background image
February, 2011
background image
Agenda
2
Market Overview
Company Overview
3Q10 Highlights
JBSS3
Stock Performance
and Ongoing Actions
background image
3
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
background image
Corporate Structure
Investors
Relations
Jeremiah
O'Callaghan /
Guilherme Arruda
Finance
Director Brazil
Marcos
Bastos
Corporate
Law
Department
Francisco
de Assis e Silva
Marcos graduate from
Mackenzie University in
Business Administration
and has a MBA in
Finance from San
Francisco State
University. Worked in
many financial institutions
in Brazil, primarily in
Investment banking,
Financial Projects, and
Portfolio management.
Started in 2008 with JBS.
Francisco is the director
of the Law Department.
Has a post graduated
from the University of
Mackenzie.
Started working at JBS in
December of 2001 and
later became a member
of the Executive Board in
January of 2007.
Jerry has a Engineering
Degree from the University
of Cork College in Ireland.
Immigrated to Brazil in
1979. Started working in
the Beef Sector in 1983
and in JBS in 1996 in order
to develop the Trade Area
and eventually became the
Investors Relations Officer.
Guilherme graduated in
Business and Economics
from the University of
California. Start in the
Company in 2009 after
working for 7 years for
BTG Pactual.
Corporate
And Adm.
Controller
Eliseo
Fernandes
Eliseo has a Business
Administration and
Accounting Degree from
the University Católica de
Pernambuco and a post
graduate degree in
Business Administration
from FGV. He started with
JBS in August 2005 and
eventually became
Director of Administration
and Corporate
Governance. He has 8
years Experience in
Auditing and Consulting
and 10 years in the Retail
industry.
Dairy
Gilson
Teixeira
CEO
MERCOSUL
Marco
Bortolon
JBS
Hides
Roberto
Motta
New business
José Luis
Medeiros
Commercial and
Distribution
International
Offices
Marco Bichieri
CEO
President
JBS S.A.
Wesley Batista
Marco has more than 10
years experience in JBS.
Initially started as a
Production Manager and
in 2009 was promoted to
Chief Operating Officer of
the Brazil Beef Division.
Marco has more than 24
years of experience in the
Protein Sector. Worked
for more than 20 years in
Bertin.
Roberto has more than 20
years in the Leather
Industry. Was
responsible for
incorporating BMZ Hides
with the JBS Group.
Gilson has more than
25 years experience in
Finance and Controller
of business units of
Bertin, where he later
served as a member of
the Board for 5 years.
José Luiz has a degree
in Accounting and has
been working in the Beef
Sector since 1975. 14
year in Bertin and
started at JBS in 1997.
January 2010 became
the Director of New
Business.
4
CHAIRMAN
JBS S.A.
Joesley Batista
background image
Corporate Structure
CEO
Australia
Iain Mars
Pilgrim's Pride
William W.
Lovette
Beef USA
Bill Rupp
JBS Five
Rivers
Mike
Thoren
JBS Carriers
Moe
Schroder
CEO
USA
Don Jackson
Pork
Martin
Dooley
Iain was born in England
and worked in the Beef
Industry for his whole life.
He became the President
and CEO of JBS Australia
in 2007, after the
acquisition of Swift. He
has worked in JBS since
2005.
Martin has a degree in
Biology from the
University of Eastern
Illinois. Worked in Swift
for his whole life, having
started the company as a
manager trainee in 1983.
In 2007 was given the
position of president of the
Pork Division of JBS USA.
Moe has more than 30
years experience in
Transportation Sector.
Graduated from the
University of Ryerson,
Toronto, Canada.
Occupied the position of
Vice President of Sales,
Dedicated Operations at
KLLM and before that
was in various executive
positions at CR England .
Moe Joined JBS to run
the carrier business
Mike is the President and
CEO of Five Rivers since
the Start of the Company.
Has a Masters of Science
in Agricultural Economics
and has a degree in
Agribusiness from the
University of Washington
State.
Bill has learned the Beef
Industry from the ground
up. Right out of college,
he began learning the
business at Cargill where
he worked for 25 years.
He was a general plant
manager and eventually
went to build a meat
processing facility in
Canada. He later
became the VP of
Operations, then was the
President of the Beef
Business, and eventually
became the president of
Cargill Meat Solutions.
Bill joined JBS in 2010 as
the President of the US
Beef Business.
William is the President,
CEO and Director of
Pilgrim's Pride since
January 2010. He is
bringing to Pilgrim's 27
years of experience in
the poultry industry.
Since 2008, he served as
president and COO of
Case Foods, Inc
. Furthermore, he spent
25 years with Tyson
Foods in various senior
management roles.
Trading
Robert
Wadland
Robert has 27 years of
meat trading experience
with 17 years of that at
JBS enhancing exports
out of Australia and New
Zealand. Recently
transferred to the US to
run the group's trading
business unit
CFO
André
Nogueira
Human
Resources
Bob
Daubenspeck
Robert assumed this
position in February
2009 and before that
was in JBS
Packerland from 2002
to 2008.
5
CEO
President
JBS S.A.
Wesley Batista
André has a degree in
Economics from the
Universidade Federal
Fluminense, a
specialization in
Marketing from PUC-SP,
a MBA from Fundação
Don Cabral and a
masters in Economics
from Universidade de
Brasilia. Worked more
than 20 years in the
banking sector and
started at JBS USA in
2007 after the Swift
acquisition.
background image
Shareholders
6
Source: JBS
FB Participações S.A.
54.5%
BNDESPAR
17.0%
Market
18.7%
PROT - FIP
8.0%
Treasury
1.7%
Average daily trade volume of R$ 35.2 million in 4Q10
background image
Leading, Sizeable and Diversified Business Platform
7
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
41.7
1.0
5.0
28.8
9.0
3.0
0.9
`000 heads/day:
7.3
0.6
mm heads/day:
49.0
`000 heads/day:
`000 hides/day:
5.4
`000 tons/day:
4.0
20.0
`000 heads/day:
Total:
89.4
Total: 7.9
Total: 49.0
Total: 82.3
Total: 5.4
Total: 24.0
Chicken
Pork
Hides / Leather
Dairy
Lamb
65
39
3
23
7
6
68.3
6.0
6.0
2.0
background image
Our Strategy
8
background image
Distribution Platform with Access to Key Markets
9
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
background image
Agenda
10
Market Overview
Company Overview
3Q10 Highlights
JBSS3
Stock Performance
and Ongoing Actions
background image
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
Oceania
EU - 27
background image
12
Global Consumption by Protein
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
100000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Pork (1000 MT CWE)
Beef (1000 MT CWE)
Chicken (1000 MT)
Source: USDA
background image
13
Global Average Export Price
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Pork (US$/MT)
Beef (US$/MT)
Chicken (US$/MT)
Source: USDA
background image
14
Global Trade by Protein
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Pork (1000 MT CWE)
Beef (1000 MT CWE)
Chicken (1000 MT)
Source: USDA
background image
Global Supply-Demand for Poultry
15
Source: Goldman Sachs
GLOBAL SUPPLY-DEMAND FOR POULTRY
Choose Year for Chart:
2020
Estimates for Chart
GS
Goldman Sachs Estimates
2020 GLOBAL SURPLUS (DEFICIT) OF POULTRY MEAT
Goldman Sachs Estimates
Surplus
Deficit
8.9
1.1
0.9
9.1
Prod.
Imports
Exports
Cons.
European Union
3.2
0.6
-
3.7
Prod.
Imports
Exports
Cons.
Russia
19.1
-
4.1
15.1
Prod.
Imports
Exports
Cons.
United States
21.6
1.1
0.2
22.5
Prod.
Imports
Exports
Cons.
China
17.0
-
7.6
9.4
Prod.
Imports
Exports
Cons.
Brazil
1.9
-
0.8
1.1
Prod.
Imports
Exports
Cons.
Thailand
3.7
0.1
-
3.8
Prod.
Imports
Exports
Cons.
India
Million tons
Million tons
background image
Global Supply-Demand for Pork
16
Source: Goldman Sachs
GLOBAL SUPPLY-DEMAND FOR PORK
Choose Year for Chart:
2020
Estimates for Chart
GS
Goldman Sachs Estimates
2020 GLOBAL SURPLUS (DEFICIT) OF PORK MEAT
Goldman Sachs Estimates
Surplus
Deficit
2.2
0.3
1.3
1.2
Prod.
Imports
Exports
Cons.
Canada
22.7
0.1
1.1
21.6
Prod.
Imports
Exports
Cons.
European Union
11.9
0.5
2.5
9.9
Prod.
Imports
Exports
Cons.
United States
3.1
1.1
-
4.1
Prod.
Imports
Exports
Cons.
Russia
1.6
0.8
0.2
2.2
Prod.
Imports
Exports
Cons.
Mexico
55.8
0.3
(0.3)
56.4
Prod.
Imports
Exports
Cons.
China
4.4
-
1.4
3.0
Prod.
Imports
Exports
Cons.
Brazil
Million tons
Million tons
background image
Global Supply-Demand for Beef
17
Source: Goldman Sachs
GLOBAL SUPPLY-DEMAND FOR BEEF & VEAL
Choose Year for Chart:
2020
Estimates for Chart
GS
Goldman Sachs Estimates
2020 GLOBAL SURPLUS (DEFICIT) OF BEEF & VEAL
Goldman Sachs Estimates
Surplus
Deficit
12.8
1.5
1.6
12.7
Prod.
Imports
Exports
Cons.
United States
8.0
0.8
0.2
8.6
Prod.
Imports
Exports
Cons.
European Union
15.4
0.2
6.0
9.5
Prod.
Imports
Exports
Cons.
Brazil
7.3
1.2
-
8.5
Prod.
Imports
Exports
Cons.
China
3.6
-
0.4
3.2
Prod.
Imports
Exports
Cons.
Argentina & Uruguay
2.4
-
1.6
0.8
Prod.
Imports
Exports
Cons.
Australia
4.1
-
0.4
3.7
Prod.
Imports
Exports
Cons.
India
Million tons
Million tons
background image
Beef
Exports Brazil vs USA
18
Source: USDA and Secex
US Beef and Veal Exports (Tons)
Brazilian Beef Exports (Tons)
Both Brazil and the US continue to lead global beef exports.
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
2005
2006
2007
2008
2009
2010
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Br Beef Exports (Tons)
Avg. Price (US$/Ton)
2,7%
24,4%
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
2005
2006
2007
2008
2009
Jan-Nov
2009
Jan-Nov
2010
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
USA Beef & Veal Exports (Tons)
Avg. Price (US$/Ton)
9,8%
23,1%
background image
Chicken
Exports Brazil vs USA
19
Source: USDA and Secex
Brazilian Chicken Exports (Tons)
US Chicken Exports (Tons)
The reopening of the Russian market in late August should boost US chicken exports
in the latter half of 2010.
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
2005
2006
2007
2008
2009
JAN-NOV
09
JAN-NOV
10
-
200
400
600
800
1,000
1,200
USA Broiler Meat Exports (Tons)
Avg. Price (US$/Ton)
-1,5%
-4,8%
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2005
2006
2007
2008
2009
2010
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
BR Chicken exports (Tons)
Avg. Price (US$/Ton)
6,0%
13,4%
background image
Agenda
20
Market Overview
Company Overview
3Q10 Highlights
JBSS3
Stock Performance
and Ongoing Actions
background image
Highlights - 3Q10
21
Net revenue for the 3Q10 was R$14,069.6 million, practically stable in comparison to the 2Q10,
which was R$14,116.3 million.
Consolidated EBITDA increased by 2.6% q-o-q, reaching R$1,026.4 million for the
3Q10. EBITDA margin was 7.3% in the quarter. The main operating highlights were:
JBS Mercosul operations presented EBITDA of R$363.7 million and EBITDA margin of
10.4% for the quarter, versus 9.5% in 2Q10, despite challenges such as cost of raw materials
and FX-rate.
JBS USA Pork presented EBITDA of US$90.8 million and a historical EBITDA margin of
11.8% in 3Q10.
JBS USA Chicken (PPC) had an EBITDA of US$170.0 million, 33.2% higher q-o-q, with
EBITDA margin of 9.9%.
Consolidated customer base grew 15.3% q-o-q, primarily in Mercosul, and now exceeds 350
thousand clients globally.
background image
Consolidated Performance by Protein
22
Export Growth
Customer Base Evolution
(1) in Local GAAP
R$ Millions
Net Income
EBITDA
Margin EBITDA
Beef
8,624.2
448.2
5.2%
Pork
1,350.8
158.8
11.8%
Chicken
2,994.1
309.5
10.3%
Others
1,100.5
109.8
10.0%
Total
14,069.6
1,026.4
7.3%
1
-
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
4Q09
1Q10
2Q10
3Q10
Customers (thousand)
1
-
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
3,500.0
4,000.0
4,500.0
4Q09
1Q10
2Q10
3Q10
Exports (R$ Millions)
Exports (mil tons)
background image
JBS Consolidated Results
23
Source: JBS
EBITDA Margin (%)
Net Revenue (R$ million)
EBITDA and EBITDA Margin (R$ million)
8,379.9
7,408.9
12,550.3
14,116.3
14,069.6
3Q09
4Q09
1Q10
2Q10
3Q10
12.5%
69.4%
-0.3%
-11.6%
291.9
397.8
862.0
1,000.0
1,026.4
3.5%
5.4%
6.9%
7.1%
7.3%
3Q09
4Q09
1Q10
2Q10
3Q10
36.3%
116.7%
16.0%
2.6%
background image
Performance by Business Units
24
Net Sales (US$ billion)
Net Sales (US$ million)
Net Sales (US$ billion)
EBITDA (US$ mm) EBITDA
margin
EBITDA (US$ mm) EBITDA
margin
EBITDA (US$ mm) EBITDA
margin
JBS USA Beef
Including Australia
JBS USA Pork
JBS USA Chicken (PPC)
Source: JBS
EBITDA Margin (%)
Net Sales (R$ billion)
EBITDA (R$ mm) EBITDA
margin
JBS MERCOSUL
1.7
1.7
3.0
3.5
3.5
3Q09
4Q09
1Q10
2Q10
3Q10
2.8
2.8
2.8
3.3
3.4
3Q09
4Q09
1Q10
2Q10
3Q10
108.4
126.0
170.5
194.9
103.5
3.8%
4.5%
6.0%
5.9%
3.1%
3Q09
4Q09
1Q10
2Q10
3Q10
559
606
646
739
772
3Q09
4Q09
1Q10
2Q10
3Q10
15.3
28.6
34.9
48.7
90.8
2.7%
4.7%
5.4%
6.6%
11.8%
3Q09
4Q09
1Q10
2Q10
3Q10
1.8
1.7
1.7
1.7
2Q09
3Q09
2Q10
3Q10
164.6
184.4
127.6
170.0
9.3%
10.6%
7.5%
9.9%
2Q09
3Q09
2Q10
3Q10
47.3
112.2
352.6
334.5
363.7
2.9%
6.6%
11.9%
9.5%
10.4%
3Q09
4Q09
1Q10
2Q10
3Q10
background image
Revenue Distribution by Market
25
Revenue Distribution by Market 3Q10
Revenue Distribution by Market 2Q10
Revenue Distribution by Business Units 3Q10
Revenue Distribution by Business Units 2Q10
Beef
Domestic 44%
Pork
Domestic 7%
Chicken
Domestic 20%
Beef Exports
25%
Pork
Exports 2%
Chicken
Exports 2%
Exports = 29%
Domestic Market = 71%
Source: JBS
* Including Australia
Mercosul
27%
USA Beef
42%
USA Pork
9%
USA Chicken
22%
*
*
Beef
Domestic 44%
Pork
Domestic 8%
Chicken
Domestic 20%
Beef Exports
25%
Pork
Exports 1%
Chicken
Exports 2%
Exports = 28%
Domestic Market = 72%
background image
EBITDA Distribution by Business Units
26
3Q10
2Q10
USA BEEF
18.1%
USA PORK
15.9%
USA Chicken
29.7%
Mercosul
36.4%
USA BEEF
36.1%
USA PORK
7.4%
USA Chicken
12.6%
Mercosul
43.9%
Source: JBS
* Including Australia
*
*
background image
JBS Consolidated Exports Distribution
27
JBS Exports 3Q10
JBS Exports 2Q10
US$2,3331.0 Millions
US$2,326.9 Millions
Source: JBS
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%
background image
Debt Profile
28
The ratio of net debt to EBITDA was 2.9x in the quarter, slightly less than 3.0x in 2Q10.
It is important to note that the liquidity of the balance sheet continues to improve, as the cash
position amounted to R$4,402.5 million (25.2% higher than 2Q10), almost 90% of short-term debt,
compared to 70.0% in the previous quarter and 55.0% in 1Q10.
Additionally, the debt profile also improved. ST debt reached 33.0% of total debt in the 3Q10,
compared to 36.0% in the 2Q10 and 40.0% in the 1Q10.
*
3.3
3.1
3.1
3.0
2.9x
3Q09
4Q09
1Q10
2Q10
3Q10
Leverage
ST / LT Profile
40%
36%
33%
60%
64%
67%
1Q10
2Q10
3Q10
Short term
Long term
Source: JBS
*LTM including Bertin
and Pilgrim's Pride pro
-forma.
EBITDA Margin
EBITDA
background image
Agenda
29
Market Overview
JBSS3
Stock Performance
and Ongoing Actions
Company Overview
3Q10 Highlights
background image
Stock Performance
30
Source: Bloomberg (Base 100 = 01/07/10)
JBS'
shares fell 7.5% when compared with the 2
nd
Quarter closing price. The Ibovespa and the
S&P 500 Indexes increased 13.4% and 11.1% respectively, in 3
rd
Quarter 2010.
The sector, in general, was impacted by factors such as FX-Rate and rising input cost.
The Company continues to focus on measures to enhance the share price.
JBS vs Ibovespa in the 3Q10
80.0
85.0
90.0
95.0
100.0
105.0
110.0
115.0
120.0
125.0
130.0
Jul-10
Aug-10
Sep-10
JBSS3
IBOV
background image
Ongoing Actions
31
INALCA JBS
JBS bought 50% of Inalca JBS in 2008 paying a total of
218.5
million.
JBS filed a request at the International Chamber of Commerce
in Paris to guarantee the right to nominate the CFO, which has
been denied JBS from the outset.
The Company requested Ernst & Young to conduct a full audit,
which in progress.
Argentina
Pending issues
Actions
The Company closed 3 plants and concentrated its production in a
more efficient industrial complex.
Laid off 1,500 employees from 4 plants.
Negotiated commercial agreements that will increase plants
utilization and deficiencies as well as maximizing the Pilar Distribution
Center.
Transferred headquarters from Buenos Aires to Rosario, reducing
administrative expenses.
3Q10 income already reflects an improvement over the previous
quarter due to these actions.
background image
Ongoing Actions
32
Convertible Debentures
JBS paid a premium of R$ 521,940,000.00 to its Debenture holders
on December 23
rd
, 2010.
JBS communicated that it is in advanced stages of negotiation with
its main Debenture holder for the 2
nd
issuance of mandatorily
convertible Debentures.
The new Debentures will have the following characteristics:
Debt Distribution and Income Tax Rate
Pending issues
Actions
The management is in advanced studies supported by specialized
consultants, aiming to rebalance the Company's debt, according to the
cash flow of each region.
The Company believes that a solution will be implemented during the
first half of 2011, which should reduce the cost of capital and maximize
the goodwill amortization, increasing the Company's profitability
Amount: R$4 billion
Period: 5 years
Interest:8.5% per annum, paid
quarterly
Mandatorily convertible into JBS
S.A. shares at the end of the 5th year.
Conversion price of R$ 9.50 per
share (JBSS3), plus interest paid on
the debentures, net of taxes, minus the
remuneration paid to shareholders in
the period (dividends, interest on
equity, etc).
background image
Institution
Analyst
Recommendation
Target Price
Banco do Brasil
Mariana Peringer
Buy
13.18
Bradesco
Ricardo Boiati
Market Perform
8,80
BTG Pactual
Fábio Monteiro
Buy
9.30
Goldman Sachs
Gustavo Wigman
Neutral
7,30
HSBC
Pedro Herrera
Overweight
9.50
Merrill Lynch BofA
Fernando Ferreira
Neutral
8.00
Santander
Luis Miranda
Buy
9.60
Safra
Erick Guedes
Outperform
10.35
UBS
Gustavo Oliveira
Neutral
8.80
Votorantim
Luiz Carlos Cesta
Neutral
8.80
Coverage by Equity Analysts
33
The Company continues to work on increasing coverage by equity analysts.
Please find here below the list of present analysts covering JBS.
Source: Bloomberg and Company
background image
34
"In God We Trust, Nature We Respect"
IR Contacts:
ir@jbs.com.br
+55 11 3144 4447
www.jbs.com.br/ir