Minerva Day. November 19 th, 2018

Transcription

1 Minerva Day November 19 th, 2018

2 Agenda 1:30pm 2:00pm 3:00pm 3:30pm 4:00pm 4:30pm 2018 Retrospective and 2019 Perspective Fernando Galletti de Queiroz CEO Minerva Foods Agricultural Conjuncture and Future Perspective Alexandre L. Mendonça de Barros - MB Agro Partner Coffee Break Athena Foods Scenario e Perspective Iain Anderson Mars CEO Athena Foods Operating and Financial Results Edison Ticle CFO Minerva Foods Q&A

3 Retrospective 2018 and Perspective 2019 Fernando Queiroz CEO Minerva Foods

4 Retrospective 2018 & Perspective 2019 SECTOR S RETROSPECTIVE & PERSPECTIVE DEMAND: Global demand for beef: strong growth especially from Asia and MENA Possible opening of new markets to Southern American countries (e.g. Argentina to US, Brazil to Indonesia and Uruguay to Japan) USDA - Global imports: +3.7% 2019E vs 2018E SUPPLY: USDA - Global exports: +0.2% 2019E vs 2018E (South America +3.8%) South America to become a beef export platform (~34% of global exports) Brazil and Paraguay: Cattle Cycle still positive in 2019 Argentina: Cattle retention remains to recompose the herd, but availability of cattle ready to be slaughtered has increased OVERALL SCENARIO: Signs of economic recovery in Brazil and stability on the relation Real/US Dollar Argentina: Current economical situation opens room to exports to increase further in 2019 (USDA expects increase of 15% yoy, to tons) MINERVA RETROSPECTIVE 2018 Integration process of Mercosur Assets concluded Recovery of Gross Margin and EBITDA Working Capital Management - 9M18: +R$100.9 million Conclusion of private capital increase PERSPECTIVE 2019 FOCUS ON RESULTS: Deleverage + Improvement of ROIC + Debt management = FCF generation STRATEGY: Geographic diversification + Operational Efficiency + Commercial Efficiency = Generation of better, less volatile and more predictable results ATHENA STRATEGY: First file in November 2018 IPO expected in the 1H19 Growth Business Plan after the IPO Capital Structure Management 4

5 Well Positioned to Capture Herd Growth Colombia Colombia Brazil Brazil Brazil Brazil Paraguay Paraguay Paraguay Paraguay Uruguay Uruguay Uruguay Argentina Processing Plant Slaughter Unit 7 Slaughter Units 11 Slaughter Units 17 Slaughter Units 1 Processing Plants 26 Slaughter Units 3 Processing Plants THE SOUTH AMERICAN MARKET HAS SEEN CONSISTENT GROWTH THROUGHOUT THE YEARS DESPITE GLOBAL DECELERATION 58.8% 39.8% Cattle Herd (mm heads) (2018E x 2000) 16.2% 11.3% 6.8% Brazil Paraguay Colombia Uruguay Argentina

6 Cattle Purchase MERITOCRACY Encouraging the cattle purchaser to generate results Phase 1: Related to the cost efficiency (below market price) Phase 2: Anticipate the Markets movements (Cost + Long & Short) Phase 3: Attending the portfolio (Cost + L&S + Quality) Selection of partnerships: cost, quality and seasonality Suppliers Minerva 5,847 (37% of total) Athena 9,753 (63% of total) FOCUS ON QUALITY: PEC (Programa de Eficiência de Carcaça) optimizes the perception of the animal that will be purchased Adjustments in pricing SPECIFIC ACTIONS NICHE MARKETS: Hilton: focus on heifers New line for premium segment (Hilton "by-product") Expansion of the Prime line in low cost units Organic: 3 units qualified, plus 1 undergoing qualification process 6

7 Efficiency Programs OPERATIONS: MAIN OBJECTIVES Standardization of processes Increase yield and productivity Minimize volatility of operational resources COMMERCIAL FOCUS: SEGMENTATION FOR... Niche markets Organic products Export of chilled cuts MAIN PROGRAMS ATITUDE CAMPEÃ PROGRAM Best practices among units, resulting in better attendance of KPIs and better financial returns for the Company Bring the "Spirit of Ownership" culture to each Employee Promote the criteria of excellence and collective growth Potential gain of R$ 7 million/month Savings of R$ 43 million YTD - until Sep/18 EXPANSION OF THE "PORCIONADOS" PROJECT Increase in the share of food service SPRAY CHILLING SYSTEM Minimize losses with the Carcass Spray Chilling System Average monthly gain of ~ R$ 2.5 million OSSO BRANCO PROJECT Design of quarter deboning for the half-carcass deboning (RL and AR), aiming at a higher yield and reduction of cuts Potential gain of 3 million/year 7

8 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Domestic Market BRAZILIAN DIVISION HIGHTLIGHTS Beef Premium 9% Third-parties 37% clients % SHARE 2018* Beef Commodity 54% Premium % Share Beef 7% 12% 15% Third-parties % Share Total 29% 38% 37% ATHENA FOODS HIGHTLIGHTS Focus on industrial food companies, retailers and other clients in the domestic industrial food processing industry Through 5 distributions centers, Athena resell and distribute in the domestic market a variety of products produced by third-parties Better use of the company structure and distribution platform Increase the food service share of wallet Gain of market share and profitability Growth in premium brands TOTAL BEEF = 63% CHANNELS / TYPE Food Service 56% Bar & Snackbar 13% Steakhouse 13% Others 3% Restaurant/ Buffet 71% GROWTH OF SALES CHANNELS Direct and indirect clients 63.8 Source: Minerva *% of share based on gross margin

9 Export Market Focus on Emerging Countries HIGHLIGHTS Primary focus: emerging markets (more than 100 countries) Niche markets: organic beef for the USA and Europe (USDA approved) Special cuts (including kosher and halal) for the Middle East and Russia 13 international offices (Americas, Europe, Middle East, Africa, Oceania and Asia) Sales through 3 distinct channels: Industry Food Service Retail USA Chile Brazil Italy UK Argelia Lebanon Egypt +2 International Trading Russia China China Hong Kong Singapore Australia International Offices New Zealand BRAZILIAN DIVISION BREAKDOWN OF EXPORTS (% OF REVENUE) ATHENA FOODS BREAKDOWN OF EXPORTS (% OF REVENUE) Americas 8% Africa 14% EU 15% LTM3Q17 CIS NAFTA 7% 2% Middle East 31% Asia 23% 1 Africa 14% EU 14% Americas 15% LTM3Q18 CIS 3% Asia 27% Middle East 27% EU 11% NAFTA 11% Middle East 15% LTM3Q17 Africa CIS 3% 8% Americas 32% Asia 20% Middle NAFTA East 5% 8% EU 13% CIS 18% LTM3Q18 Africa 1% Asia 33% Americas 22% 9

10 Agricultural Conjuncture and Future Perspective Alexandre L. Mendonça de Barros

11 Agribusiness perspectives Minerva Day Alexandre Mendonça de Barros November, 2018

12 1990 Agricultural trade balance deficits and surpluses (billion US$, WTO data) USA 7 Argentina 7 Brazil EU27-6 Middle East 2 China 5 Thailand -7 South Korea 2 Indonesia 9 Australia -47 Japan 2 USA Brazil EU Middle East -1 Russia 21 Thailand China 19 Indonesia 19 Australia Japan Argentina

13 Cattle Herd (Million head, 2017, USDA data) World : Million head United States 226 European Union India 99 China 54 Argentina Brazil 25 Australia

14 12,1 12,2 World Production: 61.4 MMt World Consumption: 59.4 MMt Beef (MMT, 2017, USDA data) 7,9 7,8 7,1 8,0 9,5 7,7 4,3 1,3 1,8 1,9 1,8 Mexico United States 2,8 2,5 Argentina Brazil European Union 1,5 1,5 1,8 1,7 2,4 Turkey Pakistan India China Russia 2,1 0,7 Australia

15 World Imports: MMt World Exports: MMt Beef (MMT cwe, 2017, USDA data) United States 55 0 India Russia 20 China 3 Japan 1 Korea, South 570 Brazil 14 Australia 10 New Zealand

16 El Niño/La Niña Outlook CPC/IRI Probabilistic Early November Mid October 16

17 Forecast Niño 1+2 e Niño 3.4 Niño 1+2: Maior influência na América do Sul. Niño 3.4: Maior influência na Ásia e Austrália. 17

18 El Niño Outlook Forecast (Niño 3.4) Fonte: European Centre for Medium-Range Weather Forecasts. 18

19 Soybean: world supply and demand (million t) Millions t 2015/ / / /19 Var Begining Stocks % Production % USA % Brazil % Argentina % China % Others % Consumption % Ending Stocks % Stock/Use (%) 26% 30% 30% 32% Source: USDA. Prepa red by MB Agro Nov-18 19

20 US$c/bu Soybean: international price and future market (US$c/bushel) ,2% 4,5% -1,2% -4,8% -2,0% Source: CME Future price: 11/08/18 20

21 China: Trade War new rates Product Currente Proposed Var Soybean 3% 28% 25 pp Corn 1% (in-quota) 26% (in-quota) 25 pp 65% (out-quota) 90% (out-quota) 25 pp Corn flour 9% (in-quota) 34% (in-quota) 25 pp 40% (out-quota) 65% (out-quota) 25 pp Cotton 4% 29% 25 pp Meat 12% 37% 25 pp Cold pork 20% 45% 25 pp Frozen pork 12% 62% 50 pp Orange Juice 7,5% 32,5% 25 pp Source: USDA. Prepared by: MBAgro 21

22 China: Consumption x Imports SOYBEAN - CHI NA ( MI T) Import Others 4 Import BR 54 Consumption 103 C O N S U M P T IO N Import USA 36 Production CH 13 S U P P L Y SOURCE; USDA. PREPARED BY: MBAGRO 22

23 US$c/bu Soybean premium Paranaguá Port (US$c/bu) Source: Bloomberg. Prepared by MB Agro 23

24 jan/14 mai/14 set/14 jan/15 mai/15 set/15 jan/16 mai/16 set/16 jan/17 mai/17 set/17 jan/18 mai/18 set/18 jan/19 mai/19 R$/sc Soybean prices Cepea/BM&F Sorriso Rio Verde Triângulo Mineiro Oeste (PR) Barreiras CME BVM&F MS 24

25 Corn: supply and demande - USDA Millions t 2015/ / / /19 Var Begining Stocks % Production % USA % China % UE % Brazil % Argentina % Others % Consumption % Ending Stocks % Stock/Use (%) 21% 22% 19% 14% Source: USDA. Prepa red by MB Agro out/18 25

26 Corn: international prices and future market US$c/bu jan/06 jan/07 jan/08 jan/09 jan/10 jan/11 jan/12 jan/13 jan/14 jan/15 jan/16 jan/17 jan/18 jan/19 (US$c/bu) ,2% 2,5% 6,8% 250 Average : 375,80 US$c/bushel 150 Source: CME. Prepared by MB Agro Future prices 11/08/18 26

27 jan/12 jul/12 jan/13 jul/13 jan/14 jul/14 jan/15 jul/15 jan/16 jul/16 jan/17 jul/17 jan/18 jul/18 jan/19 R$/sc Corn: Brazil Prices Rio Verde (GO) Cascavel (PR) Sorriso (MT) Ponta Grossa BMF CME (R$/sc) Passo Fundo (RS) Recife (PE) Barreiras (BA) Source: Aedata, BM&F. 27

28 African swine fever notifications Jan-Oct/18 28

29 Europa Jan-Oct/18 African swine fever notifications China 29

30 African swine fever notifications China Jul/18 Aug/18 Sep/18 Oct/18 30

31 Swine meat (MMT cwe, 2017, USDA data) World Production: 111 MMt World Consumption: 111 MMt 53,5 54,9 23,4 20,6 2,0 0,9 11,7 9,6 3,0 3,3 Canada United States 3,7 2,9 Brazil European Union China Russia 2,8 2,7 Vietnam 1,3 2,7 Japan

32 Swine meat (MMT cwe, 2017, USDA data) 2,6 2,8 World Imports: 7.9 MMt World Exports: 8.3 MMt 1,3 1,7 1,4 0,2 Canada 1,1 0,2 Mexico 0,5 United States 0,8 European Union China 0,2 0,4 0,7 Korea, South Hong Kong Japan 0,1 0,2 Brazil Chile

33 S&D Beef Balance 33 Beef a b b/a c c/b c/b (1000 tec) % 2019 % Var. abs Beginning stock % % -24 Production 59,710 60,478 61,624 62, % 63, % 745 USA 10,817 11,507 11,943 12, % 12, % 439 Brazil 9,425 9,284 9,550 9, % 10, % 300 EU 7,684 7,880 7,863 7, % 7, % -115 China 6,700 7,000 7,260 7, % 7, % 75 India 4,100 4,200 4,250 4, % 4, % 30 Argentina 2,720 2,650 2,840 2, % 3, % 50 Australia 2,547 2,125 2,149 2, % 2, % -120 Mexico 1,850 1,879 1,925 1, % 2, % 40 Pakistan 1,710 1,750 1,780 1, % 1, % 20 Turkey 1,423 1,484 1,399 1, % 1, % 0 Others 10,734 10,719 10,665 10, % 10, % 26 Consumption 57,812 58,756 59,674 60, % 61, % 1,010 Ending stock % % 1 Stock/Consump. 1.0% 1.0% 0.9% 0.8% 0.8% Source: USDA (oct/18) Prepared by MB Agro

34 Beef Imports Beef a b b/a c c/b share (1000 tec) % Imports 7,654 7,704 7,953 8, % 8, % 100% United States 1,528 1,366 1,358 1, % 1, % 16% China , % 1, % 14% Japan % % 10% Korea, South % % 7% Russia % % 6% Hong Kong % % 7% European Union % % 4% Chile % % 4% Egypt % % 4% Canada % % 3% Others 2,144 2,068 2,116 2, % 2, % 26% Source: USDA (oct/18) Prepared by MB Agro 34

35 Index Number ( =100) FAO Real Price Index Food Price Index Meat Price Index Dairy Price Index oct/ Source: FAO Prepared by MB Agro

36 Cow slaughter rate (%) producer countries Argentina 48% 46% 44% 42% 40% 38% Source: IPVCA USA 50% 48% 46% 44% 42% 40% 38% Source: USDA EU-27 48% 46% 44% 42% 40% 38% Source: EUROSTAT Uruguay 55% % 50% % 45% % 46% % 40% % % Source: INAC 38% Austrália Brazil 50% 46% 42% 38% 34% 30% Source: IBGE Paraguay 50% 48% 45% 43% 40% 38% 35% Source: SENACSA Source: ABS

37 mai/17 jun/17 jul/17 ago/17 set/17 out/17 nov/17 dez/17 jan/18 fev/18 mar/18 abr/18 mai/18 jun/18 jul/18 ago/18 set/18 out/18 Beef estimate: oct/18 (1000 t) P 2019 P 17/16 18/17 19/18 Beginning Stock % -14.3% 5.5% Production 11,481 11,918 12,261 12, % 2.9% 3.6% Exports 1,160 1,298 1,436 1, % 10.6% 2.6% Imports 1,369 1,359 1,374 1, % 1.1% 2.4% E-I % 0.0% 0.0% Consumption 11,656 12,027 12,182 12, % 1.3% 3.7% Per capita (kg) % 0.5% 2.8% End. Stock % 5.5% 0.7% Source: USDA, Prepared by MB Agro 7,0% 6,0% 5,0% 4,0% 3,0% 2,0% 1,0% US meats production 2018/17 (revisions) 3,3% 2,9% 2,2% 5,5% 5,0% 4,5% 4,0% 3,5% 3,0% 2,5% 2,0% 1,5% 1,0% USDA Beef WASDE S&D US meats production 2019/18 (revisions) mai/18 jun/18 jul/18 ago/18 set/18 out/18 5,2% 3,6% 1,9% Beef Poultry Pork Beef Poultry Pork 37

38 Jan Fev Mar Abr Mai Jun Jul Ago Set Out Nov Dez 1000 cabeças US Cattle Slaughter Cattle Slaughter - USA Cow Slaughter - USA cabeças Jan Fev Mar Abr Mai Jun Jul Ago Set Out Nov Dez Jan Fev Mar Abr Mai Jun Jul Ago Set Out Nov Dez Cattle Total Slaughter Cow Slaughter 2016/15 6,4% 5,0% 2017/16 5,3% 9,6% Jan-Set 18/17 2,6% 7,5% 42% 40% 38% 36% 34% 32% 30% Heifers & Other cows

39 heads 1000 heads heads US Beef Herd 1975; ; US Cattle Herd Cattle Inventory (1st of Jan) 18/ heads Rebanho EUA Total Herd 0,7% 694 January 1 Cows & Heifers 1,4% 563 thousand head Calves 0,3% ,0% 3,0% 2,0% 1,0% YoY Herd 0,7% 3,1% 1,9% 0,7% 0,0% -1,0% -2,0% -0,6% -1,4% -0,7% -1,3% -1,9% -1,2% -1,7% Cows and Heifers - US -3,0% Calves - US ; ;

40 jan-13 abr-13 jul-13 set-13 dez-13 mar-14 jun-14 set-14 dez-14 mar-15 jun-15 set-15 dez-15 mar-16 jun-16 set-16 dez-16 mar-17 jun-17 set-17 dez-17 mar-18 jun-18 set-18 Steer Price in US Source: USDA, Prepared by MB Agro

41 US$/cwt US$/cwt nov/18 out/18 nov 18/out 18 nov 18/17 Jan-Nov 18/17 Choice % 4.0% 1.9% US beef prices 280 Choice beef cutout, USDA month

42 jan/90 jan/92 jan/94 jan/96 jan/98 jan/00 jan/02 jan/04 jan/06 jan/08 jan/10 jan/12 jan/14 jan/16 jan/18 USD/kg # of cows slaughtered (1000 head) US calf price x Cow slaughter Calf price (nominal) Cow slaughter (12 month moving average) calf price: aug/18 slaughter: sep/ Source: USDA, Prepared by MB Agro

43 1000 cabeças US$/kg AUS Steer price until 11/08/2018 Million heads Cattle Herd Australia % (18/17) or -550 thousand heads jan-14 abr-14 jun-14 set-14 dez-14 mar-15 jun-15 set-15 dez-15 mar-16 jun-16 set-16 dez-16 mar-17 jun-17 set-17 dez-17 mar-18 jun-18 set-18 Source: Bloomberg/MLA, Prepared by MB Agro f 2019 f 2020f 2021f 2022f 52% 50% 48% 46% 44% 42% 40% 38% Australia - Cow slaughter ,500 9,000 8,500 8,000 7,500 7,000 6,500 6,000 8,344 9,226 9,007 Slaughter 7,288 7,158 7, % (18/17) or 642 thousand heads 7,300 7,600 7,900 8, f 2019 f 2020f 2021f 2022f 43 Source: ABS Source: MLA (Jul/18), Prepared by MB Agro

44 jan-17 mar-17 mai-17 jun-17 ago-17 out-17 dez-17 fev-18 abr-18 jun-18 ago-18 out-18 Australia Steer prices and cow slaughter US$/kg AUS Steer price until 11/08/2018 jan-14 abr-14 jun-14 set-14 dez-14 mar-15 jun-15 set-15 dez-15 mar-16 jun-16 set-16 dez-16 mar-17 jun-17 set-17 dez-17 mar-18 jun-18 set-18 Source: Bloomberg/MLA, Prepared by MB Agro AUD/kg Australian steer price - AU$ jan-14 abr-14 jun-14 set-14 dez-14 mar-15 jun-15 set-15 dez-15 mar-16 jun-16 set-16 dez-16 mar-17 jun-17 set-17 dez-17 mar-18 jun-18 set-18 Source: Bloomberg/MLA, Prepared by MB Agro US x AUSTRALIA EUA AUS 52% 50% 48% 46% 44% 42% 40% 38% Australia - Cow slaughter Source: Bloombert/MLA, Prepared by MB Agro Source: ABS

45 tec USD/tec Argentina tec 280, , , , , , , , , ,000 Beef Production Source: Miniagri, Prepared by MB Agro USD/tec Per capita consumption /16 Jan-Ago 18/17 Production 8% 10% Exports (tec) 35% 72% Exports (USD/tec) -7% -9% Domestic Consump. 5% 3% Per capita Consump. 4% 2% 55,000 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 Export Quantity ,500 5,000 4,500 4,000 3,500 3,000 Export Price

46 US$/tec tec 1000 heads Uruguay 1000 heads 12,500 12,000 11,500 11,000 10,500 10,000 9,500 9,000 8,500 8,000 Source: INAC, Prepared by MB Agro Cattle Herd 2017/16: -2,6% (-318 thousand heads) Cattle Slaughter /16 Jan-Set 18/17 Cattle slaughter 3% 1% Cow slaughter 2% -0% Exports (tec) 3% 1% Exports (USD/tec) 1% 4% 4,200 4,100 4,000 3,900 3,800 3,700 3,600 3,500 3,400 3,300 Export price ,000 45,000 40,000 35,000 30,000 25,000 Export Quantity , ,

47 jan/15 abr/15 jul/15 out/15 jan/16 abr/16 jul/16 out/16 jan/17 abr/17 jul/17 out/17 jan/18 abr/18 jul/18 out/ t Brazilian Beef Exports in natura Beef - in natura Jan-Oct 18/ %

48 Hong Kong China Egypt Russia Iran Chile Saudi Arabia Arab Emirates Israel Singapore USA Lebanon Jordan Algeria Philippines Palestine EU-28 Others 1000 t (cwe) Beef exports by destiny jan-oct/17 jan-oct/18 var. 18/ % 54% 18% 91% -33% -8% 28% -16% -2% 168% 105% 39% 51% 37% 12% 11% 200% 150% 100% 50% 0% -50% Source: Secex 48

49 jan/10 jul/10 jan/11 jul/11 jan/12 jul/12 jan/13 jul/13 jan/14 jul/14 jan/15 jul/15 jan/16 jul/16 jan/17 jul/17 jan/18 jul/18 Thousand t carcass weight US$/t Brazilian Beef Exports Ton in natura In Natura price Processed Processed beef price oct/18 4,000 3, , ,500 2, , ,000 Source: Secex Elaboration: MB Agro in natura (ton) US$/ton % Out 18/Set % Out 18/ % Jan-Out 18/17-1.4% Out 18/Set % Out 18/17-2.5% Jan-Out 18/17

50 Beef Prices Wholesale mkt Carcass weight equivalent (Wholesale Beef Price) Source: Intercarnes, Prepared by MB Agro 50

51 jan/10 jul/10 jan/11 jul/11 jan/12 jul/12 jan/13 jul/13 jan/14 jul/14 jan/15 jul/15 jan/16 jul/16 jan/17 jul/17 jan/18 jul/18 Packers Internal Market Spread 1.10 Wholesale beef/steer relation Spread Avg since Source: Cepea, Intercarnes. Prepared by MB Agro 51

52 Steer/calf jan-12 jul-12 jan-13 jul-13 jan-14 jul-14 jan-15 jul-15 jan-16 jul-16 jan-17 jul-17 jan-18 jul-18 R$/head 1,500 1,400 1,300 1,200 1,100 1, Source: Cepea, Elaboration: MB Agro Calf Price days Steer, calf and terms of trade Steer Price - SP Terms of trade Packers - days of slaughter (cattle availability) 11/6/ Source: IMEA. Prepared by MB Agro 52

53 jan-17 fev-17 mar-17 abr-17 mai-17 jun-17 jul-17 ago-17 set-17 out-17 nov-17 dez-17 jan-18 fev-18 mar-18 abr-18 mai-18 jun-18 jul-18 ago-18 set-18 out-18 R$/US$ Steer future prices and Exchange rate 155 Dez jan-18 jan-18 mar-18 abr-18 mai-18 mai-18 jun-18 jul-18 ago-18 set-18 out Exchange Rate 53

54 jan-13 jul-13 jan-14 jul-14 jan-15 jul-15 jan-16 jul-16 jan-17 jul-17 jan-18 jul-18 R$/kg Wholesale prices of chicken x upper beef Chilled Poultry meat Upper half beef with bones Source: IEA, Prepared by MB Agro 54 until 11/08/2018

55 jan/14 abr/ jul/14 out/ jan/15 abr/15 jul/15 out/15 jan/16 abr/16 jul/16 out/16 jan/17 abr/ jul/ out/17 Steer future prices jan/18 abr/18 jul/ out/18 jan/19 abr/19 jul/19 out/ SP MT GO Source: Cepea, BM&F, Prepared by MB Agro Future prices of 11/08/18 nov 18/out 18: -1.5% nov 18/nov 17: 3.9% out 19/nov 18: 7.7%

56 jan/06 jan/07 jan/08 jan/09 jan/10 jan/11 jan/12 jan/13 jan/14 jan/15 jan/16 jan/17 jan/ Steer prices in USD Oct/18 USA Argentina Brazil Uruguay Paraguay Australia 56 Sources: Sagpya (ARG), INAC (URU), Cepea (BRA), El Rodeo (PAR), MLA (AUS), USDA (EUA), Bacen Prepared by MB Agro

57 kg kg kg Avg carcass weight - steers Carcass Weight by age- Cattle kg Avg carcass weight - cows Avg carcass weight - calves 202 Avg carcass weight - heifers

58 jan-16 mar-16 mai-16 jul-16 set-16 nov-16 jan-17 mar-17 mai-17 jul-17 set-17 nov-17 jan-18 mar-18 mai-18 jul-18 set-18 nov-18 R$/kg Wholesale daily prices Upper Half with bones Ribs Back Half with bones Source: Intercarnes, Prepared by MB Agro 58

59 Henrique Monteiro, th floor São Paulo - SP Brazil Phone: contato@mbagro.com.br

60 Athena Foods: Scenario and Perspective Iain Mars CEO Athena Foods

61 Athena Foods at a Glance

62 Athena Foods At a Glance BRAZILIAN INDUSTRY DIVISION ATHENA FOODS TRADING DIVISION Colombia Colombia Colombia Brazil Brazil Brazil Paraguay Paraguay Paraguay Chile Uruguay Chile Uruguay Chile Argentina Uruguay 17% of Consolidated Gross Revenue Argentina 43% of Consolidated Gross Revenue Argentina 40% of Consolidated Gross Revenue Australia New Zealand Gross Revenues 3Q18 % of 3Q18 Gross Revenue DM % of 3Q18 Gross Revenue EM 1, % 67.1% Gross Revenues 3Q18 % of 3Q18 Gross Revenue DM % of 3Q18 Gross Revenue EM 1, % 72.4% Gross Revenues 3Q18 % of 3Q18 Gross Revenue DM % of 3Q18 Gross Revenue EM % 21.5% DM: Domestic Market EM: Export Market 62

63 Colombia Athena Foods At a Glance % of Gross Revenues 70% ~ Fresh Beef Production: Leading exporter of beef in Paraguay, Argentina, Uruguay and Colombia ~ 20% Distribution: Distribution in the domestic market a variety of products produced by third-parties Paraguay 10% ~ Processed Foods: Process products, such as hamburgers, sausages, nuggets, for sale in domestic and export markets Chile Athena Foods serves 5 countries with beef and beef products from Paraguay, Argentina, Uruguay, Colombia and Chile, totaling 14,500 head/day of capacity and 5 distribution centers Slaughter Units Processing Plants Distribution Centers Argentina Uruguay CAPACITY BY COUNTRY SLAUGHTER HEADS/DAY % OF TOTAL # OF PROCESSING PLANTS # OF DISTRIBUTION CENTERS Paraguay 5,400 37% - 1 Argentina 5,050 35% 2 1 Uruguay 3,200 22% - - Colombia 850 6% - 1 Chile Total 14, %

64 Athena Foods At a Glance OVERVIEW OF ATHENA FOODS Leading South American producer and exporter of fresh beef and cattle by-products Top brands in the processed foods segment Strategically positioned in 5 countries with 17 processing facilities Export market share of beef exports of 17% in Argentina, 19% in Uruguay, 77% in Colombia and 40% in Paraguay, amounting to a 11% market share in South America KEY FINANCIAL AND OPERATING METRICS (9M2018) Market Share in South America (Exports) Net Revenues 11% R$4,889 mm EBITDA / EBITDA margin R$327mm / 6.7% Net income R$240mm NET REVENUES BY COUNTRY (3Q2018) Colombia 8% Chile 2% Uruguay 22% Paraguay 35% Argentina Uruguay Paraguay Colombia Chile 5 Slaughter Units 2 Processing Plants 1 Distribution Centers 3 Slaughter Units 6 Slaughter Units 1 Distribution Center 1 Slaughter Unit 1 Distribution Center 2 Distribution Centers Argentina 34% 64

65 A Growth Story 2008 Acquisition of the beef producer Friasa in Paraguay, which has a 700 head/day slaughtering capacity Installed Capacity 700 heads/day Installed Capacity CAGR (08-17): 40.0% 2011 Acquisition of the meatpacker PUL in Uruguay, which has a 1,400 head/day slaughtering capacity 2012 Acquisition of the meatpacker Frigomerc in Paraguay, which has a 1,000 head/day slaughtering capacity Acquisition of Red Cárnica and Red Industrial Colombiana, in Colombia, with 850 heads/day slaughtering capacity Acquisition of Frigorífico Carrasco, in Uruguay, with 900 head/day slaughter capacity Acquisition of 9 slaughter plants, 2 processing plants and a Distribution Center Two new Distribution Centers in Latin America, located in Santiago (Chile) and in Bogota (Colombia) Installed Capacity 14,500 heads/day 2018 Constitution of Athena Foods, in Chile 65

66 Investment Highlights

67 Unique Footprint in the World s Leading Protein Producing Region Sales: Exports market Colombia Market Share Minerva 77% MARKET SHARE IN SOUTH AMERICA (9M18) Athena Foods 11% Argentina Market Share Minerva 17% Paraguay Market Share Minerva 40% Uruguay Market Share Minerva 19% Growth of 106% of the exports revenue on 9M18 (YoY) Sources: Athena, Secex, INAC, SENACSA, DANE and IPCVA 67

68 Well Positioned to Capture Demand Growth THE SOUTH AMERICAN MARKET HAS SEEN CONSISTENT GROWTH THROUGHOUT THE YEARS DESPITE GLOBAL DECELERATION 58,8% 39,8% Cattle Herd (mm heads) (2018E x 2000) 16,2% 11,3% 6,8% (11,9%) (7,6%) (6,9%) (3,9%) (23,7%) (34,5%) (34,2%) Brazil Paraguay Colombia Uruguay Argentina Russia Mexico China Canada Australia EU USA... AND ATHENA S CONSTANT INVESTMENT HAS CREATED THE IDEAL SCENARIO TO TAKE ADVANTAGE OF THE MARKET Slaughter Capacity (heads / day) +166% 14,500 2,100 3,100 3,100 4,000 5,450 5, Source: USDA l E: Estimates

69 Unique Footprint in the World s Leading Protein Producing Region (cont d) Focus on Emerging Countries HIGHLIGHTS Primary focus: emerging markets (more than 100 countries) Niche markets: organic beef for the USA and Europe (USDA approved) Special cuts (including kosher and halal) for the Middle East and Russia USA Italy UK Argelia Lebanon Egypt Russia China China Hong Kong Singapore 13 international offices (Americas, Europe, Middle East, Africa, Oceania and Asia) Sales through 3 distinct channels: Industry Food Service Retail Chile Brazil +2 International Trading Australia International Offices New Zealand BREAKDOWN OF EXPORTS (% OF REVENUE) LTM3Q18 EU 13% NAFTA Middle 5% East 8% Africa 1% Asia 33% Americas 18% EU 10% Middle East 5% 3Q18 NAFTA 4% Asia 36% Source: Athena Russia 18% Americas 22% Russia 26% 69

70 Unique Footprint in the World s Leading Protein Producing Region (cont d) ATHENA S FOOTPRINT TRACK RECORD With current footprint, Athena manage to access ~90% of the global demand MAINLY BEEF IMPORTERS Country % of Global Beef Import * USA 17.1% PY UY AR CO China 12.2% Japan 10.3% Hong Kong 6.8% South korea 6.7% Russia 6.4% European Union 4.2% Chile 3.5% Egypt 3.1% Canada 2.9% Malaysia 2.7% Iran 2.6% Mexico 2.5% Philippines 2.2% Saudi Arabia 1.9% Others 14.9% Sources: Athena and USDA * Million tonnes combining fresh, frozen and chilled beef, reference:

71 Unique Footprint in the World s Leading Protein Producing Region (cont d) Sales: Domestic market Colombia Bogota DOMESTIC MARKET - % OF GROSS REVENUE 3Q18 Paraguay 15.3% Argentina 34.3% Uruguay 24.1% Colombia 52.3% Chile Santiago Concepcion Argentina Pilar Paraguay Asuncion HIGHLIGHTS Focus on retailers and food service segment Improvement of the Go to Market strategy One Stop Shop strategy implementation Result: expansion of the client portfolio 71

72 Integrated Business Model HIGHLIGHTS Through 5 distributions centers, Athena resell and distribute in the domestic market a variety of products produced by third-parties ONE-STOP-SHOP Offers several types of frozen or chilled perishable products produced or supplied by third parties Focus on industrial food companies, retailers and other clients in the domestic industrial food processing industry Strong sales platform composed by over 60k points of sales Beef Fish Poultry Pork Bogota Cheese Frozen Vegetables French Fries Asuncion Productivity & efficiency: Better use of the company structure and distribution platform Expansion: Increase the food service share of wallet Santiago Concepcion Pilar 5 Distribution Centers +45k Clients Customer Management: Gain of market share and profitability Higher experience promoted by the company ecosystem Source: Athena +60k points of sale New Drivers: New categories of own brands Higher penetration in other proteins Growth in premium brands 72

73 ago/17 set/17 out/17 nov/17 dez/17 jan/18 fev/18 mar/18 abr/18 mai/18 jun/18 jul/18 Integrated Business Model Processed Foods Segment: Argentina Swift HIGHLIGHTS POINTS OF SALES GROWTH 000 Sales focused in the domestic market with potential to improve exports Swift is #1 in Kantar Brand Footprint ranking (Refrigerated and Frozen categories) 55,0 Top supplier of the main fast food companies in the country: McDonald's and Burger King 48,1 Swift is 2nd largest player in out home and in home hamburger consumption (25% production share) DOMESTIC MARKET SHARE 26% of Market Share in Modern Trade (Key Accounts) 21% 24% 75% Strong growth in brand awareness in the last 5 years, reaching 65% of Argentinean households 2 Production Units: 11 Production lines 5,400 ton per month Capacity Utilization Rate of 80% Sources: Nielsen, Kantar and Athena internal monitoring 73

74 Swift Portfolio Branded Categories Hamburgers Sausages Nuggets Breaded Soy Spreadables Mortadela Breaded Milanesa Papas Our processed food is already positioned in LATAM Markets under theses brands: Brand Portfolio Only in Argentina Exports to Colombia, Chile and Caribbean Exports to Brazil and Chile Exports to Bolivia and Paraguay Exports to Brazil and Chile 74

75 Athena Foods Income Statement INCOME STATEMENT BRL 000 1Q18 2Q18 3Q18 9M18 Domestic Market 488, , ,841 1,465,083 Export Market 1,022,768 1,163,350 1,350,657 3,536,775 Deductions (38,881) (31,999) (42,117) (112,997) Net Revenues 1,472,526 1,592,954 1,823,381 4,888,861 COGS (1,294,515) (1,419,461) (1,598,692) (4,312,668) Gross Profit 178, , , ,193 SG&A (103,206) (93,716) (127,126) (324,048) Financial Expenses (11,482) (12,687) 1,124 (23,045) Income Taxes 9,240 (17,815) 19,726 11,151 Net Income 72,563 49, , ,251 Net Mg 4.93% 3.09% 6.49% 4.91% EBITDA 99, , , ,669 EBITDA Mg 6.76% 6.60% 6.69% 6,68% 75

76 Strong Financial Performance (cont d) NET REVENUES R$MM +66.1% EBITDA AND EBITDA MARGIN R$MM & % 0.1% 4.0% 6.8% 6.6% 6.7% ,098 1,454 1,473 1,593 1, Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 CAPACITY UTILIZATION % REVENUES BY COUNTRY (3Q18) % 78.1% 81.5% Chile 2% Paraguay 35% 68.6% 68.6% 71.5% Colombia 8% 3Q17 4Q17 1Q18 2Q18 3Q18 Uruguay 22% Argentina 34% 76

77 Strong Financial Performance (cont d) Colombia FRESH BEEF DIVISION - GROSS REVENUE (R$ MILLION) +63.7% 911 1,160 1,143 1,263 1,491 Chile Paraguay Uruguay 3Q17 4Q17 1Q18 2Q18 3Q18 PROCESSED FOOD DIVISION - GROSS REVENUE (R$ MILLION) +85.8% Argentina Gross Revenues 3Q18 (R$ 000) % of 3Q18 Gross Revenue DM % of 3Q18 Gross Revenue EM 1, % 72.4% Q17 4Q17 1Q18 2Q18 3Q18 77

78 Athena s Business Plan Colombia Potential Acquisitions Chile Improvement of distribution and potential acquisitions Argentina Capex and working capital to reopen plant and grow brand products exports to South America 78

79 Highly Experienced Management Team CEO Iain Mars CFO Eduardo Puzziello Country Manager Country Manager Distribution Manager Country Manager Country Manager Miguel de Achaval Ignacio Gamio Alexandre Boucinhas Jose Amaral Patricio Silveira +30 of experience +20 of experience +30 of experience +15 of experience +20 of experience Athena Foods has a committed management team with a long-standing track record in the sector 79

80 Highly Experienced Management Team Name Title Years of experience Background Iain Mars CEO +35 With a strong track record in the protein industry, Mr. Mars has worked across several geographies (Japan, Korea, Taiwan, Australia, Argentina, Russia, Egypt, Brazil and UK) Mr. Mars works at Minerva s since 2012 Bachelor degree in Economics from London School of Economics Eduardo Puzziello CFO +20 Mr. Puzziello is Minerva s Investor Relations Director since 2012 Before joining Minerva, Mr. Puzziello worked for Grupo Votorantim, BankBoston, Banco Santander, Banco Fator and Raymond James Bachelor degree in Business from PUC-SP with a Capital Markets MBA from USP/Fipecafi 80

81 Operating and Financial Results Edison Ticle CFO Minerva Foods

82 Operating and Financial Results GROSS REVENUE - BRAZILIAN INDUSTRY DIVISION (R$ MILLION) GROSS REVENUE ATHENA FOODS (R$ MILLION) +0.4% % 7,408 6,583 7,436 2,189 2,873 6,358 LTM3Q16 LTM3Q17 LTM3Q18 LTM3Q16 LTM3Q17 LTM3Q18 GROSS REVENUE - TRADING DIVISION (R$ MILLION) % 2,758 2, LTM3Q16 LTM3Q17 LTM3Q18 DIVISIONS BREAKDOWN (% OF GROSS REVENUE) Athena Foods 21% LTM3Q16 Trading Division 8% Brazilian Industry Division 71% Trading Division 17% Athena Foods 38% LTM3Q18 Brazilian Industry Division 45% 82

83 Operating and Financial Results (cont d) NET REVENUE (R$ MILLION) EBITDA (R$ MILLION) AND EBITDA MARGIN (%) +104% 10.9% 9.7% 9.9% 9.0% 9.3% 7,632 8,898 9,846 13,335 15, ,076 1,195 1,451 LTM3Q14 (1) LTM3Q15 LTM3Q16 LTM3Q17 (2) LTM3Q18 LTM3Q14 (1) LTM3Q15 LTM3Q16 LTM3Q17 (2) LTM3Q18 CAPACITY UTILIZATION 77.9% 9M17 9M % 76.8% 76.8% 74.5% NET DEBT/ EBITDA LTM Δ FX: +4% (BRL 4.00) 69.7% Brazilian Industry Division Athena Foods Consolidated Sep/17 Dec/17 Mar/18 Jun/18 Sep/18 (1) LTM3Q14 includes pro-forma figures for the BRF and Carrasco plants (2) LTM3Q17 includes proforma figures for the plants of the Mercosur assets acquired on August 1,

84 Operating Cash Flow R$ Million 3Q18 LTM3Q18 Net (loss) income ,486.1 (+) Net income adjustments ,264.0 (+) Changes in working capital requirements Operating cash flow

85 Free Cash Flow 3Q18 (R$ MILHÕES) (46.1) (176.0) (133.7) 93.5 EBITDA Capex (cash) Financial Results (cash) Working Capital Var¹ Free Cash Flow 9M18 (R$ MILHÕES) 1,087.6 (145.3) (654.0) EBITDA Capex (cash) Financial Results (cash) Working Capital Var¹ Free Cash Flow 1 Working capital excludes equity valuation adjustments and accumulated conversion amounts in 3Q18. 85

86 Capital Structure HIGHLIGHTS Net Debt/LTM EBITDA ratio: 4.97x Cash Position: R$ 4.2 billion At the end of September, approximately 86% of total debt was exposed to the dollar variation Debt Duration: 5.4 years Tender Offering of the Perpetual Bonds (currently the most expensive debt 8.75% p.a.) DEBT AMORTIZATION SCHEDULE (R$ MILLION) SEP/ , , , , , , , ,0 900,0 400,0-100,0 4, Short Term Debt 4, , , , Caixa 4T18 1T19 2T19 3T

87 Sensitivity Analysis SENSITIVITY ANALYSIS 2019 Net Revenue (R$ million) 15,500 15,750 16,500 Scenarios EBITDA R$ million Mg. EBITDA 9.0% R$ 1,350.0 R$ 1,417.5 R$ 1,485.0 Mg. EBITDA 9.5% R$ 1,425.0 R$ 1,496.3 R$ 1,567.5 Mg. EBITDA 10.0% R$ 1,500.0 R$ 1,575.0 R$ 1,

88 LEVERAGE (NET DEBT/EBITDA) END OF 2019 Sensitivity Analysis 2019 Net Revenue (R$ million) 15,500 15,750 16,500 Scenario 1 Leverage (x) Mg. EBITDA 9.0% Mg. EBITDA 9.5% Mg. EBITDA 10.0% Scenario 2 Leverage (x) Mg. EBITDA 9.0% Mg. EBITDA 9.5% Mg. EBITDA 10.0% All scenarios considering Fx 3.90 BRL/USD. Scenario 1 Considering Capital Increase of R$1.059 billion Scenario 2 Considering Capital Increase of R$1.059 billion and IPO raising R$1.0 billion Scenario 3 Leverage (x) Mg. EBITDA 9.0% Mg. EBITDA 9.5% Mg. EBITDA 10.0% Scenario 3 Considering Capital Increase of R$1.059 billion and IPO raising R$1.5 billion 88

89 Q&A