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Jbs presentation september v0

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  • 1. September, 2010
  • 2. 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. 2
  • 3. Agenda Company Overview Market Overview 2Q10 Highlights Short Term Outlook 3
  • 4. Who We Are Our Mission To be the best at what we set out to do, totally focused on our business, ensuring the best products 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. 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 Cunha Marco Roberto Francisco O’Callaghan / Eliseo Medeiros Offices Teixeira Bastos Bortolon Motta de Assis e Silva Guilherme Arruda Fernandes Marco Bichieri Mr. Marcos Bastos, 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, Graduate from the 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 Mackenzie University in 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 Business Administration post graduated from the the University of Cork Accounting Degree from Initially started as a been working in the Beef Sector. Worked for more Was responsible for and Controller of and has a MBA in University of Mackenzie. College in Ireland. the University Católica de Production Manager and Sector since 1975. 14 than 20 years in Bertin. incorporating BMZ Hides business units of Bertin, Finance from San Immigrated to Brazil in Pernambuco and a post in 2009 was promoted to year in Bertin and with the JBS Group. where he later served as Started working at JBS Francisco State 1979. Started working in graduate degree in Chief Operating Officer of started at JBS in 1997. a member of the Board in December of 2001 University. Worked in the Beef Sector in 1983 Business Administration the Brazil Beef Division. January 2010 became for 5 years. many financial and later became a and in JBS in 1996 in from FGV. Started with the Director of New institutions in Brazil, member of the Executive order to develop the JBS in August 2005 and Business. primarily in Investment Board in January of Trade Area and eventually became banking, Financial 2007. eventually became the Director of Administration Projects, and Portfolio Investors Relations and Corporate management. Started Officer. Governance. 8 years in 2008 with JBS. Mr. Guilherme Arruda Experience in Auditing graduated in Business and Consulting and 10 and Economics from the years in the Retail University of California. industry. Start in the Company in 2009 after working for 7 years for BTG Pactual 5
  • 6. Corporate Structure CEO USA/AUS Wesley Batista JBS Five Human Pork JBS Carriers Trading CFO Pilgrim's Pride Beef USA Australia Rivers Resources Martin Mr. Moe Robert André Don Jackson Richard Vesta Iain Mars Mike Bob Dooley Schroder Wadland Nogueira Thoren Daubenspeck Mr. Moe Schroder has Mr. Don Jackson is the Mr. Richard Vesta, Mr. Martin Dooley Mr. Iain Mars, born Mr. Thoren, Mr. Robert Wadland Mr. Robert Mr. André Nogueira has more than 30 years President, CEO and joined Smithfield Foods Has a degree in Biology in England and is the President and 27 years of meat Daubenspeck a degree in Economics experience in Director since January with the Acquisition of from the University of worked in the Beef CEO of Five Rivers trading experience with assumed this position from the Federal Transportation Sector. 2009. For 9 years was Parkerland in 2001 and Eastern Illinois. Worked Industry for his whole since the Start of the 17 years of that at JBS in February 2009 and University Fluminense, a Graduated from the the president of the now serves as the in Swift for his whole life, life. He became the Company. Has a to enhance exports out before that was in masters in Capital University of Ryerson, chicken division of Foster president and CEO of having started the President and CEO Masters of Science in of Australia and New JBS Packerland from Markets from FGV – Toronto, Canada. Farms and vice president JBS Packerland company as a manager of JBS Australia in Agricultural Economics Zealand. Recently 2002 to 2008. Fundação Getúlio Occupied the position of Food Services in trainee in 1983. In 2007 2007, after the and has a degree in transferred to the US to Vargas, and masters in of Vice President of ConAgra Poultry was given the position of acquisition of Swift. Agribusiness from the run the group’s trading Economics from Sales, Dedicated Company. president of the Pork He has worked in University of business unit University of Brasilia in Operations at KLLM Before this worked at Division of JBS USA. JBS since 2005. Washington State. 2003. Worked more than and before that was in Seaboard farms of 20 years at Bank of Brazil various executive Athens for 22 years, and started at JBS USA positions at CR including 4 years as the in 2007 after the Swift England for a period of CEO of the Chicken acquisition. 15 years; Division 6
  • 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 2Q10 Source: JBS 7
  • 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 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: 41.2 55.6 1.4 1.1 Geographic 6.7 Presence 28.6 6.9 48.5 28.6 4.5 and 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. 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 management EBITDA Margin optimization JBS’ Value & Strategy 9
  • 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. Agenda Company Overview Market Overview 2Q10 Highlights Short Term Outlook 11
  • 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. Animal protein consumption growth in the last decade Former USSR 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 13
  • 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 4.500 4.500 4.000 600.000 5.3% 1.200.000 26.6% 4.400 3.500 500.000 1.000.000 3.000 4.300 400.000 800.000 2.500 24.3% 4.200 300.000 600.000 7.0% 2.000 4.100 1.500 200.000 400.000 4.000 1.000 100.000 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. 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 1.600 2.500 1.400 2.500.000 800 2.000 1.200 1.1% 2.000.000 1.000 -6.5% 600 1.500 800 1.500.000 400 1.000 600 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. Agenda Company Overview Market Overview 2Q10 Highlights Short Term Outlook 16
  • 17. Highlights for the 2nd Quarter 2010  Revenues increased 52.5% y-o-y and 12.5% to R$14,116.3 million • JBS USA increased 67.6% y-o-y and 12.9% q-o-q • JBS MERCOSUL increased 123.1% y-o-y and 19.1% q-o-q • JBS Exports increased 37.0% q-o-q reaching 29% of sales  EBITDA increased 163.3% y-o-y and 16.0% q-o-q.  Leverage remained fairly stable at 3.0x  Consolidated customer base grew by 22.2% q-o-q, reaching more than 300 thousands customers in 2Q10. 17
  • 18. JBS Consolidated Results Net Revenue (R$ 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 12,550.3 9,255.0 397.8 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. Performance by Business Units JBS MERCOSUL JBS USA Beef JBS USA Pork JBS USA Chicken (PPC) Including Australia Net 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 2.8 606 554 559 2T09 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 24.7 82.6 15.3 47.3 2T09 3T09 4T09 1T10 2T10 2Q09 3Q09 4Q09 1Q10 2Q10 2Q09 3Q09 4Q09 1Q10 2Q10 1Q09 2Q09 1Q10 2Q10 Source: JBS EBITDA Margin (%) 19
  • 20. Revenue Distribution by Market Revenue 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. EBITDA Distribution by Business Units 2Q10 1Q10 Mercosul 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. 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% Mexico South 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. Debt While JBS leverage remained fairly constant in the quarter (at 3.0x LTM EBITDA), the liquidity of the balance sheet improved significantly. The company’s cash position increased 17,5% when compared with 1Q10 (which represents 70% of the company’s ST debt, from 55% in the previous quarter), while ST debt decreased 7,7% in the same period. Considering the US$700mm bond issuance in July, ST debt on a pro-forma basis would represent roughly 33% of total debt, closer to the company’s target of having less than 30% of its total debt maturing in the ST. Leverage ST / LT Profile 3.3 3.1 3.1 3.0x * 2.6 61% 60% 64% 67% 39% 40% 36% 33% 2Q09 1Q10 2Q10 ** (Pro-Forma)* 2Q09 3Q09 4Q09 1Q10 2Q10 Short term Long term Source: JBS *LTM including Bertin and Pilgrim’s Pride pro-forma. ** Pro-Forma takes into account senior unsecured notes issued July, 2010 23
  • 24. Agenda Company Overview Market Overview 2Q10 Highlights Short Term Outlook 24
  • 25. A Closer look at synergies – Pilgrim’s Pride  JBS already captured US$ 150 million in synergies with Pilgrim’s Pride acquisition of a total 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$70mm 23% Source: JBS 25
  • 26. A Closer look at synergies – Bertin S.A.  JBS already captured R$ 154 million in synergies due to the merger with Bertin of a total estimated 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. 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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