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1
International Conference Call
JBS S/A
2
nd
Quarter 2011 Earnings Results
August 15
th
, 2012

Operator: Good morning everyone and welcome to JBS S.A
.'
s Conference
Call. During this call we will present and analyze the results for 2
nd
Quarter of
2012. As requested by JBS this event is being recorded and the recording will
be available to listeners this afternoon and can be accessed by following the
instructions posted on the Company'
s website at
www.jbs.com.br/ir
.

Taking part in this call we have Mr. Wesley Batista, President and CEO of JBS
S.A.,
Mr. Jeremiah O'
Callaghan, Director of Investor Relations and Mr. Don
Jackson, CEO of JBS USA.

Now I will turn the conference over to Mr. Jerry O'Callaghan. Mr. O'Callaghan
you may now proceed.

Mr. O'Callaghan:
Hello, good morning. Thank you all for being with us today to
discuss the numbers for the second quarter of 2012. We just finished our call in
Portuguese, from 10 to 15 minutes ago, so we're very pleased to have our
international investors with us on this call now.

I will start by making reference to the press release we filed with the CVM in
Brazil last night, we also have a deck of the slides which we filed in English and
in Portuguese this morning and I'll make some reference to those slides as we
go through the call. But firstly I would like to start by highlighting the events of
the quarter and bringing to the attention of everybody what we think is relevant
during 2Q12.

We posted a consolidated net revenue of R$ 18.5 billion and that's 26% higher
than the same period of last year. We had a consolidated Ebitda also for the
period for the second quarter, of more than R$ 1 billion, that's 72% higher than
the same period in 2011. And specific highlights for the quarter were our South
American business, JBS Mercosul, where we had R$ 4.3 billion of revenue in
the period and that's an increase of 19%, almost 20%, over the similar period in
2011. The Ebitda increased 47% in South America comparing the same period
reaching R$ 630 million in 2012.

Also in the US, as a highlight, our chicken business Pilgrim's Pride Corporation
posted US$ 2 billion revenue in the quarter and Ebitda of north of US$ 125
million, which is an inversion of what we saw in 2011, where our chicken
business in the US had negative Ebitda.

Our adjusted net income for the period was R$ 213 million, more than US$100
million, and that's excluding and deferring income tax due to the goodwill in
Brazil, if we include that income tax, our income tax would've been R$ 170
million. At the end of the quarter we carried R$ 5.5 billion in cash and that's
more than 110% of the totality of our short-term debt.
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2
Looking at the semester briefly, just comparing semester with semester, we had
R$ 34.5 billion revenues in the semester, that's up 17.5% on the first semester
of 2011. Consolidated Ebitda for the semester also was R$ 1.7 billion, again,
20% up in the same period in 2011. Our Ebitda margin, our consolidated Ebitda
margin for the semester was 5%.

Adjusted net income also for the semester was just north of R$ 450 million and,
again, if we exclude the income tax due to the goodwill, that would have been
R$ 286 million.

Some of the strategic events during 2Q12; we started up our chicken business
in Brazil, the company was
called `"Doux Frangosul", so now it's called JBS
Frangosul, it's quite a substantial business, the third largest chicken producer in
Brazil with capacity to process more than 1 million birds per day. We also
increased our beef capacity in Brazil,
we've
been increasing the number of
facilities over the last six months and that's resulted in an increase in our
processing capacity in Brazil during the second quarter by 8000 head/cattle per
day, and that's quite substantial.

Also, during the second quarter we had the independent listing of our dairy
business through a voluntary public share swap that business has gone
independent and it's now floating as an independent company on the São Paulo
Stock Exchange
in the same segment as JBS in the "
Novo Mercado
" sin
ce near
the end of June, so that was a relevant matter during the second quarter of
2012.

Now to talk a little bit specifically each business unit and making reference to
our press release of yesterday, and specifically on JBS Mercosul, speaking
about how revenue has evolved over the last number of quarters, I can mention
that R$ 4.3 billion in revenue in this area in the second quarter of 2012 and an
Ebitda of R$ 630 million, 14.5% Ebitda margin. This business has improved on
a quarter by quarter basis and it has demonstrated a lot of consistency, and our
CEO Wesley will talk a little bit more about how we see things going forward in
our South American business before we go to Q&A.

Our beef business in the US, again, we had revenue increase and we had a
slight improvement in the margins, still negative but very very marginal in
marginal Ebitda of US$ 9 million in the quarter, and negative Ebitda margin of
0.2%, but, again, we see a trend from the first to the second quarter an
improvement in profitability and an increase in our revenues.

Our pork business in the US, JBS pork business in the US, again, revenue is
always in the US$ 850 million dollar category. Margins have been a little bit flat
over the last number of quarters, we see that leveling off at historical levels,
somewhere around 6 to 8% and we've seen that happening over the last
number of quarters.

Our chicken business, Pilgrim's Pride Corporation, we had US$ 2 billion in
revenues in the period and, again, we see a margin improvement quarter over
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quarter from the end of last year coming into part (inaudible X7:48) we were
looking forward to a very positive 2012 and, obviously, there was grain issue
which we need to address and we will address during the Q&A for the second
half of this year, and we will talk about that later on. But we had US$ 125.7
million in Ebitda in the second quarter and in Ebitda margin of 6.4%. So all of
that are quite relevant.

And from our Capex point of view, we had a total Capex just over R$ 400 million
in the quarter, that was a little bit above our quarterly average because of the
ramp up and the business in Brazil, we see that coming back to historical
leverages in the third and fourth quarter of 2012.

To speak a little bit about our indebtedness, our leverage net debt to Ebitda last
12 months was 4.27 times at the end of the quarter, slightly down of what it was
at the end of the first quarter, of 4.3 times and as I mentioned earlier we had in
cash or cash equivalent R$ 5.5 billion at the end of the period, which represents
more than 110% of the totality of our short-term debt.

Interesting to look at, and we've highlighted this in our press release and, again,
this slide we put on our webpage this morning the fact that if we dollarize, if we
convert into Dollars, our total net debt and we take the average exchange rate
over the last 5 quarters we actually observe a diminishing total net debt in US
Dollars from US$ 7.8 billion at the end of the second quarter in 2011 to just
about US$ 7.5 billion at the end of the second quarter of 2012, a reduction of
3% in our net debt in US Dollars excluding the effect of the devaluation of the
Real in the period.

Also regarding that, the profile of short-term and long-term we see our short-
term debt diminishing, it's now at 23% of the total debt 77% long-term and that
has been gradually improving over the last number of quarters.

To speak briefly about our exports in the period, our exports for the first half of
the year was just US$ 4.4 billion for the first half of 2012 and, again, would like
to highlight the fact that our exports are spread in many emerging markets in
very diversified into many markets, we had 15% of our exports going to Mexico,
just under 15% going to China, Hong Kong, and Vietnam, just under 12% going
to Japan, Africa and Middle East was 9%, Russia again was 9% as well, South
Korea just over 6% and then we see European Union representing 6.1% and
then, the other markets, particularly in South America, Chile and Venezuela
markets that grew quite substantially during first half of 2012 (these markets in
South America; Chile and Venezuela).
With that, I'll hand you back... I'll hand you over to our CEO for him to make
some comments and some forecasts for the second half of 2012 before we take
questions. Thank you very much.

Mr. Batista: Thank you Jerry and good morning you all. We closed our second
quarter, like Jerry mentioned, with R$ 18.5 billion on revenue and around R$ 1
billion on Ebitda. We believe that we had a reasonable quarter, some business
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4
units performed very well and some business units were weaker in terms of
results than we were looking for but, in the end we closed the quarter in a level
that we believe that is a reasonable level in terms of results.

Looking forward, each business unit, we are very confident and we are very
optimistic about our Mercosul business, we believe that the Mercosul business,
especially Brazil, the Brazil business, we will keep operating in a very high level
in terms of performance and in terms of delivering the results that we expect,
we believe that this business will keep running at a double-digit type of margin,
so our beef business in Brazil and also our high leather business in Brazil are
doing very well.

As you know, and Jerry mentioned here, we did a quite large expansion in our
beef business in Brazil in these last two quarters, so we had around 2 million
heads annualized, around 2 million heads capacity in our beef business in
Brazil and we are very happy that we were able to do this expansion because
the margin in Brazil is getting better, things in Brazil, condition in terms of the
market is getting better, I have been mentioning this that we're getting a new
cycle in Brazil and we are seeing more cattle available, we are able to run our
plants with a better capacity utilization and also exchange rate in Brazil is
helping the business, so exports in Brazil are more competitive today than it
was a month ago.

So, overall, again, we are very optimistic and we believe that this business will
keep delivering a double-digit type of margin in these coming quarters and in
these coming years in a sustainable basis
­
this is an important point.

So, moving outside of Mercosul and outside of Brazil, going to the US in our
different business units in the US, our beef business, as you all know, has been
quite difficult in this first semester, in these first two quarters (1Q and 2Q) was
well below then the margin that we achieved last year. We are seeing the
business condition improving, we believe that the second quarter and the
third...
sorry, the second semester in the beef business will be better than the
first semester, we are more optimistic in terms of results, we are confident that
third quarter will be a reasonable quarter, we will be able to make reasonable
margins in the beef business, I think everybody is seeing a better discipline
structure in the beef business in US, I think all the packers are looking to
reestablish margin in the beef business and I think we're getting the results of
this discipline and, again, second semester things are looking well better than it
was in the first semester.

In the pork, business we had also a reasonable last two quarters, but below
when comparing to last year, but, again, we believe that the second semester
will be better than the first semester. We are already seeing some improvement
in the pork business, who followed the features market in the US, so pork price
in US declined quite sharply in these last 30 days or so. So margin is quite
better and the hog market is improving in some areas and in some points.
Again, pork we believe we will see some improvement.
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The chicken business; this first quarter much better than the first quarter last
year, second quarter well better than second quarter last year, second quarter
you all know that it was a very difficult year for the chicken industry in the US,
this year it starts in a much better mood and we are seeing better results, but,
again, you all know that in these last 60 days things have changed, the grain
market has changed quite substantially in the US (not only in US but around the
world), corn price and soybean price are much higher than it was 60 days ago,
so this is for sure will put challenge in the chicken business.

We will see a reasonable third quarter in our business, the biggest challenge
will be for the fourth quarter (the last quarter of this year) even though we
believe that the industry and ourselves
can be able to pass... to increase
some
sales price to offset or to try to compensate a portion or, maybe, the totality of
the grain impact in our cost. But, again, it will be a challenge in the first quarter
to increase price to offset this grain price impact in our business, but we believe
that... one thing that we believe that will help US
, that Brazil is also facing, US
and Brazil are the two largest chicken producers around the world, so Brazil is
also facing a challenge in the chicken industry in Brazil will need to adjust price,
we will need to increase sales price and it's already doing this; chicken price in
the Middle East is quite higher than it was 60 days ago, so this will help US to
increase also sales price especially in the export market, Brazil doing this it will
help the chicken market overall.

Looking in a consolidated base we believe that the second semester will be
better than the first semester and we will be very focused in our business to get
the best results in each business unit and to add value to all of our shareholders
and all of our business. So, with that I will ask the operator to open for the Q&A.
Thank you.

Q&A Session

Operator: Thank you. Ladies and gentlemen we will now begin the Question
and Answer session. If you have a question please press the star key followed
by the one key on your touch-tone phone. If at any time you would like to
remove yourself from the questioning queue press star two.

Our first question comes from Ms. Farha Aslam, from Stephens Inc.

Ms. Farha Aslam:
Hi good morning.
Mr. O'Callaghan:
Hi Farha.

Mr. Batista: Hi Farha, good morning.

Ms. Farha Aslam:
I thought you have finished your comments with a
discussion on the corn grain situation. I would just like to focus on that. Given
the corn grain situation, where do you think the rationalization is going to come
from? Is it going to be in the US or are we going to see greater rationalization in
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the international markets? And how do you think that is going to impact exports
and imports out of the US in Brazil?

Mr. Batista: Farha, I will give you my view and Don Jackson is also in the call,
so I'll ask Don to make some comments also, but my view Farha, I think it's the
grain market is a global market so it's not only the US that is facing a higher
grain price and I think around the world industry the chicken industry will need
to balance supply and demand, and prices will need to be higher all over the
place to compensate this impact in grain price. I think Brazil and US, that are
the two largest chicken producers, will be the place where the adjustment will
come from
­
Brazil and US
­
and we are already seeing this, so for you to have
an idea, chicken price in the Middle East was US$ 1800 per ton, in the Middle
East today it's already US$ 2200 per ton, so Brazil is already doing some
adjustments and rationalizing will come from US in Brazil especially.

I don't know, Don, if you want to add something?

Mr. Jackson: Farha, again, as to Wesley's point, you will see some rationing
around the world that will be reflected in the US market with less US corn
exports. Today we are not seeing any further reductions in the US chicken
placements, they are basically year-over-year at about half to last year, I would
expect that we will see some decrease in chicken placements, but we haven't
seen that till this point, we are beginning to see some liquidation of the seller on
the pork side, then I would expect that to occur as our production had increased
maybe 2% year-over-year, so there is plentiful numbers of hogs, so we do think
that there will be some liquidation on that side.

Ms. Farha Aslam:
Thank you. Can you also comment on cattle? Because
perhaps to have the most global view on cattle of all companies.

Mr. Jackson: Relative to the US, you mean?

Ms. Farha Aslam: US as well as Brazil. Where do you think that the supply is
going to be, here or in the US? Can you talk about cattle flows into your plants?
As well as what you think exports will do given the rise in price that's anticipated
in cattle over the next year?

Mr. Jackson: Well, in the US right now cattle supplies are plentiful and their
prices are edging now, but we would continue to believe that cattle supply will
be adequate, but there should be some tightening in the supply in 2013, but at
the same time I think that there is a reasonable balance of supply and demand,
again, with good packer discipline in terms of the slaughter I think that the
margins can remain positive in 2013.

Ms. Farha Aslam: Okay. Thank you very much.

Mr.
O'Callaghan
: Thank you.

Mr. Batista: Thank you Farha.
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Operator: Excuse me, our next question comes from Mr. Wesley Brooks with
Morgan Stanley.

Mr. Wesley Brooks: Good morning guys.

Mr.
O'Callaghan
: Good morning.

Mr. Batista: Good morning.

Mr. Wesley Brooks: So, a couple of questions for me. Firstly, on the Mercosul
business, you grew 17% your slaughter year on year; I wanted to understand
how much of that came from running your existing plants at higher rates and
how much of that was a contribution from the new plants? I'm trying to get a feel
for how much incremental volume we can extol expect in Q3 and four from the
new least plants.

Mr.
O'Ca
llaghan: Wesley, this is Jerry here. During the second quarter we
were ramping up business, so at the end of the quarter then we would have
been higher than in the beginning of the quarter, it's kind of difficult to give you
something precise on that, but I would say 75% of the new capacity was up and
running at an efficient level by the end of the quarter, so we will see some
incremental slaughter during the second half of the year during the second half
of the year, during this quarter and the last quarter of the year, as a result of the
new facilities, but most of them were up and running by the end of the quarter.

Mr. Wesley Brooks: Excellent, thank you. And then, my second question was
coming back to the US chicken business, you guys have talked at the start of
the year about having price escalation clauses in most of your selling contracts,
actually to move that we've seen in grains has activated that. Can you talk
around how much protection you have from those? And how those contracts
are... whether you're actually being able to escalate your prices given that
prices in the market aren't necessarily going up enough to recover the cost as
yet?

Mr.
O'Callaghan
: Don?

Mr. Jackson: Sorry, I didn't understand the question Jerry.

Mr. Wesley Brooks: Sorry. The question was, at the start of the year you guys
were talking quite a lot about having price escalation clauses in most of your
chicken selling contracts. I wanted to understand how much those are working
and how much of a protection that might be relative to how spot prices are
looking?

Mr. Jackson: No, again, I can't quantify that for you on the call but, yes, we do
have some escalating contracts. Now, they are all looking in the past and not
into the future, so until we realize the increases that's really another quarter or
two quarters away before those price increases occur, so we are not going to
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have immediate release based on escalation in corn prices. We'd begin to see
that in 2013, now at the same time, we realize we are entering the time of the
year when most of those agreements will actually be renegotiated and so,
between now and the end of November we will begin to renegotiate those and
obviously we will do more focused on having that kind of sensitivity into our
pricing formulas. But I'd say the existing agreements you really wouldn't see any
relief from those through the end of 2012.

Mr. Wesley Brooks: Okay, great, thank you very much.

Mr.
O'Callaghan
: Thank you Wesley, thank you.

Operator: Our next question comes from Mr. Reza Vahabzadeh.

Mr. Reza Vahabzadeh: Good morning.

Mr.
O'Callaghan
: Good morning Reza.

Mr. Batista: Good morning.

Mr. Reza Vahabzadeh: On the US beef side was there a meaningful hedging in
your loss in the second quarter?

Mr. Batista: Well, there was a loss in the second quarter at around US$ 60
some million.

Mr. Reza Vahabzadeh: Okay, got it. And then you mentioned you would expect
a reasonable margin in the US beef and US pork in the third quarter. What is
the reasonable margin in the US beef and pork in your mind?

Mr. Batista: On the third quarter Reza, when I say reasonable margin I'm
talking about, in beef, 3 to 5%, this is what I mean reasonable margin for beef
and for pork between 5 to 8%, 6 to 8%, these are the numbers I mean when I
mentioned reasonable margins.

Mr. Reza Vahabzadeh: Okay. And as far as the impact of the drought in the
Midwest and the rising grain cost, how do you see that impacting the US beef
and pork businesses? Is it really just a moderate tightening of supplies? And
can that be passed through for the most part? Any comment on that would be
really appreciated.

Mr. Batista: In beef and pork, as we are not fully integrated, we don't have hog
production in terms of hog, and in cattle even though we have some cattle on
feed, grain impact in our segment, in our hog business, in our beef business is
not meaningful, it's completely different from chicken, so chicken of course the
impact is directly in terms of price and cost in the chicken business. But it's not
the same in our pork business and also in our cattle business. So I don't expect
a lot of the impact because of this movement in grain price in our pork in our
beef business.
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And, again, one thing that it's important that I would like to mention here in our
view, in JBS's view, grain price can be US$ 8
or US$ 7 and it's for everybody.
So I think, we believe that the industry... the question is more about "when" and
the "time" to adjust,
but the industry can do just itself to run profitable with corn
at US$ 7 or US$ 8, the question is the industry will need to adjust supply and
demand to pass price through the system, to offset this increase in grain price.

Mr. Reza Vahabzadeh: Got it. Don, last week US beef slaughter volume was
roughly 640,000. Is that enough discipline for you?

Mr. Jackson: That's become a higher number for sure when we are operating
below that margin obviously we are more favorable, so I think that is definitely
one of the highest segments where we probably need to see more moderation
on that kind of slaughter going forward.

Mr. Reza Vahabzadeh: Got it. And Wesley one last question since you see the
global angle on exports. Has the US lost any share of the beef export pie
because of the strengthening in the US Dollar and the softening in the Brazil
Real?

Mr. Batista: No, basically it's is still very competitive even though the Real is
not as strong as it was a few months ago but, if you look in our presentation
Brazil is still selling beef price almost at the same level that it was some months
ago. And it's important to
remember that US Dollar is weaker...sorry, is a
stronger comparing to some other currencies (not with all the currencies),
comparing to the Aussie Dollar, US is too weak, and Australian dollar is a very
important currency in terms of the beef business, the competitiveness of the US
beef business. So US this is still very competitive Reza.

Mr.
O'Callaghan
: And also, bear in mind that the markets that the US serves
basically are markets that Brazil doesn't serve very much, like Mexico, Canada,
Asia, whereas Brazil has its own captive market in the rest of the world.

Mr. Reza Vahabzadeh: Got it. Thank you very much.

Operator: Ladies and gentlemen our next question comes from Ms. Carla
Casella with J.P. Morgan.

Ms. Carla Casella: Hi, thank you for taking my question.

Mr. Batista: Hi Carla.

Ms. Carla Casella: On the US beef side, I wonder if you could discuss the
trends that here seeing in food service versus retail and if you're seeing any
change in food service demand?

Mr. Batista: Don, can you answer?
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10
Mr. Jackson: Yes. Again, Carla, as a company we are not overly subscribing
food service on the beef side, definitely we are more retail centric. Generally
speaking, you know, food service is stable, should be not aggressively
improving relative to beef.

Ms. Carla Casella: Okay. And then on the retail side we have heard early in the
year that there was a lot more promotional activity on beef then even on
chicken. Are you seen any change in that trend?

Mr. Jackson: Year-over-year beef ads have decreased to the extent about
maybe one less ad per month for any given retailer, so beef has declined. On
the other side, generally chicken feed trend has increased.

Ms. Carla Casella: Okay. And then just one last question. Have you changed
your leveraged target at JBS S/A or at JBS USA?

Mr. Batista: No Carla, we still have the same target.

Ms. Carla Casella: Okay, great, thank you.

Mr. Batista: Thank you.

Operator: Our next question comes from Mr. Bryan Hunt with Wells Fargo.

Mr. Bryan Hunt: Thank you. Most of my questions have been asked, that just a
few follow-ups on poultry. You all mentioned that the industry needs to institute
some production discipline to achieve pricing offset feed. How does PPC plan to
achieve production discipline in this environment? Is it through headcount
reduction or through weight reduction?

Mr. Jackson: Well, generally speaking, again, we've gone through some
seasonal adjustments in our placements going forward that would be head. We
don't really plan any weight adjustments internally. You know, history has taught
us that despite increase in corn cost that the only solution is by adjustments in
supply relative to the demand. We continue to modify our placements to make
sure that these are in balance with our own company demand. So we are not
seeing any changes on the industry side at the moment but, again, this has all
changed so quickly, it's a little early to say that there is not going to be any
change in the industry placements.

Mr. Bryan Hunt: Okay. Do you see industry placements being reduced by
cracking more eggs in your opinion? Or do you think there will be some layer
reductions, important reductions?

Mr. Jackson: Again, the breeder flock in total is it still at relatively low level
based on historic numbers, so it looks like that there has been discipline in that
regard. I'm not aware of companies breaking eggs if you will that would indicate
that the reduction will have to come in terms of further reduction in the breeder
flock, and I have to say that that couldn't happen. I think at these prices you will
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11
see a reduction in placements, but like I said, there is no material evidence of
that just yet.

Mr. Bryan Hunt: Okay. You mentioned earlier there is an important time
coming up in terms of contract negotiations for food service and retail. Do you
foresee a greater percentage of mix of variable price contracts based on what
feed has done and the impact to the industry, overall? And do you foresee an
event where you walk away from unprofitable relationships?

Mr. Jackson: I think that's always the case under any market conditions, you
were always going to have some gains on the customer side, you are generally
good have some losses on the customer side, so I don't know that that issue will
be any more dramatic than it has been in the past, I do think that you
'll
tend to
see a tightening in terms of sensitivity of pricing formulas meaning that they will
be shorter in duration and move more quickly as commodity prices move. So I
think you
'll
tend to see formulas that will move faster and move more in concert
within food cost.

Mr. Bryan Hunt: And then my last question has to do with beef. Some large
food service or restaurant operators in the US have talked about promoting
more poultry to keep value on the menu in light of higher inflation estimates
going into 2013, you know, that would imply your consumption decline next
year. Do you believe, when you look out in the next year that there will be a
greater mix of exports for the domestic beef business or the US beef business
relative to domestic consumption? And how does that impact your business
model?

Mr. Jackson: Our business model in the US basically can come as relative to
Brazil, but our business model in the US very good concern exports, we would
expect in 2013 to continue to grow our export business although actually year-
over-year there is a slight decline. This past quarter on beef export is still
basically on a par with last year's exports. Again, we've done our pork exports
year-over-year, and we will continue to grow our exports year-over-year, that's
very simple to our business model.

Mr. O
'Callaghan:
And Don, also, on the US beef balance, the US imports quite
a bit of beef, we will probably see a declining trends towards importing beef into
the US because there are demands on so many other markets around the
world, so I suspect that also would be a fact over to whether adjust supply and
demand basically inside the US.

Mr. Bryan Hunt: I appreciate your time this morning. Thank you.

Operator: Our next question comes from Mr. Jose Yordan from Deutsche
Bank.

Mr. Jose Yordan: Good morning everyone.

Mr.
O'Callaghan
: Good morning.
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12

Mr. Batista: Good morning.

Mr. Jose Yordan: Most of my questions were answered, so I just had a couple
of follow-up questions. One is if you could share with us your utilization rates in
beef Brazil. And a related question is whether you are thinking or will eventually
break out the results of Brazil poultry operations in Brazil or does that need to
get bigger before you consider it? And I guess a related question is; with all the
high price in corn, etc., in Brazil, would this be likely to leap through additional
M&A opportunities distressed, additional distress in some of the smaller players,
could that be an opportunity for you to grow that business in Brazil?
Mr. O'Callaghan:
Okay Jose, I'll answer the beginning of the question and then
I'll ask Wesley to take the last part of our M&A potential in the chicken business.

Our utilization in Brazil is pretty much close to where we would like it to be,
85/90% utilization of our beef facilities in Brazil. Our chicken business is almost
like a day-old chicken to renew sale, whether we are going to report it
separately it's something that we will discuss similar to the model that we have
with the other business units that we report and we make a decision about that
through the second half of the year. Regarding M&A and the chicken business
Wesley will comment.

Mr. Batista: Hi Jose. Basically we, as Jerry mentioned, we are like a day-old
chicken in the chicken business in Brazil and we just got Frangosul in these last
2 to 3 months, so our focus now is more to consolidate what we already did. So
we are not actually looking to M&A or to distress opportunities in the chicken
business but, after saying that, in some points if we see opportunity to growth in
the chicken business in Brazil, in a moment that we believe that we are with the
Frangosul operation in a level that we are already comfortable, we can analyze.
But, for now, we are focused to run Frangosul very efficiently; this is where we
are now.

Mr. Jose Yordan: Super. Thanks a lot.

Mr. Batista: Thank you.

Mr.
O'Callaghan
: Thank you Jose.

Operator: Our next question comes from Mr. Marcelo Menusso with
Oppenheimer Funds.

Mr. Marcelo Menusso: Good morning. I just wanted to follow-
up on Jose's
question. Can you disclose how much you are paying for leasing the Frangosul
plants?

Mr. Batista: I apologize Marcelo. We are not disclosing these numbers.
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Mr. Marcelo Menusso: Okay. And then also related to that, I understand you're
going to consider M&A with discipline criteria but, the Frangosul operations;
could you consider acquiring Frangosul or are you going to keep with the
leasing model?

Mr. Batista: We can consider acquiring Frangosul. Actually, when we agreed to
lease the assets we mentioned to the market, to everybody, that the first stage
was to keep Frangosul running to not let the business stop completely, and in
the second stage we will look the opportunity if we can acquire are not. At this
point we are doing a due diligence to know exactly what is the amount of debt
that there is in the company, so, looking all the liabilities to see. But, in some
point we will be looking to talk with the creditors, the Doux Frangosul creditors,
about the opportunity to acquire the business.

Mr. Marcelo Menusso: Okay, thank you.

Mr. Batista: You're welcome.

Mr.
O'Callaghan
: Thank you Marcelo.
Closing

Operator: This concludes today's question-and-answer session. I would like to
invite Mr. Wesley to proceed with his closing statements. Please go ahead Sir.

Mr. Batista: Thank you. I would like to thank you all to be with us today, like I
mentioned in the beginning of the call we believe that we had a reasonable
quarter, we believe that the second semester will be stronger for JBS, globally
or in a consolidated base, so we are very optimistic about our business, where
we are. We believe that we built a quite strong operation in terms of location,
geographic location; we operate in the US, Australia, Brazil and all the countries
in South America, that are the places that is the most competitive countries or
areas to produce protein, so we believe that we are very well positioned for the
future.

With the challenges that we have in front of us we believe that we can go
through this and keep running our business profitable and delivering good
results to our shareholders. So, with that, thank you all and have a good day.

Operator: Thank you. That does conclude our JBS audio conference call for
today. Thank you very much for your participation and have a good afternoon.