AnnuAl RepoRt                                2008
  theRe is one thing thAt is devAstAting when lAcking
but, if developed ...
indicAtoRs
net profit . R$ million     ebitdA . R$ million              consolidated gross
                               ...
mission,
cReed And
vAlues
            the mission of Jbs s.A.

                    “Maximise the value of each animal in a...
history of Jbs



 the history of Jbs has been marked by the acquisition of more than 30 units
 over the last 15 years, wi...
index
AnnuAl
RepoRt
2008           Jbs historical overview
               Jbs today
                                      ...
Jbs oveRview
55 yeARs
of impoRtAnt
Acquisitions
And stRong
inteRnAtionAl                                                  ...
Jbs todAy
        JBS is now the largest beef producer in the world, with                    The operations in the United ...
Jbs woRldwide
globalized production and distribution platform




   JBS NO MUNDO

    Slaughterhouse (Beef)
    Slaughter...
Jbs bRAzil


description                                                            :        19 slaughtering units situate...
Jbs ARgentinA


  description                                                             platform
  :     In 2005, JBS ac...
Jbs united stAtes


description                                                                        :           3 pig-s...
Jbs AustRAliA


        description                                                           platform
        :      The ...
inAlcA Jbs itAly


description                                                            distribution
:      The Italian ...
who Jbs is

pioneeRism
hAs been the
mARk of the                                                                       The ...
JBS is present in all the world’s consumer markets thanks          volume sold . thousand tonnes – 2008
to its productive ...
messAge fRom
the pResident
Joesley mendonça batista
President of JBS S.A.




        We kept at 2008 the same growing rat...
with                         Although pointing to 2009 as a year to conservative
                     business management ...
messAge fRom
the boARd
of diRectoRs

constAnt                                                               JBS is structu...
globAlisAtion
cAttle is the most impoRtAnt commodity in the stAte
of coloRAdo, And is Responsible foR moRe thAn 60% of
ouR...
segment
of Activity
Jbs is Active in                 The year 2008 was marked by the global financial
                    ...
The position of JBS on the markets in the United States    and also for the full retaken of the results obtained by
and in...
total scenario - herd & production - 1960 to 2009

      Total Herd
      Production (equivalent carcass weight)



      ...
consumption

        Beef is an important source of protein, and for this
                                                ...
consumption of beef per caput . in kilos per year



    65.6


                52.4

                           40.7
    ...
beef deficit and surplus . thousand tonnes                                  the beef industRy: bRAzil, ARgentinA, the
    ...
the Jbs                    The United States are the largest world producer of beef,
                  even though the cou...
gRowth
i hAve followed the tRAJectoRy of Jbs gRoup foR oveR
fouR decAdes now. fRom A humble oRigin, this compAny
gRew to g...
Acquisitions
the puRchAses                                                    US$1.4 billion, consolidated the Company’s p...
In March 2008, JBS announced the purchase of                        The acquisition of Smithfield Beef Processing included...
tRust
the ARgentineAn beef industRy hAs Added poweR to its
Activities with the pARticipAtion of bRAziliAn cApitAl.
the sig...
coRpoRAte
goveRnAnce
Jbs conducts                   JBS follows a model of Corporate Governance with the aim
             ...
In terms of operational focus, JBS believes that everything     (Bovespa). JBS S.A. discloses relevant facts and
starts at...
:      Use exclusively the arbitration rules of Bovespa,                 :    Give an opinion on the proposal for distribu...
boARd of diRectoRs                                                   José batista sobrinho: Mr. José Batista is a member o...
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RAO 2008 English

  1. 1. AnnuAl RepoRt 2008 theRe is one thing thAt is devAstAting when lAcking but, if developed And encouRAged, hAs the potentiAl of bReeding unpRecedented success in All dimensions of life. this thing is tRust. “no chAin cAn be stRongeR thAn its weAkest link. ” Jbs suppoRts the sustAinAble development of the livestock chAin.
  2. 2. indicAtoRs net profit . R$ million ebitdA . R$ million consolidated gross profit . R$ million 1,156.1 31,106 158 25 -165 602 547.8 14,727 4,749 06 07 08 06 07 08 06 07 08 total Assets . R$ million cash flow final net debt/ebitdA 2008 balance . R$ million 16,096 2,292 2.89x 2.77x 2.31x 1.95x 1,382 8,448 3,464 261 06 07 08 06 07 08 1º tri 2º tri 3º tri 4º tri .2.
  3. 3. mission, cReed And vAlues the mission of Jbs s.A. “Maximise the value of each animal in a sustainable way”. compAny cReed “As we believe that one of the main competitive differences is the quality of our people, and as we believe that, no matter how simple the position may be, well-prepared and motivated personnel make the difference, we consider Human Capital as the main asset of our company. Mainly through our people we manage to innovate, create, improve and grow. This capital, when well used and with adequate support, enables us to achieve the results necessary for the perpetuation of JBS”. ouR vAlues : Planning : Determination : Discipline : Availability : Frankness : Simplicity .3.
  4. 4. history of Jbs the history of Jbs has been marked by the acquisition of more than 30 units over the last 15 years, with appropriate capital and management structure. Inalca – ITA Swift Foods Co. – EUA/AUST. Maringá (Amambai) – BR Berazategui (Rio Platense) – ARG Colonia Caroya – ARG SB Holdings – EUA JV Beef Jerky – BRA/EUA Tasman – AUST Smithfield Beef – EUA Five Rivers – EUA Rio Branco – BR Cacoal 1 – BR Barretos Cacoal 2 – BR Venado – ARG (Anglo) – BR Porto Velho – BR Tuerto – ARG Pres. Epitácio Vilhena Pontevedra – ARG (Bordon) – BR (Frigovira) – BR (CEPA) – ARG Barra do Garças Campo Grande (Sadia) – BR (Bordon) – BR 19.8 Cáceres Pedra Preta (Frigosol) – BR (Frigo Marca) – BR Goiânia Andradina Araputanga Iturama Rosário (Anglo) – BR (Sadia) – BR (Frigoara) – BR (Frigosol) – BR (Swift) – ARG 12.7 San Jose (Swift) – ARG Anápolis (Bordon) – BR 1.5 1.9 0.7 1.2 0.3 0.4 0.4 0.5 0.5 0.4 93 96 97 99 00 01 02 03 04 05 06 07* 08** R$/US$ exchange rate at the end of the year. R$/US$: 2,337 2.337 Source: JBS * Pro forma JBS S.A. LTM Dec07 (includes JBS USA) ** Pro Forma JBS S.A. LTM Dec08 (includes JBS USA, Tasman and 50% of Inalca); Smithfield Beef LTM Dec08 growth in slaughtering capacity (head/day) Acquisitions ensuRe An 65,700 51,400 5 500 5,800 22,600 incReAse in 53 70 02 06 07 08 slAughteRing cApAcity .4.
  5. 5. index AnnuAl RepoRt 2008 Jbs historical overview Jbs today .6. .7. who Jbs is . 14 . message from the president . 16 . message from the . 18 . board of directors segments of Activity . 20 . Acquisitions . 27 . corporate governance . 30 . operations and . 39 . commercial Relationships financial performance . 46 . consolidated brands . 49 . sustainability . 53 . corporate information . 65 . financial statements . 67 . .5.
  6. 6. Jbs oveRview 55 yeARs of impoRtAnt Acquisitions And stRong inteRnAtionAl JBS have expanded the Company business based on the business spirit in management, the vocation for leadership and the quality of employees and collaborators. Innovative pResence actions have turned this company into the largest world producer of meat and the largest Brazilian food company. 1953 1968 1970 1981 a 2002 Significant expansion of the Brazilian operation through the José Batista Sobrinho purchase of slaughtering units starts operation of a small With the purchase of another and also units producing fresh Acquisition of the first slaughterhouse in the city cattle-slaughtering unit in and industrialised meat, as also slaughtering unit in of Anápolis (GO), with a Luziânia (GO), production as investments in increasing Planaltina (DF). capacity of handling five soars to 500 heads a day. the production capacity. In heads of cattle per day. this period, the slaughtering capacity reaches 5.8 thousand heads per day. 2005 2007 2008 Internationalization. IPO. Consolidation of Acquisition of Swift Acquisition of Swift EUA. globalization. Constant Argentina. Start of globalization search for efficiency. .6.
  7. 7. Jbs todAy JBS is now the largest beef producer in the world, with The operations in the United States have a total of a capacity to slaughter 65.7 thousand heads of cattle per 17,900 employees and production is distributed among day. The Company is also the largest world exporter of beef, 18 units with a total slaughtering capacity of 28,600 heads with access to all world markets, and also has production of bovine cattle per day, 48,500 pigs per day, 4,500 small platforms in the four largest world producers, namely Brazil, animals per day, and 11 confinement pens with a static Argentina, Australia and the United States. capacity to fatten 820,000 thousand heads of cattle. The Company produces both fresh and processed The JBS operations in Australia are distributed among beef, ready meals, preserved vegetables, beef by-products, 10 plants with a total capacity to slaughter 8,500 heads of and also fresh pork meat. The Company is market leader for cattle per day and 15,000 small animals daily. beef on the Brazilian, Argentinean and Australian markets, In Italy, Inalca JBS has more than 2 thousand and also the third largest beef-producing company on employees, 8 production plants and the capacity to slaughter the American market. With a slaughtering capacity of 48.5 3,000 heads of bovine cattle per day. This Company has thousand heads per day, JBS has become the third largest an additional distribution platform in countries such as the producer of pork in the United States. United Kingdom, Russia, Angola, the Congo, Algeria, the The Company operations are carried out in several Democratic Republic of the Congo and Poland. different units in Brazil, Argentina, the United States, Italy and Australia, and this has provided access to all the consumer markets of the world, operational flexibility in production, low distribution of production units in 2008 transport costs, both for transporting the cattle to the units and for transporting the products to the end clients, and a Brazil lower risk of phytosanitary problems. Australia JBS has a structure of low cost, efficient operating USA cycle and high-quality products. All platforms have a Argentina sustainable and long-term relationship with clients around Italy the world. JBS Brazil serves these clients through the Company’s 22 Production Units, with a capacity to slaughter 8 18,900 heads of cattle per day and with a total workforce of 16,900 employees in Brazil. 22 In JBS Argentina, there are six slaughterhouses with 6 a total capacity of 6,700 heads/day as well as production of industrialised products and one tin packaging factory, with a total of 5 thousand employees in that country. 18 10 .7.
  8. 8. Jbs woRldwide globalized production and distribution platform JBS NO MUNDO Slaughterhouse (Beef) Slaughterhouse and Industry Distribution Center Vegetable Canning Plant Beef Canning Plant JBSBeefMUNDO NO Jerky Plant (Beef Snack’s) Slaughterhouse (Pork) Abatedouro Slaughterhouse (Lamb) Abatedouro ePork Processing Plant Beef and Indústria Centros de Distribuição Plant Wet Blue Processing Indústria de Vegetais em Conserva Headquarters Office Indústria de Carne Enlatada Feed Lot Indústria de beef Jerky (Beef Snack’s) Package Industry Indústria de Carne Suína Inland Container Terminal Indústria de Carne Ovina Commercial Office Processamento de Carne Bovina e Suína Curtume Sede Administrativa .8. Confinamento Indústria de Embalagens
  9. 9. Jbs bRAzil description : 19 slaughtering units situated in Brazil, in the States : The operations of JBS Brazil are carried out by 22 of Acre, Goiás, Mato Grosso, Mato Grosso do Sul, production units, with a total capacity of slaughtering Minas Gerais, Rondônia, São Paulo and Paraná, 18,900 heads of cattle per day, and more than five of which also have the capacity to produce 16,900 employees; industrialised products; : The clients of JBS in Brazil are essentially sellers, : One plant for tin packaging, in the State of Rio de restaurants and leather tanning units (curtumes). The Janeiro, Brazil; current client portfolio of JBS includes more than : One plant for tin packaging for vegetables, in Minas 6,000 companies on the internal market; and Gerais, Brazil; : JBS is the largest Brazilian exporter of bovine : One plant for jerked beef in São Paulo, Brazil; and products, with a turnover of US$1.1 billion in 2007, : One confinement site in the State of São Paulo, Brazil. according to the Secretariat for Foreign Trade (SECEX). The Company is also the 22nd largest exporter in Brazil, considering all segments. clients In 2008, a total of 11,240 clients were served on the platform domestic market, and 436 on the overseas market, in more At this moment, the Company plants are distributed than 100 countries, especially Russia, the United Kingdom, as follows: Iran, Hong Kong and Saudi Arabia. AC RO AC ROMT JBS IN BRAZIL GO MT MG MS Slaughterhouses GO JBS NO BRASIL Slaughterhouses and Industry SP RJ MG PR MS Distribuition Centres Units AbatedourosVegetables for Preserved SP RJ Units AbatedourosBeef for Preserved e Indústria : total kill capacity: 18,900 Administrative Office Centros de Distribuição PR heads of cattle/day. Container Yard de Vegetais em Conserva : 16,900 employees. Indústria Confinement Unit : amount of plants: 22 Indústria de Carne em Conserva Sede Administrativa Pátio de Containers Confinamento .9.
  10. 10. Jbs ARgentinA description platform : In 2005, JBS acquired Swift, now known as JBS At this moment, the Company plants in Argentina are Argentina, with a capacity to slaughter 6,700 heads distributed as follows: of cattle per day and more than 5,000 collaborators; : Six slaughtering units in Four provinces (Buenos Aires, : The Company was the first packaging industry in Entre Ríos, Santa Fé and Córdoba), of which five also Argentina to receive the ISO 9001:2000 certification for have the capacity to produce industrialised meats; the whole process of production of processed meats; : One plant for tin packaging, in the province of : In Argentina, the Company is absolute market leader Buenos Aires. in the segment of industrialised meats for the internal market, with a market participation of 77% of all clients sales of 2007. The client portfolio consists of 786 JBS Argentina has a total of more than 650 clients companies; and internally and 140 clients on the export market, serving 43 : Last year, JBS Argentina was responsible for 87% of countries, especially the European Union, the United States, all the industrialised beef sold in the country, which Uruguay, Israel and Canada. exported to the United States, Europe and about 190 other clients. SF SF CO ER CO ER BA BA JBS NA ARGENTINA JBS IN ARGENTINA Abatedouros Slaughterhouses Abatedouros e Indústria Industry : total kill capacity: 6,700 Slaughterhouses and heads of cattle/day. Escritório Administrative Office : 5,000 employees. : amount of plants: 7 . 10 .
  11. 11. Jbs united stAtes description : 3 pig-slaughtering plants in Minnesota, Iowa and : The operations of JBS USA are carried out by 18 Kentucky; production units, with a total capacity of slaughtering : 1 sheep-slaughtering plant in the state of Colorado; 28,100 heads of cattle per day, 47,900 pigs per day, : 1 leather tanning unit in Texas; and 4,000 heads of sheep per day, as well as 11 : 2 units for production of preserved meat (jerked beef) confinement units with a total capacity of fattening in Minnesota and Texas; 820,000 heads of cattle. : 2 grease units in Pennsylvania; and : The operation has more than 24,200 employees; and : 11 confinement units in the states of Colorado, Texas, : The Company has been well known as a supplier of Oklahoma, Kansas, Ohio and Idaho. prime-quality beef and pork for more than 150 years. clients platform JBS Argentina has a total of more than 3,900 At this moment, the Company plants in the United clients in the United States and some 500 clients on the States are distributed as follows: export market, serving 37 countries, especially Mexico, : 8 slaughtering units in the states of Colorado, Utah, Canada, Taiwan, South Korea and Hong Kong. Texas, Nebraska, Wisconsin, Michigan, Pennsylvania and Arizona; MN MN WL WL CT IA NE NJ CT IA IL UT NE NJ CA CO KY IL CA AZ UT CO KY AZ TX FL JBS IN EUA TX FL Cattle Slaughterhouses JBS NOS EUA Distribution Centres : total kill capacity: 80,000 Pig Slaughterhouses heads of cattle/day. Abatedouros Bovinos Pig and Cattle Slaughterhouses : 24,200 employees. Centros de Distribuição Sheep Slaughterhouses : amount of plants: 18. Abatedouro Bovino e Suíno Administrative Headquarters Abatedouro Suíno Offices Abatedouro Ovino Sede Administrativa . 11 . Case Ready (pratos prontos)
  12. 12. Jbs AustRAliA description platform : The operations of JBS Australia are carried out by 10 At this moment, in Australia, the Company plants are production units, with a total capacity of slaughtering distributed as follows: 8,500 heads of cattle per day and 16,500 heads : 10 slaughtering units for cattle, sheep and pigs; and of sheep and pigs. In addition, the Company has : 5 confinement units in Queensland and New South some 6,900 employees; Wales. : TBS Australia is the largest meat processor and exporter on the Australian market, having a commercial clients relationship with more than 30 countries, mostly on the JBS Australia has a total of 185 clients in the United Pacific coast and in North America. States and some 400 clients on the export market, serving 35 countries, especially South Korea, China, Japan, Taiwan and Indonesia. Queensland Queensland Western Australia Southn Australia Western Australia New South Wales Southn Australia New South Wales Victoria Victoria JBS IN AUSTRALIA : total kill capacity: 25,000 heads of cattle/day. Cattle Slaughterhouses : 6,900 employees. Distribution Centres : amount of plants: 10 Administrative Headquarters Confinement Units JBS NA AUSTRÁLIA . 12 . Abatedouros Centros de Distribuição
  13. 13. inAlcA Jbs itAly description distribution : The Italian operation is responsible for the : Moscow (Russia) production of fresh bovine meat, as also as : St. Petersburg (Russia) processed and smoked meats and snacks, through : Luanda (Angola) a jointventure with the Cremonini Group; : Lobito (Angola) : Turnover of US$1,039 million and assets of US$771 : Melangie (Angola) million; : Brazzaville (Congo) : The production division is responsible for two : Point-Noire (Congo) companies: NALCA SpA and Montana Alimentari SpA; : Algiers (Algeria) : Largest producer of beef in Italy; : Largest producer of industrialised beef in Europe; production units : Largest producer of hamburgers in Italy; : Poland – Slaughterhouse : The Company is the only non-American supplier of : Moscow – Logistics and Distribution McDonald’s; : Capillarity in distribution throughout Europe, Africa clients and Russia; INALCA JBS has a base of more than 8,000 clients : Benchmark in technology in the market for cattle internally and also 660 on the external market, serving 65 countries, slaughtering; especially France, Spain, Greece, England and Germany. : 10 production plants; : Production capacity of 800,000 heads of cattle per year; : 40,000 tonnes of hamburgers per year; and : 2,019 collaborators. : total kill capacity: 800,000 heads of cattle/day. JBS IN ITALY : 2,019 employees. : amount of plants: 10 Slaughterhouses NA JBS ITÁLIA Abatedouros . 13 .
  14. 14. who Jbs is pioneeRism hAs been the mARk of the The year of 2007 has been important in the history of JBS as the start of the globalisation of the Company, while the year of 2008 has seen the consolidation of this movement. In pAth tRAiled 2007, JBS purchased the Swift Foods Company, in the USA, with units in that country and also in Australia, now known as JBS USA and JBS Australia. In 2008, JBS announced the by Jbs completion of purchase of a 50% stake in Inalca, the largest producer of beef in Italy, as also of Smithfield Beef Group, Inc. and the Tasman Group, the former being situated in the United States and the latter in Australia. The success of the Company is backed up by The acquisitions in 2008 have consolidated the business spirit and by a pioneer approach, both very strongly globalisation of the Company and also strengthen the JBS present in JBS management. strategy of geographical diversification of their production JBS S.A. was the first company to be structured and distribution units, thereby reaffirming the Company’s professionally, in the meat industry in Brazil. The strategic vision, global presence in the main meat-producing countries, focused on an expansion policy, started the internationalisation and with access to 100% of the consumer markets. This of the Company in 2005 with the purchase of Swift Argentina. production platform makes JBS a company that holds The following year, the Company became a sociedade global leadership in the beef segment, and which exports to anônima (like a PLC in the United Kingdom) and, in March the most important importing countries in this segment. 2007, promotes a new milestone on the São Paulo Stock The JBS management style also includes a search for Exchange. With the opening of the Company’s capital in 2007, modernity, quality of products and raw materials, construction JBS strengthened its pioneer spirit, being the first company in of relationships with partners, clients, collaborators and society the meat-packing segment to trade its shares on the Stock in general, satisfaction of shareholders, and a commitment to Exchange. The opening of the Company’s capital shows the issues of social and environmental responsibility. advances made by JBS, which thus consolidates the best JBS is dedicated to the production of fresh and chilled practices of Corporate Governance which the Company has beef, processed beef, fresh and chilled pork, and also beef always practiced, making the market more transparent. and pork by-products. . 14 .
  15. 15. JBS is present in all the world’s consumer markets thanks volume sold . thousand tonnes – 2008 to its productive strategy, with plants in the main beef-producing domestic market (1,343) countries – Brazil, Argentina, the United State, Italy and Australia Fresh – and also leadership in terms of exports, serving 110 countries. Processed JBS also has, as their strategy for the consolidation of global Others presence, a strong and well-structured policy of acquisitions. 6.9% In 2008, they tightened their grip on the North American market 2.4% with the purchase of Australian company Tasman for some US$150 million, and also the takeover of Smithfield Beef, which operates in the United States. JBS analyses companies throughout the world, to identify those that have good market potential but which are not able to establish an efficient management system. On takeover, the companies go through a period of financial cleansing and then the JBS standards of management are enforced. This means that there has been the start of a process of optimisation of the results of these production units and also the unification of Company culture. 90.7% Nowadays, JBS is active in the food and transport segments, and, in all the countries where the Company is volume sold . thousand tonnes – 2008 present, has a total of 48.9 thousand collaborators which export market (419) contribute towards the success of the Company. Fresh The JBS operations are structured in five segments: Processed : JBS Brazil : JBS Argentina 6.2% : JBS United States : JBS Australia : JBS Italy (Inalca) 93.8% . 15 .
  16. 16. messAge fRom the pResident Joesley mendonça batista President of JBS S.A. We kept at 2008 the same growing rate that Not less important, at 2008 JBS retaken the newly characterized Company’s management on last years, with USA’S purchased company results, between fixed costs worldwide presence in the main producer and customer reduction, operational efficiency improvement, larger scale markets for our products. Our global production platform and focus on details. Those points, due they are inside factors is consolidated, with many challenges as our culture – not exposed to market conditions – created a scenario to implantation in those unities, processes integration and Company continue presenting sustainable results. costs structure revision, that resulted in efficiency and Positive results were ensured thanks to excellent improvement increasing – we optimize our resources on JBS positioning on its main markets. EBITDA margin production processes managing, speed up our production maintenance in the 4% rate probes JBS solidity and risk unities supplying and fresh products delivery, with quality to management capacity. our customers. Company also work on is de-leverage, reducing the Company attitudes were a preparation for worldwide relation between liquid debt on EBITDA from 3.64 at 2007 to economic crisis. With the turnover in worldwide credit 1.95 at 2008. Worked with debt basically funding its working market and lower funding lines availability on international capital, not having problem to refund its short time debts in financial markets, we turn our focus to the Company the moments of low liquidity market. At 2008 also began to economic health, rather than to continue growing, as was balance geographically its debt, with incomes generation on occurring to this moment. Between adversities we were each operation country. in face of there are strong increase on cattle prices, low The Company belief in its values reflect on management cattle availability due a cyclic herd deterioration and the attitudes, as the adoption of additional corporative governance high appreciation of Brazilian currency, Real, in the first half practices in relation to that is required by law and the own of year - that prejudices our products competitiveness on regulation of New Market from BM&FBovespa, as the existence international market. of audit, Finances, People Management and Enterprise Strategy Although in face of this scenario, we close 2006 with committees,. On this last comittee, a detach for Sustainability R$ 30.3 billion of net income, that represents more tan two quaestions. We have sustainability programs suitable to each times last year income, a 114.5% growing and R$ 1.2 billion production unities, that includes environment, natural resources of EBITDA, 95.6% higher than 2007. use, wastes treatment and social actions. . 16 .
  17. 17. with Although pointing to 2009 as a year to conservative business management movements, JBS demonstrates that its growing strategy has been being correct. Company conseRvAtive is taking advantage of opportunities as firms acquisitions, where its management model, between efficiency improvement and costs reduction, can increase its resuls. At mAnAgement 2008 we incorporate to our portfolio Inalca operations, Italian firm responsible by fresh beef, manufactured, smoked and snacks production, between Association with Cremonini And A focus group, Tasman Australian group, and Smithfield Group beef unity (Smithfield Beef), in United States, and its confining operations known as Five Rivers, are now respectively on Results, named as: “ JBS Packerland” and “JBS Five Rivers”. Those acquisitions represents the conclusion of investments plan to build a slaughtering, production and Jbs envisAges trading platform sustainable, on EUA and Australia, that began at July, 2007, between Swift & Company acquisition. The next years, we believe, Will be marked by JBS oppoRtunities distribution global platform integration and expansion, to consolidate each more our strategy to create the largest world company of direct distribution of beef, cooled and Amid moments freeze dairy products. This report shows JBS’S management solidity and the trust that company entrust on its more than 48.9 thousand of tuRbulence employees around the world. . 17 .
  18. 18. messAge fRom the boARd of diRectoRs constAnt JBS is structured to grow by replicating its business model and taking opportunities that place the Company closer to the supplier markets and producers. The Company gRowth, is therefore in an excellent position to take on the current phase of the world economy, with solid financial health and a conservative management in the main markets. And solidity JBS has its main asset in its team of collaborators. The innovation capacity and the ability to meet even the strictest consumer expectations have led JBS to levels of excellence which make the Company look to the future with confidence. Even with the negative factor of the world financial crisis, which hit the markets as from October 2008, JBS managed to build a solid base to make their business permanent. The geographical expansion has ensured presence close to the Ever since the Company was set up in 1951, with clients, thereby bringing significant reductions of operational a slaughtering capacity of five heads a day, until reaching and logistics costs. The Company has been keeping up its 60 thousand heads per day, with units on six continents, margins, this clearly showing that it is possible to establish JBS has always trailed a path of excellence in business performance targets and to have security in business. management, administration of human resources and risk The Management of JBS in 2008 has shown itself assessment. Nowadays these qualities are more important to be competent and conservative in the light of a scenario than ever before. The world is changing, and business of turbulence, and this has reaffirmed its excellence of scenarios are more and more volatile. management, and credibility before the market. . 18 .
  19. 19. globAlisAtion cAttle is the most impoRtAnt commodity in the stAte of coloRAdo, And is Responsible foR moRe thAn 60% of ouR AgRicultuRAl income. Jbs bRings An inteRnAtionAl peRspective to this industRiAl segment, which will benefit the pRoduceRs And Also mAke AgRicultuRe in coloRAdo feAsible in yeARs to come. betsy markey Congresswoman from the Fourth District of Colorado . 19 .
  20. 20. segment of Activity Jbs is Active in The year 2008 was marked by the global financial crisis. As from September 2008, the world felt the pinch with the effects of this scenario. the pRoduction The speculations about the duration and the impact of the current global crisis have led to a high volatility as yet unseen in the capital markets. For JBS, this situation And commeR- of instability was regarded as an opportunity to prove the solidity of the Company and also the ability to manage risks, which gave the Company reasonable financial stability even ciAlisAtion of in the most adverse conditions. The experience of JBS in statistical studies on elasticity have shown that, during previous global crises the consumption beef, And is of bovine protein was not reduced, meaning that the Company believed that the demand for their products would continue to grow and that there would be good results at the end of 2008. pResent in Some effects of this crisis, such as exchange rate operations, brought important benefits. This movement led to the financial deleverage of JBS, as currently more than 80% of cash flow is the lARgest in American currency while almost all the debt in Brazilian Reais. It also provided operational gains through the global production and distribution platform, directing Company resources pRoducing between the markets for each region. In 2008, the first impact on business came in the form of suspension of credit lines for exports. JBS, well positioned with And consumeR the main producing and consumer markets, sought to strengthen their activities in the domestic markets where they have their units. In this way, the Company reduced its dependence on mARkets of international markets when there was lack of credit for importers. Once again, the strategy of expanding Company business throughout the world and getting closer to the main markets this segment proved to be correct. Lower costs and improvement to efficiency were key factors for the success of the Company. . 20 .
  21. 21. The position of JBS on the markets in the United States and also for the full retaken of the results obtained by and in Australia were important factors for the Company JBS USA. In addition to the good results obtained on the business not being contaminated by the world financial crisis. American market, exports have stood out through the strong The United States are the largest world market for beef, while global demand. The turnaround of operations in the USA Australian has strategic closeness to the Asian markets. In has once again proved the experience and the competence the United States, the Company also has strong operations of the Management of JBS, guided by your efficient strategy with pigs as well as cattle, this being a diversification that of seeking opportunities in purchases. also helped to ensure positive results in the year. In 2008, JBS thus consolidated the Company’s JBS obtained satisfactory results in 2008. The globalisation and also confirmed to the market its capacity Company closed the year with a positive performance. for management. The third quarter, for example, had the best quarterly result consolidated in the history of the Company, with an EBITDA pRoduction of R$470.5 million, a net turnover of R$7,771.5 million, and a net profit of R$694.0 million. In this same period, JBS USA, Brazil has the 2nd largest bovine herd and In terms considering its activities in the beef segment, also obtained of the herd commercially used, Brazil has the largest cattle its best historical result and confirmed the expected increase herd in the world, by number of cattle heads. in EBITDA margin, from 5.1% in 2Q08 to 5.6% in 3Q08. In the ranking of world production of beef, Brazil is in The year 2008 was important for JBS to confirm its 2 position, behind the United States which yonder USA are nd stability and leadership in the beef segment, even in the light the largest consumer of this product. of an adverse scenario. Australia is the second largest exporter of beef as The year has also been relevant because JBS has it has many productive advantages: exceptional sanitary confirmed its stability and leadership in the beef segment conditions, as it is a large island without borders onto any other countries, which means there is no risk of infection by animals from other countries; good weather conditions; and proximity to Asia, an important consumer market for beef. bRAziliAn mAcRoeconomic scenARio Argentina is the fourth largest beef producer. 2007 2008 Argentinean meat is in itself a very strong brand on the Growth in GDP 3,7 5,4 international market through its tradition, native pastures and Inflation (IGP – M) 3,8 1,76 also its climate similar to that of Europe. These benefits allow Inflation (IPCA – M) 3,1 4,47 the development of a product which is highly competitive on Selic (Official Interest Rate) 15,0 11,25 the European market. Sources: IBGE and FGV . 21 .
  22. 22. total scenario - herd & production - 1960 to 2009 Total Herd Production (equivalent carcass weight) 1,200.0 70.0 1,100.0 60.0 production . million tonnes herd . million head 1,000.0 50.0 900.0 40.0 800.0 30.0 700.0 20.0 600.0 10.0 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 Source: USDA main beef exporters main beef importers Brazil United States Australia Russia United States Japan India Mexico New Zealand European Union Canada South Korea Argentina Canada Uruguay Venezuela European Union Egypt Others 11 Others 18 1 26 5 29 6 6 15 3 6 17 4 4 10 10 5 12 6 6 . 22 .
  23. 23. consumption Beef is an important source of protein, and for this expectAtions reason it is the third most commonly eaten meat in the world, after pork and chicken. USDA statistics show that the consumption of beef of steAdy has been rising steadily since 1960. The same source shows that since 2001 the world consumption of beef has grown at a rate of 1.1% per year, on average. gRowth in For the next few years, we expect a steady growth in the world consumption of beef, as a result of the population growth, mainly in countries like China, Brazil, other Latin consumption American countries, the Middle East and Eastern Europe. The maintenance in the growth of the population in developed markets and the constant growth of population of beef in the emerging markets show a strong demand for the Company’s products in both the short and the long term. world population growth and consumption of beef Population of Developed Countries Population of Developing Countries Consumption of Beef* 10,000.0 140.0 120.0 consumption . million tonnes 8,000.0 cAgR 2.0% 100.0 population . million 6,000.0 80.0 60.0 4,000.0 40.0 2,000.0 20.0 0.0 - 60 65 70 75 80 85 90 95 00 05 10* 15* 20* 25* 30* 35* 40* 45* 50* Source: United Nations and USDA * UN Estimate ** Trend for beef consumption considering CAGR of 2% per annum (between 1960 and 2009) . 23 .
  24. 24. consumption of beef per caput . in kilos per year 65.6 52.4 40.7 37.3 34.7 31.7 24.1 15.9 16.3 9.4 4.7 Argentina uruguay usA brazil Australia canada mexico eu Russia Japan china commeRce In the export ranking, Brazil has been in the lead since 2004, mainly thanks to the increase of the national herd and The United States, even as the largest beef producer in also efficiency in livestock husbandry, together with the the world, has a shortage of production of lower-value cuts, in occurrence of BSE in some beef-exporting countries – this contrast to a surplus of high-value cuts, which makes the USA being an illness which does not affect the national herd, and the largest importer of subgrade beef (as the production does which therefore opened the markets formerly covered by not meet the high demand of the country) and an important these countries to the export of Brazilian meat. exporter of choice and prime cuts. The country’s exports Argentina has been significantly increasing their fall after 2003, in the wake of the outbreak of BSE (popularly exports in recent years. The beef industry in the country has known as “mad cow disease”), but started an important obtained great success through the international marketing recovery as from 2008, suggesting that the volumes exported made with the aim of placing the country’s meat with a prime should return to the levels of before 2003. perception by the international market. In Australia, export of beef is a strong activity. The country has been one of the leaders in this segment for more than a decade now. About 75% of the exports of Australian beef have been made to Japan, South Korea, Russia, Taiwan and Mexico, among other countries, and this figure is developing further, so that there may be a record growth in 2009. . 24 .
  25. 25. beef deficit and surplus . thousand tonnes the beef industRy: bRAzil, ARgentinA, the united stAtes And AustRAliA 1999 2009* With the largest beef herd for commercial purposes, Brazil has also become the largest world exporter of beef, brazil thanks to the stepping up of production, characterized by low cost, which allows the widening of the range of destination markets for exports. The reduction of sanitary Argentina and commercial barriers has also played a part in bringing about the average growth of 25.5% in Brazilian beef exports since the year 2000. Australia In 2008, considering the total between January and October, Brazil exported just over 1.89 million tonnes of fresh united states beef equivalent, with a turnover of US$4.67 million. Compared with the same period for 2007, we see that there has been a rise in turnover by 26%, in contrast to a 13% fall in volume. china The largest buyer of Brazilian fresh beef has been Russia, with 38% participation, followed by Venezuela (9%), Iran (7%), european Hong Kong (5%), Egypt (5%), Algeria (4%) and Israel (4%). union For processed meats, 20% of the total exported goes to the United States, followed by the United Kingdom (14%), Italy Russia (6%), the Netherlands (6%), Germany (2%), Belgium (1%) and Jamaica (1%). The according to data released by the Brazilian Meat Exporting Industries Association (ABIEC). south korea This year, with the tightening of European restrictions on fresh Brazilian meat, there was a significant rise in the Japan sales of processed meats (sales of fresh beef fell), even in the case of Europe itself. More specifically, at the end of 2008, the international financial crisis has had a negative (-1,500) (-500) 500 1,500 2,500 impact on shipments, particularly in the case of Russia. The restrictions set by the Argentinean Government Production - Consumption Source: USDA on beef exports in 2008 removed the country from the 4th Estimate for 2009 place among the largest world exporters, bringing it down to 7th place. In 2005, Argentina was the 3rd largest world exporter of beef. The crisis between the Government and the rural globAl leAdeRship of Jbs beef producers had an important impact on the segment. This scenario was made even worse as from September, when the world financial crisis broke out. : Production platform which leads in countries with production surplus. : Leader in exports to the most important beef-importing countries. : Access to 100% of beef consumer markets. : Sustainable and long-term relationship with global clients. . 25 .
  26. 26. the Jbs The United States are the largest world producer of beef, even though the country has only the third largest commercial herd. The country is also the largest world consumer of beef, opeRAtions ARe with significant consumption of cheaper cuts and a lower consumption of prime cuts. In this way, the country stands out for exports of prime and choice beef and, at the same time, is in confoRmity the largest importer of second-grade beef. For JBS, the United States is the most strategic market of their operations, as this is the most important consumer centre with lAws And and also a producer of beef protein. This is also a market which warrants lots of attention, through seasonality and also due to the high competitivity of the segment in the country. RegulAtions Australia is now the second largest beef exporter in the world. Australia has kept its position as leader in beef exports to Asia, making the most of the excellent economic performance of the mARkets of this region, and China is the main target, destination of two thirds of Australia’s production. wheRe the RegulAtion of the segment The production and commercialization of beef is compAny is subject to extensive regulation from Government authorities at municipal, state and federal level and also foreign institutions, with regard to the processing packaging, Active storage, distribution, advertising and labelling of the products, including food safety requirements. Recently, practices and procedures for food safety in the beef processing industry have subjected the companies to a more intense analysis and supervision. JBS seeks to remain aligned with the requirements set by the Governments and also by the regulatory bodies in the countries where the Company is active, to make sure that the Company operations comply with all laws and regulations regarding food safety. . 26 .
  27. 27. gRowth i hAve followed the tRAJectoRy of Jbs gRoup foR oveR fouR decAdes now. fRom A humble oRigin, this compAny gRew to gigAntic pRopoRtions in the scenARio of its stAte, of bRAzil And oveRseAs thRough its competence And the eARnestness it AlwAys fAced its commitments with. Jbs gRoup’s tRump cARd is the solidity in its commeRciAl tRAnsActions; its cRedibility, theRefoRe, is Above dispute. in conclusion, we cAn it is A compAny thAt inspiRes confidence, which is An edge in the globAlized woRld. iris Rezende Mayor of Goiânia . 27 .
  28. 28. Acquisitions the puRchAses US$1.4 billion, consolidated the Company’s position as the largest world producer of beef and the third largest producer of pork. mAde in 2008 In 2008, with the purchases of the JBS operations in Australia, Italy and the United States, the Company consolidated its globalisation process. hAve consoli- In March 2008, the Company clinched an agreement with Cremonini SpA (“Cremonini”), for the acquisition of a 50% stake in the capital stock of Inalca SpA (“Inalca”), one dAted the of the most important beef producers in Europe, for a total of 225 million Euros, based on an enterprise value for Inalca set at 600 million Euros. The acquisition of Inalca, which globAlisAtion now bears the name of Inalca JBS, established important synergies between products and sales channels of JBS and Cremonini, both leaders in their respective markets. On of the compAny the one hand, JBS with its production and distribution in the markets of South America, the United States and Australia, and, on the other hand, Cremonini, through Inalca, with its presence in Europe, Russia and Africa. For JBS, this operation was a unique opportunity to access, through Inalca, new markets and clients, including large multinationals in the JBS has constructed a solid business management fast-food business, producers of processed foods, large model in the food segment. The Company seeks to expand retail chains, and food service companies. This alliance also its presence on the global market through a strategy of offered JBS access to Inalca’s cutting-edge technology, assessment of opportunities and acquisition of companies widely acclaimed, as also to the products with highest that could benefit from a “management shock” based on added value, traded under the Montana brand name. the JBS model. In this way, the Company has sought to For Cremonini, this transaction gave privileged consolidate a position of leadership in strategic markets and access to the main world sources of supply of beef, as well ensure god results for the Company’s investments. as strengthening its supply chain. This Association in Italy, The Company started its internationalisation in 2005 together with the acquisitions made in the United States and with the purchase of Swift Armour, an Argentinean company, in Australia, have confirmed the global leadership enjoyed and then, as from 2007, JBS embarked on an expansion and by JBS. globalisation plan, moving towards the largest producing and The acquisitions of the American company Smithfield consuming markets for their products. In 2007, the purchase Beef and Australian company Tasman were closed at R$565 of Swift Foods, of the United States, in an operation worth million and US$150 million respectively. . 28 .
  29. 29. In March 2008, JBS announced the purchase of The acquisition of Smithfield Beef Processing included the Tasman Group, an Australian company, and also of 100% of the shares issued by subsidiary Five Rivers Ranch. Smithfield Beef, an American company. The confirmation With the purchase of Smithfield Beef Processing, that authorization had been received from the Australian JBS USA started to have four more slaughtering units in that Competition & Consumer Commission (ACCC), the country, located in Green Bay (Wisconsin), Plainwell (Michigan), Australian regulator, for the purchase of the Tasman Group Souderton (Pennsylvania) and Tolleson (Arizona); a grease- was received by JBS on 23 April 2008. The new structure producing unit in Elroy (Pennsylvania) and a bovine confinement gave JBS Australia an additional 5,000 employees and unit in South Charleston (Ohio); and a transport company, with 15 units, including slaughterhouses for bovines and small some 120 refrigerated lorries. Five Rivers has ten confinement animals (sheep and calves) with a capacity of slaughtering units for bovines, with a total capacity of 811,000 heads, in the 8,500 heads of cattle per day and also 16,500 small animals states of Colorado, Idaho, Kansas, Oklahoma and Texas. per day. With the purchases in the United States, currently this As part of JBS’s globalisation strategy, the acquisition platform accounts for about 75% of the consolidated net of Smithfield Beef in 2008 was an important step in the turnover of JBS. completion of the investment plan for the construction of a With these operations, JBS, which were already sustainable slaughtering platform, and also the production leaders in beef production, also became the leader in the and commercialization of beef, in the United States and sale of beef-based products. The Company obtained a Australia, which started in July 2007 with the purchase of significant advantage with the proximity to the largest beef- Swift & Co. This purchase shall increase JBS’s capacity producing and consuming markets in the world. After this to meet specific demands made by the clients, and shall business integration, JBS had 14% of world beef production, also provide economies of scale and operational efficiency, and a capacity to kill 15 million heads per year, as well as thereby generating value for the shareholders. 31% of meat sales on the international market. the integRAtion of the tAsmAn gRoup smithfield beef And , the confinement units of five RiveRs hAve incReAsed the pRoduction plAtfoRm And intRoduced syneRgies thAt hAve Reduced costs . 29 .
  30. 30. tRust the ARgentineAn beef industRy hAs Added poweR to its Activities with the pARticipAtion of bRAziliAn cApitAl. the significAnt development of the Jbs fRiboi gRoup , the owneR of 8 industRiAl plAnts in the countRy, cleARly expRess the decision tAken by this business gRoup A leAdeR in the segment, to boost And enhAnce , the ARgentineAn beef industRy, which shAll bRing concRete benefits foR the countRy, foR the woRkeRs And Also foR the technology of the sectoR. dr. mario dario Ravettino President | Consortium of Argentinean Beef Exporters (ABC) . 30 .
  31. 31. coRpoRAte goveRnAnce Jbs conducts JBS follows a model of Corporate Governance with the aim of implementing the best practices in the Company, that should be reflected in transparency and trust from a range of publics, its business in and also ensure the best products and services to the Company clients, solidity to suppliers, satisfactory yield for shareholders, and the certainty of a better future, for all collaborators. A tRAnspARent Corporate Governance is the very essence of the Company, which makes use of best market practices and also acts in line with currently effective laws, in a natural way. And ethicAl Governance is a reality within JBS, something dynamic and natural, which is part of the daily activities of the Company. The conduct of JBS is represented by the pillars of corporate mAnneR, this governance. This means that the view of organizational behaviour based on Governance guides JBS in the strict compliance with laws and also respect for all segments of being the the public. coRpoRAte goveRnAnce in the essence of Jbs bAse of the The corporative responsibility of JBS is shown in the transparency and equity with which the Company carries out compAny’s its business. JBS believes that, through collaborators who are both committed and motivated, the Company may constantly grow coRpoRAte and innovate, thus achieving the desired results. JBS believes that people are the same, anywhere on the planet and in any business environment, regardless of their social, goveRnAnce intellectual or hierarchical level, and only brings to the Company those people who enjoy prosperity, who seeks firm commitment to work, availability, learning, growth and expansion. For JBS, after all, their greatest asset is human capital. Indeed, it is the capacity of human work that makes a success of the Company and also sustains all possibilities for future growth and innovation. . 31 .
  32. 32. In terms of operational focus, JBS believes that everything (Bovespa). JBS S.A. discloses relevant facts and starts at the plants, as the harmony and the precision of the notifications as per CVM instructions, which requires quality of the “cattle” raw material, together with the capacity that the data about Company business are published of human work, make a success of the Company and also in a way that gives investors and the market enough back up and prop up the possibilities of growth and investment time to make decisions concerning their investments. in the future. JBS monitors external factors to make strategic JBS also, through press releases, makes the Company’s decisions and always focuses on what is within their reach and quarterly results available to the market and also holds a what can be controlled. The Company is obstinate in controlling conference for investors and market analysts, as also a costs, in increasing the slaughtering and production capacity, press conference every three months to comment on and also in the steady improvement of yield and the guarantee Company performance, events and also shed light on of the best quality of their products. possible doubts shown by the market. Risk control identifies and classifies the events that cause Commitment to efficient corporate governance is strategic risks to JBS business, according to the probability reflected in the option to register the Company in the listing thereof, and establishes the respective control procedures. The segment of the New Market of the São Paulo Stock Exchange Company conscientiously deals with possible risks that could (Bovespa), which has a strict commitment to good practices involve the Company’s segments of activity, and sets targets of corporate governance. JBS shows its commitment to and guidelines for the management thereof. transparency and also quality in business management through The Company creates and sustains different public commitments inherent to the New Market, namely: Commissions to ensure correct implementation of all : Grant to all shareholders the right to joint sale (“tag Company activities. At present, JBS has Audit, Finance, People along”), in cases of alienation of the share control of Management and Corporate Strategy Commissions. For the Company, in which case the acquirer of the control example, the Corporate Commission manages sustainability should make a public offering of share purchase to at JBS. JBS believes that its development and corporate the other shareholders; growth must be associated to the sustainability of Company : Take up supply procedures that favour scattering of actions. With this belief, JBS supports and invests in the shares; improvement of the production chain to which it belongs. : Comply with minimum standards for quarterly JBS shares are traded on the New Market, a segment of disclosure of information; Bovespa made up of companies which have committed them- : Follow stricter disclosure procedures with regard to selves, on a voluntary basis, to the adoption of corporate govern- deals made by the controlling shareholders of the ment policies in addition to those required by relevant legislation. Company, as also Board Members and Directors, involving securities of their issuance; infoRmAtion AppRAisAl policy : Submit any existing shareholder agreements and programmes with share purchase options to Bovespa; The policy for disclosure of information is another : Prepare annual financial statements, including cash key issue in meeting the rules for transparency and flow statements, in the English language, as according the requirements of regulators of the financial market, to international accounting standards like the Generally such as the Brazilian Central Bank, the Securities Accepted Accounting Principles (GAAP) of the USA, or Commission (CVM) and the São Paulo Stock Exchange the International Financial Reporting Standards (IFRS); . 32 .
  33. 33. : Use exclusively the arbitration rules of Bovespa, : Give an opinion on the proposal for distribution of by which Bovespa, the Company, the controlling dividends and tax planning; shareholder, the managers, and the members of : Monitor quarterly results; and the Fiscal Board of the Company, if installed, agree : Seek to protect the internal financial control systems. to solve any dispute or controversy concerning the listing regulations through arbitration; and people management commission : Help the Board of Directors with issues regarding To ensure correct conduct in all JBS activities, in addition remuneration and identification of directors; to the Tax and Management Commission, JBS also has : Give an opinion on the mechanisms for variable Audit, Finance, People Management and Corporate Strategy remuneration and long-term incentives; commissions. Each of these commissions plays a relevant : Help with the process of executive appraisal; role in the guarantee of JBS management processes. : Give support to the Board of Directors, for the management of the executive succession plan; Audit commission : Monitor the Company policy for retaining talent; and : Give opinions about hirings, remuneration, retaining : Give opinions about the organizational structure of the and replacement of the external auditor; Company and also the general Human Resources : Contribute to the preparation of the scope and the policies. schedule of the annual auditing activities and also to the review of current internal risk controls, seeking to corporate strategy commission improve the quality of the information supplied to the : Mr. Marcus Vinicius Pratini de Moraes is the current Board of Directors; president; : Identify and suggest actions in support of the monitoring : Develop, and propose to the Board, policies of the activities of the internal and external auditors, and regarding corporate strategy and the sustainability of establish a channel of communication between internal the Company operations; institutions for accounting controls and the Board of : Advise the Board of Directors in all matters concerning Directors; and sustainability, by means of identification, addressing : Try to solve possible controversies between the and treatment of critical issues that amount to risks, or Auditors, Board and Fiscal Commission about the which could have a negative impact on business; financial statements of accounts. : Make recommendations to the Board of Directors, and accompany the implementation of policies, finance commission strategies and actions that concern the sustainability : Give an opinion about the appropriate capital of business at the Company; and structure, and prepare studies about market capital : Assess the proposals for strategic investments of the costs vis-à-vis costs of Company debts; Company from the standpoint of sustainability, and : Study the projects for investments and adaptation of make recommendations to the Board of Directors the Company’s financial structure in depth; regarding making decisions about these investments. . 33 .
  34. 34. boARd of diRectoRs José batista sobrinho: Mr. José Batista is a member of our Board of Directors and is the founder of the JBS Group. The Board of Directors is the highest institution of He has experience in beef production in the JBS Group Company management and is responsible, among other spanning more than half a century. Mr. José Batista was points, for establishment of policies and guidelines for elected to this position on 2 January 2007. Mr. José Batista Company business. The Board of Directors also supervises is the father of Mr. Joesley Mendonça Batista, Mr. Wesley the Management and also oversees the implementation, by Mendonça Batista and Mr. José Batista Jr. the Management, of the policies and guidelines regularly established by the Board of Directors. José batista Junior: Mr. Batista is a member of our Board of The Administration Committee of JBS currently Directors, having been elected to this post on 2 January 2007, consists of seven members, three of which are independent having more than 25 years of experience in beef production committee members. within the JBS Group. Mr. Batista is one of the sons of Mr. José The term of the first Administration Committee after the Batista, the founder of the JBS Group, and brother of Mr. Joesley opening of capital, which occurred in 2007, is three years. This Mendonça Batista and Mr. Wesley Mendonça Batista. means that the term of the current members of the Administration Committee is due to expire in 2009. As from 2009, the members marcus vinicius pratini de moraes: Mr. Pratini de Moraes has been of the Administration Committee shall be voted for a unified term a member of our Independent Administration Committee since 2 of two years, with the right to unlimited re-elections. January 2007. He is an Economics graduate from the Faculty of The Administration Committee meets once a quarter, Economic Science of the University of Rio Grande do Sul (1963), or at any moment when a special meeting is called by the with graduate studies in Public Administration from the Deutsche President or by any other member. Stiftung für Entwicklungsländer, in Berlin, Germany (1965) and in Business Administration by Pittsburgh University & Carnegie Tech Joesley mendonça batista: Mr. Joesley Batista is the current – Carnegie Institute of Technology (1966). Mr. Pratini de Moraes President of the Administration Committee, having been elected held the posts of Interim Minister of Planning and General Co- to this post on 2 January 2007, and has more than 20 years of ordination (1968-1969), Minister for Industry and Commerce experience with the production of beef within the JBS Group. He (1970-1974), Minister of Mines and Energy (1992) and Minister is also the Executive President of JBS S.A. Joesley Batista has for Agriculture, Livestock and Supplies (1999-2002). worked for the JBS Group since 1988 and is one of the sons of Mr. José Batista Sobrinho, founder of the JBS Group, and brother demósthenes marques: Born in Passo Fundo, Rio Grande do Sul, of Mr. José Batista Júnior and Mr. Wesley Mendonça Batista. he is a graduate in Civil Engineering from the Federal University of Santa Maria, and completed post-graduate studies in Urban wesley mendonça batista: Mr. Wesley Batista is the current Development by the Cândido Mendes Integrated Faculties, a Vice-President of our Board of Directors, having been elected specialist in Audits of Public Works from the University of Brasília to this post on 2 January 2007, and also has more than 20 (UnB) and in Geographical Information Systems by the Federal years of experience with the production of beef within the JBS University of São Carlos (UFSCar). Group. He is also a Member of the Board, and has worked for He has been an Investments Director at FUNCEF since the JBS Group since 1987. He is one of the sons of Mr. José July 2004. He has been an employee of the Brazilian Federal Batista Sobrinho, founder of the JBS Group, and brother of Mr. Savings Bank (Caixa Econômica Federal) since 1989, and at José Batista Júnior and Mr. Joesley Mendonça Batista. this institution he carried out executive roles in the areas of Urban Development and also Social and Economic Development. membeRs of the boARd of diRectoRs post held date elected term ends Joesley Mendonça Batista President 2/1/2007 August 2009 Wesley Mendonça Batista Vice-President 2/1/2007 August 2009 José Batista Sobrinho Board Member 2/1/2007 August 2009 José Batista Jr. Board Member 2/1/2007 August 2009 Marcus Vinicius Pratini de Moraes(1) Board Member 2/1/2007 August 2009 Demósthenes Marques(1) Board Member 11/4/2008 August 2009 Humberto Pires Grault Vianna de Lima(1) Deputy Member 11/4/2008 August 2009 (1) Independent Board Member . 34 .

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