jbs day ny – adr program
TRANSCRIPT
JBS DAY NY - ADR ProgramDecember 4th, 2008
“In God we Trust”
JBS S.A.
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.
1
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.
2
Our Values
The Foundation Of Our Culture
Planning
Determination
Discipline
Availability
Openness
Simplicity
3
JBS American Depositary Receipt (JBSAY)
The Bank of New York Mellon, has been selected by JBS S.A. as the depositary bank for its
American depositary receipt (ADR) program. Each JBS ADR represents two common shares and
they are traded on the over-the-counter market under the symbol “JBSAY“.
The new program did not represent an increase in the share capital or issuance of new shares.
This step represents an opportunity to increase the liquidity, visibility and value of JBS shares.
We believe that the program will help readjusting the share price to its reasonable currency level,
considering that more than 80% of the Company’s revenue is in American Dollars and Real has
depreciated significantly.
4
JBS American Depositary Receipt (JBSAY)
5
88
The Global Beef Industry
GLOBAL BEEF TRADE AND CONSUMPTION
69.354.6
41.2 37.2 34.7 32.224.1
16.0 16.39.3 4.7
Argentina Uruguay USA Brazil Australia Canada Mexico EU Russia Japan China
Beef per Capita Consumption (in kg/year)
Source: USDA – 2008 Estimate
7
Largest Beef Exporters
Source: USDA – 2008 Estimate Source: USDA – 2008 Estimate
USA
17%
EU
6%
Russia
15%
Egypt
3%
Canada
4%
Others
33%
South Korea
5%
Japan
10%Mexico
7%
Largest Beef Importers
Brazil
27%
India
10%USA
11%
Canada
6%
EU
1%
Others
10%
Argentina
5%
Uruguay
5%
Australia
18%New Zeland
7%
RELEVANT PLAYERS IN THE GLOBAL BEEF TRADE
Global Beef Trade Balance (Thousand tons)1
1 Production- Consumption
Source: USDA
* 2008 Estimate8
JBS Global Leadership
Leader in countries with surplus production.
Leader in exports to the main beef import
countries.
Access to all global beef markets.
Sustainable and long term relationship with
its global customer base.
(1,500) (500) 500 1,500 2,500
Brazil
Argentina
Australia
USA
China
European Union
Russia
South Korea
Japan
1999 2008*
GLOBAL SCENARIO – HERD & PRODUCTION
1960 – 2009
9
Source: USDA
600,0
700,0
800,0
900,0
1000,0
1100,0
1200,0
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
Herd
(m
illi
on
of
he
ad
s)
10,0
20,0
30,0
40,0
50,0
60,0
70,0
Pro
du
cti
on
(m
illi
on
of
ton
s)
Total Herd Production
WORLD POPULATION GROWTH AND BEEF
CONSUMPTION (1960 – 2050)
0,0
1.000,0
2.000,0
3.000,0
4.000,0
5.000,0
6.000,0
7.000,0
8.000,0
9.000,0
10.000,0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010* 2015* 2020* 2025* 2030* 2035* 2040* 2045* 2050*
Po
pu
lati
on
(m
illi
on
)
-
20,0
40,0
60,0
80,0
100,0
120,0
140,0
160,0
Co
nsu
mp
tio
n (
mil
lio
n t
on
s)
Beef Consumption World Population Population - More developed regions Population - Less developed regions
10
Beef consumption trend considering CAGR of 2,0% (from 1960 to 2008)
Source: UN (United Nations) and USDA
*UN Estimates
Developed countries
Population growth, a beef
consumption driver.
BEEF MARKET
USA 1991 – 2009 (thousand tons)
11
Source: USDA
7.000
8.000
9.000
10.000
11.000
12.000
13.000
14.000
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Pro
du
cti
on
, C
on
su
mp
tio
n
0
500
1000
1500
2000
2500
3000
3500
Sto
cks
, Im
po
rt, E
xp
ort
Ending Stocks Production Consumption Imports Exports
Exports Recovering
after BSE in 2003.
BEEF MARKET
European Union 1997 – 2013 (thousand tons)
12
Source: EU Commission / DG AGRI
*Estimates
0
1.000
2.000
3.000
4.000
5.000
6.000
7.000
8.000
9.000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009* 2010* 2011* 2012* 2013*
Pro
du
cti
on
, C
on
su
mp
tio
n
0
200
400
600
800
1000
1200
1400
1600
Sto
cks
, Im
po
rt, E
xp
ort
Ending Stocks Production Consumption Import Export
EU - 25EU - 15
Increased dependence
on imports.
BEEF MARKET
RUSSIA 1991 – 2009 (thousand tons)
13
Source: USDA
0
1000
2000
3000
4000
5000
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Ending Stocks Production Import Export Consumption
44.4% of Russian
consumption comes
from imports.
88
Our Strategy
OUR STRATEGY
Pursue Growth Opportunities
Through Acquisitions
Examples:
- Brazilian Slaughterhouses
- Swift Armour
- Swift & Company
- Inalca
- Tasman
- National Beef *
- Smithfield Beef *
Experienced
management team with
over 50 years of
experience in the beef
processing industry.
* The closing of these transactions are subject to certain closing conditions, including expiration or termination of applicable waiting periods under U.S. antitrust law
Create
satisfactory and
consistent return
to shareholders
Mitigate Potential Risksas Sanitary Barriers &
Seasonality
15
0.3 0.4 0.4 0.5 0.5 0.4 0.7 1.2 1.5 1.9
12.7
24.8
1993 1996 1997 1999 2000 2001 2002 2003 2004 2005 2006 2007* 2008**
JBS’ HISTORY HAS BEEN BUILT THROUGH MORE THAN 30 ACQUISITIONS IN 15
YEARS WITH APROPRIATED CAPITAL STRUCTURE AND MANAGEMENT
Source: JBS* Pro forma JBS S.A. LTM Dec07 (includes JBS USA)** Pro Forma JBS S.A. LTM Sep08 (includes JBS USA, Tasman and 50% of Inalca); National LTM May08; Smithfield Beef LTM Sep07; (1) The closing of this transaction is subject to certain closing conditions, including expiration or termination of applicable waiting periods under U.S. antitrust law
Net Sales (in US$ billion)
Companies and assets acquired
Cáceres
(Frigosol)
Iturama
(Frigosol)Araputanga
(Frigoara)
Barretos (Anglo)
Pres. Epitácio (Bordon)
Campo Grande (Bordon)
Pedra Preta
(Frigo Marca)
Rosário
(Swift ARG)
San Jose
(Swift ARG)
Inalca
Swift Foods Co.
Maringá (Amambay)
Berazategui
(Rio Platense)
Colonia Caroya
SB Holdings
JV Beef Jerky
Venado
Tuerto
Pontevedra
(CEPA)
Rio Branco
Cacoal 1
Cacoal 2
Porto Velho
Vilhena (Frigovira)
Andradina
(Sadia)
Barra do
Garças
(Sadia)
Goiânia
(Anglo)
Anápolis
(Bordon)
R$/US$ end of the year cotation R$/US$: 1.91
16
National Beef
Tasman
Smithfield Beef
Five Rivers
(1)
MANAGEMENT
Investor
Relations
Jerry
O’Callaghan
Brazil
Humberto
Magalhães
Argentina
Nelson
Dalcanale
Italy
Luigi
Scordamaglia /
Paolo Boni
Legal
Francisco
de Assis e Silva
Financial
Director
Sérgio
Longo
CEO
Chairman
Joesley
Batista
Mr. Humberto de Campos Magalhães holds a degree in biology from Universidade
Federal do Mato Grosso. He is currently the chief operating officer of the Brazilian division. Before joining JBS in 1999, he had over 8 years of experience working in the meat industry.
Mr. Sérgio Longo, has been serving JBS as a Financial Director since April 2003 and he has been a member of JBS’ board of executive officers since 2005.
Before joining JBS he had over 25 years of experience working in financial institutions.
Mr. Francisco de
Assis e Silva, General
Counsel, holds a law
degree and a master
degree in
environmental law from
Pontifícia Universidade
Católica at Paraná
State, a master degree
in corporate law and a
master’s degree in
public law from
Universidade
Mackenzie, and an MBE
in labor economics from
Universidade de São
Paulo. He has been a
member of JBS’ board
of executive officers
since January 2, 2007 .
He has been working
for the JBS Group since
December 2001.
Mr. Nelson Dalcanale
has been working at JBS since 2001 and is currently the CEO of the division in Argentina. Before joining JBS, he had 21 years of experience in the meat industry.
Mr. Jerry O’Callaghan holds a degree in Engineering from UCC (University College Cork) in Ireland. He immigrated to Brazil in 1979. Mr. O’Callaghan entered the beef sector in 1983 and joined JBS in 1996 to develop International Trade for the group. He is currently our Investor Relations Officer.
Mr. Scordamaglia, started his career as Professor in the Veterinary University of Perugia and as an advisor in the legal and QA departments of Inalca. He was appointed CEO of Inalca in 2007.
Mr. Paolo Boniholds a degree in accounting. Before joining JBS he had over 25 years of experience in the beef industry sector. He has been a Board Member of Inalca since 1996.
Management
& Controlling
Director
Eliseo
Fernandez
Mr. Eliseo Fernandez holds a degree in business administration and accounting from Universidade Católica de Pernambuco and a master’s degree in business administration from FGV. He joined JBS in August 2005 and is currently the management and controlling director. Before joining JBS Mr Fernandez worked for eight years in the auditing and advisory industry and 10 years in the retail industry.
Wesley
Mendonça
Batista
José
Batista
Sobrinho
José
Batista Jr.
Marcus
Vinicius
Pratini de
Moraes (Independent)
Board of Directors
Demósthenes
Marques (Independent
PROT FIP)
BNDES (Independent)
17
CFO
André
Nogueira
Australia
Iain Mars
Pork
Martin
Dooley
JBS
Packerland
Beef
Richard Vesta
JBS Five
Rivers
Mike
Thoren
Beef USA
David Colwell
CEO
USA/AUSWesleyBatista
MANAGEMENT
Trading
Brent
Eastwood
Mr. André Nogueira holds a degree in Economics from Universidade Federal Fluminense, a master degree in Capital Markets from FGV – Fundacão Getúlio Vargas, a master degree in in Economics from Universidade de Brasilia in 2003.
He worked for more than 20 years in Banco do Brasil and joined JBS in 2007, following the bought Swift & Co acquisition.
Mr. Brent Eastwood had worked for Swift & Company for over 18 years.
He moved to the USA in 2007 to be Vice President / Director of JBS Trading USA, the Swift Distribution Centers USA, Australia Trading, Australia Distribution Centers and the Global Trading Business in Brazil.
Mr. Thoren has served as President and CEO of Five Rivers since the Company’s inception.
Mike received his Master of Science degree in Agricultural Economics and his degree in Agribusiness from Washington State University.
Mr. David Colwell holds a degree from University of South Florida and has been working for JBS Swift & Company for 11 years. David has been the President of JBS Beef since 2007.
Mr. Richard Vesta joined Smithfield Foods following the acquisition of Packerland in 2001 and now serves as President and CEO of JBS Packerland.
Mr. Martin Dooley
Holds a degree of Science in Biology/Medical Technology –Eastern Illinois University - 1982
Marty has worked at Swift & Company all his life, having started as a management trainee in 1983.
He was appointed in 2007 to be the President of JBS Pork division.
Mr. Iain Mars was born in England. Iain has been involved in the beef industry for all his life. Mr Mars was appointed President and CEO of JBS Australia in 2007, after the acquisition of Swift & Company. He joined JBS in 2005.
18
JBS’ main units and markets
JBS HAS A GLOBAL PRODUCTION AND DISTRIBUTION PLATFORM
x =
x
=
Legend
Slaughterhouse (Beef)
Slaughterhouse and Industry
Distribution Center
Vegetable Canning Plant
Beef Canning Plant
Beef Jerky Plant (Beef Snack’s)
Slaughterhouse (Pork)
Slaughterhouse (Lamb)
Beef and Pork Processing Plant
Wet Blue Processing Plant
Headquarters Office
Feed Lot
Package Industry
Inland Container Terminal
Commercial Office19
Global Production Platform
Additional Distribution Platform
ArgeriaAngola Congo PolandRussia Dem. Rep. of the Congo
(B) Beef; (P) Pork; (S) Smalls;
Production Units Employees
28.100 B
47.900 P
4.000 S
8.500 B
16.500 S
65.200 B
47.900 P
20.500 S
3.000
6.700 5.059
Daily Slaugther Capacity
2.019
6.995
24.295
B
B
B
6
18
10
8
Total JBS 64 55.361
JBS Argentina
JBS USA
JBS Australia
Inalca JBS
JBS Brazil 22 16.993 18.900
BRIEF DESCRIPTION
20
Brief Description
JBS Brazil’s operations are distributed thru 22 production plants, with a total
slaughter capacity of 18,900 heads of cattle per day and more than 16,900
employees.
JBS’s clients in Brazil are primarily large retailers, restaurants, and tanneries,
JBS’s portfolio currently includes more than 6,000 domestic market companies.
JBS is Brazil’s largest exporter of beef products, with revenues of US$ 1.1 billion
in 2007, according to the SECEX (Brazilian Secretariat of Foreign Trade). It is
also 22nd among the main Brazilian exporters from all sectors.
Platform Structure
In Brazil the Company’s plants are distributed as follows:
– 19 slaughtering plants located in the Brazilian states of Acre, Goiás, Mato Grosso, Mato
Grosso do Sul, Minas Gerais, Rondônia, São Paulo and Paraná, five of which also have
processed beef production plant;
– 1 canned beef production plant located in the state of Rio de Janeiro, Brazil;
– 1 canned vegetable plant located in the state of Minas Gerais, Brazil; and
– 1 beef jerky plant located in São Paulo state, Brazil.
– Beside that, it has 1 cattle feedlot located in the state São Paulo, Brazil.
JBS BRAZIL
Legend
Slaughtering Plant
Slaughtering and Industrial Plant
Distribution Centers
Canned Vegetable Plant
Canned Beef Plant
Administrative Headquarters
Container Yard
Feedlot
21
Brief Description
In 2005, it was acquired by JBS and is currently known as JBS Argentina, it has a total slaughter
capacity of 6,700 heads of cattle per day and more than 5,000 employees.
The Company was first meatpacker in Argentina to meet the regulations established by ISO
9001:2000 in its entire production process.
In Argentina, the company is the absolute leader in the canned meat segment of the domestic
market, having a share of 77% of all sales in 2007. The Argentina client portfolio is comprised of
786 companies.
In the last year, JBS Argentina accounted for 87% of processed beef exports in Argentina, which
were shipped to the United States and Europe, and includes approximately 190 clients.
Platform Structure
In Argentina the Company’s plants are distributed as follows:
6 slaughtering plants located in four provinces of Argentina (Buenos Aires, Entre Rios,
Santa Fé and Córdoba), 5 of which also have processed beef production plants.
1 can making factory in the province of Buenos Aires, Argentina.
JBS ARGENTINA
Legend
Slaughtering Plant
Slaughtering and Industrial Plant
Plant and Offices
22
Legend
Slaughtering Plant
Distribution Centers
Pork Plant
Beef and Pork Plant
Lamb Plant
Administrative Headquarters
Plant and Offices
Brief Description
JBS USA’s operations are distributed thru 18 production plants, with a total
slaughter capacity of 28,100 heads of cattle, 47,900 heads of pork per day
and 4,000 heads of smalls per day and 11 Feed Yards with a one time
capacity to fatten 820,000 head of cattle . The company has more than
24,200 employees.
The Company, has been a recognized provider of beef and pork quality
products for more than 150 years.
Platform Structure
At present, in the USA the Company’s plants are distributed as follows:
8 cattle slaughtering plants in the U.S. states of Colorado, Utah, Texas, Nebraska, Wiscosin,
Michigan, Pennsylvania and Arizona;
3 pork slaughtering plants in the U.S. states of Minnesota, Iowa, and Kentucky;
1 case-ready beef plant in the U.S. state of California;
1 lamb plant in the U.S. state of Colorado;
1 Wet Blue leather producing plant in the U.S. state of Texas.
2 beef jerky plants located in the U.S. states of Minnesota and Texas; and
2 rendering located in the U.S. state of Pennsylvania.
Beside that, it has 11 feed yard in the U.S. states of Colorado, Texas, Oklahoma, Kansas, Ohio e
Idaho;
JBS USA
23
Legend
Slaughtering Plant
Distribution Centers
Administrative Headquarters
Feedlot
Brief Description
JBS Australia’s operations are distributed thru 10 production plants,
with a total slaughter capacity of 8,500 heads of cattle per day and
more than 6,900 employees.
JBS Australia is the largest and broadest Australian meat processor and
exporter, maintaining commercial relations with more than 30
countries, especially in the Pacific Coast and in North America.
Platform Structure
In Australia the Company’s plants are distributed as follows:
10 cattle and smalls slaughtering plants.
5 cattle feedlots located in the Australian states of Queensland and New South Wales.
JBS AUSTRALIA
24
Platforms Structure
Broad Distribution
Moscow
Saint Petersburg
Luanda (Angola)
Lobito (Angola)
Melangje (Angola)
Brazzaville (Congo)
Kinshasa (Congo)
Point-noir (Congo)
Algiers (Algeria)
Production Facilities
Poland – Slaughtering facility
Moscow – Logistic and distribution platform
‘
Inalca JBS
50% 50%
Company Summary
Responsible for fresh beef production, industrialized, smoked and snacks
beef from Cremonini Group;
Revenue of €$1,039 million and assets of €$771 million;
The division is composed by 2 companies; INALCA S.p.A. and Montana
Alimentari S.p.A.;
Largest beef producer in Italy;
Largest industrialized beef producer in Europe;
Largest hamburger producer in Italy;
Only not American company supplier of hamburger to McDonald’s;
Distribution capillarity in Europe, Africa and Russia;
Benchmark in technology to the beef slaughter market;
10 production plants;
Processing capacity of 800,000 cattle head/year;
40,000 tons of hamburger/year;
2,019 employees.
Customers
INALCA JBS has more than 8,000 customers in the domestic market and 660
in the international market, supplying 65 countries, highlighting France,
Spain, Greece, England and Germany.
INALCA JBS ITALY
Legend
Slaughtering Plant
25
26
Customers Base by Business Units
DM – Domestic Market; IM – International Market
BRIEF DESCRIPTION – CUSTOMERS BASE
Customers Nº of Countries Main Customers
JBS Brasil
11.240 DM
102
Russia
436 IM European Union
JBS Argentina
653 DM
46
European Union
137 IM USA
JBS USA
3.978 DM
37
Mexico
507 IM Canada
JBS Austrália
185 DM
35
South Korea
396 IM China
Inalca JBS 8.061 DM
65 France
665 IM England
26
JBS LAUNCHS
In middle of October JBS launched the new Swift product
“Assa Fácil”, produced in Presidente Epitácio/SP.
The new line has three options of beef: rib eye, rump tail
and eye round.
The prices goes from R$17.00 to R$19.00 per kilo.
The packaging is made of polyethylene and can be
placed in the freezer for up to 12 months and ranges
from 950g to 2.7 kilos depending on the cut.
27
LANÇAMENTOS JBS
38
With five options of flavors (manioc with beef, cheese, beef
with veggies, champignon and broccolis), the line of ready
soups Swift Moments was launched in May, 2008.
The soup comes ready to eat and has a stand-up pouch
packaging, a sachet which maintains the product quality
without storage in the fridge.
With individual portions of 200 grams, the price suggested is
R$2.50.
On September 9, 2008, the soup line received the “IS
Awards”, organized by ABIA (Brazilian Association of the food
industry) and by Nielsen Business Media, as the most
innovative food product of the year.
LAUNCHS JBS
28
88
3Q08 Results
SHORT TERM DEBT PROFILE – 3rd QUARTER 2008
The Administration of the Company is secure that even if the present financial crisis has not abated until the next
quarter the Company will not have difficulties in refinancing its short term debt and believes that in the final
analysis there will be a possible increase in the cost of the debt. The Company did a sensitivity analysis
considering firstly a probable scenario and secondly a pessimistic one in relation to the renewal of its short
term financing facilities.
Obs: The Finame, Finem and Finimp credit lines are automatically liquidated, meaning they are paid on expiry and are not renewable
Trade finance, Working Capital and other credit lines are interchangeable, meaning they can be refinanced but not necessarily in the same category under which they were initially contracted.
*Including Finimp
**Percentage to be paid in the period
***Simulation of the availabilities and applications after the amortizations programmed for the respective quarter without taking into consideration cash to be generated in future quarters.
JBS S.A. Consolidated (R$ million)
4Q08 1Q09 2Q09 3Q09 Tota l %** 4Q08 1Q09 2Q09 3Q09 %** 4Q08 1Q09 2Q09 3Q09
Financing for purchase of fix ed assets
FINAME / FINEM - Enterprise financing 48 12 12 12 84 100% 48 12 12 12 100% 48 12 12 12
Notes Payable 2 - - - 2 100% 2 0 0 0 100% 2 0 0 0
Sub Total 1 50 12 12 12 86 100% 50 12 12 12 100% 50 12 12 12
Loans for w ork ing capita l purposes
ACC - Exchange advance contracts 116 174 216 122 628 0% - - - - 20% 23 35 43 24
EXIM - BNDES export credit facility 103 69 0 0 172 0% - - - - 20% 21 14 0 0
Fixed Rate Notes with final maturity in February 2011 7 - - - 7 100% 7 - - - 100% 7 0 0 0
W orking Capital - American Dollars * 7 22 24 17 70 75% 5 16 18 13 75% 5 16 18 13
W orking Capital - Australian Dollars - - 97 - 97 0% - - - - 0% 0 0 0 0
W orking Capital - Euros 218 - - - 218 0% - - - - 0% 0 0 0 0
W orking Capital - Reais 101 - - - 101 0% - - - - 30% 30 0 0 0
Export prepayment 5 130 13 13 161 0% - - - - 20% 1 26 3 3
Fixed Rate Notes with final maturity February 2016 (144-A) - 10 - - 10 100% - 10 - - 100% 0 10 0 0
NCE / COMPROR 63 245 - 92 400 0% - - - - 20% 13 49 0 18
Sub Total 2 622 649 350 244 1 .864 4% 12 26 18 13 20% 100 149 64 58
Tota l 672 661 362 255 1 .950 8% 62 38 30 24 23% 150 162 76 70
Amortiza tion of Short Term Debt
Cash, cash equiva lents and Short-term investments 3 rd Quarter 2008 *** 2 .256 2 .194 2 .156 2 .126 2 .101 2 .106 1 .944 1 .868 1 .799
EBITDA 3rd Quarter 2008 471
Pessimistic ScenarioProbable Scenario
457 155
Amortiza tionAmortiza tion
Short Term Debt
Short Term Debt
30
LIQUIDITY EVALUATION
Source: * Companies’ last public information
** Companie’s Last Twelve Months
Balance * JBS S.A.Brazilian Peers
(average)
USA Peers
(average)
ASSETS R$ (million) R$ (million) US$ (million)
Cash, cash equivalents and Short-term investments ## 2,256 1,223 57
Trade accounts receivable, net ## 2,169 623 1,017
Inventories ## 2,381 988 2,776
Prepaid expenses and other ## 326 100 215
Total Permanent assets ## 4,995 2,312 3,493
LIABILITIES R$ (million) R$ (million) US$ (million)
Loans and financings Short Term ## 1,950 1,234 297
Payroll, social charges ## 299 192 0
Trade accounts payable ## 1,410 527 1,369
Other current liabilities ## 186 134 384
Loans and financings Long Term ## 2,802 2,072 3,158
Other non-current liabilities ## 114 121 531
Net Sale Revenue ** ## 29,979 5,590 20,187
Ebitda ** ## 1,079 596 653
Ebitda Margin (%) ## 3.60% 10.66% 3.24%
Working Capital ## 2,866 718 1,726
Net Debt ## 2,496 2,083 3,398
( Deficit ) or Surplus ## 370 (1,365) (1,672)
Net Debt / Ebitda** # 2.3x 3.5x 5.2x
Net Debt / Net Sale Revenue (per month)** # 1.0 month 4.5 months 2.0 months
31
95176
291
X471
2,8
2,3
2,9
3,7
4Q07 1Q08 2Q08 3Q08 4Q08e
Net Debt/ EBITDA
Source: JBS
Without considering National Beef and Smithfield Beef acquisitions.
Net Debt / EBITDA Pro Forma per TRIMESTER (R$
million)JBS’s Net debt in relation to its Ebitda
(last twelve months pro forma) is
affected by weak results in the 4th
quarter 2007 and 1st quarter 2008.
Good results expected for the 4th
quarter 2008 and 1st quarter 2009 will
reduce the relation between Net Debt
over Ebtida.
Exchange rates:
R$ / US$ = 1.91 – 09/30/2008
US$ / €$ = 1.41 – 09/30/2008
JBS – NET DEBT/EBITDA
32
JBS CONSOLIDATED RESULTS
NET REVENUE, EBITDA AND EBITDA MARGIN
591.1
94.8176.3
290.8
470.5
6.1%
3.0%4.1%
1.4%
4.2%
12M07 4Q07 1Q08 2Q08 3Q08
14,141.6
6,650.7
5,859.1
7,129.57,771.5
12M07 4Q07 1Q08 2Q08 3Q08
Net Sales Revenue (R$ million) EBITDA and Margin (R$ million)
EBITDA Margin(%)
-11.9%
86.0%
Source: JBS
Without considering National Beef and Smithfield Beef acquisitions.
21.7%
64.5%
9.0%
61.8%
33
PERFORMANCE BY BUSINESS UNITS
2,6301,976
7,375
2,756
FY07 1Q08 2Q08 3Q08
155.6
25.8
-0.9
132.9
5.6%5.1%
-0.1%0.3%
FY07 1Q08 2Q08 3Q08
Source: JBSFY of Swift used to be from June to May and INALCA period is from January to December. (1) 13 weeks ended 03/30/2008. (2) 13 weeks ended 06/29/2008. (3) 13 weeks ended 09/28/2008.
620536
2,175
682
FY07 1Q08 2Q08 3Q08
52.1
70.3
15.7 19.9
7.6%
3.2%2.9%3.2%
FY07 1Q08 2Q08 3Q08
155132
521
143
FY07 1Q08 2Q08 3Q08
7.6
26.0
7.4 7.5
5.3%4.8%
5.6%4.9%
FY07 1Q08 2Q08 3Q08
1,4251,271
4,892
1,811
FY07 1Q08 2Q08 3Q08(1) (2) (3)
102.2
692.0
132.758.2
5.6%
4.1%
10.4%
15.3%
FY07 1Q08 2Q08 3Q08
(1) (2) (3)
(1) (2) (3) (1) (2) (3)
Net Sales
(US$ million)
JBS USA (Beef)
Including Australia
Net Sales
(US$ million)
JBS USA (Pork)
Net Sales
(€ million)
INALCA JBS MERCOSUL
Net Sales
(R$ million)
EBITDA (US$ mi) margin EBITDA
Margin (%)
EBITDA (US$ mi) margin EBITDA
Margin (%)
EBITDA (€ mi) margin EBITDA
Margin (%)
EBITDA (R$ mi) margin EBITDA
Margin (%)
34
The geographic diversification of its operations allows it to source meat efficiently, serve its customers cost-effectively, capitalize on increasing international trade opportunities and helps
to mitigate the potential impacts of sanitary barriers.
JBS: GLOBAL PRODUCTION & DISTRIBUTION PLATFORM
JBS Mercosul JBS USA / Australia Inalca JBS
Revenue Ebitda
Revenue Ebitda
Revenue Ebitda
76%
19%
5% US$42
Source: JBS
* JBS S.A. LTM Sep08, Pro forma JBS USA LTM Sep08 (includes Tasman) and Pro forma 50% of Inalca LTM Sep08
Exchange rates:
R$ / US$ = 1.91 – 09/30/2008
US$ / €$ = 1.41 – 09/30/2008
US$265
US$257
US$3,043
US$778
US$11,839
35
EVOLUTION OF THE EBITDA MARGINS OF JBS USA (BEEF)
COMPARED WITH ITS LOCAL PEERS
-0.4%
1.3% 1.3%
3.6%
0.9% 0.9%
3.2%
-0.9%
2.3%
-5.3%
-0.7%
-0.4%
-1.7%
4.2%
5.3%
-1.3%-1.2%
0.9%0.7%
FY03* FY04* FY05* FY06* FY07* 3Q07** 4Q07** 1Q08** 2Q08** 3Q08**
Peers Average Beef USA
JBS Beef USA
Source: JBS and estimates of JBS based upon public data from peers
EBITDA margins of the Companies taking into consideration beef only in the US
*Fiscal years for the Companies differ one from the other:
FY Tyson: October to September
FY Smithfield: May to April
FY National Beef: September to August
FY JBS USA: June to May (altered after the acquisition)
**The relevant quarterly period and adjustments made to the calendar year
EBITDA (%)
JBS S.A. ManagementPrevious Management
36
CONSOLIDATED PRO-FORMA OCTOBER 2008
Combined Companies Pro-forma (US$ million)
Exchange rates:
R$ / US$ = 1.91 – 09/30/2008
Source: Company Estimates
JBS – annual report, quartely reports - Pro-forma LTM Sep08 (including JBS USA, Tasman and 50% of Inalca)
Smithfield Beef – Managerial numbers LTM Sep08 and 100% of Five Rivers LTM Sep08
*ABL – Asset Based Loan contracted by JBS USA
Net Revenue (US$ mm) 15.660 3.033 18.694
EBITDA (US$ mm) 564 139 703
EBITDA Margin 3,6% 4,6% 3,8%
Cash (US$ mm) 1.178 10 1.188
Short Term Debt (US$ mm) 1.019 0 1.019
Long Term Debt (US$ mm) 1.464 400 1.864
Net Debt (US$ mm) 1.304 0 1.694
Net Debt / Ebitda 2,3x 0,0x 2,4x
Slaughter Capacity (thousand head/day) 57,6 7,6 65,2
Units 98 16 114
Employees 48.991 6.370 55.361
INTEGRATED
and Five Rivers
*
37
JBS USA BEEF EXPORT VOLUMES
12
Source: JBS
10
15
20
25
30
35
40
45
50
55
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Millio
n p
ou
nd
s
2007 2008
JBS Beef exports up
64%; industry up 33%
JBS USA EXPORTS
38
CUTOUT PRICE VS. CATTLE PRICE IN USA
12
Source: Bloomberg 39
C utout P ric e vs . C attle P ric e in T he US
115
125
135
145
155
165
175
J ul-07 Aug-07 S ep-07 O ct-07 Nov-07 Dec-07 J an-08 F eb-08 Mar-08 Apr-08 May-08 J un-08 J ul-08 Aug-08 S ep-08 O ct-08 Nov-08
US
$ /
10
0 p
ou
nd
s
-80
-70
-60
-50
-40
-30
-20
-10
0
10
20
30
40
50
60
70
80
90
100
Ma
rgin
(U
S$
/ H
ea
d)
Margin/Head C attle P rice B eef P rice
4.2%
5.3%
-5.3%
-1.3%-0.7%
E B IT DA Margin of J B S US A B eef
(excluding Aus tralia)
JBS CONSOLIDATED – GROSS REVENUE
DISTRIBUTION
Revenue Distribution by Business Units 3Q08 Revenue Distribution by Market 3Q08
Source: JBS Source: JBS
Domestic Market
64%
Exports36%
Beef Italy5% Beef Argentina
3%
Beef Brazil22%
Beef USA43%
Pork USA14%
Beef Australia13%
40
JBS CONSOLIDATED – EXPORTS DISTRIBUTION
Exports Distribution 3Q08
Source: JBS
Russia18%
Japan15%
Mexico10%E.U.
10%
Canada5%
South Korea4%
China4%
USA3%
Hong Kong
3%
Taiwan3%
Others25%
Exports JBS 3Q08US$ 1.7 billion
41
ENTERPRISE VALUE AND EBITDA MULTIPLE
Source: JBS
96.3
264.8
5.5x
15.1x
Jul-07 Sep-08
SWIFT USA ACQUISITION
EV / EBITDA
175%
US$1,458.8 mm
SMITHFIELD BEEF ACQUISITION
70.0
139.3
4.1x
8.1x
Oct-07 Sep-08
EV / EBITDA
99%
US$565.0 mm
42
4388
Ibovespa Index
THANK YOU“In God we Trust”
Investor Relations [email protected]
+ 55 11 3144 4055www.jbs.com.br
JBS S.A.