2q10 conference call presentation
TRANSCRIPT
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2nd Quarter 2010 ResultsAugust 16th, 2010
The Company posted a landmark EBITDA of R$1.0 billion in 2Q10.
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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 suggestedby 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'' orsimilar expressions.
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Wesley Mendona Batista
CEO of JBS USA
Joesley Mendona Batista
CEO of JBS S.A.
Guilherme Arruda
Investors Relations
Presenters
Jeremiah OCallaghan
Investors Relations Officer
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Agenda
4
2Q10 HighlightsMarket Overview
Company Overview
Short Term Outlook
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Our MissionTo be the best at what we set out to do, totally focused on our business, ensuring the bestproducts 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 ValuesExcellence
Planning
Determination
Discipline
Availability
Openness
Simplicity
Who We Are
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Leading, Sizeable and Diversified Business Platform
6
1stRanking
Well-Recognized
Brands
ProductionUnits
Geographic
Presenceand InstalledCapacity
2nd 3rd 1st 3rd 1st
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
81 Real growth of total consumption in tons 2010E to 2015ESource 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 HighlightsMarket Overview
Company Overview
Short Term Outlook
W ld M C i
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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 2018Growth
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
1
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 SaharanAfrica
Middle East
SoutheastAsia
East Asia
Former USSR
Oceania
EU - 27
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Beef Exports
12Source: 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 bothin 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, particularlyout 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
13Source: 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 onparticularly 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
Ch icken 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 $ p er Ton
-6,5%
-2,9%
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Agenda
14
2Q10 HighlightsMarket 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$14,116.3 million
JBS USA increased 67.6% y-o-y and 12.9% q-o-q
JBS MERCOSUL increased 123.1% y-o-y and 19.1% q-o-q
JBS Exports increased 37.0% q-o-q reaching 29% of sales
EBITDA increased 163.3% y-o-y and 16.0% q-o-q.
Leverage remained fairly stable at 3.0x
Consolidated customer base grew by 22.2% q-o-q, reaching more than 300
thousands customers in 2Q10.
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JBS Consolidated Results
16Source: JBS
EBITDA Margin (%)
Net Revenue (R$ million) EBITDA and EBITDA Margin (R$ million)
9.255,08.379,9
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) EBITDAmargin
EBITDA (US$ mi) EBITDA margin EBITDA (US$ mi) EBITDA margin
JBS USA BeefIncluding Australia
JBS USA Pork JBS USA Chicken (PPC)
Source: JBS
EBITDA Margin (%)
2,9 2,8 2,8 2,8
3,3
2Q09 3Q 09 4Q 09 1Q10 2Q10
104,6 108,4126,0
170,5
194,9
3,6% 3,8%4,5%
6,0% 5,9%
2Q 09 3Q 09 4 Q0 9 1 Q1 0 2 Q1 0
554 559606 646
739
2Q 09 3Q 09 4Q 09 1 Q10 2 Q1 0
24,7
15,3
28,634,9
48,7
4,5%
2,7%
4,7%5,4%
6,6%
2Q 09 3Q09 4Q09 1Q10 2Q10
1,71,8
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) EBITDAmargin
82,6
47,3
112,2
352,6334,5
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
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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
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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
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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 thebalance sheet improved significantly.
The companys cash position increased 17,5% when compared with 1Q10 (which represents 70% ofthe companys ST debt, from 55% in the previous quarter), while ST debt decreased 7,7% in the sameperiod.
Considering the US$700mm bond issuance in July, ST debt on a pro-forma basis would representroughly 33% of total debt, closer to the companys target of having less than 30% of its total debtmaturing in the ST.
Source: JBS
*LTM including Bertin and Pilgrims Pride pro-forma.** Pro-Forma takes into account senior unsecured notes issued July, 2010
2,6
3,3 3,1 3,1 3,0x
2Q09 3Q09 4Q09 1Q10 2Q10
39% 40% 36% 33%
61% 60% 64% 67%
2Q09 1Q10 2Q10 (Pro-Forma)*
Short term Long term
*
**
Leverage ST / LT Profile
Sh h ld
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Shareholders
22
Controlling
Holding
55,5%BNDESPAR
17,3%
Market
19,1%
PROT - FIP
8%
Average daily trade volume of USD 50,4 million in 2Q10
Source: JBS
A d
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Agenda
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2Q10 HighlightsMarket Overview
Company Overview
Short Term Outlook
A Cl l k t i Pil i P id
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A Closer look at synergies Pilgrims Pride
24
JBS already captured US$ 150 million in synergies with Pilgrims 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 MillionLogistics Optimization
Efficiency gains in the average
load factor for trucks US$50mm
Total US$70mm
Descrio
2 years
On going Synergies
ExportsReaching 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%
A Cl l k t i B ti S A
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A Closer look at synergies Bertin S.A.
25
Captured Synergies
R$154 MillionExports
Maximization of sales channels
and reviewing contracts forfreight
R$31mm
Total R$331mm
Descrio
2010
On going Synergies
HidesCapturing value with the
greatest volume of processedR$45mm 2010
Size Time
SuppliersReview of terms of contract non-
core suppliers (eg packaging)R$10mm 2010
Industrial Processes
Optimization of fixed costs and
streamlining of existingcontracts
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%
Final Considerations
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Final Considerations
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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 believ
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 financia
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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27In God We Trust, Nature We Respect
IR Contacts:
+55 11 3144 4447
www.jbs.com.br/irQ & A