Presentation – august

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Presentation – august

  1. 1. AugustJBS S.A. September 2011
  2. 2. JBS S.A.
  3. 3. JBS S.A. at a glanceFounded in the 1950’s in West Central BrazilIPO in 2007Leading protein producer and third largest food company in the WorldRevenues of over R$ 29.3 billion in the 1st semester 2011EBITDA of R$ 1.42 billion in the 1st semester 2011Organic growth of 14.2% in local currency in 2010125,000 employees worldwide134 production units in 5 continentsMarket cap of approximately R$ 13.8 billion(1) (1) 31/07/2011 PAGE 3
  4. 4. JBS Ranking1 Market Leader2 Track Record of successful acquisitions3 Geographic and 1 st Largest global beef and market segment lamb producer diversification 1 st Largest global leather processor4 Well-recognized brands 2 nd Largest global chicken producer 3rd Largest dairy producer in Brazil 3 rd Largest pork producer in the US Source: JBS PAGE 4
  5. 5. Merger and Acquisition track record1 Market Leader More than 30 acquisitions in 15 years 2005 JBS went international with the acquisition of Swift Argentina.2 Track Record 2007 JBS became the largest beef company in the world and the of successful biggest Brazilian company in the food industry and entered the acquisitions US pork market. Rockdale Beef 2008 Construction of a sustainable global meat Pilgrim´s Pride Inalca Tatiara Meat production and sales platform. (Swift Austrália)3 Geographic and Swift Foods Co. Merger with Bertin market segment 2009 Diversification of market segments through the Maringá (Amambay) JBS Couros diversification acquisition of Pilgrim’s Pride and merger with Bertin. Berazategui (Rio Platense) 5 new units 54.7 Colonia Caroya 2010 JBS Swift became the leader in lamb production in Tasman Australia. SB Holdings JV Beef Jerky Smithfield4 Well-recognized Rio Branco Cacoal 1 Venado Beef Five Rivers brands Cacoal 2 Tuerto Porto Velho Pontevedra 34.3 Barretos (Anglo) Vilhena (CEPA) 30.3 (Frigovira) Pres. Epitácio e Pedra Preta Campo grande (Frigo Marca) (Bordon) Cáceres (Frigosol) Barra do Rosário Garças Andradina Araputanga San Jose 14,1 Iturama (Sadia) (Sadia) (Frigoara) (Frigosol) (Swift Argentina) 4.3 0.3 0.4 0.4 0.5 0.5 0.4 0.7 1.2 1.5 1996 1997 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Net revenue (R$ billion) Source: JBS PAGE 5
  6. 6. Diversified market segments1 Market Leader2 Track Record of successful Beef acquisitions3 Geographic Transportation Pork and market segment diversification4 Well-recognized Leather Chicken brands Dairy Biodiesel products Collagen Lamb PAGE 6
  7. 7. Presence in more than 100 countries, in 6 continents1 Market Leader Strategic Geographical Distribution2 Track Record of successful acquisitions3 Geographic and market segment diversification4 Well-recognized brands 3 Pork 37 Chicken 7 Dairy 58 Distribution Center 134 Slaughterhouse and Industry 60 Beef 20 Leather 1 Biodiesel 7 Sales Office u Units Geographic Beef Chicken Pork Leather Dairy Lamb Presence and 85,825 heads/day 7.9 mm birds/day 50,000 heads/day 76,100 hides/day 5,400 tons/day 24,000 heads/day Production Capacity Source: JBS PAGE 7
  8. 8. Well-recognized Brands, symbols of quality1 Market Leader2 Track Record of successful acquisitions Brazil3 Geographic and market segment diversification Argentina4 Well-recognized brands EUA Australia PAGE 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 Expanding a global distribution Sales and distribution platform platform to reach end clients Developed an efficient and Production platform diversified global production platform Financial Experienced Cost reduction, Risk Structure Management process Management optimization EBITDA JBS’s Value & Strategy Margin PAGE 9
  10. 10. Perspectives for the animal protein market JBS is well positioned to serve global demand for animal protein A promising sector to invest in
  11. 11. Global consumption of animal protein has been increasingConsumption by region over the past ten years North AsiaNorth America E.U. - 27 +3.0% +47.7% +7.5% Middle East +41.4% +23.7% East AsiaCentral America +29% +70.2% Southeast Asia +48.7% +32.2% South America Oceania +23.3% AfricaSource: Rabobank PAGE 11
  12. 12. Global Protein Trade Continues to GrowJBS Has Presence in Markets That Represent Nearly 64% of Global Trade(MT in mm)300250200150100 50 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2019 Historical ForecastSource: Historical figures per USDA FAS. Projected and forecasted data per OECD estimates. PAGE 12
  13. 13. Global Protein Consumption Growth Strong Global Industry Fundamentals (MT in mm)25020015010050 0 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Source: USDA FAS PAGE 13
  14. 14. Global Beef TradeLargest Beef Exporters Others 10.0% Brazil 27.0% E.U. 1.0% Uruguay 5.0% Argentina 5.0% Canada 6.0% Australia 18.0% New Zealand 7.0% India 10.0% USA 11.0%Source: USDA PAGE 14
  15. 15. Brazil, Australia and the US continue to lead global beef exportsBrazil, Australia and US represent, respectively, 27%, 18% and 11% of global beef trade Brazilian Beef Exports (tons) 1.400.000 5.500 5.000 1.200.000 +31.6% 4.500 1.000.000 4.000 3.500 800.000 3.000 600.000 2.500 -16.4% 2.000 400.000 1.500 1.000 200.000 500 0 0 2005 2006 2007 2008 2009 2010 1H10 1H11 Australian Beef Exports (tons) US Beef and Veal Exports (tons) 1.400.000 5.500 1.400.000 5.500 5.000 5.000 1.200.000 +13.0% 1.200.000 +4.3% 4.500 4.500 1.000.000 4.000 1.000.000 4.000 3.500 3.500 800.000 800.000 3.000 3.000 600.000 2.500 600.000 2.500 +3.5% 2.000 +25.8% 2.000 400.000 1.500 400.000 1.500 1.000 1.000 200.000 200.000 500 500 0 0 0 0 2005 2006 2007 2008 2009 2010 1H10 1H11 2005 2006 2007 2008 2009 2010 1H10 1H11 Beef Exports Average Price (US$/Ton)Source: USDA, MLA and Secex PAGE 15
  16. 16. Chicken Exports Brazil vs USBrazil and US represent, respectively, 39% and 34% of global chicken tradeBrazilian Chicken Exports (tons) US Chicken Exports (tons)4.500.000 2.000 4.500.000 1.8004.000.000 1.800 4.000.000 1.600 +21.4%3.500.000 1.600 3.500.000 1.400 1.4003.000.000 3.000.000 1.200 1.200 +10.2%2.500.000 2.500.000 1.000 1.0002.000.000 2.000.000 800 +6.4% 8001.500.000 1.500.000 -1.7% 600 6001.000.000 400 1.000.000 400 500.000 200 500.000 200 0 0 0 0 2005 2006 2007 2008 2009 2010 1H10 1H11 2005 2006 2007 2008 2009 2010 1H10 1H11 Chicken Exports Average Price (US$/Ton)Source: USDA and Secex PAGE 16
  17. 17. Pork Exports US vs BrazilUS and Brazil represent, respectively, 32% and 11% of global pork tradeBrazilian Pork Exports (tons) US Pork Exports (tons) 3.000 3.0001.400.000 1.400.000 +7.2% +12.0% 2.500 2.5001.200.000 1.200.0001.000.000 2.000 1.000.000 2.000 800.000 800.000 1.500 1.500 +14.5% 600.000 600.000 1.000 1.000 400.000 400.000 -1.8% 500 500 200.000 200.000 0 0 0 0 2005 2006 2007 2008 2009 2010 1H10 1H11 2005 2006 2007 2008 2009 2010 1H10 1H11 Pork Exports Average Price (US$/Ton)Source: USDA and Secex PAGE 17
  18. 18. $ Global Surplus (deficit) Goldman Sachs forecast for animal protein in 2020 Surplus Deficit Beef & Veal Pork Chicken Source: Goldman Sachs PAGE 18
  19. 19. 2Q11 Highlights
  20. 20. 2Q11 Highlights Net revenue in 2Q11 was R$14,621.8 million, 3.6% higher than 2Q10. The Company ended the quarter with R$5.0 billion in cash more than a 100% of the short-term debt. The Company raised US$2.0 billion in long-term debt. JBS concluded the capitalization of the debentures in shares of JBS S.A. at R$7.04. All the business units of JBS presented significant organic growth y-o-y.The main operating highlights were: JBS Mercosul presented EBITDA of JBS USA Pork presented EBITDA of R$427.9 million, with a EBITDA margin of US$83.6 million, 71.7% greater than 11.8% 2Q10, with EBITDA margin of 9.9%. PAGE 20
  21. 21. JBS Consolidated Results – 2Q11 EBITDANet Revenue (R$ million) EBITDA and EBITDA Margin (R$ million) 1800,0 8,0 7.1 7.3 14,672.7 14,621.8 1600,0 6.0 5.7 14,116.3 14.069,6 14,319.6 1400,0 4.0 -0.3% +1.8% +2.5% -0.3% 1200,0 1,026 1,000 1000,0 866 836 +2.6% 800,0 -15.6% -3.5% 588 600,0 -29.7% 400,0 200,0 0,0 -12,0 2Q10 3Q10 4Q10 1Q11 2Q11 2Q10 3Q10 4Q10 1Q11 2Q11 EBITDA Margin (%)Source: JBS PAGE 21
  22. 22. Semester Analysis Performance by Business Unit JBS Mercosul JBS USA JBS USA JBS USA (PPC) (Including Australia) Net sales (R$ billion) Net sales (US$ billion) Net sales (US$ million) Net sales (US$ billion) 1.7 3.9 7.2 7.8 3.4 6.3 1.4 6.2 0 1H10 1H11 1H10 1H11 1H10 1H11 1H10 1H11 EBITDA (R$ mi) EBITDA (US$ mi) EBITDA (US$ mi) EBITDA (US$ mi) 1100 0,16 1000 0,2 0,14 0,18 0,15 1000 0,12 0,161100 0,13 0,14 0,1 900 0,12 0,11 0,08 900 0,11000 300 0,1 0,08 0,06 800 0,09 0,06 0,04 900 800 0,04 800 697.2 736.2 0,07 700 0,02 0 0,05 700 0,02 0 -0,02 188.9 0,05 -0,02 -0,04 -0,06 0,03 600 700 -0,04 -0,08 600 200 -0,06 0 -0,1 0,01 -0,12 600 -0,08 500 -0,14 365.4 500 -0,01 -0,1 -0,16 314.4 500 -0,18 -0,12 -0,05 -0,03 400 -0,2 400 83.6 -0,14 -0,22 400 -0,05 -0,24 -0,16 187.1 -0,26 300 100 300 -0,18 -0,1 -0,07 -0,28 300 -0,2 -0,3 -0,09 -0,32 200 -0,22 200 200 -0,34 -0,24 -0,15 -0,36 -0,11 -0,38 100 -0,26 100 100 -0,4 -102.8 -0,13 -0,28 -0,42 -0,44 0 -0,15 0 -0,3 0 -0,2 -0,46 0 -0,48 -0,5 1H10 1H11 1H10 1H11 1H10 1H11 -0,52 1H10 1H11 -100 -0,54 -0,56 -0,58 -200 -0,6 Source: JBS PAGE 22
  23. 23. Quarterly Analysis Performance by Business Unit JBS Mercosul JBS USA JBS USA JBS USA (PPC) (Including Australia) Net sales (R$ billion) Net sales (US$ billion) Net sales (US$ million) Net sales (US$ billion) 1300 1220 1140 4.0 1060 837 846 2.0 980 3.8 900 772 799 1.9 820 739 1.7 1.7 1.8 3.6 3.6 3.6 740 3.5 3.5 660 3.4 3.4 580 3.3 500 420 340 260 180 100 2Q10 3Q10 4Q10 1Q11 2Q11 2Q10 3Q10 4Q10 1Q11 2Q11 2Q10 3Q10 4Q10 1Q11 2Q11 2Q10 3Q10 4Q10 1Q11 2Q11 EBITDA (R$ mi) EBITDA margin EBITDA (US$ mi) EBITDA margin EBITDA (US$ mi) EBITDA margin EBITDA (US$ mi) EBITDA margin 500 16,0% 500 20,0% 11.8% 12.8% 12.6% 14,0% 18,0% 9.5% 11.8% 5.9% 5.4% 7.1% 12,0% 9.9% 16,0%600 10.4% 12,0% 10,0% 9.9% 14,0% 8.6% 400 3.1% 8,0% 400 7.5% 12,0% 7.1% 10,0% 1.1% 6,0% 6.6% 102.4 105.3 10,0% 6.9% 10,0%500 427.9 4,0% 8,0% 90.8 8,0% 2,0% 6,0% 269.7 334.5 363.7 0,0% 6,0% 300 -2,0% 100 83.6 300 4,0% -2.4%400 5,0% 308.6 2,0% -4,0% 4,0% 0,0% -6,0%300 238.8 2,0% 194.9 194.8 -8,0% -10,0% 170 -2,0% -4,0% 200 -12,0% 48.7 0,0% 200 127.6 -2.9% -6,0% 124.8 0,0% -14,0% -8,0%200 -2,0% 103.5 -16,0% -18,0% -10,0% -12,0% -4,0% -20,0% 100100 -6,0% 100 44.7 -22,0% -24,0% -5,0% -14,0% -16,0% -18,0% -8,0% -26,0% -28,0% 0 -55.2 -47.6 -20,0% -22,0% 0 -10,0% 0 -30,0% 0 -10,0% -24,0% 2Q10 3Q10 4Q10 1Q11 2Q11 -26,0% 2Q10 3Q10 4Q10 1Q11 2Q11 2Q10 3Q10 4Q10 1Q11 2Q11 2Q10 3Q10 4Q10 1Q11 2Q11 -100 -28,0% -30,0% EBITDA Margin (%) Source: JBS PAGE 23
  24. 24. Revenue and EBITDA Distribution by Business Unit Revenue - 2Q11 Revenue - 2010 21.5% 25.4% 22.5% 24.8% 9.6% 9.7% 43.5% 43.0% EBITDA - 2Q11 EBITDA -12.6% 73.4% 23.0% 34.7% 26.5% 12.6%12.7% 29.7% Source: JBS PAGE 24
  25. 25. Organic Growth Each business unit presented double digit organic growth in their local currency, for the period. JBS USA Beef – Net Revenue (US$ million) JBS USA Chicken – Net Revenue (US$ million) 4.000 2.100 3.800 2.000 3.600 3.400 1.900 3.200 1.800 3.000 1.700 2.800 2.600 1.600 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 JBS USA Pork – Net Revenue (US$ million) JBS Mercosul – Net Revenue (R$ million) 850 3.600 800 3.500 750 3.400 700 3.300 3.200 650 3.100 600 3.000 550 2.900 500 2.800 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11Source: JBS PAGE 25
  26. 26. JBS Consolidated Exports Distribution Others 16.0% Japan 13.7% 2Q11Vietnam1.2% Africa and Middle East 13.6%Taiwan 2.7%China 4.1% US$ 2,363.6 millionCanada 4.8% Mexico 13.0%Hong Kong 6.8% E.U. 6.9% Russia 9.5% South Korea 7.7% Others 14.0% Africa and Middle East 15.9% 1Q11 Philippines 1.3% Mexico 14.4% Taiwan 2.5% China 4.0% US$ 2,450.3 million Canada 4.4% Japan 13.1% E.U. 5.2% Hong Kong 6.8% Russia 8.4% South Korea 10.1% Source: JBS PAGE 26
  27. 27. Debt ProfileNet debt to EBITDA, excluding Pilgrim’s Pride Corp. (PPC)*, went from 2.9x in 1Q11 to 3.2x in 2Q11Net debt to EBITDA, including Pilgrim’s Pride Corp. (PPC)*, went from 3.1x in 1Q11 to 3.6x in 2Q11The Company ended the quarter with R$5.0 billion in cash or cash equivalents, more than a 100% of the Company’s short-term debtLeverage ST / LT Profile 2Q11 27% 73% 1500 3.6x 1300 3.1 1100 3.0 2.9 3.0 3,0 1Q11 30% 70% 900 4Q10 33% 67% 700 2,0 500 3Q10 33% 67% 300 1,0 100 2Q10 36% 64% -100 2Q10 3Q10 4Q10 1Q11 2Q11 0,0 . Leverage EBITDA Short Term Long TermSource: JBS PAGE 27* subsidiary controlled by JBS with non-recourse debt.
  28. 28. Stock MarketIn 2007, JBS was the first Company in the beef industry to trade its shares on the stock market
  29. 29. ShareholdersAverage dailytraded volumeof R$ 22.7million in 3.0%2Q11 Source: JBS PAGE 29
  30. 30. $ Sell-side analyst recommendation Institution Analyst Recommendation Target Price (R$) Banco do Brasil Mariana Peringer Hold In revision– 10.20 (last) Bradesco Ricardo Boiati / Alan Cardoso Market Perform 8.80 BTG Pactual Fábio Monteiro / Thiago Duarte Buy 9.30 Citi Carlos Albano Hold 7.40 Goldman Sachs Gustavo Wigman / Claudio Lensing Neutral 7.30 HSBC Pedro Herrera / Diego Maia Neutral 6.40 Merrill Lynch BofA Fernando Ferreira / Isabella Simonato Neutral 5.00 Santander Luis Miranda Hold 7.00 Safra Erick Guedes / Fernando Labes Outperform 10.35 UBS Gustavo Oliveira / Flavio Barcala Neutral 5.10 Source: Bloomberg and JBS PAGE 30
  31. 31. Corporate GovernanceJBS is listed on the Novo Mercado, a segment in which companies are committed tofollowing a series of rules that provide better transparency and security to investors Transparency Management and Board of Directors Good Governance Practices Board of Directors Audit Committe Confidence 11 members 5 members Best services and products 1 president Consist of shareholders or not, liable to 5 permanent directors be elected or dismissed at any time of Solidity 5 permanent independent directors the General Meeting. Profitability Future * Board of Executive Officers Committes of Directors Elected by the board of directors, for three-year terms, and are eligible for reelection. 4 committes Audit Finance Human Resources Corporate Strategy / Sustainability PAGE 31
  32. 32. SustainabilityJBS is listed on the Novo Mercado which guarantees transparency, confidence and continuous improvements in best practices
  33. 33. Social, economic and environmental responsibility has always been a part of thedevelopment and business growth of JBS Foundation Economic Social Environmental Risk and Crises Citizenship and Environmental Management Education Management Corporate Direction Good Practices of Human Eco-efficiency Resource Knowledge Management Sustainable Cattle Human Capital Breeding Stakeholders Development Engagement Climate Changes Premises Priorities Ecologically viable Sustainable use of the materials * Clean Development Ecologically correct Partnership with reputable organizations Mechanism **United Nations Socially responsible Health and Quality of life Framework Convention on Climate Change Culturally acceptable Climate Residue TreatmentSource: JBS Sustainability Policy PAGE 33
  34. 34. JBS Institute funds Germinare School Social Responsibility Social GERMINARE SCHOOL Started in 2010 Germinare School is a social initiative of the JBS Institute which looks at Education as the principal instrument to transform society. Purpose: to prepare well-educated and well-rounded citizens with a broad cultural repertoire, sound ethical values and a positive attitude toward life and society. Classroom SocialNumber of students (2011): 270Capacity of 630 students.Top Brazilian professors.Area: 6,000 m2Sport complex, swimming pool, computer lab and chemistry lab.Selection process: tests and group dynamics.Amount invested: R$15 million Laboratory Source: JBS PAGE 34
  35. 35. JBS actions related to cattle traceability and the Amazon Biome SustainabilityGTPS (Sustainable Livestock Working Group) SocialSatellite image monitoring of the Amazon BiomePurpose: reduce deforestation in the Amazon Biome; avoidpurchasing cattle from Environmentally Protected Areas – EPAs,Indigenous reserves and protected areas; eradication of slavelabor in Brazil. AmazonSocial JBS Brazil monitors a 100% of its cattle suppliers properties via satellite georeferencing (GPS monitoring). JBS contains a database of almost 12,000 cattle ranches registred in the Amazon Biome. After the property coordinates are collected, the data is keyed into JBS’s registry of cattle suppliers and is sent to an outsource company to be analyzed by superimposing on a map constructed from satellite images and the DETER(1) and PRODES(2) produced by Brazil’s National Satellite image Institute for Space Research – INPE. Source: JBS Sustainability Policy (1)Real Time Deforestation Detection PAGE 35 (2)Legal Amazon Deforestation Monitoring Project
  36. 36. Mission“To be best in what we set out to do, totally focused onour 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 to all our employees.

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