March, 2010 JBS S.A. 0 In God We Trust, Nature We Respect
Our Values Excellence Planning Determination Discipline Availability Openness Simplicity 1
Agenda Company Overview Market Overview 4Q09 Highlights Short Term Outlook 2
Company Overview 3
JBS S.A. at a Glance Founded 1953 in central Brazil IPO in 2007 Ibovespa ticker: JBSS3 ADR ticker: JBSAY Leading animal protein producer in the World Production platform in South America, North America, Europe and Oceania 125,000 employees worldwide Revenues of about US$ 30 Billion per annum Market cap of R$ 22 billion * *Source: Bloomberg 25/02/2010 4
JBS S.A. Growth Through Acquisitions JBS History has been built through more than 30 acquisitions in 15 years with adequate capital structure and management Inalca Swift Foods Co. Maringá (Amambay) Berazategui (Rio Platense) Bertin Association Pilgrim s Pride JBS Hides 5 new units Net Sales (in US$ billion) Companies and assets acquired Colonia Caroya SB Holdings JV Beef Jerky Tasman Smithfield Beef Five Rivers Goiânia (Anglo) Barretos (Anglo) Pres. Epitácio (Bordon) Campo Grande (Bordon) Rio Branco Cacoal 1 Cacoal 2 Porto Velho Venado Tuerto Pontevedra (CEPA) 30.3 Vilhena (Frigovira) Barra do Garças (Sadia) Andradina (Sadia) Araputanga (Frigoara) Cáceres (Frigosol) Iturama (Frigosol) Pedra Preta (Frigo Marca) Rosário (Swift ARG) San Jose (Swift ARG) 12.7 19.8 0.3 0.4 0.4 0.5 0.5 0.4 0.7 1.2 1.5 1.9 R$/US$ end of the year quotation Source: JBS (1) Pro Forma JBS S.A. LTM Dec07 (2) Pro Forma JBS S.A. LTM Dec08 (3) Pro Forma JBS S.A. LTM Jun09 (including 5 new units and hides operation); Pilgrim s 5 Pride Sep09 (Estimated); Bertin LTM Jun09 (1) (2) (3) 1996 1997 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
EBITDA Growth JBS remains a Growth Company. 3.058 4,92% 5,73% 6,0% 11,0% 9,7% 10,5% 11,2% 13,6% 4,3% 3,8% 5,5% 1.156 32 51 73 150 185 345 432 548 602 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009* EBITDA (R$ mm) EBITDA Margin *Pro forma including Bertin and Pilgrim s Pride. Source: JBS 6
Our Strategy 2005/2006 Adequate Financial Structure 2007/2008 Global Production Platform 2009/2010 Global Sales & Distribution Platform 2011/2012 Value Added Products & Branding Debt for Working Capital Equity to Finance Growth South America North America Australia European Union South America North America Australia European Union Asia Russia Africa Middle East Fresh Products Cooked Products Minced Products Cured Products Ready to Eat Products Case Ready Products Global Brands Marketing Investments - High liquidity level. - Debt equalized to cash generation. - Strong cash position. - Access to international capital markets to finance growth. - Development of long term financing plan. - Use of export platform to grow. - Hands-on working capital management. - Access to raw material supply globally. - Leader in countries with surplus production. - Scale. - Leader in exports globally. - Access to all meat markets. - Exchange of best practices. - Efficiency cost gains. - Cost reduction opportunities. - Margin improvements. 7 - Integrate the sales and distribution platform to serve efficiently, local and external markets, small retailers, food processors, restaurants, and other customers globally. - Sales force distributed over the globe. - Efficiency on selling the best product, to the best market, with the best price. - Cost reduction on sales and transport. - Margin improvements. - High technology investments to produce value added products. - Increase value added products portfolio. - Customized products to each market. - Convenience to consumers day to day. - Brand and Quality recognition and leadership. - Marketing investments to be present in consumer minds. - Margin improvements.
Our Strategy Branding Value Added Products Sales & Distribution Platform Production Platform 4% Financial Structure Experienced Management Cost Reduction, Productivity, Process Optimization Risk Management EBITDA Margin Foundation 8
Corporate Structure Batista Family Bertin Family Controlling Holding Market (Free Float) 59% 41% JBS S.A. (including Bertin) 100% 80% - 75% BNDES US$ 2 Bn Other subsidiaries JBS U.S.A. Includes AUS 20% - 25% 64% Other shareholders 36% Pilgrim s Pride 9
Shareholders Individual 1% Foreign Investors 10% Others 10% BNDESPAR 19% Controlling Holding 59% 10
Global Production Platform Production Units Employees Daily Slaughter Capacity JBS Brasil 61 44,993 43,400 B JBS MERCOSUR 8 6,217 8,400 B JBS USA 16 24,295 28,600 B 48,500 P 4,500 S Pilgrims Pride 37 39,000 7,200,000 C JBS Austrália 10 6,995 8,690 B 20,000 S Inalca JBS 8 3,500 3,000 B Total 140 125,000 92,090 B 48,500 P 24,500 S 7,200,000 C (B) Beef; (P) Pork; (S) Smalls; (C) Chicken 11
Market Overview 12
Market Highlights Robust domestic consumption in Brazil. Growing middle classes in the Emerging Market sourcing more product through imports. Recovery of exports from US allied with improved domestic American consumption. European protein production declining. Gradual Improvement in exports generally with the reduction and/or removal of trade barriers. 13
Per capita food consumption curve (Kg / Year) 180 160 140 120 100 1969/ 71 1979/ 81 1989/ 91 1999/ 01 2030 2050 80 60 40 20 0 Cereals Source: FAO Roots and Tubers Beans, Peas and Lentils Sugar Oils Crops and its products Meat Milk and its products 14
Brazilian Beef exports (Thousand Tons) 1,600 1,425 1,491 1,400 1,200 1,095 1,263 1,218 1,086 1,000 800 780 600 400 200 0 2003 2004 2005 2006 2007 2008 2009 E.U. Russia Egypt Venezuela Algeria USA Hong Kong Others Source: Secex 15
US Beef and Veal Exports (Million Pounds) 3.000 2.500 2.412 2.467 2.269 2.449 2.520 2.000 1.888 1.867 1.500 1.146 1.433 1.000 697 500 461 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Mexico Canada South Korea Japan Vietnam China Hong Kong N etherlands Others Source: USDA ERS 16
US Pork Exports (Million Pounds) 5.000 4.667 4.500 4.128 4.000 3.500 3.000 2.667 2.995 3.142 2.500 2.181 2.000 1.500 1.278 1.287 1.560 1.612 1.717 1.000 500 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Japan China Hong Kong Mexico Russia Canada South Korea Australia Others Source: USDA ERS 17
US Poultry Exports (Million Pounds) 8.000 7.000 7.109 6.906 6.000 5.000 4.980 5.138 5.738 4.942 5.013 4.997 5.333 5.367 6.070 4.000 3.000 2.000 1.000 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Russia China (Mainland) Iraq Mexico Canada Cuba Other Chicken Others Source: USDA ERS 18
Per capita consumption (kg/capita) Strong Long-term Industry Fundamentals Meats Consumption Per Capita Recommended consumption 80kg/capita Population growth coupled with rising worldwide standards of living will drive an increase in protein demand on emerging global middle class Source: FAO 19
4Q09 Highlights 20
Highlights for the 4th Quarter 2009 Net Profit of R$127.9 million in 4Q09. Net Revenue for 2009 was R$34,311.8 million, representing a 13.1% increase y-o-y. In 4Q09 the consolidated EBITDA increased 49.6% compared to 4Q08, from R$265.9 million to R$397.8 million. The consolidated EBITDA margin was 5.4% for the period, compared with 2.8% for 4Q08 Completion of the Bertin S.A. Merger and the acquisition of a controlling interest in Pilgrim s Pride Corporation. A pro forma Net Revenue in 2009 of R$55,223.6 million, 82.0% higher than 2008. EBITDA pro forma of R$3,058.0 million in 2009, increase of 164.5% over the previous year. 21
JBS Consolidated Results Net Revenue (R$ million) EBITDA and EBITDA Margin (R$ million) 13.1% 11.2% -3.8% -0.1% -9.5% -11.6% -20.4% 81.6% -24.0% 36.3% Source: JBS EBITDA Margin (%) 22
Performance by Business Units JBS USA (Beef) Including Australia JBS USA (Pork) INALCA JBS JBS MERCOSUL Net Sales (US$ billion) Net Sales (US$ million) Net Sales ( million) Net Sales (R$ billion) 2.8 2.7 2.9 2.8 2.8 600 526 554 559 606 162 144 144 146 141 1.6 1.4 1.7 1.7 1.7 4Q08 1Q09 2Q09 3Q09 4Q09 4Q08 1Q09 2Q09 3Q09 4Q09 4Q08 1Q09 2Q09 3Q09 4Q09 4Q08 1Q09 2Q09 3Q09 4Q09 EBITDA (US$ mi) EBITDA margin EBITDA (US$ mi) EBITDA margin EBITDA ( mi) EBITDA margin EBITDA (R$ mi) EBITDA margin 2.2% 2.2% 3.6% 3.8% 4.5% 4.3% 1.4% 4.5% 2.7% 4.7% 5.1% 3.9% 4.6% 6.6% 5.0% 60.4 59.7 104.6 108.4 126.0 25.6 7.5 24.7 15.3 28.6 8.3 5.6 6.6 9.7 7.0 4Q08 1Q09 2Q09 3Q09 4Q09 4Q08 1Q09 2Q09 3Q09 4Q09 4Q08 1Q09 2Q09 3Q09 4Q09 Source JBS EBITDA Margin (%) 23
Debt The Net Debt/EBITDA reduced from 3.3x in 3Q09 to 3.1x in 4Q09. JBS raised US$2.0 billion by issuing two million Debentures. The company s cash position is sufficient to cover, almost entirely, the short term debt of JBS Current assets exceed current liabilities by almost 50%, demonstrating the liquidity of the Company s balance sheet. Net Debt / EBITDA Pro Forma per Quarter Gross debt Profile (R$ million) * 14,429.8 5,479.6 63% 62% 37% 38% 2009 2008 Source: JBS Net Debt/ EBITDA EBITDA pro-forma * LTM including Bertin and Pilgrim s Pride pro-forma. Short Term Long Term 24
Revenue Distribution by Market 2009 2008 E x ports 23% Domes tic Market 77% E x ports 33% Domestic Ma rket 67% Source: JBS 25 Source: JBS
JBS Consolidated Exports Distribution JBS Exports 2009 JBS Exports 2008 US$ 5.0 billion US$ 5.6 billion Taiwan 2% China 4% USA 5% Others 19% Mexico 8% Japan 13% Canada 8% E.U. 11% Russia 10% USA 3% Taiwan 4% South Korea 4% China 3% Middle East 7% Others 15% Canada 8% Japan 9% Mexico 18% E.U, 11% Russia 13% Hong Kong 6% South Korea 6% Africa and Middle East 7% Hong Kong 5% Source: JBS 26
Short Term Outlook 27
A Closer look at synergies Pilgrim s Pride USD 95 Million already captured, through initiatives in the personnel, transportation, and packaging supply areas. USD 65 Million further by mid year, principally through G&A, exports, and logistic efficiencies. USD 200 / 300 Million total annual synergies. Pilgrim s Pride Stock Price 12 10 Announcement ofthe PPC acquisition by JBS Closing of the acquisition 8 6 4 2 0 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Source: Bloomberg 28
A Closer look at synergies Bertin S.A. R$145 million implemented by end of 1Q10 in packaging, industrial processes, formulation and corporate. R$100 million further synergies to be realized particularly at corporate and exports in the coming six months. Total annual synergies expected to reach R$500 million by 2011. 29
Thank You IR Contacts: ir@jbs.com.br +55 11 3144 4055 www.jbs.com.br/ir 30 30 In God We Trust, Nature We Respect