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July 2010
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2
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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Agenda
3
Market Overview
1Q10 Highlights
Short Term Outlook
Company Overview
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JBS at a Glance
4
Founded in the 1950's in Central West Brazil
IPO in 2007
Leading protein producer and third largest food company in the World
Revenues of about USD 30 billion per annum
125,000 employees worldwide
Market cap of approximately USD 10,7 billion*
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Shareholders
5
*April and May/2010
Controlling
Holding
55,5%
BNDESPAR
17,3%
Market
19,1%
PROT - FIP
8%
Average daily trade volume of USD 34,1 million*
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Growth Company (Net Revenues
­
R$ mm)
1
World's Largest Food Companies
2009 Net Revenues (US$ bn)
1
Company at a Glance
JBS
­
A Leading Global Food Company
6
·
World's largest protein producer (chicken,
beef, pork and lamb) with a global and
diversified low cost production platform
·
We've been focusing our sales growth mainly
in exports and Emerging Markets, the sum of
which represent approx. 40% of JBS 2009
sales
·
We've been expanding our margins through
a wide range of value-added products,
expanding worldwide distribution capabilities
and developing our brands, such as: Swift,
Maturatta, Friboi, Montana, Cabaņa Las Lilas,
Bertin
, King Island, 1855, Pilgrim's Pride, Gold
Kist, Vigor and Leco
·
World's largest hides/leather processor
·
Significant producer of dairy products in Brazil
650
890 1.212 1.289 1.912 3.501 3.709
4.302
14.142
30.340
55.224
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
CAGR
56%
Source: Bloomberg
Note: 1 Pro forma figures
Nes
t
le
Kraft Fo
o
d
s
J
BS
Ty
so
n
General
M
il
ls
BRF
Co
n
Ag
ra
Smit
h
field
H
ein
z
Cam
p
b
ell
So
u
p
s
H
o
rm
el
95
40
30
27
15
14
13
12
10
8
7
Protein Companies
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66
147
165
327
399
548
602
1,156
3,058
2001
2002
2003
2004
2005
2006
2007
2008
2009
JBS
­
A Growth Company
7
EBITDA (R$mm)
.
Bertin Merger
Pilgrim's Pride
JBS Hides
5 new units
Tasman
Smithfield Beef
Five Rivers
Inalca
Swift Foods Co.
SB Holdings
Venado
Tuerto
Pontevedra
(CEPA)
CAGR (1999-2009): 58%
1999
2006
­
pre IPO
2009
% of total revenues of R$650mm
% of total revenues of R$4.3bn
% of total revenues of R$55.2bn
Beef
Beef
Industrialized/
Further
Processed
Beef
Poultry
Industrialized/
Further
Processed
Pork
100%
23%
77%
52%
13%
6%
29%
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8
World Beef Producers
World Pork Producers
World Chicken Producers
Global Low Cost Production Platform
Total Number of Plants
65
33
3
6
3
10
5
44
Others
Brazil
EU
34%
16%
14%
21%
10%
China
5%
India
US
Others
Brazil
EU
17%
3%
10%
48%
China
22%
US
Others
Brazil
EU
34%
15%
22%
17%
China
12%
US
8
33
3
1
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Global Low Cost Production Platform (cont'd)
9
Chicken (
/kg slaughtered chicken)
Pork (
/Kg live weight)
Cattle Cost (US$/kg cwe)
Source: LEI
­
Wageningen University and Research Center (2007)
Source: Rabobank (2006)
0,51
0,52
0,65
0,74
0,75
0,77
0,79
0,85
0,90
1,07
1,28
1,35
1,35
1,46
1,56
Source: World Beef Report (March 2010)
2,54
2,69
2,71
2,71
3,19
4,04
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Leading, Sizeable and Diversified Business Platform
10
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
65
33
3
26
7
6
55.6
28.6
6.0
1.2
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Strong Track Record of Acquisition Integration and Turnaround
JBS USA Margin Improvement
11
Pre-acquisitions
Post JBS' Ownership
At Acquisition
JBS Management
Acquisition of Pilgrim's
Pride
·
US$ 800 million (64% stake)
2008
Acquisition of Smithfield
Beef
2
·
EV of US$ 565 million
Achieved consolidated
EBITDA of US$163mm
2
,
even during the crisis
2007
Acquisition of Swift
·
EV of US$ 1.5 billion
Took EBITDA from
US$96.3mm to nearly
US$375mm
2
8.1x
EV/EBITDA
15.1x
EV/EBITDA
3.5x
EV/2008EBITDA
3.9x
EV/2008EBITDA
2009
Stock price Sept/09:
~US$5.8
Stock price April 6, 2010:
US$10.9
Market Cap :
US$1.3 bi
Market Cap
3
:
US$2.4 bi
Notes:
1 Assumes 2-month operation of Smithfield Beef in 2008
2 Assumes 12-month operation of Smithfield Beef in 2008
3
Pilgrim's Pride Market Cap as of April 6, 2010
236
193
21
(31)
398
451
2004
2005
2006
2007
2008
2009
2,5%
2,0%
0,2%
3,2%
3,4%
(0.3%)
1
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Our Strategy
12
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
13
Protein Consumption in Key Markets (millions of Ton, 2009E)
DC's and Sales Offices
Growth
1
2 %
5 %
8 %
Growth
1
7 %
16 %
25 %
Growth
1
9%
8%
13 %
Growth
1
4 %
3 %
-2 %
Total: 46 mm ton
Total: 74 mm ton
Total: 86 mm ton
Asia & Middle
East
13
North America
15
Europe
8
Latin America
10
28%
17%
22%
33%
Asia & Middle
East
30
North America
21
Europe
12
Latin America
11
41%
16%
15%
28%
Asia
51
North America
11
Europe
21
Latin America
3
59%
24%
3%
13%
1 Real growth of total consumption in tons
­
2010E to 2015E
Source
­
OECD-FAO
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Agenda
14
Market Overview
1Q10 Highlights
Short Term Outlook
Company Overview
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Market Highlights
15
·
Domestic growth in Brazil remains strong
·
Input cost consistently attractive, including grain prices
·
Signs of growing importance of international trade with increased demand
in all major importing markets
·
Consistent increase in US Exports to more diverse destinations
·
Declining production in Europe
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Animal protein consumption growth in the last decade
16
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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Agenda
17
Market Overview
1Q10 Highlights
Short Term Outlook
Company Overview
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Highlights for the 1st Quarter 2010
18
·
Net Revenue increased by 35.4%, from R$9,267.9 million in 1Q09 to R$12,550.3 million
in 1Q10, mainly due to the incorporation of Bertin
and acquisition of Pilgrim's Pride.
·
The 1Q10 consolidated EBITDA increased 307.5% compared to the same period in 2009,
from R$211.5 million to R$862.0 million. The EBITDA margin was 6.9% for the period,
compared with 2.3% for 1Q09.
·
Net Profit of R$99.4 million in 1Q10, compared to a net loss of R$322.7 million in 1Q09.
·
Beef US posted EBITDA of US$170.5 million, on margin of 6.0%, a record for 1Q.
·
In Mercosul, JBS posted EBITDA of R$352.6 million, with 11.9% margin.
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JBS Consolidated Results
19
Source: JBS
EBITDA Margin (%)
Net Revenue (R$ million)
EBITDA and EBITDA Margin (R$ million)
211,5
384,0
291,9
397,8
862,0
2,3%
4,1%
3,5%
5,4%
6,9%
1Q09
2Q09
3Q09
4Q09
1Q10
9.267,9
9.255,0
8.379,9
7.408,9
12.550,3
1Q09
2Q09
3Q09
4Q09
1Q10
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Performance by Business Units
20
JBS MERCOSUL
1,4
1,7
1,7
1,7
3,0
1Q09
2Q09
3Q09
4Q09
1Q10
53,5
82,6
47,3
112,2
352,6
3,7%
4,9%
2,9%
6,6%
11,9%
1Q09
2Q09
3Q09
4Q09
1Q10
INALCA JBS
144
144
146
141
138
1Q09
2Q09
3Q09
4Q09
1Q10
5,6
6,6
9,7
7,0
10,1
3,9%
4,6%
6,6%
5,0%
7,3%
1Q09
2Q09
3Q09
4Q09
1Q10
Net Sales (R$ billion)
EBITDA (R$ mi) EBITDA margin
Net Sales (
million)
EBITDA (
mi) EBITDA margin
Source: JBS
EBITDA Margin (%)
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Performance by Business Units
21
2,7
2,9
2,8
2,8
2,8
1Q09
2Q09
3Q09
4Q09
1Q10
59,7
104,6
108,4
126,0
170,5
2,2%
3,6%
3,8%
4,5%
6,0%
1Q09
2Q09
3Q09
4Q09
1Q10
526
554
559
606
646
1Q09
2Q09
3Q09
4Q09
1Q10
7,5
24,7
15,3
28,6
34,9
1,4%
4,5%
2,7%
4,7%
5,4%
1Q09
2Q09
3Q09
4Q09
1Q10
1,7
1,6
1T09
1T10
80,8
59,5
4,8%
3,6%
1T09
1T10
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)
Pilgrim's Pride Corporation
Source: JBS
EBITDA Margin (%)
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Debt
22
·
Net debt / EBITDA ratio remained at 3.1x q-o-q. Gross debt declined 5.7%, while Net Debt
increased 12.2%, reflecting working capital requirements to ramp up recent acquisitions, as well as
investments in fixed assets, further impacted by FX fluctuations.
·
The vast majority of the
company's
short term debt is composed of revolving trade finance credit
lines.
·
As demonstrated below, the percentage of short term debt was 40% in 1Q10, compared with 37%
in 4Q09 and 47% in 1Q09.
Source: JBS
Net Debt/ EBITDA EBITDA pro-forma
* LTM including Bertin
and Pilgrim's Pride pro
-forma.
2,5
2,6
3,3
3,1
3,1
1Q09
2Q09
3Q09
4Q09
1Q10
47%
37%
40%
53%
63%
60%
1Q09
4Q09
1Q10
Short term
Long term
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Revenue Distribution by Market
23
Domestic
Market
77%
Exports
23%
Domestic
Market
78%
Exports
22%
1Q10
1Q09
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JBS Consolidated Exports Distribution
24
Japan
16%
E.U.
16%
USA
11%
Mexico
9%
Russia
8%
South Korea
6%
China
5%
Hong Kong
5%
Canada
4%
Middle East
4%
Taiwan
2%
Others
14%
JBS Exports 1Q10
JBS Exports 1Q09
US$ 1,765.4 Million
US$ 901.4 Million
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Agenda
25
Market Overview
1Q10 Highlights
Short Term Outlook
Company Overview
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A Closer look at synergies
­ Pilgrim's Pride
26
US$35mn
US$30mn
US$50mn
US$50mn
US$35mn
US$20mn
US$220mn
Description
Size
Timing
Transportation
Suppliers
G&A
Logistics optimization
Corporate
Exports
Total
Review of contract terms with carriers
Review of contract terms with packaging and other suppliers
Review of service contracts (e.g. Legal, insurance and IT)
Increase efficiency in average weight per truck
Streamlining of corporate structure and headquarters closure
Reach-out to end clients through JBS existing sales network
2010
1H10
Pilgrim's Pride Acquisition: Synergies of over US$220mm/year
1H10
2 years
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A Closer look at synergies
­
Bertin S.A.
27
R$45mn
R$20mn
R$40mn
R$35mn
R$245mn
R$100mn
Hides / Leather
Logistics
Corporate/G&A
Suppliers
Industrial Processes
Exports
Total
R$485mn
Value enhancement through further processing
Review of transportation contracts
Offices, personnel, services contracts and third parties
Review contract terms of non core suppliers (e.g. packaging)
Optimization of fixed costs and rationalization of existing contracts
Maximization of the combined sales channels and review of freight contracts
Description
Size
Timing
1H10
1H10
2 years
2010
Association with Bertin: Synergies to Achieve at Least R$485mm/year
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28
"In God We Trust, Nature We Respect"
IR Contacts:
ir@jbs.com.br
+55 11 3144 4447
www.jbs.com.br/ir