1Q11 Conference Call Presentation
Transcript of 1Q11 Conference Call Presentation
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JBS S.A.
Results Presentation1Q11
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JBS S.A.
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3PAGE
JBS S.A. at a glance
Founded in the 1950s in West Central Brazil
IPO in 2007
Leading protein producer and third largest food company in the World
Revenues of over R$ 54 billion in 2010
EBITDA of R$ 3.76 billion in 2010
Organic growth of 14.2% in local currency in 2010
125,000 employees worldwide
134 production units in 5 continents
Market cap of approximately R$ 15.1 billion(1)
(1) 31/03/2011
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JBS Ranking
3 Geographic andmarket segmentdiversification
1 Market Leader
4 Well-recognizedbrands
2 Track Recordof successfulacquisitions
Largest global beef andlamb producer1
st
Largest global leatherprocessor1
st
Largest global chickenproducer2
nd
Largest dairyproducer in Brazil3rd
Largest pork producerin the US3rd
Source: JBS
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Merger and Acquisition track recordMore than 30 acquisitions in 15 years
0,3 0,4 0,4 0,5 0,5 0,4 0,7 1,2 1,54,3
14,1
30,3
34,3
55,1
1996 1997 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Barra doGaras(Sadia)
Andradina(Sadia)
Barretos (Anglo)
Pres. Epitcio eCampo grande(Bordon)
Araputanga(Frigoara)
Cceres(Frigosol)
Iturama(Frigosol)
Rio BrancoCacoal 1
Cacoal 2Porto VelhoVilhena(Frigovira)
Pedra Preta(Frigo Marca)
Venado
TuertoPontevedra(CEPA)
JV Beef Jerky
BeefFive Rivers
Merger with BertinJBS Couros5 new units
Tatiara Meat(Swift Austrlia)
Net revenue (R$ billion)
TasmanSmithfield
Inalca
SB Holdings
Berazategui (Rio Platense)Colonia Caroya
Maring (Amambay)
Swift Foods Co.
JBS went international with the acquisition of Swift Argentina.
Construction of a sustainable global meatproduction and sales platform.
2005
JBS became the largest beef company in the world and thebiggest Brazilian company in the food industry and entered theUS pork market.
2007
2008
Diversification of market segments through theacquisition of Pilgrims Pride and merger with Bertin.
2009
JBS Swift became the leader in lamb production inAustralia.
2010
RosrioSan Jose(Swift Argentina)
Pilgrims Pride
3 Geographic andmarket segmentdiversification
1 Market Leader
4 Well-recognizedbrands
2 Track Recordof successfulacquisitions Rockdale Beef
Source: JBS
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6PAGE
Presence in more than 100 countries, in 6 continents
Source: JBS
Slaughterhouse and Industry
Sales Office
Pork
LeatherBeef
Distribution CenterDairy
Biodiesel
Strategic Geographical Distribution
Chicken
GeographicPresence andProductionCapacity
84,800 heads/day
Beef
7.9 mm birds/day
Chicken
50,000 heads/day
Pork
5,400 tons/day
Dairy
24,000 heads/day
Lamb
82,300 hides/day
Leather
3
60
39
23
7
1
58
7
144
u Units
3 Geographicand marketsegmentdiversification
1 Market Leader
4 Well-recognizedbrands
2 Track Record ofsuccessfulacquisitions
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Well-recognized Brands, symbols of quality
Brazil
Argentina
3 Geographic andmarket segmentdiversification
1 Market Leader
4 Well-recognizedbrands
2 Track Record ofsuccessfulacquisitions
EUA
Australia
http://www.vigor.com.br/vigor/foodservice/marca.php?idm=4&idc=0http://www.vigor.com.br/vigor/foodservice/marca.php?idm=6&idc=0 -
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Perspectives for the animal protein market
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0
50
100
150
200
250
300
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2019
Global Protein Consumption Growth
Source: Historical figures per USDA FAS. Projected and forecasted data per OECD estimates.
(MT in mm)
Historical Forecast
Strong Global Industry Fundamentals
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10PAGESource: USDA FAS.
Global Protein Trade Continues to Grow
13,98914,282
15,074
16,359
17,21917,954
19,750 19,839
20,688
22,707
21,714
22,95923,513
7,2187,824
8,7779,543
10,33011,022
12,661 12,82813,874
15,11214,558 14,587
14,993
0
5,000
10,000
15,000
20,000
25,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010P 2011F
(MT in 000s)
JBSMarket
Presence64%
JBS Has Presence in Markets That Represent Nearly 64% of Global Trade
Historical Forecast
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Brazil, Australia and the US continue to lead global beef exports
Source: USDA, MLA and Secex
Beef Exports Average Price (US$/Ton)
Australian Beef Exports (tons)
Brazil, Australia and US represent, respectively, 27%, 18% and 11% of global beef trade
Brazilian Beef Exports (tons)
US Beef and Veal Exports (tons)
0
500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
4.500
5.000
5.500
0
200.000
400.000
600.000
800.000
1.000.000
1.200.000
1.400.000
+11.1%
0
500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
4.500
5.000
5.500
0
200.000
400.000
600.000
800.000
1.000.000
1.200.000
1.400.000
-18.3%
+15.1%
0
500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
4.500
5.000
5.500
0
200.000
400.000
600.000
800.000
1.000.000
1.200.000
1.400.000
2005 2006 2007 2008 2009 2010 1Q101Q11
-10.5%
+35.5%
+12.2%
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Chicken Exports Brazil vs US
Source: USDA e Secex
Brazilian Chicken Exports (tons) US Chicken Exports (tons)
Chicken Exports Average Price (US$/Ton)
Brazil and US represent, respectively, 39% and 34% of global chicken trade
0
200
400
600
800
1.000
1.200
1.400
1.600
1.800
0
500.000
1.000.000
1.500.000
2.000.000
2.500.000
3.000.000
3.500.000
4.000.000
4.500.000
2005 2006 2007 2008 2009 2010 1Q10 1Q11
+18.2%
0
200
400
600
800
1.000
1.200
1.400
1.600
1.800
0
500.000
1.000.000
1.500.000
2.000.000
2.500.000
3.000.000
3.500.000
4.000.000
4.500.000
2005 2006 2007 2008 2009 2010 Jan-Feb10
Jan-Feb11
+10.2%
+6.1%
+1.7%
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Pork Exports US vs Brazil
Source: USDA e Secex
Brazilian Pork Exports (tons) US Pork Exports (tons)
Chicken Exports Average Price (US$/Ton)
US and Brazil represent, respectively, 32% and 11% of global pork trade
0
500
1.000
1.500
2.000
2.500
3.000
0
200.000
400.000
600.000
800.000
1.000.000
1.200.000
1.400.000
2005 2006 2007 2008 2009 2010 1Q10 1Q11
+12.7%
0
500
1.000
1.500
2.000
2.500
3.000
0
200.000
400.000
600.000
800.000
1.000.000
1.200.000
1.400.000
2005 2006 2007 2008 2009 2010 Jan-Feb10
Jan-Feb11
-7.1%
+13.4%
+8.0%
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1Q11 Highlights
Net income was R$147.0 million in the period
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Net revenue in 1Q11 was R$14,672.7 million, 20.2% higher than 1Q10.
Net income in 1Q11 was R$147.0 million, an increase of47.9% compared to the 1Q10.
1Q11 Highlights
The main operating highlighs were:
JBS USA Beef presented EBITDA ofUS$269.7 million, 58.2% superior than 1Q10and EBITDA margin of 7.4%.
JBS Mercosul presented EBITDA ofUS$308.3 million and EBITDA margin of8.6%.
JBS USA Pork presented EBITDA of
US$105.3 million, 201.7% superiorthan 1Q10 and EBITDA margin of12.6%.
Exports increased more than 17% in1Q11 compared to 1Q10, reachingUS$2.45 billion for the period.
EBITDA was R$ 835.9 million with an EBITDA margin of 5.7%.
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16PAGESource: JBS
JBS Consolidated Results 1Q11
862 1.000 1.026 866 836
7,1 7,1 7,36,0 5,7
-12,0
8,0
0,0
200,0
400,0
600,0
800,0
1000,0
1200,0
1400,0
1600,0
1800,0
1Q10 2Q10 3Q10 4Q10 1Q11
EBITDANet Revenue (R$ million) EBITDA and EBITDA Margin (R$ million)
12.207,3
14.116,3 14.069,6 14.319,6 14.672,7
1Q10 2Q10 3Q10 4Q10 1Q11
+2.5%
+15.6%
-0.3% +1.8%
+ 116.7%
+ 16.0%+2.6%
-3.4%
EBITDA Margin (%)
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JBS Mercosul
Source: JBS
Net sales (R$ billion) EBITDA (R$ mi) EBITDA margin
362,7334,5
363,7
238,8
308,6
12,8%
9,5%10,4%
7,1%8,6%
-10,0%-8,0%
-6,0%-4,0%-2,0%0,0%2,0%4,0%6,0%8,0%10,0%12,0%
0
100
200
300
400
500
600
1Q10 2Q10 3Q10 4Q10 1Q11
2,8
3,5 3,5 3,43,6
1Q10 2Q10 3Q10 4Q10 1Q11
EBITDA Margin (%)
25% of JBS S.A. Net Revenues.
R$ million 1Q11 4Q10 % 1Q10 %
Heads slaughtered (thousand) 1,747.1 1,585.0 10.2% 1,722.4 1.4%Net Revenue 3,604.2 3,362.8 7.2% 2,822.7 27.7%
EBITDA 308.3 238.8 29.1% 362.7 -15.0%
EBITDA margin % 8.6% 7.1% 12.8%
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JBS USA Beef (including Australia)
2,8
3,3 3,43,6
3,8
1Q10 2Q10 3Q10 4Q10 1Q11
Net sales (R$ billion) EBITDA (R$ mi) EBITDA margin
170,5194,9
103,5
194,8
269,7
6,0%5,9%
3,1%5,4%
7,1%
-10,0%-8,0%
-6,0%
-4,0%-2,0%
0,0%2,0%
4,0%6,0%
8,0%
10,0%12,0%
0
100
200
300
400
500
1Q10 2Q10 3Q10 4Q10 1Q11
Source: JBS
EBITDA Margin (%)
43% of JBS S.A. Net Revenues.
US$ million 1Q11 4Q10 % 1Q10 %
Heads slaughtered (thousand) 2,003.1 2,047.3 -2.2% 1,880.0 6.5%Net Revenue 3,793.3 3,588.7 5.7% 2,827.7 34.1%
EBITDA 269.7 194.8 38.5% 170.5 58.2%
EBITDA margin % 7.1% 5.4% 6.0%
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JBS USA Pork
Net sales (R$ billion) EBITDA (R$ mi) EBITDA margin
34,9
48,7
90,8102,4 105,3
5,4%
6,6%
11,8%12,8% 12,6%
-10,0%
-5,0%
0,0%
5,0%
10,0%
0
100
1Q10 2Q10 3Q10 4Q10 1Q11
646739 772
799 837
0100200300400500600700800900
10001100
1Q10 2Q10 3Q10 4Q10 1Q11
Source: JBS
EBITDA Margin (%)
10% of JBS S.A. Net Revenues.
US$ million 1Q11 4Q10 % 1Q10 %
Animals slaughtered (thousand) 3,303.6 3,587.2 -7.9% 3,115.6 6.0%Net Revenue 836.6 799.4 4.7% 645.9 29.5%
EBITDA 105.3 102.4 2.8% 34.9 201.7%
EBITDA margin % 12.6% 12.8% 5.4%
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JBS USA Chicken
1,6 1,7 1,71,8 1,9
1Q10 2Q10 3Q10 4Q10 1Q11
Net sales (R$ billion) EBITDA (R$ mi) EBITDA margin
59,5
127,6170
124,8
-55,2
3,6%7,5%
9,9%6,9%
-2,9%
-30,0%-28,0%-26,0%-24,0%-22,0%-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%
-100
0
100
200
300
400
500
1Q10 2Q10 3Q10 4Q10 1Q11
Source: JBS
EBITDA Margin (%)
22% of JBS S.A. Net Revenues.
US$ million 1Q11 4Q10 % 1Q10 %
Net Revenue 1,892.5 1,811.3 4.5% 1,642.9 15.2%EBITDA (55.2) 124.8 - 59.5 -
EBITDA margin % -2.9% 6.9% 3.6%
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21PAGESource: JBS
Revenue and EBITDA Distribution by Business Unit
Revenue
EBITDA
36.8%
53.9%
21.0%
-11.6%
43.1%
25.2%21.9%
9.7%
1Q11
1Q11
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22PAGESource: USDA
2.500
2.700
2.900
3.100
3.300
3.500
3.700
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q111.600
1.650
1.700
1.750
1.800
1.850
1.900
1Q10 2Q10 3Q10 4Q10 1Q11
500
550
600
650
700
750
800
850
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11
2.800
2.900
3.000
3.100
3.200
3.300
3.400
3.500
3.600
1Q10 2Q10 3Q10 4Q10 1Q11
Organic Growth 2009 / 2010
Each business unit presented double digit organic growth in their local currency, for the period.
JBS USA Beef Net Revenue (US$ million) JBS USA Chicken Net Revenue (US$ million)
JBS USA Pork Net Revenue (US$ million) JBS Mercosul Net Revenue (R$ million)
JBS C lid t d E t Di t ib ti
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23PAGESource: JBS
Philippines 1.3%
Taiwan 2.5%
China 4.0%
Canada 4.4%
E.U. 5.2%
Hong Kong 6.8%
Others 14.0%
Russia 8.4%
Africa and Middle East 15.9%
Mexico 14.4%
Japan 13.1%
South Korea 10.1%
US$ 2,450.3 million
1Q11
Vietnam 1.5%
Taiwan 2.3%
China 3.5%
Canada 4.0%
South Korea 4.7%
Hong Kong 6.8%
Others 13.4%
E.U. 9.2%
Mexico 15,0%
Africa and Middle East 14.9%
Russia 12.5%
Japan 12.2%
US$ 2,087.9 million
4Q10
JBS Consolidated Exports Distribution
D bt P fil
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The ratio of net debt to EBITDA was 3.1x in the 1Q11, compared with 3.0x in 4Q10.
The slight increase in debt refers to the working capital needs of the Company.
. Leverage EBITDA
Leverage
Source: JBS
Debt Profile
Short Term Long Term
ST / LT Profile
3,13
2,93
3.1x
0
1
2
3
-100
100
300
500
700
900
1100
1300
1500
1Q10 2Q10 3Q10 4Q10 1Q11
40%
36%
33%
33%
30%
60%
64%
67%
67%
70%
1Q10
2Q10
3Q10
4Q10
1Q11
It is important to note that the Companys Cash and Equivalents is equal to 80% of the short term debt, and more than 70% ofthe debt is
long term.
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Mission
To be bestin what we set out to do, totally focusedonour business, ensuring the best products and services
for our customers, solidityfor our suppliers,satisfactory profitabilityfor our shareholders and the
certainty of a better future to all our employees.