2q10 conference call presentation

7/30/2019 2Q10 Conference Call Presentation

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2nd Quarter 2010 ResultsAugust 16th, 2010

The Company posted a landmark EBITDA of R$1.0 billion in 2Q10.


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2

Disclaimer

The forward-looking statements presented herein are subject to risks and uncertainties. These

statements are based on the beliefs and assumptions of our management, and on information

currently available to us.

Forward-looking statements are not guarantees of performance. They involve risks,

uncertainties and assumptions because they relate to future events and therefore depend on

circumstances that may or may not occur. Our future operating results, financial condition,

strategies, market share and values may differ materially from those expressed in or suggestedby 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'' orsimilar expressions.


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3

Wesley Mendona Batista

CEO of JBS USA

Joesley Mendona Batista

CEO of JBS S.A.

Guilherme Arruda

Investors Relations

Presenters

Jeremiah OCallaghan

Investors Relations Officer


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Agenda

4

2Q10 HighlightsMarket Overview

Company Overview

Short Term Outlook


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Our MissionTo be the best at what we set out to do, totally focused on our business, ensuring the bestproducts 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 ValuesExcellence

Planning

Determination

Discipline

Availability

Openness

Simplicity

Who We Are


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Leading, Sizeable and Diversified Business Platform

6

1stRanking

Well-Recognized

Brands

ProductionUnits

Geographic

Presenceand InstalledCapacity

2nd 3rd 1st 3rd 1st

Global Global U.S.A. Global Brazil Global

Beef

41.2

1.1

6.7

28.6

8.7

3.0

1.0

000 heads/day:

6.9

0.7

mm heads/day:

48.5

000 heads/day: 000 hides/day:

1.4

000 tons/day:

4.5

23.0

000 heads/day:

Total: 90.3 Total: 7.6 Total: 48.5 Total: 91.4 Total: 1.4 Total: 27.5

Chicken Pork Hides / Leather Dairy Lamb

75 33 3 26 7 6

55.6

28.6

6.0

1.2


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Our Strategy

7

Production platform

Sales and distribution platform

Value added products

Branding

JBS Value & Strategy

EBITDA Margin

Financial

structure

Experienced

management

Cost reduction,

process

optimization

Risk

management

Developed an efficient

and diversified global

production platform

Expanding a global distribution

platform to reach end clients

Customized and further processed

products for the

end users

Associating quality and branding to

increase client loyalty

Rationale


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Distribution Platform with Access to Key Markets

81 Real growth of total consumption in tons 2010E to 2015ESource OECD-FAO

Distribution Center

Growth 1

2 %

5 %

8 %

Growth 1

7 %

16 %

25 %

Growth 1

9%

8%

13 %

Growth 1

4 %

3 %

-2 %

Sales Offices


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Agenda

9


Company Overview

Short Term Outlook

W ld M C i


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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 2018Growth

2009-2018

OECD 92 100.4 108.5 8%NON OECD 127 164 205 25%

Source: OECD/FAO Agricultural Outlook 2009-2018

10


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Animal protein consumption growth in the last decade

1

3

Source: FAPRI February 2010

7.5%

29%

32.2%

70.2%

41.4%

47.7%

23.7%

23.3%

48.7%

North America

Central

America

South America

Sub SaharanAfrica

Middle East

SoutheastAsia

East Asia

Former USSR

Oceania

EU - 27


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Beef Exports

12Source: USDA and Secex

US Beef and Veal Exports (Tons) Brazilian Beef Exports (Tons)

Rising demand in emerging economies drove export volumes up in the semester bothin 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, particularlyout of the US, in the coming years.

0

100.000

200.000

300.000

400.000

500.000

600.000

700.000

2005 2006 2007 2008 2009 JAN-JUN 09 JAN-JUN 10

3.800

3.900

4.000

4.100

4.200

4.300

4.400

4.500

4.600

Beef Exports Avg Price in US$ per Ton

24,3%

5,3%

0

200.000

400.000

600.000

800.000

1.000.000

1.200.000

1.400.000

2005 2006 2007 2008 2009 JAN-JUN 09 JAN-JUN 10

0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

Beef Exports Avg Price in US$ per Ton

7,0%

26,6%


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Chicken Exports

13Source: USDA and Secex

Brazilian Chicken Exports (Tons) US Poultry Exports (Tons)

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 onparticularly taking into account the reopening of the Russian market for US product.

0

500

1.000

1.500

2.000

2.500

3.000

3.500

2005 2006 2007 2008 2009 JAN-JUN 09 JAN-JUN 10

0

200

400

600

800

1.000

1.200

1.400

1.600

1.800

2.000

Ch icken Exports Avg Price in US$ per Ton

1,1%

17,3%

-

500.000

1.000.000

1.500.000

2.000.000

2.500.000

3.000.000

3.500.000

2005 2006 2007 2008 2009 JAN-JUN 09JAN-JUN 10

-

200

400

600

800

1.000

1.200

Chicken Exports Avg Price in US $ p er Ton

-6,5%

-2,9%


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Agenda

14


Company Overview

Short Term Outlook


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Highlights for the 2nd Quarter 2010

15

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

16Source: JBS

EBITDA Margin (%)

Net Revenue (R$ million) EBITDA and EBITDA Margin (R$ million)

9.255,08.379,9

7.408,9

12.550,3

14.116,3

2Q09 3Q09 4Q09 1Q10 2Q10

69,4%-11,6% 12,5%-9,5%

384,0

291,9

397,8

862,0

1.000,0

4,1%3,5%

5,4%

6,9% 7,1%

2Q09 3Q09 4Q09 1Q10 2Q10

-24,0% 36,3% 116,7% 16,0%


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Performance by Business Units

17

Net Sales (US$ billion) Net Sales (US$ million) Net Sales (US$ million)

EBITDA (US$ mi) EBITDAmargin

EBITDA (US$ mi) EBITDA margin EBITDA (US$ mi) EBITDA margin

JBS USA BeefIncluding Australia

JBS USA Pork JBS USA Chicken (PPC)

Source: JBS

EBITDA Margin (%)

2,9 2,8 2,8 2,8

3,3

2Q09 3Q 09 4Q 09 1Q10 2Q10

104,6 108,4126,0

170,5

194,9

3,6% 3,8%4,5%

6,0% 5,9%

2Q 09 3Q 09 4 Q0 9 1 Q1 0 2 Q1 0

554 559606 646

739

2Q 09 3Q 09 4Q 09 1 Q10 2 Q1 0

24,7

15,3

28,634,9

48,7

4,5%

2,7%

4,7%5,4%

6,6%

2Q 09 3Q09 4Q09 1Q10 2Q10

1,71,8

1,6 1,7

1Q09 2Q09 1Q10 2Q10

80,8

164,6

59,5

127,6

4,8%

9,3%

3,6%

7,5%

1Q09 2Q09 1Q10 2Q10

1,7 1,7 1,7

3,0

3,5

2T09 3T09 4T09 1T10 2T10

Net Sales (R$ billion)

EBITDA (R$ mi) EBITDAmargin

82,6

47,3

112,2

352,6334,5

4,9% 2,9%

6,6%

11,9%

9,5%

2T09 3T09 4T09 1T10 2T10

JBS MERCOSUL


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Revenue Distribution by Market

18

Revenue Distribution by Market 2Q10 Revenue Distribution by Market 1Q10

Revenue Distribution by Market 2Q10 Revenue Distribution by Market 1Q10

Beef

Domestic 44%

Pork

Domestic 7%

Chicken

Domestic 20%

Beef Exports

25%

Pork

Exports 2%

Chicken

Exports 2%

Exports = 29% Domestic Market = 71%

Beef

Domestic 47%

Pork

Domestic 8%

Chicken

Domestic 22%

Beef

Exports 20%

Pork

Exports 1%

Chicken

Exports 2%

Exports = 23% Domestic Market = 77%

Source: JBS

Mercosul

27%

USA Beef

42%

USA Pork

9%

USA Chicken

22%Mercosul

23%

USA Beef

42%

USA Pork

10%

USA Chicken

25%


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EBITDA Distribution by Business Units

19

2Q10 1Q10

USA BEEF

34,7%

USA PORK

8,7%USA Chicken

22,7%

Mercosul

33,5%

USA BEEF

36,1%

USA PORK

7,4%USA Chicken

12,6%

Mercosul

43,9%

Source: JBS


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JBS Consolidated Exports Distribution

20

JBS Exports 2Q10 JBS Exports 1Q10

US$2,3331.0 Million US$1,765.4 Million

Source: JBS

Africa and Middle East

16%

Mexico

14%

Japan

12%Hong Kong

9%

Russia

8%

E.U.

8%

USA

7%

South Korea

4%

China

4%

Canada

4%

Taiwan

2% Others

12%Africa and Middle East

19%

Mexico

12%

Japan

10%Hong Kong

8%

Russia

10%

E.U.

7%

USA

7%

South Korea

5%

China

4%

Canada

4%

Taiwan

2% Others

12%


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Debt

21

While JBS leverage remained fairly constant in the quarter (at 3.0x LTM EBITDA), the liquidity of thebalance sheet improved significantly.

The companys cash position increased 17,5% when compared with 1Q10 (which represents 70% ofthe companys ST debt, from 55% in the previous quarter), while ST debt decreased 7,7% in the sameperiod.

Considering the US$700mm bond issuance in July, ST debt on a pro-forma basis would representroughly 33% of total debt, closer to the companys target of having less than 30% of its total debtmaturing in the ST.

Source: JBS

*LTM including Bertin and Pilgrims Pride pro-forma.** Pro-Forma takes into account senior unsecured notes issued July, 2010

2,6

3,3 3,1 3,1 3,0x

2Q09 3Q09 4Q09 1Q10 2Q10

39% 40% 36% 33%

61% 60% 64% 67%

2Q09 1Q10 2Q10 (Pro-Forma)*

Short term Long term

*

**

Leverage ST / LT Profile

Sh h ld


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Shareholders

22

Controlling

Holding

55,5%BNDESPAR

17,3%

Market

19,1%

PROT - FIP

8%

Average daily trade volume of USD 50,4 million in 2Q10

Source: JBS

A d


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Agenda

23


Company Overview

Short Term Outlook

A Cl l k t i Pil i P id


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A Closer look at synergies Pilgrims Pride

24

JBS already captured US$ 150 million in synergies with Pilgrims Pride acquisition of a

total estimated amount of US$ 220 million.

The next graphic shows the origin of the captured synergies.

Captured Synergies

US$ 150 MillionLogistics Optimization

Efficiency gains in the average

load factor for trucks US$50mm

Total US$70mm

Descrio

2 years

On going Synergies

ExportsReaching final customers

through the JBS current sales

structure.

US$20mm 2010

Size Time

Source: JBS

Logistics

23%

Suppliers

20%

Corporative

23%

General

administrative

expenses

34%

A Cl l k t i B ti S A


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A Closer look at synergies Bertin S.A.

25

Captured Synergies

R$154 MillionExports

Maximization of sales channels

and reviewing contracts forfreight

R$31mm

Total R$331mm

Descrio

2010

On going Synergies

HidesCapturing value with the

greatest volume of processedR$45mm 2010

Size Time

SuppliersReview of terms of contract non-

core suppliers (eg packaging)R$10mm 2010

Industrial Processes

Optimization of fixed costs and

streamlining of existingcontracts

R$245mm 2 Years

Source: JBS

JBS already captured R$ 154 million in synergies due to the merger with Bertin of a total

estimated amount R$ 485 million.

The next graphic shows the origin of the captured synergies.

Administrative

expenses

26%

Exports

45%

Logistics

13%

Suppliers

16%

Final Considerations


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Final Considerations

26

Having seen double digit revenue growth and EBITDA of R$1 billion in the last quarter, we are on track to

deliver the top line growth and EBITDA budgeted for 2010.

An increase in our exports q-o-q of 37% demonstrates the recovery of international trade which we believ

will continue to grow and serve as a driver for better margins.

Rating agencies upgrades demonstrate recognition for the effort we continue to make to maintain financia

improvements with a view towards reaching Investment grade category.

We surpassed 300 thousand active customers globally in 2Q10, proving that our distribution strategy

(another margin driver) continues to gain traction.


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27In God We Trust, Nature We Respect

IR Contacts:

[email protected]

+55 11 3144 4447

www.jbs.com.br/irQ & A

2q10 conference call presentation

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