Transcript jbss.infoinvest.com.br

September, 2010
Disclaimer
The forward-looking statements presented herein are subject to risks and uncertainties. These
statements are based on the beliefs and assumptions of our management, and on information
currently available to us.
Forward-looking statements are not guarantees of performance. They involve risks,
uncertainties and assumptions because they relate to future events and therefore depend on
circumstances that may or may not occur. Our future operating results, financial condition,
strategies, market share and values may differ materially from those expressed in or suggested
by these forward-looking statements. Many of the factors that will determine these results and
values are beyond our ability to control or predict.
Forward-looking statements also include information concerning our possible or assumed future
operating results, as well as statements preceded by, followed by, or including the words
''believes,'' ''may,'' ''will,'' ''continues,'' ''expects,'‘ ''anticipates,'' ''intends,'' ''plans,'' ''estimates'' or
similar expressions.
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Agenda
Company Overview
Market Overview
2Q10 Highlights
Short Term Outlook
3
Who We Are
Our Mission
To be the best at what we set out to do, totally focused on our business, ensuring the best
products and services for our customers, solidity for our suppliers, satisfactory profitability for
our shareholders and the certainty of a better future for all our employees.
Our Values
Excellence
Planning
Determination
Discipline
Availability
Openness
Simplicity
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Corporate Structure
CEO
President
Joesley
Batista
Finance
Director Brazil
Marcos Cunha
Bastos
Mr. Marcos Bastos,
Graduate from the
Mackenzie University in
Business Administration
and has a MBA in
Finance from San
Francisco State
University. Worked in
many financial
institutions in Brazil,
primarily in Investment
banking, Financial
Projects, and Portfolio
management. Started
in 2008 with JBS.
Corporate
Law
Department
Francisco
de Assis e Silva
Mr. Francisco de Assis
e Silva, Director of the
Law Department. Has a
post graduated from the
University of Mackenzie.
Started working at JBS
in December of 2001
and later became a
member of the Executive
Board in January of
2007.
Investors
Relations
Jeremiah
O’Callaghan /
Guilherme Arruda
Mr. Jeremiah
O’Callaghan, Has a
Engineering Degree from
the University of Cork
College in Ireland.
Immigrated to Brazil in
1979. Started working in
the Beef Sector in 1983
and in JBS in 1996 in
order to develop the
Trade Area and
eventually became the
Investors Relations
Officer.
Mr. Guilherme Arruda
graduated in Business
and Economics from the
University of California.
Start in the Company in
2009 after working for 7
years for BTG Pactual
Corporate
And Adm.
Controller
Eliseo
Fernandes
Mr. Eliseo Fernandez
Has a Business
Administration and
Accounting Degree from
the University Católica de
Pernambuco and a post
graduate degree in
Business Administration
from FGV. Started with
JBS in August 2005 and
eventually became
Director of Administration
and Corporate
Governance. 8 years
Experience in Auditing
and Consulting and 10
years in the Retail
industry.
CEO
MERCOSUL
Marco
Bortolon
Mr. Marco Bortolon, has
more than 10 years
experience in JBS.
Initially started as a
Production Manager and
in 2009 was promoted to
Chief Operating Officer of
the Brazil Beef Division.
New business
José Luis
Medeiros
Mr. José Luiz
Medeiros, has a degree
in Accounting and has
been working in the Beef
Sector since 1975. 14
year in Bertin and
started at JBS in 1997.
January 2010 became
the Director of New
Business.
Commercial and
Distribution
International
Offices
Marco Bichieri
Mr. Marco Bichieri, has
more than 24 years of
experience in the Protein
Sector. Worked for more
than 20 years in Bertin.
JBS
Hides
Roberto
Motta
Mr. Roberto Motta, has
more than 20 years in
the Leather Industry.
Was responsible for
incorporating BMZ Hides
with the JBS Group.
Dairy
Gilson
Teixeira
Mr. Gilson Teixeira,
has more than 25 years
experience in Finance
and Controller of
business units of Bertin,
where he later served as
a member of the Board
for 5 years.
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Corporate Structure
CEO
USA/AUS
Wesley
Batista
Pilgrim's Pride
Don Jackson
Beef USA
Richard Vesta
Mr. Don Jackson is the
President, CEO and
Director since January
2009. For 9 years was
the president of the
chicken division of Foster
Farms and vice president
of Food Services in
ConAgra Poultry
Company.
Before this worked at
Seaboard farms of
Athens for 22 years,
including 4 years as the
CEO of the Chicken
Division
Mr. Richard Vesta,
joined Smithfield Foods
with the Acquisition of
Parkerland in 2001 and
now serves as the
president and CEO of
JBS Packerland
Pork
Martin
Dooley
Australia
Iain Mars
JBS Five
Rivers
Mike
Thoren
Mr. Martin Dooley
Has a degree in Biology
from the University of
Eastern Illinois. Worked
in Swift for his whole life,
having started the
company as a manager
trainee in 1983. In 2007
was given the position of
president of the Pork
Division of JBS USA.
Mr. Iain Mars, born
in England and
worked in the Beef
Industry for his whole
life. He became the
President and CEO
of JBS Australia in
2007, after the
acquisition of Swift.
He has worked in
JBS since 2005.
Mr. Thoren,
is the President and
CEO of Five Rivers
since the Start of the
Company. Has a
Masters of Science in
Agricultural Economics
and has a degree in
Agribusiness from the
University of
Washington State.
JBS Carriers
Mr. Moe
Schroder
Mr. Moe Schroder has
more than 30 years
experience in
Transportation Sector.
Graduated from the
University of Ryerson,
Toronto, Canada.
Occupied the position
of Vice President of
Sales, Dedicated
Operations at KLLM
and before that was in
various executive
positions at CR
England for a period of
15 years;
Trading
Robert
Wadland
Mr. Robert Wadland
27 years of meat
trading experience with
17 years of that at JBS
to enhance exports out
of Australia and New
Zealand. Recently
transferred to the US to
run the group’s trading
business unit
Human
Resources
Bob
Daubenspeck
Mr. Robert
Daubenspeck
assumed this position
in February 2009 and
before that was in
JBS Packerland from
2002 to 2008.
CFO
André
Nogueira
Mr. André Nogueira has
a degree in Economics
from the Federal
University Fluminense, a
masters in Capital
Markets from FGV –
Fundação Getúlio
Vargas, and masters in
Economics from
University of Brasilia in
2003. Worked more than
20 years at Bank of Brazil
and started at JBS USA
in 2007 after the Swift
acquisition.
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Shareholders
Market
19.1%
PROT - FIP
8.1%
Controlling Holding
55.5%
BNDESPAR
17.3%
Average daily trade volume of USD 50.4 million in 2Q10
Source: JBS
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Leading, Sizeable and Diversified Business Platform
Ranking
Production
Units
Beef
Chicken
Pork
Hides / Leather
Dairy
Lamb
1st
2nd
3rd
1st
3rd
1st
Global
Global
U.S.A.
Global
Brazil
Global
75
33
3
26
7
6
mm heads/day:
‘000 heads/day:
‘000 hides/day:
‘000 tons/day:
‘000 heads/day:
41.2
55.6
‘000 heads/day:
1.4
1.1
Geographic
Presence
and Installed
Capacity
6.7
28.6
6.9
48.5
8.7
28.6
4.5
6.0
23.0
3.0
1.0
0.7
Total: 90.3
Total: 7.6
1.2
Total: 48.5
Total: 91.4
Total: 1.4
Total: 27.5
WellRecognized
Brands
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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 diversified global
production platform
Production platform
EBITDA Margin
Financial
structure
Experienced
management
Cost reduction,
process
optimization
Risk
management
JBS’ Value & Strategy
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Distribution Platform with Access to Key Markets
Growth 1
-2 %
3%
4%
Growth 1
9%
13 %
8%
Growth
2%
1
Growth 1
7%
25 %
8%
16 %
5%
Distribution Center
Sales Offices
1 Real growth of total consumption in tons – 2010E to 2015E
Source – OECD-FAO
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Agenda
Company Overview
Market Overview
2Q10 Highlights
Short Term Outlook
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World Meat Consumption
(million tons cwe)
2000
2009
2018
Growth
2009-2018
Pork
89
102
120
18%
Poultry
70
98
120
23%
Beef
60
65
75
15%
TOTAL
219
265
315
19%
2000
2009
2018
Growth
2009-2018
OECD
92
100.4
108.5
8%
NON OECD
127
164
205
25%
Source: OECD/FAO Agricultural Outlook 2009-2018
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Animal protein consumption growth in the last decade
Former USSR
47.7%
EU - 27
North America
Central
America
41.4%
7.5%
29%
23.7%
Middle East
Southeast
Asia
70.2%
South America
East Asia
48.7%
Sub Saharan
Africa
32.2%
23.3%
Oceania
3
Source: FAPRI February 2010
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Beef Exports
 Rising demand in emerging economies drove export volumes up in the semester both
in Brazil and in the US but more importantly, pricing was very strong. As beef production
is long cycle, some of this export demand will tend to boost chicken exports, particularly
out of the US, in the coming years.
US Beef and Veal Exports (Tons)
700,000
600,000
5.3%
Brazilian Beef Exports (Tons)
4,600
1,400,000
4,500
1,200,000
4,400
500,000
4,300
400,000
24.3%
300,000
4,000
0
Beef Exports
JAN-JUN JAN-JUN
09
10
Avg Price in US$ per Ton
2,000
1,500
1,000
3,800
2009
7.0%
400,000
0
2008
2,500
600,000
200,000
2007
3,000
800,000
3,900
2006
4,000
3,500
1,000,000
100,000
2005
26.6%
4,200
4,100
200,000
4,500
500
0
2005
2006
2007
Beef Exports
2008
2009
JAN-JUN JAN-JUN
09
10
Avg Price in US$ per Ton
Source: USDA and Secex
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Chicken Exports
 Strong domestic demand in both Brazil and the US limited exports in the first
semester although it is clear that prices will tend to push up export volumes from now on
particularly taking into account the reopening of the Russian market for US product.
Brazilian Chicken Exports (Tons)
3,500
US Poultry Exports (Tons)
2,000
1,800
3,000
17.3%
2,500
1.1%
2.9%
3,000,000
1,200
2,500,000
800
2,000,000
-6.5%
1,000
1,500
1,000
800
1,500,000
600
1,000,000
200
0
0
2005
2006
2007
2008
Chicken Exports
2009
JAN-JUN JAN-JUN
09
10
Avg Price in US$ per Ton
600
400
400
500
1,200
1,000
1,600
1,400
2,000
3,500,000
200
500,000
-
2005
2006
2007
Chicken Exports
2008
2009 JAN-JUN JAN-JUN
09
10
Avg Price in US$ per Ton
Source: USDA and Secex
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Agenda
Company Overview
Market Overview
2Q10 Highlights
Short Term Outlook
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Highlights for the 2nd Quarter 2010
 Revenues increased 52.5% y-o-y and 12.5% to R$14,116.3 million
•
JBS USA increased 67.6% y-o-y and 12.9% q-o-q
•
JBS MERCOSUL increased 123.1% y-o-y and 19.1% q-o-q
•
JBS Exports increased 37.0% q-o-q reaching 29% of sales
 EBITDA increased 163.3% y-o-y and 16.0% q-o-q.
 Leverage remained fairly stable at 3.0x
 Consolidated customer base grew by 22.2% q-o-q, reaching more than 300
thousands customers in 2Q10.
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JBS Consolidated Results
Net Revenue (R$ million)
EBITDA and EBITDA Margin (R$ million)
6.9%
7.1%
5.4%
4.1%
3.5%
1,000.0
862.0
14,116.3
12,550.3
9,255.0
8,379.9
-9.5%
2Q09
-11.6%
3Q09
69.4%
4Q09
397.8
384.0
7,408.9
291.9
-24.0%
12.5%
1Q10
2Q10
2Q09
36.3%
3Q09
116.7%
4Q09
16.0%
1Q10
2Q10
Source: JBS
EBITDA Margin (%)
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Performance by Business Units
JBS MERCOSUL
JBS USA Beef
Net Sales (R$ billion)
Net Sales (US$ billion)
JBS USA Pork
JBS USA Chicken (PPC)
Net Sales (US$ million)
Net Sales (US$ million)
Including Australia
3.5
3.0
3.3
1.7
1.7
1.7
2T09
3T09
4T09
2.9
1T10
2T10
EBITDA (R$ mi) EBITDA
margin
2Q09
2.8
2.8
2.8
3Q09
4Q09
1Q10
2Q10
EBITDA (US$ mi) EBITDA
margin
554
559
606
646
2Q09
3Q09
4Q09
1Q10
352.6
2.9%
1.7
1Q09
334.5
6.0%
3.6%
3.8%
5.9%
4.5%
4.5%
4.7%
1.8
2Q09
1.6
1.7
1Q10
2Q10
EBITDA (US$ mi) EBITDA margin
6.6%
9.5%
4.9%
2Q10
EBITDA (US$ mi) EBITDA margin
11.9%
6.6%
739
9.3%
5.4%
7.5%
2.7%
4.8%
164.6
3.6%
194.9
127.6
170.5
104.6
112.2
82.6
108.4
48.7
126.0
24.7
3T09
80.8
34.9
59.5
15.3
47.3
2T09
28.6
4T09
1T10
2T10
2Q09
3Q09
4Q09
1Q10
2Q10
2Q09
3Q09
4Q09
1Q10
2Q10
1Q09
2Q09
1Q10
2Q10
Source: JBS
EBITDA Margin (%)
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Revenue Distribution by Market
Revenue Distribution by Market 2Q10
Pork
Exports 2%
Revenue Distribution by Market 1Q10
Chicken
Pork
Exports 1% Exports 2%
Chicken
Exports 2%
Beef Exports
25%
Beef
Exports 20%
Beef
Domestic 44%
Chicken
Domestic 22%
Chicken
Domestic 20%
Pork
Domestic 8%
Pork
Domestic 7%
Exports = 29%
Beef
Domestic 47%
Domestic Market = 71%
Revenue Distribution by Market 2Q10
USA Chicken
22%
Exports = 23%
Revenue Distribution by Market 1Q10
Mercosul
27%
USA Pork
9%
Domestic Market = 77%
USA Chicken
25%
Mercosul
23%
USA Pork
10%
USA Beef
42%
USA Beef
42%
Source: JBS
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EBITDA Distribution by Business Units
2Q10
Mercosul
33.5%
USA Chicken
22.7%
1Q10
USA BEEF
34.7%
USA PORK
8.7%
USA BEEF
36.1%
Mercosul
43.9%
USA Chicken
12.6%
USA PORK
7.4%
Source: JBS
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JBS Consolidated Exports Distribution
JBS Exports 2Q10
China
4%
South Korea
5%
Taiwan
Canada 2%
4%
USA
7%
Others
12%
JBS Exports 1Q10
Africa and Middle East
19%
Mexico
12%
E.U.
7%
Russia
10%
Hong Kong
8%
US$2,3331.0 Million
Japan
10%
Taiwan
Canada 2%
4%
China
4%
South Korea
4%
USA
7%
Others
12%
Africa and Middle East
16%
Mexico
14%
E.U.
8%
Russia
8%
Hong Kong
9%
Japan
12%
US$1,765.4 Million
Source: JBS
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Debt
While JBS leverage remained fairly constant in the quarter (at 3.0x LTM EBITDA), the liquidity of the
balance sheet improved significantly.
The company’s cash position increased 17,5% when compared with 1Q10 (which represents 70% of
the company’s ST debt, from 55% in the previous quarter), while ST debt decreased 7,7% in the same
period.
Considering the US$700mm bond issuance in July, ST debt on a pro-forma basis would represent
roughly 33% of total debt, closer to the company’s target of having less than 30% of its total debt
maturing in the ST.
Leverage
3.3
3.1
ST / LT Profile
3.1
3.0x *
2.6
2Q09
3Q09
4Q09
1Q10
2Q10
Source: JBS
*LTM including Bertin and Pilgrim’s Pride pro-forma.
** Pro-Forma takes into account senior unsecured notes issued July, 2010
61%
60%
64%
67%
39%
40%
36%
33%
2Q09
1Q10
2Q10
(Pro-Forma)*
Short term
**
Long term
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Agenda
Company Overview
Market Overview
2Q10 Highlights
Short Term Outlook
24
A Closer look at synergies – Pilgrim’s Pride
 JBS already captured US$ 150 million in synergies with Pilgrim’s Pride acquisition of a
total estimated amount of US$ 220 million.
Descrição
 The illustration bellow the origins of the captured synergies.
Captured Synergies
On going Synergies
US$ 150 Million
Adminstrative
expenses
34%
Size
Time
Logistics Optimization
Efficiency gains in the average
load factor for trucks
US$50mm
2 years
Exports
Reaching final customers
through the JBS current sales
structure.
US$20mm
2010
Logistics
23%
Suppliers
20%
Corporate
23%
Total
US$70mm
Source: JBS
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A Closer look at synergies – Bertin S.A.
 JBS already captured R$ 154 million in synergies due to the merger with Bertin of a total
estimated amount R$ 485 million.
Descrição
 The next graphic shows the origin of the captured synergies.
Captured Synergies
On going Synergies
Size
R$154 Million
Maximization of sales channels
and reviewing contracts for
freight
R$31mm
2010
Capturing value with the
greatest volume of processed
R$45mm
2010
Suppliers
Review of terms of contract noncore suppliers (ex packaging)
R$10mm
2010
Industrial Processes
Optimization of fixed costs and
streamlining of existing
contracts
R$245mm
2 Years
Exports
Suppliers
16%
Logistics
13%
Administrative
expenses
26%
Exports
45%
Time
Hides
Total
R$331mm
Source: JBS
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IR Contacts:
[email protected]
+55 11 3144 4447
www.jbs.com.br/ir
“In God We Trust, Nature We Respect”
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