business Consulting and 10 years Projects, and and Economics from the in the Retail industry. Portfolio University of California. management. Start in the Company in Started in 2008 2009 after working for 7 with JBS. years for the Bank Pactual 5
  6. 6. Corporate Structure CEO USA/AUS Wesley Batista JBS Five Human Pork JBS Carriers Trading CFO Pilgrims Pride Beef USA Australia Rivers Resources Martin Mr. Moe Robert André Don Jackson Richard Vesta Iain Mars Mike Bob Dooley Schroder Wadland Nogueira Thoren DaubenspeckMr. Don Jackson is the Mr. Richard Vesta, Mr. Martin Dooley Mr. Iain Mars, born Mr. Thoren, Mr. Moe Schroder has Mr. Robert Wadland Mr. André Nogueira has Mr. Robert President, CEO and joined Smithfield Foods Has a degree in Biology in England and is the President and more than 30 years 27 years of meat a degree in Economics Daubenspeck Director since January with the Acquisition of from the University of worked in the Beef CEO of Five Rivers experience in trading experience with from the Federal assumed the position2009. Originally was the Parkerland in 2001 and Eastern Illinois. Worked Industry for his whole since the Start of the Transportation Sector. 17 years at JBS University Fluminense, a in February 2009 andpresident of the chicken serves as the president in Swift for his whole live, life. He became the Company. Has a Majored at the enhancing exports out masters in Capital before that in JBSdivision of Foster Farms and CEO of JBS having started the President and CEO Masters of Science in University of Ryerson, of Australia and New Packerland from 2002 Markets from FGV – for 9 years and vice Packerland company as a manager of JBS Australia in Agricultural Economics Toronto, Canada. Zealand. Recently Fundação Getúlio to 2008. president of Food trainee in 1983. In 2007 2007, after the and has a degree in Occupied the position transferred to the US to Vargas, masters in Service in ConAgra was given the position of acquisition of Swift. Agribusiness from the of Vice President of run the groups trading Economics from Poultry Company. president of the Pork He has worked in University of Sales and Dedicated business unit University of Brasilia in Before this worked for Division of JBS USA. JBS since 2005. Washington State. Operations at KLLM 2003. Worked more than the Seaboard farm of and before that has 20 years at Bank of Brazil Athens or 22 years, occupied executive and started at JBS USAincluding 4 years as the positions for 15 years in 2007 after the Swift CEO of the Chicken at CR England acquisition. Division 6
  7. 7. Shareholders PROT - FIP 8.1% Market 19.1% Controlling Holding 55.5% BNDESPAR 17.3% Average daily trade volume of USD 50.4 million in 2Q10Source: JBS 7
  8. 8. Leading, Sizeable and Diversified Business Platform Beef Chicken Pork Hides / Leather Dairy Lamb Ranking 1st 2nd 3rd 1st 3rd 1st Global Global U.S.A. Global Brazil GlobalProduction 75 33 3 26 7 6 Units ‘000 heads/day: mm heads/day: ‘000 heads/day: ‘000 hides/day: ‘000 tons/day: ‘000 heads/day: 41.2 55.6 1.4 1.1 Geographic 6.7 Presence 28.6 6.9 48.5 28.6 4.5and Installed Capacity 8.7 6.0 23.0 3.0 1.0 0.7 1.2 Total: 90.3 Total: 7.6 Total: 48.5 Total: 91.4 Total: 1.4 Total: 27.5 Well-Recognized Brands 8
  9. 9. Our Strategy Rationale Branding • Associating quality and branding to increase client loyalty • Customized and further processed Value added products products for the end users Sales and distribution platform • Expanding a global distribution platform to reach end clients • Developed an efficient Production platform and diversified global production platform Cost reduction, Financial Experienced Risk process structure management managementEBITDA Margin optimization JBS’ Value & Strategy 9
  10. 10. Distribution Platform with Access to Key Markets Growth 1 -2 % 3% 4% Growth 1 9% 13 % 8% Growth 1 Growth 1 7% 2% 25 % 8% 16 % 5% Distribution Center Sales Offices 1 Real growth of total consumption in tons – 2010E to 2015E Source – OECD-FAO 10
  11. 11. Agenda Company OverviewMarket Overview 2Q10 Highlights Short Term Outlook 11
  12. 12. World Meat Consumption (million tons cwe) Growth 2000 2009 2018 2009-2018 Pork 89 102 120 18% Poultry 70 98 120 23% Beef 60 65 75 15% TOTAL 219 265 315 19% Growth 2000 2009 2018 2009-2018 OECD 92 100.4 108.5 8% NON OECD 127 164 205 25%Source: OECD/FAO Agricultural Outlook 2009-2018 12
  13. 13. Animal protein consumption growth in the last decade Former USSR 47.7% EU - 27North America 41.4% 7.5% 23.7% East Asia Central 29% Middle East America Southeast 70.2% Asia 48.7% Sub Saharan Africa South America 32.2% 23.3% Oceania 3 Source: FAPRI February 2010 13
  14. 14. Beef Exports  Rising demand in emerging economies drove export volumes up in the semester both in Brazil and in the US but more importantly, pricing was very strong. As beef production is long cycle, some of this export demand will tend to boost chicken exports, particularly out of the US, in the coming years. US Beef and Veal Exports (Tons) Brazilian Beef Exports (Tons)700.000 4.600 1.400.000 4.500600.000 5.3% 4.500 4.000 1.200.000 26.6% 4.400 3.500500.000 1.000.000 3.000 4.300400.000 800.000 2.500 24.3% 4.200300.000 600.000 7.0% 2.000 4.100 1.500200.000 400.000 4.000 1.000100.000 3.900 200.000 500 0 3.800 0 0 2005 2006 2007 2008 2009 JAN-JUN JAN-JUN 2005 2006 2007 2008 2009 JAN-JUN JAN-JUN 09 10 09 10 Beef Exports Avg Price in US$ per Ton Beef Exports Avg Price in US$ per Ton Source: USDA and Secex 14
  15. 15. Chicken Exports  Strong domestic demand in both Brazil and the US limited exports in the first semester although it is clear that prices will tend to push up export volumes from now on particularly taking into account the reopening of the Russian market for US product. Brazilian Chicken Exports (Tons) US Poultry Exports (Tons)3.500 2.000 3.500.000 1.200 - 1.800 2.9%3.000 17.3% 3.000.000 1.000 1.6002.500 1.400 2.500.000 8002.000 1.200 1.1% 2.000.000 1.000 -6.5% 6001.500 800 1.500.000 4001.000 600 1.000.000 400 500 500.000 200 200 0 0 - - 2005 2006 2007 2008 2009 JAN-JUN JAN-JUN 2005 2006 2007 2008 2009 JAN-JUN JAN-JUN 09 10 09 10 Chicken Exports Avg Price in US$ per Ton Chicken Exports Avg Price in US$ per Ton Source: USDA and Secex 15
  16. 16. Agenda Company OverviewMarket Overview 2Q10 Highlights Short Term Outlook 16
  17. 17. Highlights for the 2nd Quarter 2010 Revenues increased 52.5% y-o-y and 12.5% to R$14,116.3 million • JBS USA increased 67.6% y-o-y and 12.9% q-o-q • JBS MERCOSUL increased 123.1% y-o-y and 19.1% q-o-q • JBS Exports increased 37.0% q-o-q reaching 29% of sales EBITDA increased 163.3% y-o-y and 16.0% q-o-q. Leverage remained fairly stable at 3.0x Consolidated customer base grew by 22.2% q-o-q, reaching more than 300 thousands customers in 2Q10. 17
  18. 18. JBS Consolidated Results Net Revenue (R$ million) EBITDA and EBITDA Margin (R$ million) 6.9% 7.1% 5.4% 4.1% 3.5% 1,000.0 862.0 14,116.3 12,550.39,255.0 397.8 8,379.9 384.0 7,408.9 291.9 -9.5% -11.6% 69.4% 12.5% -24.0% 36.3% 116.7% 16.0%2Q09 3Q09 4Q09 1Q10 2Q10 2Q09 3Q09 4Q09 1Q10 2Q10 Source: JBS EBITDA Margin (%) 18
  19. 19. Performance by Business Units JBS MERCOSUL JBS USA Beef JBS USA Pork JBS USA Chicken (PPC) Including AustraliaNet Sales (R$ billion) Net Sales (US$ billion) Net Sales (US$ million) Net Sales (US$ million) 3.5 3.0 3.3 1.8 1.7 1.7 1.6 739 1.7 1.7 2.9 2.8 646 1.7 2.8 2.8 606 554 5592T09 3T09 4T09 1T10 2T10 2Q09 3Q09 4Q09 1Q10 2Q10 2Q09 3Q09 4Q09 1Q10 2Q10 1Q09 2Q09 1Q10 2Q10 EBITDA (R$ mi) EBITDA EBITDA (US$ mi) EBITDA EBITDA (US$ mi) EBITDA margin EBITDA (US$ mi) EBITDA margin margin margin 11.9% 6.6% 9.3% 5.4% 9.5% 6.0% 5.9% 4.5% 4.7% 7.5% 4.5% 2.7% 6.6% 3.6% 3.8% 4.8% 352.6 3.6% 334.5 164.6 4.9% 2.9% 194.9 127.6 170.5 48.7 126.0 104.6 108.4 34.9 80.8 112.2 28.6 59.5 24.782.6 15.3 47.32T09 3T09 4T09 1T10 2T10 2Q09 3Q09 4Q09 1Q10 2Q10 2Q09 3Q09 4Q09 1Q10 2Q10 1Q09 2Q09 1Q10 2Q10 Source: JBS EBITDA Margin (%) 19
  20. 20. Revenue Distribution by MarketRevenue Distribution by Market 2Q10 Revenue Distribution by Market 1Q10 Pork Chicken Pork Chicken Exports 2% Exports 1% Exports 2% Exports 2% Beef Beef Exports Exports 20% Beef Beef 25% Domestic 44% Domestic 47% Chicken Domestic 22% Chicken Domestic 20% Pork Pork Domestic 8% Domestic 7% Exports = 29% Domestic Market = 71% Exports = 23% Domestic Market = 77%Revenue Distribution by Market 2Q10 Revenue Distribution by Market 1Q10 USA Chicken Mercosul USA Chicken Mercosul 22% 27% 25% 23% USA Pork 9% USA Pork 10% USA Beef USA Beef 42% 42% Source: JBS 20
  21. 21. EBITDA Distribution by Business Units 2Q10 1Q10Mercosul USA BEEF USA BEEF 33,5% 34,7% Mercosul 36,1% 43,9% USA PORK USA PORK USA Chicken 8,7% USA Chicken 7,4% 22,7% 12,6% Source: JBS 21
  22. 22. JBS Consolidated Exports Distribution JBS Exports 2Q10 JBS Exports 1Q10 Taiwan Taiwan Canada 2% Others Canada 2% Others 12% Africa and Middle East Africa and Middle East 4% 4% 12% China 19% China 16% 4% 4% MexicoSouth Korea Mexico South Korea 14% 5% USA 12% 4% USA 7% E.U. Japan 7% Japan E.U. 7% Russia Hong Kong 10% 8% Russia Hong Kong 12% 10% 8% 8% 9% US$2,3331.0 Million US$1,765.4 Million Source: JBS 22
  23. 23. DebtWhile JBS leverage remained fairly constant in the quarter (at 3.0x LTM EBITDA), the liquidity of thebalance sheet improved significantly.The company’s cash position increased 17,5% when compared with 1Q10 (which represents 70% ofthe company’s ST debt, from 55% in the previous quarter), while ST debt decreased 7,7% in the sameperiod.Considering the US$700mm bond issuance in July, ST debt on a pro-forma basis would representroughly 33% of total debt, closer to the company’s target of having less than 30% of its total debtmaturing in the ST. Leverage ST / LT Profile 3.3 3.1 3.1 3.0x * 2.6 61% 60% 64% 67% 39% 40% 36% 33% 2Q09 1Q10 2Q10 ** (Pro-Forma)* 2Q09 3Q09 4Q09 1Q10 2Q10 Short term Long term Source: JBS *LTM including Bertin and Pilgrim’s Pride pro-forma. ** Pro-Forma takes into account senior unsecured notes issued July, 2010 23
  24. 24. Agenda Company OverviewMarket Overview 2Q10 Highlights Short Term Outlook 24
  25. 25. A Closer look at synergies – Pilgrim’s Pride JBS already captured US$ 150 million in synergies with Pilgrim’s Pride acquisition of atotal estimated amount of US$ 220 million. Descrição The illustration bellow the origins of the captured synergies. Captured Synergies On going Synergies Size Time US$ 150 Million Efficiency gains in the average Logistics Optimization US$50mm 2 years load factor for trucks Logistics Adminstrative 23% Reaching final customers expenses Exports through the JBS current sales US$20mm 2010 34% structure. Suppliers 20% Corporate Total US$70mm 23% Source: JBS 25
  26. 26. A Closer look at synergies – Bertin S.A. JBS already captured R$ 154 million in synergies due to the merger with Bertin of a totalestimated amount R$ 485 million. Descrição The next graphic shows the origin of the captured synergies. Captured Synergies On going Synergies Size Time R$154 Million Maximization of sales channels Exports and reviewing contracts for R$31mm 2010 freight Suppliers Capturing value with the Administrative Hides R$45mm 2010 16% greatest volume of processed expenses Logistics 26% 13% Review of terms of contract non- Suppliers R$10mm 2010 core suppliers (ex packaging) Exports Optimization of fixed costs and 45% Industrial Processes streamlining of existing R$245mm 2 Years contracts Total R$331mm Source: JBS 26
  27. 27. IR Contacts: ir@jbs.com.br +55 11 3144 4447 www.jbs.com.br/ir“In God We Trust, Nature We Respect” 27
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