Mission Perdigão is a leading provider of high quality, affordably priced food products to fast-changing tastes and lifestyles. Working in harmony

Transcription

1 Mission Perdigão is a leading provider of high quality, affordably priced food products to fast-changing tastes and lifestyles. Working in harmony with the community and the environment, Perdigão`s mission is to become the premium food merchant, premium investment and employer of choice in Brazil and around the world A n n u a l R e p o r t 1

2 Values Importance of The Human Developm Professional Respo Ethical Relations Swiftness In Chang Teamwork Consumer Satisfac Efficient Managem The client always comes first; his/her problems are ours. We will exceed expectations. We encourage the development of our workers, creating opportunities for personal and Our professional success is attained through high levels of performance and dedication. We e conduct all internal and external relations ethically and coherently. We are constantly required to accept change, and rapidly take advantage of any Collective interest shadows individual progress, and all contribute for the success of the Our products always satisfy consumers and guarantee health safety. Our profit is the result of efficient management, adequately rewarding our shareholders and 2 A n n u a l R e p o r t

3 Client ent nsibility professional growth. eopportunities. opportunities. tion ent team. respecting other Company values A n n u a l R e p o r t 3

4 Message from Management Since 1994, Perdigão has been implementing measures in the administrative and marketing areas, basing these actions on sustained development and the creation of shareholder value. From 1994 to 2000, the average investment was R$ 130 million per year, which in turn generated 1,200 new jobs. The strength of the brand and the distribution structure have transformed each newly launched product into a success. The effort of bringing the consumer what he wants from a modern foodstuffs company is not only evident in the growing profits, but also in the expressive expansion in market share of industrialized and frozen products. Consolidation in the leadership of specialty meat products, in the domestic market, reflects the insight of these decisions. Other areas have also posted consistent gains. Acquisition of the meat processing company Frigorífico Batávia marked a strategic advance in market diversification, including the addition of turkey into our product mix. The launch of American Depositary Receipts, Level 2 ADRs, on the New York Stock Exchange, can be seen as a benchmark in our history, expanding the globalization process, while adhering to the policy of transparency adopted in the transaction of business. Perdigão is the first Brazilian foodstuffs company to trade ADRs on the largest stock exchange in the world. The growth program coincides with the improvement of economic perspectives in Brazil. Perdigão has based its strategic decisions on the trends of the Brazilian economy's performance and its own induction into the international scenario. The growth program considers several aspects: the country's performance in 1999, when there was a veritable boom in the intermediate goods segment due to the devaluation of Brazil's currency; 2000, which was highlighted by improvement in the public accounts and growth of the durable consumer goods sector; and by the forecasted increase in nondurable consumer goods, particularly foodstuffs, due to the recovery of employment levels and the rise in the general basic salary. 4 A n n u a l R e p o r t

5 The growing demand for foodstuffs coincides with the increase of installed capacity, marked by the excellent progress in the Buriti Project - in which R$ 400 million is being invested. The excellent corn and soy bean harvests offer the sector the perspective of ample supplies for 2001 at prices lower than those seen in 2000, synchronized with the price recovery in the last quarter of that year. We have expectations for growth in exports, especially to the European Union (EU) and Asia, due to the replacement of beef for chicken and pork, and to the effort made in light of opening new markets. In relation to the domestic market, the Company will foster an aggressive policy for launching new products, foreseeing the release of 30 new items, which will be added to the current mix of more than 400 products. For 2001, based on these assumptions, we estimate a growth of above 10% in sales volumes of meats, besides a R$ 100 million investment aimed, largely, at the completion of the Buriti Project. The market has shown Perdigão, its shareholders and the country, that the policy of aggregating product value is a successful one. Our commitment now is to sustain the markets we have already developed and the excellence in relations between consumer/clients, as well as the communities in the regions of our plants. Social awareness and constant investments to protect the environment are part of Perdigão's philosophy, which proudly surges into a new millennium shouldering greater responsibility, having won the Model Award for Social Responsibility, sponsored by the business magazine Exame. Management would like to share the honor of this award with all those that took part in the development of one of the largest foodstuffs companies in Latin America. Nildemar Secches Chief Executive Officer Eggon João da Silva Chairman of the Board A n n u a l R e p o r t 5

6 Consolidated Leadership With a well-defined strategy, Perdigão consolidated leadership in the specialty meats segment, ending December with 22.5% market share. The frozen ready-to-eat dishes (pasta) started from scratch in 1998, its launch date, reached 15.8% market share in 1999 and ended 2000 with a remarkable 31.9%. Frozen meats rose from 31.3% in 1999 to 32.5% in Meat products showed an increase of 19% in terms of volume, reaching sales of 443 thousand tons in the domestic market. João Rozário da Silva Chief Sales Officer Other processed products, such as pasta, pizza, cheese bread, cheese sticks, as well as frozen vegetables, posted a growth of 6% in volume and 37% in revenues. Market expansion, together with the evolution of other segments, such as the institutional and small retail markets, contributed to a 21% increase in gross revenue in the domestic market, compared to the previous period. 6 A n n u a l R e p o r t

7 Market Share ( % ) Specialty Meats Frozen Meats Ready-to-eat pastas A n n u a l R e p o r t 7

8 Options for C Concerned with consumer needs, the Company launched 48 products during the year,, which include 33 items with the Perdigão brand name, and 15 goods under the Batavo brand, including frozen lines (Toque de Sabor,, Aperitivo, Recheados, Pão de Queijo) and special products (Apreciatta, frozen ready-to-eat pizzas; and Prontinho, with beans and feijoada). Perdigão is the only Brazilian company with two exclusive low-calorie product lines: Chester-P -Perdigão and Turkey urkey-batavo. As an option to the Chester-P -Perdigão line, another low-calorie product is being launched: Perdigão's "Light & Elegant" line, with turkey meat. Exports by region In Volumes % Middle East 7% Other Countries 36% Far East 28% Europe Other highlights include product lines, such as Toque de Sabor, with its family lasagna, green pasta with bolognese sauce, gnocchi and rondellini; Apreciatta, with its pizzas, calzone and mini-pizzas; Aperitivos, sticks with ham and cheese, chicken thighs and manioc balls; Recheados, filled with cheese and broccoli; and the Prontinho line, with feijoada and two types of beans. Additionally, Perdigão began production of its own cheese bread, previously outsourced, and new frozen options. The high technology of these products was recognized by the market. The Brazilian Association of Supermarkets (ABRAS) presented the Company with the NEW PRODUCTS OF THE YEAR award for the following products: Mortadella Chesterella Perdigão, Apresuntado Lanche Confiança and Salame Italiano Light, in the cold-cuts segment; and in the ready-to-eat and semi ready-to-eat categories, Lasanha Toque de Sabor and Lasanha à Bolonhesa Turma da Mônica. 8 A n n u a l R e p o r t

9 onsumers Sales to the foreign market boomed 14% in product volume, totaling 244,000 tons. Due to the excess supply across the world, prices came under pressure throughout the year, resulting in a 1% fall in revenue. Perdigão considers Europe to be the region with the most growth potential for the Company. In 2000, exports of processed foods to the E.U. were 79% higher, in relation to This year, there will be an increase in new, higher value-added products, such as turkey cold cuts. Pork also has room to expand in the international market. The situation on the international meat market as a whole, regarding the "mad cow" (BSE) crisis and the return of foot-and-mouth disease in Europe and Argentina, has created extremely favorable conditions for competitiveness; not only are costs reduced, but Brazilian products boast an unquestionably high sanitary standard A n n u a l R e p o r t 9

10 Growth with Productivity A modern administration, concerned with offering consumers first-grade products and accompanying today's rapid technological advances, propels Perdigão into maintaining a permanent goal of gains in productivity, the most efficient way to assure adequate return on shareholder investment. All the Company's plants underwent a 6-year optimization program ending in 2000, which resulted in an average annual increase in productivity per worker - shown in product tons / worker - of 6%. Carlos Alberto Gradin Chief Operating Officer The new industrial complex in Rio Verde began slaughtering hogs in June and poultry in October. The industrialization process - with the most advanced technology available - is in its initial stages, but should be considerably expanded with new production lines during The challenge is to produce at total capacity, which is forecasted for 2003, when Perdigão will have total meat production capacity of 930,000 tons per year. 1 0 A n n u a l R e p o r t

11 Raw material comsumption In thousand tons 1,453 1, , , Corn Soybean For the third consecutive year, the plants in Marau and Capinzal received certification from the rigorous European Food Safety Inspection System (EFSIS). The Carambeí unit, the most recent, acquired in 2000, is also undergoing an adaptation process to meet Perdigão's standards and has already shown considerable gains in productivity. Perdigão's constant quest for gains in productivity did not entail the cutback of employees. On the contrary, the Company has, year after year, increased its workforce, resulting in Perdigão today being among the country's top twenty employers A n n u a l R e p o r t 1 1

12 Preparing for Continued Growth The Company invested R$ 216 million last year, some 14% more than in 1999, including R$ 24 million in working capital. Of this total, 71% was injected into the Buriti Project, in Rio Verde, in Goiás state. Investments In millions of Brazilian Reais 216 These investments will continue throughout 2001, aimed at completing the implementation of the plant The Carambeí regional plant received investments of R$ 8 million, with the automation of the turkey slaughtering line. In 2001, a further R$ 4 million will be used for the frozen products storage system The agile and high quality distribution of Perdigão's products is one of the differentials that boosts the Company's performance and market recognition. Net sales composition % Net sales Pork / beef - domestic market Elaborated / processed products Cuts Pork / beef - exports Total pork / beef Poultry - domestic market Elaborated / processed products Cuts Whole chicken Poultry - exports Elaborated / processed products Cuts Whole chicken Total poultry Other processed (owned + third parties) Soybean Other Total Total elaborated / processed A n n u a l R e p o r t

13 The logistics structure guarantees delivery of any product, from the state of Rio Grande do Sul to Amazonas, within 24 hours. This effort is backed by 30 Distribution Centers strategically placed around the country. A parcel of total investments is earmarked for constant upgrading of this system. For 2001, the Company foresees overall investments of R$ 100 million. This figure is lower than traditional investments values due to the advanced stages of implementation of the Rio Verde plant, where the largest part of funds has already been applied A n n u a l R e p o r t 1 3

14 Generating Re Stock Market Volume traded- PRGA 4 Performance - PRGA Bovespa Index million (9.5%) (10.7%) ADRs Listing on 10/20/00 on the NYSE Volume traded Appreciation - PDA Dow Jones Index 34, % 5.5% Company sales, which surpassed R$ 2 billion last year, grew by 15%. The main cause of this growth was investments in improved productivity and innovation in production lines of higher value-added products. Profit margins suffered from prices and costs as a consequence of effects from two simultaneous factors: excess supply of products and the significant increase in the cost of grains. Wang Wei Chang Chief Financial Officer The R$ 160 million of EBITDA - Earnings Before Interest, Taxes, Depreciation and Amortization - and the R$ 45 million net result were attributed to efforts towards reverting unfavorable price and cost conditions. Additional financing received throughout the year was the fruit of investments in the Buriti Project and the acquisition of Frigorífico Batávia. 1 4 A n n u a l R e p o r t

15 sults Despite unfavorable market fluctuations which began in 1999, the Company believes it has formed a solid competitive base for 2001, especially in the foreign market, based on the strength of the brand, its investments and the additional advanced technology. 800 Shareholders Value In millions of Brazilian Reais Regarding shareholder remuneration, profits distributed as dividends increased by 30% in Book Value Market Capitalization A n n u a l R e p o r t 1 5

16 Social Model The Model for Social Responsibility Award, sponsored by the business magazine Exame, is recognition of the social efforts the Company has made over the last six years, when employee numbers jumped from just over 12,000 to 20,000. Besides salaries and direct benefits, Perdigão offers new professional opportunities and quality of life. During the year, more than R$ 27 million was invested in programs for food supplies, health, transportation, housing, education, private pension funds, child care and benefits to retired employees. This figure is 15% higher than the amount invested in the previous year. The Company, which encourages and values internal growth, has more than 90% of its executives as established career figureheads in the Company. The average age throughout the organization is 29 years old. By the end of 2001, the Basic Education Program will ensure that each and every employee will have completed an elementary education level. Professional development of executives is achieved through an MBA program - an "In Company" Masters of Business Administration, in conjunction with the University of São Paulo (USP), involving 70 participants. In the area of production, a Multi-Functional Program was developed, in which workers are trained to carry out at least four different responsibilities. In 2000, the average training level in the entire organization was 29 hours per worker. 1 6 A n n u a l R e p o r t

17 Benefits and Social Efforts R$ million Payroll INSS/FGTS Contribution (employee taxes) Food Health/ Private Pension Fund Transportation Other Benefits Housing - Fund Transactions in the Year Workforce Indicators Number of workers at end of period Number of women working in the Company Leading positions held by women Average age of workers (years) Time in service (average/years) 19,291 6,218 4% 29 5 Added value distribution % Dividends 5% Retention 10% Interest 39% Taxes 44% Human resources Total of R$ 607 million; 5.6% higher A n n u a l R e p o r t 1 7

18 Instituted in 1997, the Perdigão Housing Program (PROHAB) delivered 424 houses (by 2003 the total will be 800) and offered 572 loans for extending and refurbishing residences. The Company's health program is one of the largest self-run plans in the country, serving 45,000 clients. The credit cooperative unites 97% of the workers and, in 2000 alone, carried out more than 10,000 credit operations. The Private Pension Fund complements retirement by means of a closed pension plan, which accepts defined contributions and boasts the support of 99% of eligible workers. In Rio Verde, state of Goiás, in partnership with the National Bank for Economic and Social Development (BNDES), some R$ 2 million is being invested, through the Atende Project, to cover areas such as health, assistance to minors, safety and environmental protection programs. This is a model project, developed with the aid of the local city council. Environmental programs have become an institutionalized practice at Perdigão. The organization has adopted the Hermínio Salata de Almeida island, located on a river in Videira, in Santa Catarina state; helps in the recovery of the Vida Verde Ecological Reserve, in conjunction with the Marau city council, in Rio Grande do Sul state; develops the Environmental Education Program together with cities on the São Paulo coastline; and is involved in the Recuperation of River Sources and Embankments in the city of Rio Verde, in Goiás state. All industrial plants have Water Treatment Centers, which are constantly being upgraded with the intent of avoiding any damage to the environment. For two consecutive years, Perdigão has appeared among the "Best Companies in the Country to Work For", a study done by the business magazine Exame. 1 8 A n n u a l R e p o r t

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20 Corporate Governance The Company's relationship with the market is a practice that has been incorporated into Perdigão's day-to-day business through an Investor Relations team. Shareholders' meetings are systematically held with an average attendance of more than 90% of the representatives of the voting capital, and more than 70% of the total capital. The Board of Directors is made up of seven members. The president is not included in the current controlling shareholders' agreement. All follow pursuits outside the Company and meet on a monthly basis. The Fiscal Council's representatives include three controlling shareholder representatives, one representing minority shareholders and one representing preferred stock shareholders. They meet once a month and, when necessary, confer with the Board of Directors. All wholly-owned subsidiaries are audited by an internationally recognized company, which is responsible for tracking the Company's accounting. Besides personalized services to investors and analysts, Perdigão holds yearly meetings with Abamec across the entire country. Quarterly conference calls are made, as are road shows, for the exposure of the Company in Brazil and abroad. Shareholders and the market receive quarterly information, besides an Administrative Report and the Annual Report. All information is available on the Company's website. Perdigão has received numerous awards as a result of good corporate governance practices. 2 0 A n n u a l R e p o r t

21 Total Capital Distribution 7.4% Sistel 9.3% Petros 15.3% Previ 7.4% Bradesco Companies 7.7% Fapes - BNDES 7.5% Weg S.A 4.1% Valia 3.5% Real Grandeza 0.7% ADRs 15.6% Foreign Investors 1.5% Telos 1.5% Previ - Banerj 0.3% Treasury Shares 18.2% Domestic Investors A n n u a l R e p o r t 2 1

22 Promising Outlook The results achieved in 2000 and the investment effort that Perdigão has made in recent years have presented favorable perspectives in the short, medium and long-term, to which should be added the good performance of the Brazilian economy and the international meat market in terms of sanitary conditions. Chester,, a low-fat product, has been in the market for 18 years. Thus, the Company has outlined its goals for 2001: - Approximately 10% growth in meat volumes and 18% in sales. - Possibility of 30% expansion in exports, taking into consideration the increase in foreign sales of turkey. - Investments of R$ 100 million. - Creation of 2,000 new jobs. 2 2 A n n u a l R e p o r t

23 Goals in the medium-term include: - 10% growth per year in the meat segment until Concentration on high value-added food products. - Expansion to new markets and segments. - Constantly add value for investors. - Continue as a Model of Social Responsibility. Increase of meat production capacity Ch. % Poultry slaughter ( thousand heads/day) 1,350 1, Hog slaughter (thousand heads/day) Total meats (thousand tons/year) A n n u a l R e p o r t 2 3

24 2000 Annual Report Edited by Investor Relations, Institutional Relations and Marketing Areas Text Nelson Tucci Ney Antonio Flores Schwartz Desktop Publishing and Production The Media Group Photograph Souk Produção de Imagem Ivson Miranda Perdigão Files Printing Grupo Adgraf (All monetary amounts contained in this report are in millions of Brazilian Reais, by Corporate Law). 2 4 A n n u a l R e p o r t