3q14 presentation
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JBS 3Q14 Results PresentationNovember 13th, 2014
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This release contains forward-looking statements relating to the prospects of the business, estimates for
operating and financial results, and those related to growth prospects of JBS. These are merely projections and,as such, are based exclusively on the expectations of JBSmanagement concerning the future of the businessand its continued access to capital to fund the Companys business plan. Such forward-looking statementsdepend, substantially, on changes in market conditions, government regulations, competitive pressures, theperformance of the Brazilian economy and the industry, among other factors and risks disclosed in JBS fileddisclosure documents and are, therefore, subject to change without prior notice.
Disclaimer
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JBS Global
EstimatedNet Revenue of around US$50.0 billion in 2014
Bovines49%
Poultry17%
Pork7%
Preparedproducts and
others27%
Revenue2014E
US$50.0 bi
Capacity to process 100,000 bovinesper day in 73 unitsin seven countries
Capacity to process 72,000 hogsper day in11 unitsin Brazil and the United State
Capacity to process more than 13 million birdsper day in 57 unitsin the Americas
Capacity to producemore than 100 thousand hidesper day in31units worldwide
More than 80 thousand tons of convenient and value added products permonth in the world
More than 200 thousand employees around the world
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Presence in20+ countries, Exports to150+ countriesand more than300,000 clients
Note 1. It considers only domestic salesNote 2. Includes beef and lamb operations in the USA and AustraliaNote 3. Includes leather and hides operations in Brazil, Uruguay, Mexico, Germany, Vietnam and China and also Rigamonti operations in Italy.
JBS Global
Tokyo
Hong Kong
Shanghai
Taipei
Santiago
Dubai
Moscow
London HamburgGhent
ChicagoToronto
So Paulo(headquarter)
Sales office
Sales office presence
Production Platform
North America
~51% of JBS revenue,
South America
~17% of JBS revenue,3
96% from Brasil
Seoul
Caracas
84% of JBS
Revenue is
denominated in US$
Exports
~32% of JBS revenue
16% of JBS
Revenueis
denominated inR$
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JBS Evolution
Net Revenue (R$ billion)
EBITDA (R$ million)
30.3 34.3
54.761.8
75.7
92.9
113.4
2008 2009 2010 2011 2012 2013 LTM
1,156.1 1,285.2
3,497.0 3,072.04,410.3
6,130.3
9,664.2
3.8% 3.7%
6.4 %5.0%
5.8%
6.6%
8.5%
2008 2009 2010 2011 2012 2013 LTM
EBITDA margin (%)
+274%
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Consolidated Results
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Gross Profit Adjusted EBITDA
EBITDA
Net Revenue Net Income
3Q14 Highlights - Consolidated
24,222.027,222.2 26,419.1
28,968.930,778.6
3Q13 4Q13 1Q14 2Q14 3Q14
Net Revenue of R$30.8 billion,
expansion of R$6.6 billion, or 27.1%
superior than 3Q13
3Q14 Highlights (R$ Million)
Operational Cash Generation of R$3.0 billion and Free Cash Generation (after Investments) of R$2.1 billion.
JBS ended the quarter with leverage of 2.54x compared to 3.15x in 2Q14.
1,709.7 1,873.5 1,749.7
2,432.7
3,617.97.1 6.9 6.6
8.4
11.8
3Q13 4Q13 1Q14 2Q14 3Q14
EBITDA of R$3.6 billion, 111.6%
superior than 3Q13. EBITDA
margin was 11.8%.
27.1%
6.2%
Adjusted EBITDA Margin (%)
219.8 140.7 70.0254.3
1,092.90.08 0.05 0.02
0.09
0.38
3Q13 4Q13 1Q14 2Q14 3Q14
EPS (R$)
Net Income of R$1.1 billion,
equivalent to an EPS of R$0,38.
3,128.03,732.0 3,421.0
4,255.0
5,560.012.9 13.7 13.014.7
18.1
3Q13 4Q13 1Q14 2Q14 3Q14
Gross Margin (%)
Gross Profit of R$5.6 billion, an
increase of R$2.4 billion, or 77.7%
higher than 3Q13.
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3Q14 Highlights - Businesses Units
JBS Foods recorded net revenue of R$3,376.8 million, 9.5% superior over 2Q14, and EBITDA of R$576.0 million, with an EBITDAmargin of 17.1%.
JBS Mercosul posted net revenue of R$6,470.5 million, 14.8% higher than 3Q13 and EBITDA of R$554.6 million, with EBITDAmargin of 8.6%.
JBS USA Beef posted net revenue of US$5,849.3 million, 24.7% higher than 3Q13. EBITDA was US$504.9 million, with anEBITDA margin of 8.6%
Net Revenue of JBS USA Pork totaled US$937.8 million, 3.8% higher than 3Q13, and EBITDA of US$113.2 million, with an EBITDAmargin of 12.1%.
JBS USA Chicken (PPC) reported net revenue of US$2,268.0 million, an increase of 5.8% compared to 3Q13. EBITDA wasUS$435.4 million, with a margin of 19.2%.
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Cash Generation
CAPEX
Capex and Cash Generation
In 3Q14, total capital expenditure (CAPEX) was R$878.6 million, of which approximately 20% in
acquisitions, 25% in expansions and facilities modernization and 55% in maintenance.
In 3Q14 the Company generated net cash flow from operations of R$3.0 billion and free cash flow
(after capex) of R$2.1 billion, due to the strong performance of JBSbusinesses units.
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4.03
3.70 3.26 3.15
2.54
0
1,000
2,000
3,000
4,000
5,000
6,000
3Q13 4Q13 1Q14 2Q14 4Q14
Debt Profile
Leverage EBITDA (R$ million)
JBS ended the quarter with leverage of 2.54x compared to 3.15x in2Q14.
The reduction in leverage is due to the improvement in operational
performance of JBS, combined with a strong cash generation in the
quarter.
This reduction in the leverage reflects the Management commitment in
improve continuously its capital structure in order to generate value to all
its stakeholders.
Leverage (Net Debt/EBITDA LTM)
Breakdown by Currency and Costs Breakdown by Company
US$80%
R$20%
JBS S.A.56%
JBS Foods13%
Subsidiaries31%
Breakdown by Source
CapitalMarkets40.0%
CommercialBanks 59.9%
BNDES 0.1%11.50% per
annum
5.71% perannum
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1
-1,095
1,050
4,543
1,638
5,245
744
5,290
2,798
5,636
Short Term* 2015 2016 2017 2018 2019 2020 2021 after 2021
The Company ended the quarter with R$12,578.5 million in cash,
equivalent to 110% of its short-term debt.
JBS USA has US$1.33 billion fully available under
revolving credit facilities which, if added to the current cash
position, represents 121% of short term debt.
The percentage of short term debt (ST) in relation to total
debt was 30% in 3Q14.
* Net of Cash
Debt Profile and Maturity
Short Term Long Term
30%
28%
29%
29%
35%
70%
72%
71%
71%
65%
3Q14
2Q14
1Q14
4Q13
2Q13
Debt Profile
Maturity (R$ million)
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1
Business Units
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1
JBS Foods
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1
EBITDA 9M14Net Revenue 9M14 R$9.2 billion
5.1 million birds per day
21,200 hogs per day
~80,000 tons per month
2ndlargest producer and exporter of poultry and pork in Brazil
Large production platform, with 60 production units1,2 and nearly 55,000 employees
National distribution platform serving ~79,000 points of sale
Strong international presence, exporting to over 100 countries
Complete product portfolio with leading and well-known brands
Uniquely positioned as the natural consolidator of the sector in Brazil, allowing accelerated growth
JBS Foods
Leading producer of prepared foods (PFPs) and fresh poultry and pork products
Operational Platform +55,000 employees
R$1,396 million
15.1% Margin
Brazil
29 slaughterhouses and deboning units
08 slaughterhouses and deboning units
23 PFP units
15 distribution centers
15 distribution centers
Production units located in the south,
southeast and mid-west regions
Production units located in the south
and mid-west regions
Production units located in the south,
southeast, northeast and mid-west
regions
In 12 states
Notes: 1 Industrial Complex: location with one or more units of production; 2 Includes Tyson acquired units, approved in October/14; 3 Total produced volume of PFP, poultry and pork of 182 mm tons, 359 mm tons and 54 mmtons in 3Q14, respectively. Total export volume of 331 mm tons in 3Q14
1
MTBA
MG
RJ
PR
RS
MS
DF
5
7
2
SC 8 3 7
SP 4 3
1
2
511
3
1
1
21
221
1
1
CE1
PE 1
1
1
3
1
2
1
1
AM
% JBS Net Revenue
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1
2.9 2.83.1
3.4
4Q13 1Q14 2Q14 3Q14
JBS Foods
Net Revenue (R$ billion)
EBITDA (R$ million)
EBITDA Margin (%)
11%
24%
40%
8%
18%
Net Revenue of R$3,376.8 million in the quarter, 9.5% higher than
2Q14:
Increase of 16.8% in domestic volumes;
Increase of 2.9% in average prices of prepared products in domesticmarket;
Higher volume of fresh pork exports (+17.7%);
Increase of 6.4% in average export prices.
EBITDA totaled R$576.0 million, with an EBITDA margin of 17.1%,compared to 14.3% in 2Q14:
Higher productivity with lower production costs, as well as a decrease inthe cost of raw materials resulted in a COGS representing 71.5% of netrevenue, compared to 74.4% in 2Q14;
Reduction in SG&A (14.4% over net revenue compared to 15.2% in the2Q14), mainly due to lower logistics costs, reflecting the reorganization andoptimization of the companyslogistics network.
227.3
379.8440.4
576.07.9%
13.7% 14.3%17.1%
-20.0%
-18.0%
-16.0%
-14.0%
-12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0 .0 %
2 .0 %
4 .0 %
6 .0 %
8 .0 %
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
22.0%
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
900.0
1000.0
4Q13 1Q14 2Q14 3Q14
9.5%
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1
JBS Mercosul
JBS M l
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1
EBITDA LTM14Net Revenue LTM14 R$27.8 billion
~ 55,000 bovines per day
90,000hides per day
43 distribution centers
09 related businesses
92% in Brazil, 3% in Argentina, 3% in
Paraguay and 2% in Uruguay
Facilities in Brazil, Argentina, Uruguay,
China, Vietnam and Mexico
11 central and 32 regional
Biodiesel
Can making
Collagen
JBS Carriers
Trading
Hygiene and Clean
Casings
TRPComplementary to JBSCarriers
Recycling
JBS Mercosul
Beef production in Brazil, Argentina, Paraguay and Uruguay, in addition to leather and other Related Business
Operational Platform +70,000 employees
R$2,477.4 million
10.0% Margin
Argentina
Leadership in beef production
05beef processing facilities02can making01tannery
ParaguayJBS is the leader in beef processing and has around 25% of market share inexports of Paraguay
02beef processing facility
Uruguay
Great access to export markets; the only country to export fresh beef to the US01beef processing02tanneries
Brazil
48 beef processing facilities
06 feedlots
29 tanneries
43 distribution centers
1
15
9
3
1
1
16
4
3
4
4
2 1
1
3
2
1
2
6
2
4
2
8
5
3
2
2
1
1
1
2
1
1
1 23 63
PA
AM
AC RO MT
MA
PEBA
MG
ES
RJ
SP
SC
PR
RS
MS
1
GO
1 CE
JBS Mercos l 7%% JBS Net Revenue
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2
5.66.3
5.76.3 6.5
3Q13 4Q13 1Q14 2Q14 3Q14
JBS Mercosul
Net Revenue (R$ billion)
EBITDA (R$ million)
EBITDA margin (%)
11%
21%
44%
7%
17%
Net revenue of R$6.470,5 million in the quarter, 14.8% higher than
3Q13:
Increase in sales prices in the export market;
Compared to 2Q14, net revenue increased 2.8%;
The launching of convenience beef products reflected in an increase in thesales volumes in this category (processed products) coupled with anincrease in prices during the period.
EBITDA totaled R$554.6 million, with EBITDA margin of 8.6%:
Strong demand in the international market
More products towards exports in order to maximize profitability per animalprocessed
Strategy of investing in brands and product innovation in the domesticmarket
653.9 692.4 596.1 634.3 554.6
11.6% 11.0% 10.4% 10.1% 8.6%
-20.0%
-18.0%
-16.0%
-14.0%
-12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0 .0 %
2 .0 %
4 .0 %
6 .0 %
8 .0 %
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
22.0%
24.0%
26.0%
28.0%
0.0
200.0
400.0
600.0
800.0
1000.0
1200.0
1400.0
1600.0
3Q13 4Q13 1Q14 2Q14 3Q14
2.8%
14.8%
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2
Beef
JBS USA
JBS USA Beef
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2
Australia
Leadership in beef exports
Leadership in the processing of lamb (22,000 lamb per day)
#1st in the Food Industry Ranking
Growth of 112% in revenues from 2007 to LTM2014
01beef processing facility01feedlot (bovine)01trading
13processing facilities08 bovine and 05 lamb
07feedlots05 bovine and 02 lamb
01tannery07distribution centers
03case ready facilities
~40,000 bovines per day
11,000hides per day
07 distribution centers
09 beef processing facilities
11 feedlots
01 tannery
06 carriers units
28,000 in the US
4,000 in Canada
8,000 in Australia
5,000 in the US
6,000 in Australia
07 DCs in Australia and 06 carriers
units in the US
JBS USA Beef
Beef production in the United States, Canada and Australia
Operational PlatformUnited States
Canada
Growth of 17% in revenues from 2013 to LTM2014
16 feedlots (bovine)
11 in the US/ Capacity of 1.0 million
bovines
01 in Canada / Capacity of 70,000
bovines
05 in Australia / Capacity of 152,000
bovines
Note 1. Source: Food&Drink Business Magazine
+30,000 employees
EBITDA LTM14Net Revenue LTM14 US$20.5 billionUS$704.9 million
3.4% Margin
1
NE 2
1CO 1
4
1
UT1
1
TX
1
3
1
2
WI1
1 MI1
PA1
AZ
1
ID 1
KS1
OK1
4
1
1
2
2
2
1
1
1
4
JBS USA Beef% JBS Net Revenue
7%
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2
4.7 4.8 4.5
5.3
5.8
3Q13 4Q13 1Q14 2Q14 3Q14
JBS USA Beef
Net Revenue (US$ billion)
EBITDA (US$ million)
EBITDA margin (%)
Net revenue of US$5,849.3 million in the quarter, 24.7% higher than
3Q13:
Increase in sales volume in both domestic and export markets;
Increase in prices;
Compared with 2Q14, net revenue posted an increase of 9.7%;
Main destinations of this business unit were Japan, Greater China andSouth Korea;
EBITDA totaled US$504.9 million, with EBITDA margin of 8.6%:
Company strategy regarding the purchase of cattle permitted theimprovement in COGS;
Seasonal stronger beef demand in a scenario which beef supply remainsconstraint, contributing to an increase in sales prices;
Australia operations performed well and contributed to the strong resultsof this quarter.
125.3 113.9-22.5 108.6
504.92.7% 2.4%
-0.5%2.0%
8.6%
-20.0%
-18.0%
-16.0%
-14.0%
-12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0 .0 %
2 .0 %
4 .0 %
6 .0 %
8 .0 %
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
22.0%
24.0%
26.0%
28.0%
-30.0
170.0
370.0
570.0
770.0
970.0
1170.0
3Q13 4Q13 1Q14 2Q14 3Q14
24.7%
9.7%
11%
21%
44%
7%
17%
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2
PorkJBS USA
JBS USA Pork
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2
~ 51,300 hogs per day
03 hogs processing facilities
02 case ready facilities
01lamb processing facility
100% in the US
JBS USA Pork
Pork production in the United States
United States
CO 1
IA1
KY1
CA
1
1
02 case ready facilities
~3,000 lamb per day
Main Brands
Swift Premium
Dry Rubbed Ribs
Swift PremiumRubbed Loin Filet
Products
Swift Premium
Boneless Backrib
Swift PremiumBoneless Pork Chops
Operational Platform+6,000 employees
EBITDA LTM14Net Revenue LTM14 US$3.8 billionUS$396.2 million
10.5% Margin
Convenience productsNC
1
JBS USA Pork% JBS Net Revenue
7%
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2
903.3 904.9 896.91,028.3
937.8
3Q13 4Q13 1Q14 2Q14 3Q14
JBS USA Pork
Net Revenue (US$ million)
EBITDA (US$ million)
EBITDA margin (%)
Net revenue of US$937.8 million in the quarter, 3.8% higher than
3Q13: Increase of 18.7% in sales prices in the domestic market and an increase
of 14.7% in export prices;
Compared with 2Q14, net revenue decrease 8.8%, due to lower volumes.
EBITDA of US$113.2 million, with EBITDA margin of 12.1%:
In comparison with 2Q14, EBITDA remained stable;
The maintenance of pork prices in higher levels due to constraint supply,coupled with a decrease in raw material costs contributed to this quarterresults.43.8
86.3 82.9113.8 113.2
4.8%
9.5% 9.2%11.1% 12.1%
-20.0%
-18.0%
-16.0%
-14.0%
-12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0 .0 %
2 .0 %
4 .0 %
6 .0 %
8 .0 %
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
22.0%
24.0%
26.0%
28.0%
-30.0
20.0
70.0
120.0
170.0
220.0
270.0
320.0
370.0
3Q13 4Q13 1Q14 2Q14 3Q14
11%
21%
44% 17%
3.8%
-8.8%
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2
Pilgrims Pride
JBS USA Chicken (Pilgrims Pride Corporation - PPC)
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2
United StatesOperational Platform
~ 7.5 million birds per day
24 poultry processing facilities 6.5 million in the US
250,000 in Porto Rico
800,000 in Mexico
( g p )
Poultry production in the United States, Porto Rico and Mexico
TX10 distribution centers
Located in Mexico
Mexico
With Tyson acquisition, PPC will have an additional of threefacilities, adding 600,000 birds per day of capacity and 9,000employees
03poultry processing facilities10distribution centers
4
1
3
AL
AR
1
NC 2
FL1
GA
7
KY 1
LA
Porto Rico
SC1
TN 1
VA1
WV1
01processing facility
+ de 3,500 contract growers
36 hatcheries
28 feed mills
+39,000 employees
EBITDA LTM14Net Revenue LTM14 US$8.5 billionUS$1,176.3 million
13.8% Margin
JBS USA Chicken (Pilgrims Pride Corporation - PPC)% JBS Net Revenue
7%
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2
2.1 2.0 2.0 2.22.3
3Q13 4Q13 1Q14 2Q14 3Q14
( g p )
Net Revenue (US$ billion)
EBITDA (US$ million)
EBITDA margin (%)
Net revenue of US$2,268.0 million in the quarter, increase of 5.8%
compared to 3Q13: In the US, sales increased 4.8%, of which 2.4% is due to an increase in
volume and 2.4% is due to an increase in prices, as a reflect of a changein product mix, with an improvement in the participation of small anddeboned small birds, in addition to convenience products;
In Mexico, revenue increased 15.0%, as a result of an increase in price perkilo, due to the restriction in the supply of eggs sets for incubation, as wellas in the number of chicks placed. This increase in revenue was partially
offset by a decrease in volume sold and by the devaluation of MexicanPeso.
EBITDA in 3Q14 was US$435.4 million, with EBITDA margin of19.2%:
Reduction of US$102.8 million in feed costs in the US and of US$12.5million in Mexico;
Reduction in costs with labor, freights and storage, packaging and incontract growers, totaling US$13.8 million.
226.1 197.2 205.2
338.6
435.410.6% 9.6% 10.2%
15.5%19.2%
-20.0%
-18.0%
-16.0%
-14.0%
-12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0 .0 %
2 .0 %
4 .0 %
6 .0 %
8 .0 %
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
22.0%
24.0%
26.0%
28.0%
-30.0
70.0
170.0
270.0
370.0
470.0
570.0
670.0
3Q13 4Q13 1Q14 2Q14 3Q14
11%
21%
44% 17%
5.8%
3.7%
Consumer Ready USA
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3
y
Production capacity in 2014: 19.8 thousand tons per month
Production capacity in 2015: 30.2 thousand tons per month
Increase in production: +52.8%
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Mission
To be the best in what we set out to do, completelyfocusedonour business, ensuring the best products
and services for our customers, consistency forour suppliers,profitabilityfor our shareholders and the
opportunity of a better future for all our team members.
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