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2
nd
Quarter 2010 Results
August 16th, 2010
The Company posted a landmark EBITDA of R$1.0 billion in 2Q10.
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2
Disclaimer
The forward-looking statements presented herein are subject to risks and uncertainties. These
statements are based on the beliefs and assumptions of our management, and on information
currently available to us.
Forward-looking statements are not guarantees of performance. They involve risks,
uncertainties and assumptions because they relate to future events and therefore depend on
circumstances that may or may not occur. Our future operating results, financial condition,
strategies, market share and values may differ materially from those expressed in or suggested
by these forward-looking statements. Many of the factors that will determine these results and
values are beyond our ability to control or predict.
Forward-looking statements also include information concerning our possible or assumed future
operating results, as well as statements preceded by, followed by, or including the words
''believes,'' ''may,'' ''will,'' ''continues,'' ''expects,'` ''anticipates,'' ''intends,'' ''plans,'' ''estimates'' or
similar expressions.
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3
Wesley Mendonça Batista
CEO of JBS USA
Joesley Mendonça Batista
CEO of JBS S.A.
Guilherme Arruda
Investors Relations
Presenters
Jeremiah O'Callaghan
Investors Relations Officer
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Agenda
4
2Q10 Highlights
Market Overview
Company Overview
Short Term Outlook
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5
Our Mission
To be the best at what we set out to do, totally focused on our business, ensuring the best
products and services for our customers, solidity for our suppliers, satisfactory profitability for
our shareholders and the certainty of a better future for all our employees.
Our Values
Excellence
Planning
Determination
Discipline
Availability
Openness
Simplicity
Who We Are
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Leading, Sizeable and Diversified Business Platform
6
1
st
Ranking
Well-
Recognized
Brands
Production
Units
Geographic
Presence
and Installed
Capacity
2
nd
3
rd
1
st
3
rd
1
st
Global
Global
U.S.A.
Global
Brazil
Global
Beef
41.2
1.1
6.7
28.6
8.7
3.0
1.0
`000 heads/day:
6.9
0.7
mm heads/day:
48.5
`000 heads/day:
`000 hides/day:
1.4
`000 tons/day:
4.5
23.0
`000 heads/day:
Total: 90.3
Total: 7.6
Total: 48.5
Total: 91.4
Total: 1.4
Total: 27.5
Chicken
Pork
Hides / Leather
Dairy
Lamb
75
33
3
26
7
6
55.6
28.6
6.0
1.2
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Our Strategy
7
Production platform
Sales and distribution platform
Value added products
Branding
JBS' Value & Strategy
EBITDA Margin
Financial
structure
Experienced
management
Cost reduction,
process
optimization
Risk
management
·
Developed an efficient
and diversified global
production platform
·
Expanding a global distribution
platform to reach end clients
·
Customized and further processed
products for the
end users
·
Associating quality and branding to
increase client loyalty
Rationale
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Distribution Platform with Access to Key Markets
8
1 Real growth of total consumption in tons
­
2010E to 2015E
Source
­
OECD-FAO
Distribution Center
Growth
1
2 %
5 %
8 %
Growth
1
7 %
16 %
25 %
Growth
1
9%
8%
13 %
Growth
1
4 %
3 %
-2 %
Sales Offices
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Agenda
9
2Q10 Highlights
Market Overview
Company Overview
Short Term Outlook
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World Meat Consumption
(million tons cwe)
2000
2009
2018
Growth
2009-2018
Pork
89
102
120
18%
Poultry
70
98
120
23%
Beef
60
65
75
15%
TOTAL
219
265
315
19%
2000
2009
2018
Growth
2009-2018
OECD
92
100.4
108.5
8%
NON OECD
127
164
205
25%
Source: OECD/FAO Agricultural Outlook 2009-2018
10
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Animal protein consumption growth in the last decade
11
3
Source: FAPRI February 2010
7.5%
29%
32.2%
70.2%
41.4
%
47.7%
23.7%
23.3
%
48.7%
North America
Central
America
South America
Sub Saharan
Africa
Middle East
Southeast
Asia
East Asia
Former USSR
Oceania
EU - 27
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Beef Exports
12
Source: USDA and Secex
US Beef and Veal Exports (Tons)
Brazilian Beef Exports (Tons)
Rising demand in emerging economies drove export volumes up in the semester both
in Brazil and in the US but more importantly, pricing was very strong. As beef production
is long cycle, some of this export demand will tend to boost chicken exports, particularly
out of the US, in the coming years.
0
100.000
200.000
300.000
400.000
500.000
600.000
700.000
2005
2006
2007
2008
2009
JAN-JUN 09 JAN-JUN 10
3.800
3.900
4.000
4.100
4.200
4.300
4.400
4.500
4.600
Beef Exports
Avg Price in US$ per Ton
24,3%
5,3%
0
200.000
400.000
600.000
800.000
1.000.000
1.200.000
1.400.000
2005
2006
2007
2008
2009
JAN-JUN 09 JAN-JUN 10
0
500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
4.500
Beef Exports
Avg Price in US$ per Ton
7,0%
26,6%
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Chicken Exports
13
Source: USDA and Secex
Brazilian Chicken Exports (Tons)
US Poultry Exports (Tons)
Strong domestic demand in both Brazil and the US limited exports in the first
semester although it is clear that prices will tend to push up export volumes from now on
particularly taking into account the reopening of the Russian market for US product.
0
500
1.000
1.500
2.000
2.500
3.000
3.500
2005
2006
2007
2008
2009
JAN-JUN 09 JAN-JUN 10
0
200
400
600
800
1.000
1.200
1.400
1.600
1.800
2.000
Chicken Exports
Avg Price in US$ per Ton
1,1%
17,3%
-
500.000
1.000.000
1.500.000
2.000.000
2.500.000
3.000.000
3.500.000
2005
2006
2007
2008
2009
JAN-JUN 09JAN-JUN 10
-
200
400
600
800
1.000
1.200
Chicken Exports
Avg Price in US$ per Ton
-6,5%
-2,9%
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Agenda
14
2Q10 Highlights
Market Overview
Company Overview
Short Term Outlook
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Highlights for the 2nd Quarter 2010
15
Revenues increased 52.5% y-o-y and 12.5% to R$14,116.3 million
·
JBS USA increased 67.6% y-o-y and 12.9% q-o-q
·
JBS MERCOSUL increased 123.1% y-o-y and 19.1% q-o-q
·
JBS Exports increased 37.0% q-o-q reaching 29% of sales
EBITDA increased 163.3% y-o-y and 16.0% q-o-q.
Leverage remained fairly stable at 3.0x
Consolidated customer base grew by 22.2% q-o-q, reaching more than 300
thousands customers in 2Q10.
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JBS Consolidated Results
16
Source: JBS
EBITDA Margin (%)
Net Revenue (R$ million)
EBITDA and EBITDA Margin (R$ million)
9.255,0
8.379,9
7.408,9
12.550,3
14.116,3
2Q09
3Q09
4Q09
1Q10
2Q10
69,4%
-11,6%
12,5%
-9,5%
384,0
291,9
397,8
862,0
1.000,0
4,1%
3,5%
5,4%
6,9%
7,1%
2Q09
3Q09
4Q09
1Q10
2Q10
-24,0%
36,3%
116,7%
16,0%
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Performance by Business Units
17
Net Sales (US$ billion)
Net Sales (US$ million)
Net Sales (US$ million)
EBITDA (US$ mi) EBITDA
margin
EBITDA (US$ mi) EBITDA margin
EBITDA (US$ mi) EBITDA margin
JBS USA Beef
Including Australia
JBS USA Pork
JBS USA Chicken (PPC)
Source: JBS
EBITDA Margin (%)
2,9
2,8
2,8
2,8
3,3
2Q09 3Q09 4Q09 1Q10 2Q10
104,6
108,4
126,0
170,5
194,9
3,6%
3,8%
4,5%
6,0%
5,9%
2Q09 3Q09 4Q09 1Q10 2Q10
554
559
606
646
739
2Q09 3Q09 4Q09 1Q10 2Q10
24,7
15,3
28,6
34,9
48,7
4,5%
2,7%
4,7%
5,4%
6,6%
2Q09 3Q09 4Q09 1Q10 2Q10
1,7
1,8
1,6
1,7
1Q09
2Q09
1Q10
2Q10
80,8
164,6
59,5
127,6
4,8%
9,3%
3,6%
7,5%
1Q09
2Q09
1Q10
2Q10
1,7
1,7
1,7
3,0
3,5
2T09
3T09
4T09
1T10
2T10
Net Sales (R$ billion)
EBITDA (R$ mi) EBITDA
margin
82,6
47,3
112,2
352,6
334,5
4,9%
2,9%
6,6%
11,9%
9,5%
2T09
3T09
4T09
1T10
2T10
JBS MERCOSUL
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Revenue Distribution by Market
18
Revenue Distribution by Market 2Q10
Revenue Distribution by Market 1Q10
Revenue Distribution by Market 2Q10
Revenue Distribution by Market 1Q10
Beef
Domestic 44%
Pork
Domestic 7%
Chicken
Domestic 20%
Beef Exports
25%
Pork
Exports 2%
Chicken
Exports 2%
Exports = 29%
Domestic Market = 71%
Beef
Domestic 47%
Pork
Domestic 8%
Chicken
Domestic 22%
Beef
Exports 20%
Pork
Exports 1%
Chicken
Exports 2%
Exports = 23%
Domestic Market = 77%
Source: JBS
Mercosul
27%
USA Beef
42%
USA Pork
9%
USA Chicken
22%
Mercosul
23%
USA Beef
42%
USA Pork
10%
USA Chicken
25%
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EBITDA Distribution by Business Units
19
2Q10
1Q10
USA BEEF
34,7%
USA PORK
8,7%
USA Chicken
22,7%
Mercosul
33,5%
USA BEEF
36,1%
USA PORK
7,4%
USA Chicken
12,6%
Mercosul
43,9%
Source: JBS
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JBS Consolidated Exports Distribution
20
JBS Exports 2Q10
JBS Exports 1Q10
US$2,3331.0 Million
US$1,765.4 Million
Source: JBS
Africa and Middle East
16%
Mexico
14%
Japan
12%
Hong Kong
9%
Russia
8%
E.U.
8%
USA
7%
South Korea
4%
China
4%
Canada
4%
Taiwan
2%
Others
12%
Africa and Middle East
19%
Mexico
12%
Japan
10%
Hong Kong
8%
Russia
10%
E.U.
7%
USA
7%
South Korea
5%
China
4%
Canada
4%
Taiwan
2%
Others
12%
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Debt
21
While JBS leverage remained fairly constant in the quarter (at 3.0x LTM EBITDA), the liquidity of the
balance sheet improved significantly.
The company's cash position increased 17,5% when compared with 1Q10 (which represents 70% of
the company's ST debt, from 55% in the previous quarter), while ST debt decreased 7,7% in the same
period.
Considering the US$700mm bond issuance in July, ST debt on a pro-forma basis would represent
roughly 33% of total debt, closer to the company's target of having less than 30% of its total debt
maturing in the ST.
Source: JBS
*LTM including Bertin
and Pilgrim's Pride pro
-forma.
** Pro-Forma takes into account senior unsecured notes issued July, 2010
2,6
3,3
3,1
3,1
3,0x
2Q09
3Q09
4Q09
1Q10
2Q10
39%
40%
36%
33%
61%
60%
64%
67%
2Q09
1Q10
2Q10
(Pro-Forma)*
Short term
Long term
*
**
Leverage
ST / LT Profile
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Shareholders
22
Controlling
Holding
55,5%
BNDESPAR
17,3%
Market
19,1%
PROT - FIP
8%
Average daily trade volume of USD 50,4 million in 2Q10
Source: JBS
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Agenda
23
2Q10 Highlights
Market Overview
Company Overview
Short Term Outlook
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A Closer look at synergies
­ Pilgrim's Pride
24
JBS already captured US$ 150 million in synergies with Pilgrim's Pride acquisition of a
total estimated amount of US$ 220 million.
The next graphic shows the origin of the captured synergies.
Captured Synergies
US$ 150 Million
Logistics Optimization
Efficiency gains in the average
load factor for trucks
US$50mm
Total
US$70mm
Descrição
2 years
On going Synergies
Exports
Reaching final customers
through the JBS current sales
structure.
US$20mm
2010
Size
Time
Source: JBS
Logistics
23%
Suppliers
20%
Corporative
23%
General
administrative
expenses
34%
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A Closer look at synergies
­
Bertin S.A.
25
Captured Synergies
R$154 Million
Exports
Maximization of sales channels
and reviewing contracts for
freight
R$31mm
Total
R$331mm
Descrição
2010
On going Synergies
Hides
Capturing value with the
greatest volume of processed
R$45mm
2010
Size
Time
Suppliers
Review of terms of contract non-
core suppliers (eg packaging)
R$10mm
2010
Industrial Processes
Optimization of fixed costs and
streamlining of existing
contracts
R$245mm
2 Years
Source: JBS
JBS already captured R$ 154 million in synergies due to the merger with Bertin of a total
estimated amount R$ 485 million.
The next graphic shows the origin of the captured synergies.
Administrative
expenses
26%
Exports
45%
Logistics
13%
Suppliers
16%
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Final Considerations
26
Having seen double digit revenue growth and EBITDA of R$1 billion in the last quarter, we are on track to
deliver the top line growth and EBITDA budgeted for 2010.
An increase in our exports q-o-q of 37% demonstrates the recovery of international trade which we believe
will continue to grow and serve as a driver for better margins.
Rating agencies upgrades demonstrate recognition for the effort we continue to make to maintain financial
improvements with a view towards reaching Investment grade category.
We surpassed 300 thousand active customers globally in 2Q10, proving that our distribution strategy
(another margin driver) continues to gain traction.
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27
"In God We Trust, Nature We Respect"
IR Contacts:
ir@jbs.com.br
+55 11 3144 4447
www.jbs.com.br/ir
Q & A