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Presentation jbs conference call 3 q

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  • 1. JBS DAYNovember 14th, 2012Earnings Release 3Q12
  • 2. JBS S.A.
  • 3. JBS S.A. at a GlanceFounded in the 1950’s in Midwest of BrazilIPO in 2007Leading protein producer in the WorldNet Revenue of R$53.8 billion accumulated in nine months of 2012EBITDA of R$3.2 billion accumulated in nine month of 2012Organic Growth of 16,0% in first 9 months of 2012 compared to 9M11140,000 employees worldwide307 production units in 5 continents PAGE 3
  • 4. JBS Ranking 1 st Largest global beef and lamb producer 1 st Largest global leather processor 1 st Largest global chicken producer 3 rd Largest pork producer in the USSource: JBS PAGE 4
  • 5. Sustainable GrowthAdequate Capital Structure and Qualified Management to Promote Growth Long Term 2010 to 2012 2008 to Global Distribution Platform 2009 And Value Added Products Integration of the Increase in the portfolio operations and focus on with high value added cash generation products Recognition and leadership 2005 to Constructing a global Reduction of Operating in brand and quality 2007 meat production Costs Direct service to retail and platform Reduction of Working foodservice Capital Needs Higher margins and cash Geographic Capture of Synergies generation diversification in Adequate the Capital Reduction of Cost of Investments in Marketing, regions with low Structure Debt Research and production costs Benchmark between Development. Debt to finance Protein diversification production platforms Building Global Brands Working Capital Access to all consumer Economies of Scale  Equity to finance markets growth Leadership in countries with production surplus PAGE 5
  • 6. 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 Done JBS’s Value & Strategy Margin PAGE 6
  • 7. Presence in More Than 100 Countries, in 5 Continents1 Production Strategic Geographical Distribution – Exports to more than 150 countries and more the 300.000 clients Platform2 Sales and Distribution Platform3 Added Value USA Products 30 DCs4 Brands Brazil: Australia 11 DCs 7 DCs 2 Biodiesel Slaughterhouses and 3 Pork 39 Chicken 64 Distribution Center 301 Production Units 61 Beef 6 Lamb 29 Leather 17 Sales Office Geographic Beef Chicken Pork Leather Lamb Presence and 81,400 heads/day 8.3 mm birds/day 50,100 heads/day 86,300 hides/day 18,265 heads/day Production Capacity Source: JBS PAGE 7
  • 8. High Value Added Products Portfolio1 Production Top of Mind Brands Platform2 Sales and FRESH BEEF DEEP FROZEN PRODUCTS Hamburger Distribution Swift Black Arab Cuisine Specialties Platform Swift Orgânico Meatballs Swift Maturatta Potatoes Swift Grill Lamb products3 Added Value Açougue Swift Fish products Products Swift Linha Profissional Swift Friboi4 Brands INDUSTRIALIZED Canned vegetable Ham Corned beef Feijoada Pâté Jerky / Jerked Beef Sausage PAGE 8
  • 9. Well-recognized Brands, symbols of quality1 Production Platform2 Sales and Distribution Platform Mercosul3 Added Value Products4 Brands USA Australia PAGE 9
  • 10. Perspectives for the animal protein market Global Scenario
  • 11. World’s Food* Surpluses and DeficitsNet intra-regional trade, million tonnes 150 100 50 Central Western Middle East America Europe Asia & Africa 0 North South Australia America America 50 Eastern Europe and former 100 Soviet Union 150 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010* Cereals, rice, oilseeds, meals, oils and feed equivalent of meat. PAGE 11 Source: The Economist
  • 12. Beef Production and Consumption Forecasts - 2000/2021Global Scenario 76.5 CAGR¹ 1.2% 75.9 59.1 58.8 CAGR² 1.2% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E (million tons) Beef Production Beef ConsumptionSource: FAO PAGE 12Note 1. Production CAGR / Note 2. Consumption CAGR
  • 13. US Cattle Herd and Beef Production Substantial Recovery starting in 2014120 14 US Cattle Herd (million head) US Annual Beef Production (million tonnes cwt)115 Forecast 13110 12105100 11 95 10 90 9 85 80 8 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012E 2014E 2016E 2018E 2020E Source: USDA and JBS PAGE 13
  • 14. World Average Meat Consumption per Person, 60’s to 2030Consumption (kg/capita/year) 1964-66 1997-99 2030 0 5 10 15 20 25 30 35 40 45 50 Poultry Pork Lamb BeefSource: FAO PAGE 14
  • 15. Meat Consumption Growth Forecast 2011-2020 Expected increase in meat demand by country groupsMeat Consumption Forecast (Million tons) between 2010 - 2020 338.3 Developed 73.6 278.2 15.6 228.1 64.6 19% 58.6 12.7 126.6 11.2 105.7 81% 90.8 122.5 95.1 67.5 2001 Ave 2008-10 2020 Emerging Poultry Pork Sheep BeefSource: FAO - OECD PAGE 15
  • 16. Protein Consumption in the World Today is Half That Recommended by FAOPer Capita Meat Consumption (Kg/per capita) The population growth coupled with rising living standards around the world will drive an increase in demand for proteins in the emerging middle class 121 88 80 82 62 69 48 42 China Russia Rússia Mexico México EU - 27 UE-27 Brazil Brasil USA EUA World Mundo Developed DesenvolvidosSource: FAO PAGE 16
  • 17. Global Protein Trade – Largest ExportersJBS is present in the main exporter markets Beef Exports Others 13% India* 20% Canada 5% Brazil 17% New Zealand 6% Mercosul** 9% USA 14% Australia 17% Chicken Exports Pork Exports Others 7% Others 4% Turkey 3 % Brazil 36% Chile 2% Argentina 3% USA 34% China 4% Thailand 5% Brazil 9% E.U. 12% Canada 17% E.U. 30% USA 34%Source: USDA 2012 (Estimated) PAGE 17*Buffaloes / **Not considering Brazilian exports
  • 18. 3Q12 Highlights
  • 19. 3Q12 Highlights Net Revenue (R$ billion) EBITDA (R$ million) Net Income (R$ million) 2000,0 8,0 7.1 600,0 1800,0 495.4 19.4 5.1 500,0 1600,0 1,378.8 15.6 1400,0 400,0 1200,0 1000,0 300,0 786.8 800,0 24% 200,0 600,0 75% 400,0 100,0 -67.5 200,0 0,0 -12,0 0,0 3Q11 3Q12 3Q11 3Q12 3Q11 3Q12 -100,0 -12 EBITDA margin (%) Positive Operating Cash Flow of R$630 million R$157 million Free Cash Flow Leverage decreased significantly and was 3.68x at the end of the quarter PAGE 19
  • 20. 9M12 Highlights Net Revenue (R$ billion) EBITDA (R$ million) Net Income (R$ million) 5000,0 8,0 4500,0 6.0 53.8 4.9 948.6 4000,0 1000,0 3500,0 3,239.4 800,0 3000,0 2500,0 2,210.4 600,0 2000,0 44.9 400,0 1500,0 20% 47% 1000,0 200,0 500,0 -101.3 0,0 -12,0 0,0 9M11 9M12 9M11 9M12 9M11 9M12 -200,0 -12 EBITDA margin (%) PAGE 20
  • 21. Strategic EventsJBS entered the Canadian beef market through the signature of an agreement to manage and operate assets of XLFoods in Canada, including a purchase option (2 plants, 1 feedlot and a farm) and XL Foods assets in the UnitedStates (2 plants).The Company also signed a term sheet to acquire 100% of the shares of Agrovêneto S.A. a company specialized inthe production of chicken products which operates out of Nova Veneza in the southern Brazilian state of SantaCatarina. The plant has capacity to process 140,000 birds per day.JBS is scheduled to open 6 new beef plants in Brazil in the coming months as follows: Rolim de Moura, state ofRondonia which is due to initiate operations on 19.Nov.2012, Nova Andradina (Mato Grosso do Sul) with start-upscheduled for 03.Dec.2012, Pontes e Lacerda and Vila Rica, both in the state of Mato Grosso, scheduled to start on07.Jan.2013, Senador Canedo (Goiás) scheduled for 04.Feb.2013 and Castelo dos Sonhos, in the Northern state ofPará, scheduled for 08.Apr.2013. These plants will add a total capacity of 1.2 million head of cattle by 2013, whichrepresents a 15% increase over the current capacity in Brazil. PAGE 21
  • 22. JBS Consolidated Results – 3Q12 EBITDANet Revenue (R$ million) EBITDA and EBITDA Margin (R$ million) 1800,0 8,0 19,366.6 7.1 18,468.3 1600,0 5.6 5.5 16,934.5 5.1 1,378.8 16,011.1 4.3 15,567.8 1400,0 +4.9% +15.3% 1200,0 +8.8% -5.5% 1,012.8 1000,0 940.6 786.8 800,0 696.5 +36.1% 600,0 +19.5% +45.4% -26.0% 400,0 200,0 0,0 -12,0 3Q11 4Q11 1Q12 2Q12 3Q12 3Q11 4Q11 1Q12 2Q12 3Q12 EBITDA Margin (%)Source: JBS PAGE 22
  • 23. JBS MercosulPerformance by Business Unit 24% % Net Revenue JBS S.A.Net Revenue (R$ billion)  Net revenue at JBS Mercosul came in at R$4,597.8 million in 3Q12, YoY 17.7% 4.6 increase of 17.7% in comparison with 3Q11. 4.3 3.9 3.8 3.8  EBITDA totaled R$665.6 million in 3Q12, an increase of 46.7% over the same quarter last year. 3Q11 4Q11 1Q12 2Q12 3Q12EBITDA (R$ million) 850 13.3% 14.6% 14.5% 16,0%  EBITDA margin at JBS Mercosul was 14.5% in the quarter. 750 11.6% 10.7% 14,0% 665.6 12,0% 650 630.3 10,0% 508.6 8,0% 550 453.8 407.7  The result of this business unit reflects an improved cattle cycle in 6,0% 450 4,0% 2,0% 350 Brazil, the Company’s efforts to enhance operational efficiencies and to 0,0% 250 -2,0% -4,0% 150 -6,0% capture synergies in addition to the Company’s strategy. 50 -8,0% -50 -10,0% 3Q11 4Q11 1Q12 2Q12 3Q12 EBITDA Margin (%)Source: JBS PAGE 23
  • 24. JBS USA Beef (including Australia) 45%Performance by Business Unit % Net Revenue JBS S.A.Net Revenue (US$ billion) YoY  Net revenue for this business unit was US$4,275.9 million in the 1.6% quarter. 4.5 4.2 4.3 4.3 4.1  This quarter was the turning point when margins became positive in 2012. EBITDA at JBS USA Beef unit totaled US$175.1 million in the period, with an EBITDA margin of 4.1%. 3Q11 4Q11 1Q12 2Q12 3Q12EBITDA (US$ million)  The improvement in the dynamics of the sector in the U.S., due 500 16,0% 14,0% 12,0% to the better balance between supply and demand, permitted an 10,0% 400 4.4% 5.0% 4.1% 8,0% 6,0% -0.2% improvement in margins at JBS USA. -1.1% 4,0% 2,0% 300 0,0% 223.6 -2,0% 184.1 -4,0% 200 175.1 -6,0% -8,0%  Furthermore, the successful outcome of the operation in -10,0% -12,0% -14,0% 100 -16,0% -45.4 -9.1 Australia contributed to the results of this business unit. -18,0% -20,0% -22,0% 0 -24,0% 3Q11 4Q11 1Q12 2Q12 3Q12 -26,0% -28,0% -100 -30,0% EBITDA Margin (%)Source: JBS PAGE 24
  • 25. 9%JBS USA PorkPerformance by Business Unit % Net Revenue JBS S.A.Net Revenue (US$ million) YoY  Net revenue in the pork business for the quarter was US$846.1 1300,0 -2.4% million, 2.4% lower than 3Q11. 1220,0 1140,0 1060,0 923.1 844.0 846.1 980,0 867.1 855.4 900,0 820,0 740,0 660,0 580,0  EBITDA was US$40.4 million in 3Q12 with an EBITDA margin of 500,0 420,0 340,0 260,0 4.8%. 180,0 100,0 3Q11 4Q11 1Q12 2Q12 3Q12EBITDA (US$ million) 199,977  The quarterly result was influenced by the reduction of average 8.8% 13,0% 8.3% 6.5% 5.8% 4.8% 9,0% 5,0% selling prices in general, compared to last year, due to oversupply 1,0% 99,977 75.9 77.0 -3,0% -7,0% of finished products in the period. 55.8 49.2 40.4 -11,0% -15,0% -19,0% -0,023 -23,0% 3Q11 4Q11 1Q12 2Q12 3Q12 EBITDA Margin (%)Source: JBS PAGE 25
  • 26. JBS USA Poultry (Pilgrim’s Pride Corporation) 22%Performance by Business Unit % Net Revenue JBS S.A.Net Revenue (US$ billion)  Net revenue in the 3Q12 for this business unit came in at YoY US$2,068.5 million, 9.4% higher than the same period of 2011. 9.4% 2.0 2.1 1.9 1.8 1.9  EBITDA in the 3Q12 was US$105.6 million, reversing the negative US$31.4 million in 3Q11. 3Q11 4Q11 1Q12 2Q12 3Q12EBITDA (US$ million)  EBITDA in the 3Q12 was US$105.6 million, reversing the negative US$31.4 million in 3Q11. 500 6.4% 9,0% 5.5% 5.1% 7,0% 400 5,0% 1.2% 3,0% 300 -1.7% 1,0% -1,0% -3,0% 104.0 125.7  Reduction in the PPC’s net debt to US$1.1 billion at the end of 200 -5,0% 105.6 -7,0% -9,0% 22.6 September, as a consequence primarily of the US$75.6 operating cash 100 -31.4 -11,0% -13,0% flow. 0 -15,0% 3Q11 4Q11 1Q12 2Q12 3Q12 -17,0% -19,0% -100 -21,0% -23,0% -200 -25,0% EBITDA Margin (%)Source: JBS PAGE 26
  • 27. JBS Consolidated Exports Distribution in 3Q12Approximately US$2.53 billion, an increase of 7,9% in relation to 2Q12 Others 18.6% Africa and Middle East 14.5% Taiwan 1.6% Mexico 13.7% Venezuela 2.0% US$2,534.4 Chile 2.9% million China, HK and Vietnam 12.7% Canada 4.3% Japan 11.6% South Korea 4.6% E.U 6.7% Russia 6.8%Source: JBS PAGE 27
  • 28. Debt Profile
  • 29. Debt Profile3Q12 Net debt to EBITDA was 3.68x, substantially lower than the 2Q12.The Company ended the quarter with R$5,0 billion in cash, which represents more than 90% of short-term debt.The percentage of short term debt increased from 23% in 2Q12 to 27% in 3Q12. Leverage ST / LT Debt Profile 1500 5 4Q11 28% 72% 1300 4.30 4.27 1100 4.04 4.00 3.68 4 1Q12 27% 73% 900 3 700 500 2 2Q12 23% 77% 300 1 100 3Q12 27% 73% -100 3Q11 4Q11 1Q12 2Q12 3Q12 0 . Leverage EBITDA (R$ million) Short Term Long Term .Source: JBS PAGE 29
  • 30. Debt Maturity Schedule and Profile Net Debt: 15,243.9 (R$ million) Short Term Net of Cash 2013 2014 2015 2016 2017 2018 2019 and after -202 -172 -472 -1,454 -2,081 -2,727 -3,743 -4,393 Breakdown by Currency and Company Bonds / Other JBS S.A. Subsidiaries 3Q12 59% 41% Bonds Other 3Q12 39% 61% 3Q12 R$ 27% USD 73%Source: JBS Financial Statements 3Q12 PAGE 30
  • 31. Sustainability andSocial Responsability
  • 32. JBS actions related to cattle traceability and the Amazon Biome Sustainability EnvironmentalJBS SA participates in CDP - Carbon Disclosure Project.Also, JBS integrates the Carbon Efficient Index of BOVESPA - ICO2.Satellite image monitoring of the Amazon Biome.Purpose: reduce deforestation in the Amazon Biome; avoidpurchasing cattle from Environmentally Protected Areas – EPAs,Indigenous reserves and protected areas; eradication of slavelabor in Brazil. AmazonSocial & Environmental JBS Brazil monitors a 100% of its cattle suppliers properties via satellite geo-referencing (GPS monitoring). JBS contains a database of almost 12,000 cattle ranches registered 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 32 (2)Legal Amazon Deforestation Monitoring Project
  • 33. 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: 360 (2012)Capacity 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 33
  • 34. 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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