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December, 2010
Agenda                      Company Overview       JBSS3 Stock Performance                       Market Overviewand Ongoin...
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                                            Treasury                                              1.7%        ...
Leading, Sizeable and Diversified Business Platform                    Beef             Chicken           Pork           H...
Our Strategy                                                                             Rationale                        ...
Distribution Platform with Access to Key Markets                                                     Growth 1             ...
Agenda                      Company Overview       JBSS3 Stock Performance                       Market Overviewand Ongoin...
Animal Protein Consumption Growth in the Last Decade                                                                      ...
Global Supply-Demand for Poultry               GLOBAL SUPPLY-DEMAND FOR POULTRYChoose Year for Chart:                 2020...
Global Supply-Demand for Pork               GLOBAL SUPPLY-DEMAND FOR PORKChoose Year for Chart:               2020Estimate...
Global Supply-Demand for Beef               GLOBAL SUPPLY-DEMAND FOR BEEF & VEALChoose Year for Chart:                 202...
Beef                                                            Exports Brazil vs USA   Both Brazil and the US continue t...
Chicken                                                               Exports Brazil vs USA    The reopening of the Russi...
Agenda                      Company Overview       JBSS3 Stock Performance                       Market Overviewand Ongoin...
Highlights - 3Q10 Net revenue for the 3Q10 was R$14,069.6 million, practically stable in comparison to the 2Q10,   which ...
1                     Consolidated Performance by Protein                                          1                  R$ M...
JBS Consolidated Results                  Net Revenue (R$ million)                                     EBITDA and EBITDA M...
Performance by Business Units       JBS MERCOSUL                                  JBS USA Beef                            ...
Revenue Distribution by Market    Revenue Distribution by Market 3Q10                                  Revenue Distributio...
EBITDA Distribution by Business Units                        3Q10                                             2Q10        ...
JBS Consolidated Exports Distribution  JBS Exports 3Q10                                        JBS Exports 2Q10           ...
Debt Profile   The ratio of net debt to EBITDA was 2.9x in the quarter, slightly less than 3.0x in 2Q10.   It is importa...
Agenda                      Company Overview       JBSS3 Stock Performance                       Market Overviewand Ongoin...
Stock Performance      JBS’ shares fell 7.5% when compared with the 2nd Quarter closing price. The Ibovespa and the      ...
Ongoing ActionsPending issues                                           Actions                         JBS bought 50% of...
Ongoing Actions          Pending issues                                               Actions      Convertible Debentures ...
Coverage by Equity Analysts              The Company continues to work on increasing coverage by equity analysts.         ...
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 december v

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Transcript of "Jbs presentation december v"

  1. 1. December, 2010
  2. 2. Agenda Company Overview JBSS3 Stock Performance Market Overviewand Ongoing Actions 3Q10 Highlights 2
  3. 3. 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 3
  4. 4. Corporate Structure CEO President Joesley Batista Corporate Investors Corporate Commercial and Finance CEO JBS Law Relations And Adm. New business Distribution Dairy Director Brazil MERCOSUL Hides Department Jeremiah Controller José Luis International Gilson Marcos Marco Roberto Francisco O’Callaghan / Eliseo Medeiros Offices Teixeira Bastos Bortolon Motta de Assis e Silva Guilherme Arruda Fernandes Marco Bichieri Marcos graduate from Francisco is the director Jerry has a Engineering Eliseo has a Business Marco has more than 10 José Luiz has a degree Marco has more than 24 Roberto has more than 20 Gilson has more than Mackenzie University in of the Law Department. Degree from the University Administration and years experience in JBS. in Accounting and has years of experience in the years in the Leather 25 years experience inBusiness Administration Has a post graduated of Cork College in Ireland. Accounting Degree from Initially started as a been working in the Beef Protein Sector. Worked Industry. Was Finance and Controller and has a MBA in from the University of Immigrated to Brazil in the University Católica de Production Manager and Sector since 1975. 14 for more than 20 years in responsible for of business units of Finance from San Mackenzie. 1979. Started working in Pernambuco and a post in 2009 was promoted to year in Bertin and Bertin. incorporating BMZ Hides Bertin, where he later Francisco State the Beef Sector in 1983 graduate degree in Chief Operating Officer of started at JBS in 1997. with the JBS Group. served as a member of Started working at JBS in University. Worked in and in JBS in 1996 in order Business Administration the Brazil Beef Division. January 2010 became the Board for 5 years. December of 2001 andmany financial institutions to develop the Trade Area from FGV. He started with the Director of New later became a member in Brazil, primarily in and eventually became the JBS in August 2005 and Business. Investment banking, of the Executive Board in Investors Relations Officer. eventually became Financial Projects, and January of 2007. Director of Administration Guilherme graduated in Portfolio management. Business and Economics and CorporateStarted in 2008 with JBS. from the University of Governance. He has 8 California. Start in the years Experience in Company in 2009 after Auditing and Consulting working for 7 years for and 10 years in the Retail BTG Pactual. industry. 4
  5. 5. Corporate Structure CEO USA/AUS Wesley Batista JBS Five Human Pork JBS Carriers Trading CFO Pilgrims Pride Beef USA Australia Rivers Resources Martin Moe Robert André Don Jackson Bill Rupp Iain Mars Mike Bob Dooley Schroder Wadland Nogueira Thoren Daubenspeck Don is the President, Bill has learned the Beef Martin has a degree in Iain was born in England Mike is the President and Moe has more than 30 Robert has 27 years of Robert assumed this André has a degree in CEO and Director of Industry from the ground Biology from the and worked in the Beef CEO of Five Rivers since years experience in meat trading experience position in February Economics from the Pilgrim’s Pride since up. Right out of college, University of Eastern Industry for his whole life. the Start of the Company. Transportation Sector. with 17 years of that at 2009 and before that Federal University January 2009. For 9 he began learning the Illinois. Worked in Swift He became the President Has a Masters of Science Graduated from the JBS enhancing exports was in JBS Fluminense, a masters inyears was the president business at Cargill where for his whole life, having and CEO of JBS Australia in Agricultural Economics University of Ryerson, out of Australia and New Packerland from 2002 Capital Markets fromof the chicken division of he worked for 25 years. started the company as a in 2007, after the and has a degree in Toronto, Canada. Zealand. Recently to 2008. FGV – Fundação Getúlio Foster Farms and vice He was a general plant manager trainee in 1983. acquisition of Swift. He Agribusiness from the Occupied the position of transferred to the US to Vargas, and masters in president of Food manager and eventually In 2007 was given the has worked in JBS since University of Washington Vice President of Sales, run the group’s trading Economics from Services in ConAgra went to build a meat position of president of the 2005. State. Dedicated Operations at business unit University of Brasilia in Poultry Company. processing facility in Pork Division of JBS USA. KLLM and before that 2003. Worked more than Before this he worked Canada. He later was in various executive 20 years at Bank of at Seaboard farms of became the VP of positions at CR England . Brazil and started at JBS Athens for 22 years, Operations, then was the Moe Joined JBS to run USA in 2007 after theincluding 4 years as the President of the Beef the carrier business Swift acquisition. CEO of the Chicken Business, and eventually Division became the president of Cargill Meat Solutions. Bill joined JBS in 2010 as the President of the US Beef Business. 5
  6. 6. Shareholders Treasury 1.7% PROT - FIP 8.0% Market 18.7% FB Participações S.A. 54.5% BNDESPAR 17.0%  Average daily trade volume of R$ 33.3 million in 3Q10Source: JBS 6
  7. 7. 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 Global Production 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: 40.2 55.6 1.4 1.1 Geographic 5.7Presence and 28.6 6.9 48.5 28.6 4.5 Installed Capacity 8.7 6.0 23.0 3.0 1.0 0.7 1.2 Total: 88.2 Total: 7.6 Total: 48.5 Total: 91.4 Total: 1.4 Total: 27.5 Well-Recognized Brands 7
  8. 8. 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 8
  9. 9. 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 9
  10. 10. Agenda Company Overview JBSS3 Stock Performance Market Overviewand Ongoing Actions 3Q10 Highlights 10
  11. 11. Animal Protein Consumption Growth in the Last Decade 47.7% EU - 27 North 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 11
  12. 12. Global Supply-Demand for Poultry GLOBAL SUPPLY-DEMAND FOR POULTRYChoose Year for Chart: 2020Estimates for Chart GS Goldman Sachs Estimates 2020 GLOBAL SURPLUS (DEFICIT) OF POULTRY MEAT Goldman Sachs Estimates European Union Russia Surplus Million tons - Deficit Million tons 0.6 1.1 0.9 3.7 8.9 9.1 3.2 Prod. Imports Exports Cons. Prod. Imports Exports Cons. United States China 1.1 0.2 - 4.1 21.6 22.5 19.1 15.1 Prod. Imports Exports Cons. Prod. Imports Exports Cons. Brazil India Thailand 0.1 - - - 0.8 7.6 17.0 3.7 3.8 1.9 9.4 1.1 Prod. Imports Exports Cons. Prod. Imports Exports Cons. Prod. Imports Exports Cons. Source: Goldman Sachs 12
  13. 13. Global Supply-Demand for Pork GLOBAL SUPPLY-DEMAND FOR PORKChoose Year for Chart: 2020Estimates for Chart GS Goldman Sachs Estimates 2020 GLOBAL SURPLUS (DEFICIT) OF PORK MEAT Goldman Sachs Estimates Canada European Union Surplus Million tons 0.1 1.1 0.3 Deficit Million tons 1.3 22.7 21.6 2.2 1.2 Prod. Imports Exports Cons. Prod. Imports Exports Cons. United States Russia 0.5 - 2.5 1.1 11.9 4.1 9.9 3.1 Prod. Imports Exports Cons. Prod. Imports Exports Cons. Mexico Brazil China 0.3 - 0.2 1.4 0.8 55.8 56.4 4.4 2.2 1.6 3.0 (0.3) Prod. Imports Exports Cons. Prod. Imports Exports Cons. Prod. Imports Exports Cons. Source: Goldman Sachs 13
  14. 14. Global Supply-Demand for Beef GLOBAL SUPPLY-DEMAND FOR BEEF & VEALChoose Year for Chart: 2020Estimates for Chart GS Goldman Sachs Estimates 2020 GLOBAL SURPLUS (DEFICIT) OF BEEF & VEAL Goldman Sachs Estimates United States European Union Surplus Million tons 1.5 1.6 0.2 Deficit Million tons 0.8 12.8 12.7 8.0 8.6 Prod. Imports Exports Cons. Prod. Imports Exports Cons. Brazil China 1.2 - 0.2 6.0 15.4 7.3 8.5 9.5 Prod. Imports Exports Cons. Prod. Imports Exports Cons. Argentina & Uruguay India Australia - 0.4 - 0.4 - 1.6 3.6 3.2 4.1 2.4 3.7 0.8 Prod. Imports Exports Cons. Prod. Imports Exports Cons. Prod. Imports Exports Cons. Source: Goldman Sachs 14
  15. 15. Beef Exports Brazil vs USA Both Brazil and the US continue to lead global beef exports. Brazilian Beef Exports (Tons) US Beef and Veal Exports (Tons)1.400.000 4.500 800.000 5.000 8.4% 4.000 700.000 4.5001.200.000 23.2% 3.500 4.000 600.0001.000.000 3.500 3.000 500.000 23.1% 800.000 10.8% 3.000 2.500 400.000 2.500 600.000 2.000 300.000 2.000 1.500 400.000 1.500 1.000 200.000 1.000 200.000 100.000 500 500 0 0 0 0 2005 2006 2007 2008 2009 JAN-SEPT JAN-SEPT 2005 2006 2007 2008 2009 JAN-SEPT JAN-SEPT 09 10 09 10 Beef Exports Avg Price in US$ per Ton Beef Exports Avg Price in US$ per Ton Source: USDA and Secex 15
  16. 16. Chicken Exports Brazil vs USA  The reopening of the Russian market in late August should boost US chicken exports in the latter half of 2010. Brazilian Chicken Exports (Tons) US Chicken Exports (Tons)4.000.000 2.000 4.000.000 1.200 1.800 -5.9%3.500.000 3.500.000 13.5% 1.000 1.6003.000.000 3.000.000 6.5% 1.400 8002.500.000 1.200 2.500.000 -5.7%2.000.000 1.000 2.000.000 6001.500.000 800 1.500.000 400 6001.000.000 1.000.000 400 200 500.000 200 500.000 0 0 - - 2005 2006 2007 2008 2009 JAN-SEPT JAN-SEPT 2005 2006 2007 2008 2009 JAN-SEPT JAN-SEPT 09 10 09 10 Chicken Exports Avg Price in US$ per Ton Chicken Exports Avg Price in US$ per Ton Source: USDA and Secex 16
  17. 17. Agenda Company Overview JBSS3 Stock Performance Market Overviewand Ongoing Actions 3Q10 Highlights 17
  18. 18. Highlights - 3Q10 Net revenue for the 3Q10 was R$14,069.6 million, practically stable in comparison to the 2Q10, which was R$14,116.3 million. Consolidated EBITDA increased by 2.6% q-o-q, reaching R$1,026.4 million for the 3Q10. EBITDA margin was 7.3% in the quarter. The main operating highlights were:  JBS Mercosul operations presented EBITDA of R$363.7 million and EBITDA margin of 10.4% for the quarter, versus 9.5% in 2Q10, despite challenges such as cost of raw materials and FX-rate.  JBS USA Pork presented EBITDA of US$90.8 million and a historical EBITDA margin of 11.8% in 3Q10.  JBS USA Chicken (PPC) had an EBITDA of US$170.0 million, 33.2% higher q-o-q, with EBITDA margin of 9.9%.  Consolidated customer base grew 15.3% q-o-q, primarily in Mercosul, and now exceeds 350 thousand clients globally. 18
  19. 19. 1 Consolidated Performance by Protein 1 R$ Millions Net Income EBITDA Margin EBITDA Beef 8,624.2 448.2 5.2% Pork 1,350.8 158.8 11.8% Chicken 2,994.1 309.5 10.3% Others 1,100.5 109.8 10.0% Total 14,069.6 1,026.4 7.3% Export Growth Customer Base Evolution4.500,0 400,04.000,0 350,03.500,0 300,03.000,0 250,02.500,02.000,0 200,01.500,0 150,01.000,0 100,0 500,0 50,0 - - 4Q09 1Q10 2Q10 3Q10 4Q09 1Q10 2Q10 3Q10 Exports (R$ Millions) Exports (mil tons) Customers (thousand) (1) in Local GAAP 19
  20. 20. JBS Consolidated Results Net Revenue (R$ million) EBITDA and EBITDA Margin (R$ million) 6,9% 7,1% 7,3% 5,4% 3,5% 1.026,4 1.000,0 862,0 14.116,3 14.069,6 12.550,3 397,88.379,9 7.408,9 291,9 -11.6% 69.4% 12.5% -0.3% 36.3% 116.7% 16.0% 2.6%3Q09 4Q09 1Q10 2Q10 3Q10 3Q09 4Q09 1Q10 2Q10 3Q10 Source: JBS EBITDA Margin (%) 20
  21. 21. 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$ billion) 3,5 3,5 3,4 3,3 3,0 1,8 1,7 1,7 1,7 772 739 2,8 2,8 2,8 606 646 1,7 559 1,73Q09 4Q09 1Q10 2Q10 3Q10 3Q09 4Q09 1Q10 2Q10 3Q10 3Q09 4Q09 1Q10 2Q10 3Q10 2Q09 3Q09 2Q10 3Q10 EBITDA (R$ mm) EBITDA EBITDA (US$ mm) EBITDA EBITDA (US$ mm) EBITDA EBITDA (US$ mm) EBITDA margin margin margin margin 10,6% 11,9% 9,3% 9,9% 11,8% 9,5% 10,4% 6,0% 7,5% 5,9% 6,6% 4,5% 3,8% 184,4 3,1% 6,6% 90,8 363,7 4,7% 5,4% 164,6 170,0 352,6 334,5 2,9% 2,7% 194,9 127,6 170,5 126,0 48,7 108,4 103,5 34,9 112,2 28,647,3 15,33Q09 4Q09 1Q10 2Q10 3Q10 3Q09 4Q09 1Q10 2Q10 3Q10 3Q09 4Q09 1Q10 2Q10 3Q10 2Q09 3Q09 2Q10 3Q10 Source: JBS EBITDA Margin (%) 21
  22. 22. Revenue Distribution by Market Revenue Distribution by Market 3Q10 Revenue Distribution by Market 2Q10 Pork Chicken Pork Chicken Exports 1% Exports 2% Exports 2% Exports 2% Beef Exports Beef Beef Exports 25% Beef Domestic 44% 25% Domestic 44% Chicken Domestic 20% Chicken Domestic 20% Pork Pork Domestic 8% Domestic 7% Exports = 28% Domestic Market = 72% Exports = 29% Domestic Market = 71%Revenue Distribution by Business Units 3Q10 Revenue Distribution by Business Units 2Q10 USA Chicken Mercosul 22% 27% USA Pork 9% * USA Beef * 42% Source: JBS * Including Australia 22
  23. 23. EBITDA Distribution by Business Units 3Q10 2Q10 USA BEEF *Mercosul 18.1% USA BEEF* 36.4% Mercosul 36.1% 43.9% USA PORK 15.9% USA PORK USA Chicken USA Chicken 7.4% 29.7% 12.6% Source: JBS * Including Australia 23
  24. 24. JBS Consolidated Exports Distribution JBS Exports 3Q10 JBS Exports 2Q10 Taiwan Canada 2% Others 4% 12% Africa and Middle East China 19% 4% South Korea Mexico 5% USA 12% 7% E.U. Japan 7% Russia Hong Kong 10% 10% 8% US$2,326.9 Millions US$2,3331.0 MillionsSource: JBS 24
  25. 25. Debt Profile The ratio of net debt to EBITDA was 2.9x in the quarter, slightly less than 3.0x in 2Q10. It is important to note that the liquidity of the balance sheet continues to improve, as the cash position amounted to R$4,402.5 million (25.2% higher than 2Q10), almost 90% of short-term debt, compared to 70.0% in the previous quarter and 55.0% in 1Q10. Additionally, the debt profile also improved. ST debt reached 33.0% of total debt in the 3Q10, compared to 36.0% in the 2Q10 and 40.0% in the 1Q10. Leverage ST / LT Profile 3,3 3,1 3,1 3,0 2,9x* 60% 64% 67% 40% 36% 33% 1Q10 2Q10 3Q10 3Q09 4Q09 1Q10 2Q10 3Q10 Short term Long term Source: JBS *LTM including Bertin and Pilgrim’s Pride pro-forma. EBITDA Margin EBITDA 25
  26. 26. Agenda Company Overview JBSS3 Stock Performance Market Overviewand Ongoing Actions 3Q10 Highlights 26
  27. 27. Stock Performance JBS’ shares fell 7.5% when compared with the 2nd Quarter closing price. The Ibovespa and the S&P 500 Indexes increased 13.4% and 11.1% respectively, in 3rd Quarter 2010. The sector, in general, was impacted by factors such as FX-Rate and rising input cost. The Company continues to focus on measures to enhance the share price. JBS vs Ibovespa in the 3Q10 130,0 125,0 120,0 115,0 110,0 105,0 100,0 95,0 90,0 85,0 80,0 Jul-10 Aug-10 Sep-10 JBSS3 IBOV Source: Bloomberg (Base 100 = 01/07/10) 27
  28. 28. Ongoing ActionsPending issues Actions JBS bought 50% of Inalca JBS in 2008 paying a total of € 218.5 INALCA JBS million. JBS filed a request at the International Chamber of Commerce in Paris to guarantee the right to nominate the CFO, which has been denied JBS from the outset. The Company requested Ernst & Young to conduct a full audit, which in progress. The Company closed 3 plants and concentrated its production in a Argentina more efficient industrial complex.  Laid off 1,500 employees from 4 plants.  Negotiated commercial agreements that will increase plants utilization and deficiencies as well as maximizing the Pilar Distribution Center.  Transferred headquarters from Buenos Aires to Rosario, reducing administrative expenses.  3Q10 income already reflects an improvement over the previous quarter due to these actions. 28
  29. 29. Ongoing Actions Pending issues Actions Convertible Debentures The Company believes that the most probable scenario is the conversion of the outstanding debentures at JBS USA during 2011.Debt Distribution and Income Tax Rate  The management is in advanced studies supported by specialized consultants, aiming to rebalance the Companys debt, according to the cash flow of each region.  The Company believes that a solution will be implemented during the first half of 2011, which should reduce the cost of capital and maximize the goodwill amortization, increasing the Companys profitability 29
  30. 30. Coverage by Equity Analysts The Company continues to work on increasing coverage by equity analysts. Please find here below the list of present analysts covering JBS.Institution Analyst Recommendation Target PriceBanco do Brasil Mariana Peringer Buy 13.18Bradesco Ricardo Boiati Outperform 11.00BTG Pactual Fábio Monteiro Buy 14.20Goldman Sachs Gustavo Wigman Neutral 8.60HSBC Pedro Herrera Overweight 11.50Link Rafael Cintra Outperform 12.00Merrill Lynch BofA Fernando Ferreira Buy 9.50Santander Luis Miranda Buy 13.50SLW Cauê Pinheiro Buy 12.30UBS Gustavo Oliveira Neutral 9.00Votorantim Daniel Fonseca Buy 12.00 Source: Bloomberg and Company 30
  31. 31. IR Contacts: ir@jbs.com.br +55 11 3144 4447 www.jbs.com.br/ir“In God We Trust, Nature We Respect” 31
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