2q11 and 1h11 earnings release period highlights...2q11 and 1h11 earnings release eusébio, ceará,...

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2Q11 AND 1H11 EARNINGS RELEASE

Eusébio, Ceará, July 25, 2011 – M. Dias Branco S.A. (Bovespa: MDIA3), a food company and leader in Brazil's cookie, cracker and pasta markets, announces its results for the second quarter of 2011 (2Q11) and the first six months of 2011 (1H11). The consolidated financial statements were prepared in accordance with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and the accounting practices adopted in Brazil (BR GAAP). Due to the first-time adoption of the IFRS in the preparation of the annual financial statements of 2010, in accordance with CVM Resolution 603/2009, we restated the financial information for the quarter ended June 30, 2010 based on the new accounting standards.

PERIOD HIGHLIGHTS Net revenue grew 21.6% in 2Q11 to R$ 722.3 million ,

from R$ 594.0 million in 2Q10. In 1H11, net revenue was R$ 1,369.5 million , up 18.5% from R$ 1,156.0 million in 1H10. Excluding the effects from the acquisition of Pilar, net revenue grew 17.9% in 2Q11 and 16.6% in 1H11;

Cookie and cracker sales volume totaled 106,700 tonnes in 2Q11, up 11.4% on 2Q10, and 200,100 tonnes in 1H11, up 9.0% on 1H10; Excluding the effects from the Pilar acquisition, cookie and cracker sales volume grew 7.9% and 7.2% in 2Q11 and 1H11, respectively;

Pasta sales volume increased by 15.0% in 2Q11 and 8.5% in 1H11 in comparison with the same periods last year. Excluding the effects from the acquisition of Pilar, pasta sales volume grew 8.0% and 5.0% in 2Q11 and 1H11, respectively;

Net income was R$ 82.5 million in 2Q11, up 2.6% on 2Q10.In 1H11, net income grew 9.1% in relation to 1H10;

EBITDA stood at R$ 109.2 million in 2Q11, down 5.1% on the R$ 115.1 million recorded in 2Q10. In 1H11, EBITDA was R$ 223.2 million , up 3.1% from R$ 216.5 million in 1H10;

EBITDA margin represented 15.1% of net revenue in 2Q11, versus 19.4% in 2Q10 (down 4.3 p.p. ). EBITDA margin represented 16.3% of net revenue in 1H11, versus 18.7% in 1H10 (down 2.4 p.p.);

Net debt fell from R$ 355.5 million in 1H10 to R$ 290.2 million in 1H11 (down 18.4% ), representing a ratio to LTM EBITDA of 0.6, versus 0.8 in 1H10.

Financial and Operating Results 2Q11 2Q10 Variation 1H 11 1H10 Variation

Net Revenue 722.3 594.0 21.6% 1,369.5 1,156.0 18.5%

Cookies & Crackers Sales Volume (thousand tonnes) 106.7 95.8 11.4% 200.1 183.6 9.0%

Pasta Sales Volume (thousand tonnes) 69.2 60.2 15.0% 130.2 120.0 8.5%

Wheat Flour and Bran Sales Volume (thousand tonnes) 151.2 148.6 1.7% 305.7 293.5 4.2%

Net Profit 82.5 80.4 2.6% 164.7 150.9 9.1%

EBITDA 109.2 115.1 -5.1% 223.2 216.5 3.1%

EBITDA Margin 15.1% 19.4% -4,3 p.p 16.3% 18.7% -2,4 p.p

Net Debt 290.2 355.5 -18.4% 290.2 355.5 -18.4%

Net Debt / EBITDA (last 12 months) 0.6 0.8 -25.0% 0.6 0.8 -25.0%

IR Contact

Geraldo Luciano Mattos Júnior Vice-President of Investments and Comptrollership Tel: (85) 4005-5667 E-mail: [email protected]

Álvaro Luiz B. de Paula Investments and Investor Relations Director Tel: (85) 4005-5952 E-mail: [email protected] IR Website: www.mdiasbranco.com.br/ri 2Q11 and 1H11 Results Conference Call Date: July 27, 2011. Time: > Portuguese (BR GAAP) 11:00 am (Brasília) 10:00 am (EST) Dial-in: (55-11) 4688-6361 Replay: (55-11) 4688-6312 Code: M Dias Branco / 1831938 > English (BR GAAP) 11:00 am (Brasília) 10:00 am (EST) Dial-in: +1 888 700-0802 +1 786 924-6977 Replay: (55-11) 4688-6312 Code: M Dias Branco / 4972637 Stock Price: Close on July 25, 2011 MDIA3: R$ 39.45 per share Market Cap: R$ 4,475.6 million

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M. Dias Branco announces its results for the second quarter of 2011 (2Q11), confirming its commitment to the best practices of transparency and disclosure in order to provide shareholders and society with the broadest and most accurate interpretation of its operations and financial data. In the Material Fact dated April 26, 2011, the Company announced the acquisition of NPAP Alimentos S.A. (Pilar), which produces and markets cookies, crackers and pasta under the brand Pilar, through its subsidiary Indústria de Alimentos Bomgosto Ltda (Vitarella). The transaction is part of the Company's strategy to participate actively in the consolidation of the industry, expanding its leadership in the pasta, cookie and cracker segments, while helping boost its competitiveness and presence in the Northeast region. According to data from the marketing research firm A.C. Nielsen for May and June 2011, the Company holds market share of 24.3% in terms of volume in Brazil's cookie, cracker and pasta segment. Note that the Pilar integration process currently underway does not prevent us from continuing to seek out new opportunities for growth through acquisitions. Our consolidated results in the quarter include Pilar’s results as of the publication date of the Material Fact cited above, and the impact of these figures on M. Dias Branco’s results will be highlighted over the course of this report. To begin the presentation of the results, in 2Q11 M. Dias Branco registered total sales volume, net of returns, of approximately 338,800 tonnes, up 6.9% from 2Q10 in the consolidated results, with growth in the cookie and cracker (11.4%) and pasta (15.0%) segments. The result is predominantly due to the higher sales of cookies and crackers and pasta, especially in the Northeast and Southeast regions, as well as the effects from the acquisition of Pilar. Regarding prices, reflecting its efforts to pass through the higher costs of its main raw materials over recent quarters, the Company registered a 13.9% increase in the average consolidated price of its products in relation to 2Q10, which included increases in the average price of wheat flour and bran (24.3%), cookies and crackers (7.8%), pasta (6.2%) and margarine and shortening (13.0%). However, it is important to note that the increases did not rebuild margins, therefore the Company will continue to focus its efforts on this area in the following months, which include price increases implemented as of June 2011. As a result of the volume and price figures presented previously, in 2Q11 M. Dias Branco recorded net revenue of R$ 722.3 million, up 21.6% from 2Q10. Note that the Company remains focused on growing its exports, given its belief that expanding beyond Brazil as well represents the natural course of its growth trajectory. Even if exports initially do not represent a significant share of results, the Company believes they represent a strategic positioning in markets that could add value in the future while also enabling the use of hedging due to the generation of receivables (assets) in foreign currency to offset the liabilities in foreign currency arising from its raw material imports. The Company recorded total operating costs of R$ 457.1 million in 2Q11, up 31.8% from 2Q10, while total operating costs per tonne rose 23.3%. Raw materials was the main component of operating costs, totaling

MANAGEMENT’S COMMENTS

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R$ 329.5 million in 2Q11 (up 38.0% from 2Q10), for an increase of 29.2% in total operating costs per tonne in the same period. Note that, in addition to the Company’s decision to continue gradually passing through its higher costs to prices, the effects from the acquisition of Pilar also helped pressure margins in 2Q11. As the integration process advances, the Company expects the synergies from the acquisition to help rebuild margins at the acquired company. As a result of the difference between revenue and operating costs, gross profit amounted to R$ 265.2 million in 2Q11, growing by 7.3% from 2Q10. Total operating expenses were R$ 171.4 million in 2Q11, up 18.0% from 2Q10, while operating expenses per tonne increased 10.4%, primarily due to the higher selling expenses, which were mainly driven by the higher sales volume and marketing expenses in the comparison period, mainly reflecting the realization of promotional campaigns in 2Q11. In view of the factors explained above, EBITDA was R$ 109.2 million in 2Q11, down 5.1% from 2Q10. Net income came to R$ 82.5 million in the quarter, increasing by 2.6% from the same quarter a year ago. Following a period of gradual and constant reduction in its debt, the Company opted to finance its imported inputs to enable it to meet the needs arising from the Pilar acquisition and the payment of interest on equity. As a result, M. Dias Branco’s net debt stood at R$ 290.2 million at the close of 2Q11, up from R$ 196.4 million in 1Q11, although 18.4% lower than the R$ 355.5 million in 2Q10. Regarding its investments to support organic growth, the Company continues to expand its capacity to meet both the stronger demand for its products and the increased need for raw materials for internal consumption (vertical integration), making investments of R$ 59 million in the first six months of 2011, which corresponded to 4.3% of net revenue in the period. Management remains focused on the need to boost sales and reduce the ratio of costs and expenses, aware of its commitment to maximize value for shareholders and meet the challenge to transform its past results into goals to be surpassed.

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The company's business activities are supported by important inputs in the production matrix, such as wheat grain and vegetable oil, as well as wheat flour and fats acquired from third parties for processing at the units located in the states of Pernambuco, São Paulo and Rio Grande do Sul. The prices of these inputs vary in accordance with the dynamics of supply and demand in commodity markets.

However, it is important to note that the Company’s business model features a series of management instruments and market operations that enable it to ensure low levels of variation in gross margin over time despite the significant and successive variations in the prices of its principal raw materials.

Some of these instruments are fundamental for this, such as the strength of the M. Dias Branco brands, its distribution model, its strategy of adopting a vertical integration, the management of the passthrough of input costs to its product prices and its extensive product portfolio.

Information is presented below on the scenario of our main raw materials, as well as the trajectory of the average acquisition price of these inputs practiced by the Company in relation to the average price practiced by the industry.

WHEAT

Wheat prices reached a monthly average of USD 349 in 2Q11, up 50.6% from USD 232 in 2Q10. In 1H11, wheat price increased 49.8% to average USD 341, from USD 228 in 1H10. However, excluding the variation in March 2011, when the average monthly price totaled USD 345 per tonne (FOB), the average price remained virtually flat in 2Q11, with a slight variation of 1.2%, showing a slowdown in the upward trend in prices.

As of the end of June 2011, wheat prices began a downward trajectory, primarily due to the following factors: a) improved weather conditions in Europe, which alleviated concerns regarding production; b) increased harvesting of wheat during the winter in the U.S. (63%), in line with the average recorded in the last 10 years, and the quality of the U.S. spring wheat crop (73% classified good or excellent); c) record wheat production in India (86 million tonnes), which could make exports feasible after four years of bans; and d) approval of wheat exports from Russia, with Egypt, the world’s largest wheat importer, making the first purchase of around 180,000 tonnes.

In 1H11, the Company maintained its average purchase price below the market price, which represented average savings in the period of 8.8%.

COMMODITY MARKETS

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*Source: www.safras.com.br

VEGETABLE OILS

Following the price hikes in January 2011, soy and palm oil began to decrease in February 2011, mainly due to the stabilized weather conditions in Malaysia (which contributed to the palm crop) and in South America (which contributed to the soy crop). In June 2011, average soybean oil prices stood at R$ 2,584 (FOB) per tonne. Despite the price hike in May, palm oil prices dropped in June, driven by the expectations of an increase in world inventories, reaching USD 1,239 (FOB) per tonne in June.

The drop in soybean oil prices since February is primarily due to the excellent soybean crop in South America, which increased world soybean stocks and impacted prices of the commodity due to supply and demand dynamics.

Regarding palm oil, the expected increase in production in Indonesia, Malaysia and Thailand since May 2011 is leading to estimates of higher world stocks and consequently lower prices.

On the other hand, the continuity of oil prices at the current level of above USD 95/barrel supports the use of vegetable oils for the production of biofuels, which could impact the continued downward trend in prices.

Given the expected increase in soybean oil production in South America and palm oil production, especially in Indonesia and Malaysia, and considering that weather conditions do not impact supply and the continuity of current oil prices, we do not expect oil price hikes in the following quarter. As in the case of wheat, the Company maintains its objective of keeping its average vegetable oil purchase price below the market price, obtaining savings of 7.6% in soybean oil and 0.6% in palm oil during 1H11.

226240

229 228

272

300 292 289 291

314

343 345 346 351 350

215 212 209 200 206

217

238 249

265

285 292

324 320 319 327

150

175

200

225

250

275

300

325

350

Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11

US$

MONTH

WHEATAcquisition Average Price M. Dias Branco X Market P rice

US$ / TON2010 and 2011

Market* MDias

226240

229 228

272

300 292 289 291

314

343 345 346 351 350

215 212 209 200 206

217

238 249

265

285 292

324 320 319 327

150

175

200

225

250

275

300

325

350

Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11

US$

MONTH

WHEATAcquisition Average Price M. Dias Branco X Market P rice

US$ / TON2010 and 2011

Market* MDias

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*Source: www.safras.com.br *Source : Braincorp

The Company's operating structure comprises M. Dias Branco S.A. Indústria e Comércio de Alimentos, which is headquartered in the state of Ceará, and the subsidiaries Adria Alimentos do Brasil Ltda., Indústria de Alimentos Bomgosto Ltda. (Vitarella) and NPAP Alimentos S.A. (Pilar). At the close of 2Q11, the parent company and its subsidiaries Adria, Vitarella and Pilar had 24 distribution centers and 12 production units, whose production, sales and logistics operations are coordinated using a centralized and integrated model. The production units are located in the states of Ceará (3 units), Rio Grande do Norte (1), Bahia (1), Paraíba (1), Pernambuco (2), São Paulo (3) and Rio Grande do Sul (1). The Company's production process is integrated and vertically integrated, allowing for a substantial part of its two main raw materials (wheat flour and vegetable shortening) used to make pastas and cookies and crackers to be produced internally. In 1H10, 67.4% of the wheat flour and 58.5% of the vegetable shortening used were manufactured internally. It is important to note that our vertical integration increased in relation to 1H10. In that period, the Company produced internally 65.4% of all wheat flour and 55.0% of all vegetable shortening it consumed. Note also that the Company continues seeking to increase its vertical integration and that the results presented do not yet include all the synergies to be captured at the subsidiaries Vitarella and Pilar. Our total production capacity increased by 7.4% in the six-month period, reflecting the acquisition of Pilar, the expansion of production capacity at the margarine and shortening unit located in the state of Ceará, the acquisition of new cookie and cracker production lines at the units in Salvador, Fortaleza and Jaboatão, and the new instant pasta production line at the Salvador unit. Capacity utilization stood at 76.7% in 2Q11, up 1.4 p.p. from 75.3% in 2Q10. In 1H11, capacity utilization stood at 75.1%, up 0.6 p.p. from the prior-year period.

OPERATING HIGHLIGHTS

2,013 2,009 1,961 1,903 1,968

2,168

2,016

2,231 2,293

2,425 2,523

2,692 2,754 2,792 2,708

2,632 2,597 2,584

1,837 1,876 1,816 1,792 1,736 1,722 1,725 1,755 1,889

1,983 2,011

2,331

2,551 2,566 2,510 2,447

2,376 2,392

1,400

1,800

2,200

2,600

3,000

Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11

R$

MONTH

SOYBEAN OILAcquisition Average Price M. Dias Branco X Market P rice

R$ / TON2010 and 2011

Market* MDias

Jun-11

858 903 930

943

915

902

9821,064 1,075

1,1551,166

1,3681,469 1,441

1,3421.311

1.355

1.239

745 755 844

1,129

893

1,019

949 949 949 957 1,029

1,127 1,202

1,355

1,364 1.396 1.396 1.396

550

850

1.150

1.450

Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11

US$

MONTH

PALMA OILAcquisition Average Price M. Dias Branco X Market P rice

R$ / TON2010 and 2011

Market* MDias

,

,

Jun-11

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Regarding its sales structure, the Company maintained its strong performance among small retailers, with 79.7% of total sales in 1H11 resulting from a combination of direct sales and indirect sales via wholesalers and distributors. Sales to our largest customer accounted for a mere 5.9% of net revenue in 1H11, confirming our highly disperse customer base.

(*) Direct service

GROSS REVENUE

Consolidated gross revenue was R$ 854.3 million in 2Q11, up 21.6% from 2Q10, reflecting the higher sales volume of cookies and crackers and pasta, which was due to organic growth and the acquisition of Pilar (the latter representing an increase of 3.7%), as well as the price increases in all segments, which accounted for an increase of 13.2%.

2Q11 2Q10 2Q11 2Q10 2Q11 2Q10 2Q11 2Q10 2Q11 2Q10

Total Production 106.7 94.3 73.3 60.1 246.8 232.6 21.3 18.5 448.1 405.5

Total Production Capacity 132.6 120.5 103.8 95.6 302.8 302.8 45.0 19.5 584.2 538.4

Capacity Usage 80.5% 78.3% 70.6% 62.9% 81.5% 76.8% 47.3% 94.9% 76.7% 75.3%

Effective Production / Production Capacity *

Cookies and Crackers

PastaWheat Flour and

Bran

Margarine and Vegetable Shortening

Total

2Q11 and 1H11 RESULTS

1H11 1H10 1H11 1H10 1H11 1H10 1H11 1H10 1H11 1H10


Total Production Capacity 259.1 241.0 202.1 191.2 605.6 605.6 90.0 39.0 1,156.8 1,076.8

Capacity Usage 78.2% 77.9% 67.0% 65.2% 80.9% 74.8% 45.1% 93.3% 75.1% 74.5%

* Thousand tonnes

TotalEffective Production / Production Capacity *



Bran

Margarine and Vegetable

Shortening

1H11 1H10 1H11 1H10 1H11 1H10 1H11 1H10 1H11 1H10


Total Production Capacity 259.1 241.0 202.1 191.2 605.6 605.6 90.0 39.0 1,156.8 1,076.8

Capacity Usage 78.2% 77.9% 67.0% 65.2% 80.9% 74.8% 45.1% 93.3% 75.1% 74.5%

* Thousand tonnes

TotalEffective Production / Production Capacity *



Bran

Margarine and Vegetable

Shortening

Client Mix 2Q11 2Q10 Variation 1H11 1H10 VariationSmall Retail * 35.9% 36.8% -0.9 p.p 36.2% 37.1% -0.9 p.p

Wholesale/ Distributers 43.4% 43.9% -0.5 p.p 43.5% 43.8% -0.3 p.p

Main Chains 16.9% 15.4% 1.5 p.p 16.7% 15.2% 1.5 p.p

Industry 3.4% 3.7% -0.3 p.p 3.2% 3.7% -0.5 p.p

Other 0.4% 0.2% 0.2 p.p 0.4% 0.2% 0.2 p.p

TOTAL 100.0% 100.0% 100.0% 100.0%

Client Mix 2Q11 2Q10 Variation 1H11 1H10 VariationSmall Retail * 35.9% 36.8% -0.9 p.p 36.2% 37.1% -0.9 p.p

Wholesale/ Distributers 43.4% 43.9% -0.5 p.p 43.5% 43.8% -0.3 p.p

Main Chains 16.9% 15.4% 1.5 p.p 16.7% 15.2% 1.5 p.p

Industry 3.4% 3.7% -0.3 p.p 3.2% 3.7% -0.5 p.p

Other 0.4% 0.2% 0.2 p.p 0.4% 0.2% 0.2 p.p

TOTAL 100.0% 100.0% 100.0% 100.0%

Sequence Accumulated Individual Accumulated Individual A ccumulated

Major Client 1 52.9 6.2% 6.2% 95.0 5.9% 5.9%

49 Subsequent 50 236.3 27.8% 34.0% 440.9 27.4% 33.3%

50 Subsequent 100 75.3 8.9% 42.9% 145.0 9.0% 42.3%

900 Subsequent 1,000 236.7 27.8% 70.7% 443.9 27.6% 69.9%

Other Clients All clients 249.0 29.3% 100.0% 485.3 30.1% 100.0%

TOTAL 850.2 1,610.1

Major Clients Sales 2Q11 (R$ million)

Participation on Net Revenue excluding Disconts Sales Sales 1H11

(R$ million)

Participation on Net Revenue excluding Disconts Sales

Sequence Accumulated Individual Accumulated Individual A ccumulated

Major Client 1 52.9 6.2% 6.2% 95.0 5.9% 5.9%

49 Subsequent 50 236.3 27.8% 34.0% 440.9 27.4% 33.3%

50 Subsequent 100 75.3 8.9% 42.9% 145.0 9.0% 42.3%

900 Subsequent 1,000 236.7 27.8% 70.7% 443.9 27.6% 69.9%

Other Clients All clients 249.0 29.3% 100.0% 485.3 30.1% 100.0%

TOTAL 850.2 1,610.1

Major Clients Sales 2Q11 (R$ million)

Participation on Net Revenue excluding Disconts Sales Sales 1H11

(R$ million)

Participation on Net Revenue excluding Disconts Sales

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In 1H11, gross revenue was R$ 1,618.0 million , up 18.4% from R$ 1,366.9 million in the same period a year ago, basically due to the same factors that impacted the second quarter. Pilar’s sales represented 1.9% of sales growth in the six-month period in comparison with the same period last year. Exports accounted for R$ 2.9 million in 2Q11, compared with R$ 1.2 million in 2Q10, and for R$ 4.4 million in 1H10, versus R$ 3.2 million in 1H10.

Note that excluding the effects from the acquisition of Pilar, the company recorded organic growth in sales volume of 8.3% in the cookie and cracker segment and 7.5% in the pasta segment in 2Q11 in relation to 2Q10, and of 7.3% and 4.5% in 1H11 in comparison with 1H10, respectively.

NET REVENUE Net revenue came to R$ 722.3 million and R$ 1,369.5 million in 2Q11 and 1H11, respectively, up 21.6% from 2Q10 and 18.5% from 1H10, chiefly due to the price increases (13.9% in 2Q11 and 11.8% in 1H11) and the Pilar acquisition. Excluding the effects from the acquisition, net revenue grew 17.9% in 2Q11 and 16.6% in 1H11.

Segment Net

RevenueWeight Average

PriceNet


PriceNet


PriceCookies and Crackers 398.4 106.7 3.73 331.4 95.8 3.46 20.2% 11.4% 7.8%

Pasta 154.8 69.2 2.24 127.2 60.2 2.11 21.7% 15.0% 6.2%

Wheat Flour anda Bran 139.0 151.2 0.92 110.0 148.6 0.74 26.4% 1.7% 24.3%

Margarine and Vegetable Shortening 27.7 10.3 2.69 23.8 10.0 2.38 16.4% 3.0% 13.0%

Other 2.4 1.4 1.71 1.6 2.4 0.67 - - -TOTAL 722.3 338.8 2.13 594.0 317.0 1.87 21.6% 6.9% 13.9%

* Net Revenue in R$ million, Weight excluding returned sales in thousand tonnes and Net Average Price in R$/Kg.

2Q11 2Q10 Variation

Segment NetRevenue

Weight AveragePrice

NetRevenue

Weight AveragePrice

NetRevenue

Weight AveragePrice

Cookies and Crackers 398.4 106.7 3.73 331.4 95.8 3.46 20.2% 11.4% 7.8%

Pasta 154.8 69.2 2.24 127.2 60.2 2.11 21.7% 15.0% 6.2%



Other 2.4 1.4 1.71 1.6 2.4 0.67 - - -TOTAL 722.3 338.8 2.13 594.0 317.0 1.87 21.6% 6.9% 13.9%


2Q11 2Q10 Variation

Segment Gross


PriceGross


PriceGross



Pasta 189.1 71.1 2.66 154.5 61.3 2.52 22.4% 16.0% 5.6%



Other 3.0 1.4 2.14 1.5 2.4 0.63 - - -TOTAL 854.3 342.6 2.49 702.3 319.7 2.2 21.6% 7.2% 13.2%

*Gross Revenue in R$ million, Weight in thousand tonnes and Average Price in R$/Kg.

2Q11 2Q10 Variation

Segment

Gross Revenue

WeightAverage

PriceGross

RevenueWeight

AveragePrice

Gross Revenue

WeightAverage


Pasta 356.5 133.0 2.68 308.8 122.3 2.52 15.4% 8.7% 6.3%



Other 4.6 3.5 1.31 3.3 5.3 0.62 - - -TOTAL 1,618.0 665.6 2.43 1,366.9 627.3 2.18 18.4% 6.1% 11.5%

*Gross Revenue in R$ million, Weight in thousand tonnes and Average Price in R$/Kg.

Variation1H11 1H10

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Note: Sundry items represented 0.4% and 0.3% of net operating revenue in 2Q11 and 1H11, respectively.

COOKIES AND CRACKERS

Net revenue from cookies and crackers totaled R$ 398.4 million in 2Q11, for growth of 20.2% from 2Q10, basically due to the increase in sales volume to 106,700 tonnes in 2Q11, from 95,800 tonnes in 2Q10 (up 11.4%), and the increase in the average net price of 7.8% in the period. In addition to the effects from the acquisition of Pilar, sales volume growth was mainly led by products from the brands Vitarella, Richester and Fortaleza, and by the states of Ceará, Pernambuco, São Paulo, Bahia and Rio de Janeiro. Excluding the effects from the acquisition, net revenue in the cookie and cracker segment was R$ 387.0 million in 2Q11 and R$ 734.9 million in 1H11, representing growth of 16.8% and 15.7%, respectively, from the same periods in the prior year. The average net price of this product line increased by 7.8%, from R$ 3.46/kg in 2Q10 and 1H10 to R$ 3.73/kg in 2Q11 and 1H11, reflecting the need to rebuild margins due to the higher average price of wheat, our main raw material.

55.2% 55.8% 54.5% 54.9%

21.4% 21.4% 21.2% 22.1%

19.2% 18.5% 20.2% 18.7%

3.8% 4.0% 3.8% 4.0%

2Q11 2Q10 1H11 1H10

Net Revenue Breakdown


Wheat Flour and Bran

Pasta

Cookies and Crackers55.2% 55.8% 54.5% 54.9%

21.4% 21.4% 21.2% 22.1%

19.2% 18.5% 20.2% 18.7%

3.8% 4.0% 3.8% 4.0%

2Q11 2Q10 1H11 1H10

Net Revenue Breakdown


Wheat Flour and Bran

Pasta


70.4%

17.4%

6.8%5.4%

Sales by Region - 1H11(% Gross Revenue excluding Discounts)

Northeast Southeast South Other

Segment Net


PriceNet


PriceNet



Pasta 290.6 130.2 2.23 255.3 120.0 2.13 13.8% 8.5% 4.7%



Other 4.0 3.5 1.14 3.4 5.3 0.64 - - -

TOTAL 1369.5 659.2 2.08 1156.0 621.7 1.86 18.5% 6.0% 11.8%


1H11 1H10 Variation

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In 1H11, net revenue from cookies and crackers was R$ 746.3 million , up 17.5% from 1H10, reflecting the 9.0% increase in sales volume , due to the same factors presented for the quarterly results.

PASTA

Net revenue from the pasta segment totaled R$ 154.8 million in 2Q11, up 21.7% from R$ 127.2 million in 2Q10, reflecting the 15.0% upturn in sales volume, which increased from 60,200 tonnes in 2Q10 to 69,200 tonnes in 2Q11, and the higher price due to the hikes in raw material prices. As a result, the average price of this product line increased 6.2%, from R$ 2.11/kg in 2Q10 to R$ 2.24/kg in 2Q11. Note that, in addition to the acquisition of Pilar, the increased trade marketing actions, the incentive programs for the sales teams and the logistics actions to improve the distribution of sales over the course of the month contributed to the higher sales volume, as observed especially in the brands Vitarella, Fortaleza and Adria, as well as in the states of São Paulo, Pernambuco and Rio Grande do Norte. Excluding the effects from the Pilar acquisition, net revenue in the pasta segment was R$ 145.6 million in 2Q11 and R$ 281.4 million in 1H11, representing growth of 14.5% and 10.2%, respectively, from the same periods in the prior year. In 1H11, net revenue from the pasta segment was R$ 290.6 million , up 13.8% from 1H10, due to the 8.5% growth in sales volume, which came to 130,200 tonnes, and the 4.7% increase in the average net price of this line, as noted in the comments for the second quarter.

WHEAT FLOUR AND BRAN Net revenue from wheat flour and bran totaled R$ 139.0 million in 2Q11, up 26.4% from 2Q10, reflecting the 24.3% increase in the average net price , from R$ 0.74/Kg in 2Q10 to R$ 0.92/Kg in 2Q11, which is explained by the recovery in margins to offset the increase in the average price of wheat, the main raw material of this line. In 1H11, net revenue from wheat flour and bran was R$ 276.2 million , up 28.0% from 1H10, primarily reflecting the 21.6% increase in the average net price of this line, which was due to the price increases in the Company’s products implemented to rebuild its margins in view of the increase in the average wheat price, and to the 4.2% growth in sales volume, from 293,500 tonnes in 1H10 to 305,700 tonnes in 1H11.

MARGARINE AND VEGETABLE SHORTENING Net revenue from margarine and vegetable shortening increased 16.4% to R$ 27.7 million in 2Q11, from R$ 23.8 million in 2Q10, as a result of the 13.0% increase in the average net price to R$ 2.69/kg in 2Q11, from R$ 2.38/kg in 2Q10, with the aim of rebuilding margins in view of the higher average vegetable oil price. In 1H11, net revenue from margarine and vegetable shortening increased 12.7% to R$ 52.4 million , reflecting the 10.4% increase in the average price of this product line due to the same factors explained for the second-quarter results. Note that sales volume in this line grew by 3.0% in 2Q11 and 2.1% in 1H11.

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OPERATING COSTS AND EXPENSES Operating costs and expenses totaled R$ 628.5 million in 2Q11, up 27.7% from R$ 492.2 million in 2Q10. In 1H11, operating costs and expenses totaled R$ 1,176.8 million , up 21.9% from R$ 965.0 million in 1H10. Excluding the effects from the Pilar acquisition, operating costs and expenses were R$ 605.4 million in 2Q11 and R$ 1,153.7 million in 1H11, representing growth of 23.0% and 19.6%, respectively, from the same periods in the prior year. The following tables present the main items that led to this result. Cost of Goods Sold

Sales volume net of returns increased by 6.9% in 2Q11, while Operating Costs increased by 31.8% (63.3% of net revenue in 2Q11 and 58.4% in 2Q10) in absolute terms. These variations were basically due to the following factors:

The 30.6% increase in the average wheat price resulting from the higher prices practiced in the acquisition market in 2Q11 than in 2Q10, as explained in the topic on commodity markets;

The 43.6% increase in the average vegetable oil price due to the price hikes practiced in the market for the acquisition of soybean and palm oil in 2Q11 in comparison with 2Q10, despite the reduction in the prices of these commodities as of mid-1Q11, as commented previously in the Commodity Markets section of this release;

The higher labor costs, reflecting the pay raises given under collective bargaining agreements and hiring of staff for the new production lines;

Operating Costs(R$ million) 2Q11

% Net Rev.

2Q10% Net Rev.

1H11% Net Rev.

1H10% Net Rev.

Raw material 329.5 45.6% 238.7 40.2% 38.0% 5.4 p.p 617.6 45.1% 470.4 40.7% 31.3% 4.4 p.p

Wheat 168.7 23.4% 113.3 19.1% 48.9% 4.3 p.p 322.9 23.6% 225.1 19.5% 43.4% 4.1 p.p

Vegetable Oil 38.3 5.3% 24.4 4.1% 57.0% 1.2 p.p 72.0 5.3% 45.5 3.9% 58.2% 1.4 p.p

Sugar 24.7 3.4% 18.0 3.0% 37.2% 0.4 p.p 47.7 3.5% 37.4 3.2% 27.5% 0.3 p.p

Third Party Flour 38.2 5.3% 32.9 5.5% 16.1% -0.2 p.p 67.7 4.9% 68.5 5.9% -1.2% -1 p.p

Third Party Vegetable Shortening 20.1 2.8% 17.6 3.0% 14.2% -0.2 p.p 35.7 2.6% 34.0 2.9% 5.0% -0.3 p.p

Other 39.5 5.5% 32.5 5.5% 21.5% 0 p.p 71.6 5.2% 59.9 5.2% 19.5% 0 p.p

Packages 51.0 7.1% 40.5 6.8% 25.9% 0.3 p.p 94.6 6.9% 78.3 6.8% 20.8% 0.1 p.p

Labor 55.5 7.7% 45.9 7.7% 20.9% 0 p.p 103.0 7.5% 84.0 7.3% 22.6% 0.2 p.p

Indirect costs 38.8 5.4% 31.6 5.3% 22.8% 0.1 p.p 71.1 5.2% 60.6 5.2% 17.3% 0 p.p

Depreciation and amortization 12.3 1.7% 10.2 1.7% 20.6% 0 p.p 24.1 1.8% 19.3 1.7% 24.9% 0.1 p.p

Other 2.5 0.3% 0.5 0.1% 400.0% 0.2 p.p 3.3 0.2% 2.4 0.2% 37.5% 0 p.p

Tax incentives (ICMS) -32.5 -4.5% -20.5 -3.5% 58.5% -1 p.p -58.5 -4.3% -40.3 -3.5% 45.2% -0.8 p.p

TOTAL 457.1 63.3% 346.9 58.4% 31.8% 4.9 p.p 855.2 62.4% 674. 7 58.4% 26.8% 4 p.p

VariationVariation

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The increase in depreciation, mainly due to the acquisition of machines and equipment to expand the Company's production capacity;

The higher investment subsidies in states where our production units supported by state development programs are located, which was mainly due to the higher ICMS tax owed on the acquisition of wheat (which is the base for calculating the subsidy), the higher investment subsidies under the Pernambuco State Development Program (PRODEPE) granted to the Vitarella unit, and the acquisition of Pilar, whose subsidy is identical to that of PRODEPE.

In 1H11, operating costs increased 26.8% to R$ 855.2 million, from R$ 674.7 million in 1H10, reflecting the same factors that impacted the second quarter.

Operating Expenses

In 2Q11, selling expenses grew 19.5% from 2Q10, reflecting the higher promotional expenses, which was due to the increases in trade marketing and advertising actions; freight costs, reflecting the growth in sales volume; contract costs, due to the agreements signed between the Company and distributors; and personnel expenses, due to the collective bargaining agreements. Excluding the effects from the Pilar acquisition, selling expenses increased by 16.7%.

In the six-month period, selling expenses amounted to R$ 242.8 million , up 10.0% from 1H10, primarily driven by the same factors presented for the second quarter, though with lower variation, due to the provision to mitigate amounts receivable from clients, which decreased in 1H11 compared with 1H10. Excluding the effects from the Pilar acquisition, selling expenses increased by 8.6% in 1H11 from 1H10.

Administrative expenses increased by 16.7% in comparison with 2Q10 and 19.1% in relation to 1H10, chiefly due to the increase of R$ 1.2 million in expenses at Pilar in 2Q11 and 1H11; the pay increases under collective bargaining agreements of R$ 1.9 million in 2Q11 and R$ 3.5 million in 1H11; and the business consulting services of R$ 0.9 million in 2Q11 and R$ 2.4 million in 1H11. Excluding the effects from the Pilar acquisition, administrative expenses increased 12.0% in 2Q11 and 16.7% in 1H11 in comparison with the same periods in the previous year.

Management fees increased from R$ 3.7 million in 1H10 to R$ 4.0 million in 1H11, due to the pay increases for the Company’s executive officers.

Operating Expenses(R$ million) 2Q11

% Net Rev.

2Q10% Net Rev.

1H11% Net Rev.

1H10% Net Rev.

Selling 132.8 18.4% 111.1 18.7% 19.5% -0.3 p.p 242.8 17.7% 220.7 19.0% 10.0% -1.3 p.p

Administrative 30.1 4.2% 25.8 4.3% 16.7% -0.1 p.p 59.3 4.3% 49.8 4.3% 19.1% 0 p.p

Management fees 2.0 0.3% 2.0 0.3% 0.0% 0 p.p 4.0 0.3% 3.7 0.3% 8.1% 0 p.p

Taxes 3.8 0.5% 3.6 0.6% 5.6% -0.1 p.p 7.5 0.5% 7.6 0.7% -1.3% -0.2 p.p

Depreciation and amortization 3.1 0.4% 3.1 0.5% 0.0% -0.1 p.p 6.4 0.5% 6.2 0.5% 3.2% 0 p.p

Other operating expenses/(revenues) -0.4 -0.1% -0.3 -0.1% 33.3% 0 p.p 1.6 0.1% 2.3 0.2% -30.4% -0.1 p.p

TOTAL 171.4 23.7% 145.3 24.5% 18.0% -0.8 p.p 321.6 23.5% 290 .3 25.1% 10.8% -1.6 p.p

Variation Variation

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Other operating revenue came to R$ 0.4 million in 2Q11 , basically explained by the sale of fixed assets, damages, waste and scrap and to the COFINS tax debits of R$ 1.4 million declared under the REFIS 4 tax amnesty program. In 1H11, other operating expenses came to R$ 1.6 million , due primarily to the extraordinary payment of ICMS tax of R$ 3.8 million in the state of Paraíba for the period from May 2005 to August 2007, and to the COFINS tax debits of R$ 1.4 million declared under the REFIS 4 tax amnesty program. Offsetting these expenses, in 1H11 the Company recorded other operating revenue of R$ 3.6 million from the sale of fixed assets, damages, waste and scrap.

FINANCIAL RESULT

To provide a better understanding of the variations in financial results, we report and analyze financial income and expenses excluding the effects from exchange rate variation in the period, as the following table shows: The 57.9% and 58.6% growth in financial income in relation to 2Q10 and 1H10, respectively, reflect the increased investments in 2011, which resulted in higher returns in the period. Financial expenses fell 17.7% in relation to 1H10, due essentially to the 9.9% drop in the Company’s debt. Financial expenses did not decrease in 2Q11, due to the payment of interest on the COFINS tax credits of R$ 1.2 million announced in the tax installment repayment program (REFIS 4) at the subsidiary Adria and the prepayment of agreements signed with a financial institution and Pilar of R$ 2.1 million. Gains from foreign exchange variation increased from R$ 0.3 million in 2Q10 to R$ 4.8 million in 2Q11, and from R$ 5.6 million in 1H10 to R$ 7.5 million in 1H11. This increase reflects the appreciation in the Brazilian real against the U.S. dollar, which generated a positive impact for the Company.

Financial Income(R$ million) 2Q11 2Q10 Variation 1H11 1H10 Variation

Financial Revenue 11.9 8.5 40.0% 20.0 23.3 -14.2%

Financial Expenses -12.4 -15.8 -21.5% -20.4 -33.8 -39.6%

TOTAL -0.5 -7.3 -93.2% -0.4 -10.5 -96.2%

Financial Income(R$ million) 2Q11 2Q10 Variation 1H11 1H10 Variation

Financial Revenue 6.0 3.8 57.9% 11.1 7.0 58.6%

Financial Expenses -11.3 -11.4 -0.9% -19.0 -23.1 -17.7%

Exchange Variation 4.8 0.3 1500.0% 7.5 5.6 33.9%

TOTAL -0.5 -7.3 -93.2% -0.4 -10.5 -96.2%

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INCOME AND SOCIAL CONTRIBUTION TAXES

The 23.1% decrease in income and social contribution taxes in 2Q11 compared with 2Q10 was due to the smaller tax base and the constitution of tax credits on the negative social contribution tax base for the settlement fines and interest on debt under the REFIS tax amnesty program.

Tax incentives on income tax (IRPJ) fell 16.7% in 1H11 from 1H10, basically due to the smaller tax base and the end of the effective period for this subsidy at the production unit located in the state of Rio Grande do Norte. Note that the Company is formulating a new claim to confirm the modernization investments at this unit, which will be submitted to the Northeast Development Superintendence (SUDENE) at an opportune time. If approved by the end of this year, the effects from the calculation of the incentives will be retroactive to January 1, 2011.

Note that goodwill amortization was prohibited as of January 2009. However, this procedure did not change the tax effects from the goodwill to be amortized under the Transitional Tax Regime (RTT) provided for by Law 11,941/09. In this context, as required by CPC 32 – Income Taxes (CVM Resolution 599/09), the Company is constituting deferred tax obligations from this amortization under income and social tax expenses only for fiscal purposes, even though it does not believe in the possibility of the future realization of this obligation. Since January 2010, the Company has been recording under expenses with income tax and social contribution tax on net income (CSLL) an amount equivalent to R$ 3.6 million on a quarterly basis.

NET INCOME

The Company’s net income grew by 2.6%, from R$ 80.4 million in 2Q10 to R$ 82.5 million in 2Q11, and was R$ 164.7 million in 1H11, up 9.1% from R$ 150.9 million in 1H10, as a result of factors presented over the course of this release. Excluding the effects from the acquisition of Pilar, the Company’s net income was R$ 83.9 million in 2Q11 and R$ 166.1 million in 1H11.

Income and Social Contribution Taxes(R$ million)

2Q11 2Q10 Variation 1H11 1H10 Variation

Income and Social Contribution Taxes 19.3 25.1 -23.1% 42.6 47.6 -10.5%

Income Tax Incentive -8.5 -11.0 -22.7% -15.0 -18.0 -16.7%

TOTAL 10.8 14.1 -23.4% 27.6 29.6 -6.8%

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EBITDA

EBITDA – NET INCOME: EBITDA – GROSS REVENUE: Excluding the effects from the acquisition of Pilar, the Company’s EBITDA was R$ 108.2 million in 2Q11 and R$ 222.2 million in 1H11.

Capitalization (R$ million) 6/30/2011 6/30/2010 Variation

Short Term 149.4 260.3 -42.6%

Long Term 268.3 203.3 32.0%

Total Indebtedness 417.7 463.6 -9.9%(-) Cash * -127.5 -108.1 17.9%

(=) Net Debt 290.2 355.5 -18.4%(+) Shareholders Equity 1,891.4 1,613.3 17.2%Capitalization 2,309.1 2,076.9 11.2%

* Includes Cash and Cash equivalents.

Financial Indicator 6/30/2011 6/30/2010 VariationNet Debt / Adjusted EBITDA (last 12 months) 0.6 0.8 -25.0%

Net Debt / Shareholders Equity 15.3% 22.0% -6.7 p.pIndebtedness / Total Assets 16.0% 19.9% -3.9 p.p

DEBT, CAPITALIZATION AND CASH

EBITDA CONCILIATION (R$ million) 2Q11 2Q10 Variation 1H11 1H10 VariationNet Profit 82.5 80.4 2.6% 164.7 150.9 9.1%Income Tax and Social Contribution 19.3 25.1 -23.1% 42.6 47.6 -10.5%


Financial Revenues -11.9 -8.5 40.0% -20.0 -23.3 -14.2%

Financial Expenses 12.4 15.8 -21.5% 20.4 33.8 -39.6%

Depreciation and Amortization over cost of goods 12.3 10.2 20.6% 24.1 19.3 24.9%

Depreciation and Amortization Adm/Com Expenses 3.1 3.1 0.0% 6.4 6.2 3.2%

EBITDA 109.2 115.1 -5.1% 223.2 216.5 3.1%

EBITDA Margin 15.1% 19.4% -4.3 p.p 16.3% 18.7% -2.4 p.p







EBITDA 109.2 115.1 -5.1% 223.2 216.5 3.1%








EBITDA 109.2 115.1 -5.1% 223.2 216.5 3.1%








EBITDA 109.2 115.1 -5.1% 223.2 216.5 3.1%


EBITDA CONCILIATION (R$ million) 2Q11 2Q10 Variation 1H11 1H10 VariationGross Revenue 854.3 702.3 21.6% 1,618.0 1,366.9 18.4%Sales taxes and deductions on sales -132.0 -108.3 21.9% -248.5 -210.9 17.8%

Cost of goods sold -457.1 -346.9 31.8% -855.2 -674.7 26.8%


Operating Expenses -171.4 -145.3 18.0% -321.6 -290.3 10.8%


EBITDA 109.2 115.1 -5.1% 223.2 216.5 3.1%







EBITDA 109.2 115.1 -5.1% 223.2 216.5 3.1%







EBITDA 109.2 115.1 -5.1% 223.2 216.5 3.1%


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After a period of gradual and constant reduction in its debt, the Company opted to contract financing lines to purchase imported input and ended 2Q11 with debt of R$ 417.7 million , down 9.9% from R$ 463.6 million in 2Q10. The Company’s degree of financial leverage, as represented by the net debt / equity ratio , was 15.3% in 2Q11, versus 22.0% in 2Q10.

* Interest Rate on June 30, 2011, except when another date is specified.

The Company opts not to hedge the price of its main inputs, due to its storage capacity and market monitoring and purchase planning actions. It has liabilities indexed to foreign currency (mostly U.S. dollar), primarily due to its wheat and oil imports, as shown below. Due to circumstantial cash needs arising from the payment commitments assumed in April 2011, especially the payment of interest on equity, the Company opted to prioritize the acquisition of raw materials (wheat) through financing lines, which in effect led to a temporary mismatch that will be reversed over the course of 2011.

Description 6/30/2011 6/30/2010

Assets (USD million) 0.1 0.0

Liabilities (USD million) 69.4 39.2

BALANCE -69.3 -39.2

Consolidated Debt (R$ million) Index Interest (year) 6/30/2011 Variation 6/30/2010 Variation AH% Variation

Domestic Currency: 309.3 74.0% 392.9 84.7% -21.3%FINAME TJLP 2.01% (1.73% in 06/30/10) 12.4 3.0% 23.6 5.1% -47.5%

BNDES - PSI R$ 4.69% (4.5% in 06/30/10) 68.9 16.5% 29.7 6.4% 132.0%

(PROVIN-MOINHO) Financing of state taxes TJLP - 16.6 4.0% 17.1 3.7% -2.9%

(DESENVOLVE) Financing of state taxes TJLP - 3.2 0.8% 3.0 0.6% 6.7%

BNB-FNE - Financings 10.0% 84.6 20.3% 80.9 17.5% 4.6%

BNDES - MODERMAQ TJLP 1.03% (1.11% in 06/30/10) 2.0 0.5% 3.4 0.7% -41.2%

BNB - FNE - Working Capital Financings 10.0% 0.3 0.1% 2.1 0.5% -85.7%

BNDES AUTOMATIC - Financing TJLP 2.49% 0.7 0.2% 0.9 0.2% -22.2%

BNDES AUTOMATIC - Financing Variable rate 2.49% 0.2 0.0% 0.4 0.1% -50.0%

Investment of assigment of Vitarella's shares CDI - 100% - 95.0 22.7% 231.8 50.0% -59.0%

Investment of assigment of Pilar's shares CDI - 100% - 25.4 6.1% 0.0 0.0% 0.0%

Foreign Currency: 108.4 26.0% 70.7 15.3% 53.3%Imports financing USD 1.53% (4.5% in 06/30/10) 104.4 25.0% 66.0 14.2% 58.2%

Machinery CHF 1.50% (Libor* + 2.11% in 06/30/10) 4.0 1.1% 4.7 1.0% -14.9%

TOTAL 417.7 100.0% 463.6 100.0% -9.9%

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Investments totaled R$ 26.4 million in 2Q11, compared with R$ 35.4 million in 2Q10. The main items forming capital expenditure in 2Q11 were: (i) the acquisition, assembly and improvements of the cookie and cracker lines at the production units located in the states of Ceará, Bahia, Pernambuco and São Paulo; (ii) the expansion of the wheat flour storage and mixture system and installation of new pasta lines at the production unit located in the state of Rio Grande do Sul; (iii) the construction of more adequate facilities to accompany the expansion at the production unit in the state of Pernambuco; (iv) the expansion of crushing capacity at the unit located in the state of Bahia; (v) the expansion of bagging capacity at the unit located in the state of Paraíba; (vi) the implementation of the deodorized fat storage system at the margarine and shortening unit located in the state of Ceará; and (vii) the installation of a new flour mixing line at the production unit located in the state of Rio Grande do Norte. In 1H11, investments amounted to R$ 59.0 million , basically reflecting the items mentioned above and the acquisition of machinery to replace old lines at the unit located in São Caetano do Sul. In addition to the investments explained above, another highlight was the acquisition of Pilar on April 26, 2011, for R$ 69.9 million, of which R$ 21.0 million was retained as guarantee of payment by the sellers of the required contingencies.

As mentioned previously, the Company acquired the control of Pilar in April, and therefore the results announced herein already include these effects.

The company opted not to prepare pro-forma financial information to show the impacts from the acquisition of Pilar on its performance as if it had occurred on January 1, 2010, due to the different accounting practices adopted by the Company and because it believes that the investment represents a small share of the consolidated figures.

However, to enable an analysis of the Company’s organic growth during the periods analyzed, we are presenting the income statement without the effects from this acquisition.

INVESTMENTS

Statement of results excluding the effects from the acquisi tion of Pilar

Investiments (R$ Million) 2Q11 2Q10 Variation 1H11 1H10 V ariation

Buildings 1.0 1.3 -23.1% 1.8 2.8 -35.7%

Machinery and equipment 20.3 23.5 -13.6% 45.7 63.9 -28.5%

Construction in progress 2.5 5.0 -50.0% 6.6 6.6 0.0%

Vehicles 0.6 1.5 -60.0% 0.8 1.6 -50.0%

IT Equipament 0.4 2.3 -82.6% 0.8 2.3 -65.2%

Furniture and Fixtures 0.6 0.3 100.0% 1.1 0.6 83.3%

Others 1.0 1.5 -33.3% 2.2 2.6 -15.4%Total 26.4 35.4 -25.4% 59.0 80.4 -26.6%


Buildings 1.0 1.3 -23.1% 1.8 2.8 -35.7%



Vehicles 0.6 1.5 -60.0% 0.8 1.6 -50.0%

IT Equipament 0.4 2.3 -82.6% 0.8 2.3 -65.2%


Others 1.0 1.5 -33.3% 2.2 2.6 -15.4%Total 26.4 35.4 -25.4% 59.0 80.4 -26.6%


Buildings 1.0 1.3 -23.1% 1.8 2.8 -35.7%



Vehicles 0.6 1.5 -60.0% 0.8 1.6 -50.0%

IT Equipament 0.4 2.3 -82.6% 0.8 2.3 -65.2%


Others 1.0 1.5 -33.3% 2.2 2.6 -15.4%Total 26.4 35.4 -25.4% 59.0 80.4 -26.6%


Buildings 1.0 1.3 -23.1% 1.8 2.8 -35.7%



Vehicles 0.6 1.5 -60.0% 0.8 1.6 -50.0%

IT Equipament 0.4 2.3 -82.6% 0.8 2.3 -65.2%


Others 1.0 1.5 -33.3% 2.2 2.6 -15.4%Total 26.4 35.4 -25.4% 59.0 80.4 -26.6%

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The highlights from the effects of this acquisition on the Company’s results are presented in this release when deemed relevant.

The performance of the Company’s stock from its IPO on October 18, 2006 to July 25, 2011 is shown in the chart below. On July 25, 2011, MDIA3 stock was quoted at R$ 39.45, representing market capitalization of R$ 4.48 billion . Average daily trading volume in this period was R$ 2.7 million . On July 25, 2011, the Ibovespa index stood at 59,970 points and the Special Corporate Governance Index (IGC) stood at 6,825 points.

CAPITAL MARKETS

INCOME STATEMENT

(R$ million) REVENUES 828.5 702.3 18.0% 1,592.2 1,366.9 16.5%

Sales of goods 828.5 702.3 18.0% 1,592.2 1,366.9 16.5%

DEDUCTIONS -127.9 -108.3 18.1% -244.4 -210.9 15.9%

Sales taxes and deductions on sales -127.9 -108.3 18.1% -244.4 -210.9 15.9%

NET REVENUES 700.6 594.0 17.9% 1,347.8 1,156.0 16.6%

COST OF GOODS SOLD -440.8 -346.9 27.1% -838.9 -674.7 24.3%

GROSS PROFIT 259.8 247.1 5.1% 508.9 481.3 5.7%

OPERATING EXPENSES -167.0 -145.3 14.9% -317.2 -290.3 9.3%

Selling expenses -129.7 -111.1 16.7% -239.7 -220.7 8.6%

Administrative and general expenses -28.9 -25.8 12.0% -58.1 -49.8 16.7%

Management fees -2.0 -2.0 0.0% -4.0 -3.7 8.1%

Taxes -3.4 -3.6 -5.6% -7.1 -7.6 -6.6%

Depreciation and Amortization -3.4 -3.1 8.9% -6.7 -6.2 7.7%

Other operating expenses 0.4 0.3 28.1% -1.6 -2.3 -29.8%

OPERATING INCOME - before Financial Results 92.8 101. 8 -8.8% 191.7 191.0 0.4%

Financial income 11.8 8.5 38.8% 19.9 23.3 -14.6%

Financial expenses -10.0 -15.8 -36.7% -18.0 -33.8 -46.7%

INCOME - before income and social contribution taxe s 94.6 94.5 0.1% 193.6 180.5 7.3%

Income and social contribution taxes -10.7 -14.1 -24.1% -27.5 -29.6 -7.1%

NET INCOME 83.9 80.4 4.4% 166.1 150.9 10.1%

2Q11 2Q10 Variation 1H11 1H10 VariationINCOME STATEMENT

(R$ million) REVENUES 828.5 702.3 18.0% 1,592.2 1,366.9 16.5%

Sales of goods 828.5 702.3 18.0% 1,592.2 1,366.9 16.5%

DEDUCTIONS -127.9 -108.3 18.1% -244.4 -210.9 15.9%

Sales taxes and deductions on sales -127.9 -108.3 18.1% -244.4 -210.9 15.9%

NET REVENUES 700.6 594.0 17.9% 1,347.8 1,156.0 16.6%


GROSS PROFIT 259.8 247.1 5.1% 508.9 481.3 5.7%

OPERATING EXPENSES -167.0 -145.3 14.9% -317.2 -290.3 9.3%

Selling expenses -129.7 -111.1 16.7% -239.7 -220.7 8.6%


Management fees -2.0 -2.0 0.0% -4.0 -3.7 8.1%

Taxes -3.4 -3.6 -5.6% -7.1 -7.6 -6.6%



OPERATING INCOME - before Financial Results 92.8 101. 8 -8.8% 191.7 191.0 0.4%

Financial income 11.8 8.5 38.8% 19.9 23.3 -14.6%


INCOME - before income and social contribution taxe s 94.6 94.5 0.1% 193.6 180.5 7.3%

Income and social contribution taxes -10.7 -14.1 -24.1% -27.5 -29.6 -7.1%

NET INCOME 83.9 80.4 4.4% 166.1 150.9 10.1%

2Q11 2Q10 Variation 1H11 1H10 Variation

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Note the increase in the average daily trading volume of MDIA3 after the Block Trade transaction in November 2010. Considering the five-month period prior to and the seven-month period following November 2010, average daily trading volume increased 302%, from R$ 1.1 million to R$ 4.5 million, as the following chart shows.

Note: Average daily trading volume in November 2010 was R$ 23.2 million.

1.8

0.9

1.5

0.7 0.6

4.0

3.3

4.1

5.0

4.1

4.9

5.9

Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11

MDIA3 - ADTV (R$ million)

-50%

0%

50%

100%

150%

200%

,000500,000

1000,0001500,0002000,0002500,0003000,0003500,0004000,0004500,0005000,0005500,0006000,0006500,0007000,0007500,000

Oct -06 Apr -07 Oct -07 Apr -08 Oct -08 Apr -09 Oct -09 Apr -10 Oct -10 Apr -11

10/18/2006 a 07/25/2011

MDIA3 X IBOV X IGC

Average Daily Volume: MDIA3

MDIA3 X IBOV X IGC

Profitability (%)

Jul-11

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The company’s Board of Directors meeting held on April 29, 2011, elected the members of the Audit Committee for a one-year term, in accordance with its bylaws. Three members were elected to form the Committee. The company’s Board of Director meeting held on April 26, 2011, approved the acquisition through the subsidiary Indústria de Alimentos Bomgosto Ltda. of the total shares representing the capital stock of NPAP Alimentos S.A., which operates in the cookie and cracker and pasta segment, with head offices and legal venue in the city of Recife, Pernambuco state, which manufactures products under the brand "Pilar".

Date: July 27, 2011 Portuguese: 11:00 a.m. (Brasília) 10:00 a.m. (EST)

Live webcast: http://webcast.mz-ir.com/publico.aspx?codplataforma=2909

English: 11:00 a.m. (Brasília) 10:00 a.m. (EST) Live webcast: http://webcast.mz-ir.com/publico.aspx?codplataforma=2910

MAIN ADMINISTRATIVE EVENTS

2Q11 and 1H11 RESULTS CONFERENCE CALL

Portuguese

Phone: +55 (11) 4688-6361

Code: M Dias Branco

Replay: +55 (11) 4688-6312

Code: 1831938

English

Phone: +1 888 700 0802

Code: +1 786 924 6977

M Dias Branco

Replay: +55 (11) 4688-6312

Code: 4972637

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About M Dias Branco M. Dias Branco S.A., operating for over half a century, is the leader in the production of cookies and crackers and pasta, with activities also in the wheat crushing, oil refining, vegetable shortening, margarine and vegetable cream segments. Its brands are a hallmark of tradition and quality, forming a bond of confidence and respect with the consumer. Disclaimer The statements contained in this document related to business prospects, projected operating and financial results and the growth outlook of M Dias Branco are merely forecasts and, as such, are based exclusively on the expectations of management as to the future of the businesses. These expectations depend, substantially, on changes in market conditions, on the performance of the Brazilian economy, of the sector and of the international markets and, therefore, are subject to changes without prior notice.

INCOME STATEMENT(R$ million) REVENUES 854.3 702.3 21.6% 1,618.0 1,366.9 18.4%Sales of goods 854.3 702.3 21.6% 1,618.0 1,366.9 18.4%

DEDUCTIONS -132.0 -108.3 21.9% -248.5 -210.9 17.8%Sales taxes and deductions on sales -132.0 -108.3 21.9% -248.5 -210.9 17.8%

NET REVENUES 722.3 594.0 21.6% 1,369.5 1,156.0 18.5%


GROSS PROFIT 265.2 247.1 7.3% 514.3 481.3 6.9%

OPERATING EXPENSES -171.4 -145.3 18.0% -321.6 -290.3 10.8%Selling expenses -132.8 -111.1 19.5% -242.8 -220.7 10.0%


Management fees -2.0 -2.0 0.0% -4.0 -3.7 8.1%

Taxes -3.8 -3.6 5.6% -7.5 -7.6 -1.3%



OPERATING INCOME - before Financial Results 93.8 101. 8 -7.9% 192.7 191.0 0.9%Financial income 11.9 8.5 40.0% 20.0 23.3 -14.2%


INCOME - before income and social contribution taxe s 93.3 94.5 -1.3% 192.3 180.5 6.5%Income and social contribution taxes -10.8 -14.1 -23.4% -27.6 -29.6 -6.8%

NET INCOME 82.5 80.4 2.6% 164.7 150.9 9.1%

2Q11 1H10 Variation 2Q10 Variation 1H11INCOME STATEMENT(R$ million) REVENUES 854.3 702.3 21.6% 1,618.0 1,366.9 18.4%Sales of goods 854.3 702.3 21.6% 1,618.0 1,366.9 18.4%

DEDUCTIONS -132.0 -108.3 21.9% -248.5 -210.9 17.8%Sales taxes and deductions on sales -132.0 -108.3 21.9% -248.5 -210.9 17.8%

NET REVENUES 722.3 594.0 21.6% 1,369.5 1,156.0 18.5%


GROSS PROFIT 265.2 247.1 7.3% 514.3 481.3 6.9%

OPERATING EXPENSES -171.4 -145.3 18.0% -321.6 -290.3 10.8%Selling expenses -132.8 -111.1 19.5% -242.8 -220.7 10.0%


Management fees -2.0 -2.0 0.0% -4.0 -3.7 8.1%

Taxes -3.8 -3.6 5.6% -7.5 -7.6 -1.3%



OPERATING INCOME - before Financial Results 93.8 101. 8 -7.9% 192.7 191.0 0.9%Financial income 11.9 8.5 40.0% 20.0 23.3 -14.2%


INCOME - before income and social contribution taxe s 93.3 94.5 -1.3% 192.3 180.5 6.5%Income and social contribution taxes -10.8 -14.1 -23.4% -27.6 -29.6 -6.8%

NET INCOME 82.5 80.4 2.6% 164.7 150.9 9.1%

2Q11 1H10 Variation 2Q10 Variation 1H11

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BALANCE SHEET

(R$ million) 6/30/2011 6/30/2010 VariationASSETSCURRENT 808.0 707.8 14.2%Funds 116.3 101.7 14.4%

Trade accounts receivable 321.1 249.2 28.9%

Inventories 292.3 279.1 4.7%

Taxes recoverable 53.3 48.8 9.2%

Advances to suppliers 9.0 5.1 76.5%

Related Parties 0.8 0.7 14.3%

Other accounts receivable 12.7 21.0 -39.5%

Prepaid expenses 2.5 2.2 13.6%

NONCURRENT 1,809.1 1,617.8 11.8%Short-term investments 11.2 6.4 75.0%

Judicial deposits 33.7 27.9 20.8%


Deferred income and social contribution taxes 24.9 24.8 0.4%

Tax incentives / other accounts receivable 6.3 5.2 21.2%

Investments 0.1 0.1 -

Property, plant and equipments 1043.7 950.0 9.9%

Intangible 614.1 557.4 10.2%

TOTAL ASSETS 2,617.1 2,325.6 12.5%

LIABILITIES AND SHAREHOLDERS EQUITYCURRENT 356.5 453.0 -21.3%Suppliers 74.0 63.6 16.4%

Financing with financial institutions 145.5 112.9 28.9%

Direct financing 3.9 147.4 -97.4%

Labor and social charges payable 72.0 63.1 14.1%

Taxes and contribution payable 39.7 36.5 8.8%

Advances 2.6 6.4 -59.4%

Other accounts payable 13.6 10.4 30.8%

Government Grant 5.2 12.7 -59.1%

NONCURRENT LIABILITIES 369.2 259.3 42.4%Financing with financial institutions 151.8 118.9 27.7%

Direct financing 116.5 84.4 38.0%



Accounts payable 3.4 2.4 41.7%

Provision for contingencies 49.4 41.8 18.2%

SHAREHOLDERS EQUITY 1,891.4 1,613.3 17.2%Capital 777.8 745.0 4.4%

Capital reserves 122.0 123.4 -1.1%

Equity valuation adjustments - 0.1 -100.0%

Profit reserves 833.2 608.2 37.0%

(-) Treasury shares - -0.7 -100.0%

Accrued profit 158.4 137.3 15.4%

TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 2,617.1 2,3 25.6 12.5%

M. DIAS (CONSOLIDATED)BALANCE SHEET



Inventories 292.3 279.1 4.7%













Intangible 614.1 557.4 10.2%

TOTAL ASSETS 2,617.1 2,325.6 12.5%






Advances 2.6 6.4 -59.4%



















Inventories 292.3 279.1 4.7%













Intangible 614.1 557.4 10.2%

TOTAL ASSETS 2,617.1 2,325.6 12.5%






Advances 2.6 6.4 -59.4%
















M. DIAS (CONSOLIDATED) BALANCE SHEET



Inventories 292.3 279.1 4.7%













Intangible 614.1 557.4 10.2%

TOTAL ASSETS 2,617.1 2,325.6 12.5%






Advances 2.6 6.4 -59.4%



















Inventories 292.3 279.1 4.7%













Intangible 614.1 557.4 10.2%

TOTAL ASSETS 2,617.1 2,325.6 12.5%






Advances 2.6 6.4 -59.4%



















Inventories 292.3 279.1 4.7%













Intangible 614.1 557.4 10.2%

TOTAL ASSETS 2,617.1 2,325.6 12.5%






Advances 2.6 6.4 -59.4%
















M. DIAS (CONSOLIDATED) BALANCE SHEET



Inventories 292.3 279.1 4.7%













Intangible 614.1 557.4 10.2%

TOTAL ASSETS 2,617.1 2,325.6 12.5%






Advances 2.6 6.4 -59.4%



















Inventories 292.3 279.1 4.7%













Intangible 614.1 557.4 10.2%

TOTAL ASSETS 2,617.1 2,325.6 12.5%






Advances 2.6 6.4 -59.4%



















Inventories 292.3 279.1 4.7%













Intangible 614.1 557.4 10.2%

TOTAL ASSETS 2,617.1 2,325.6 12.5%






Advances 2.6 6.4 -59.4%
















M. DIAS (CONSOLIDATED)

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CASH FLOW (R$ million)CASH FLOW FROM OPERATING ACTIVITIES

Net Income before Income Tax and Social Contributio n 93.3 94.5 -1.3% 192.3 180.5 6.5%Adjustments to Reconcile net incomeand cash from operating activities:Depreciation and amortization 15.4 13.4 14.9% 30.5 25.6 19.1%

Sale cost of permanet assets 0.3 0.0 0.0% 0.4 0.1 300.0%

Loans update 2.3 9.7 -76.3% 5.3 17.1 -69.0%

Interests and dividends received 0.0 0.0 0.0% 0.0 1.6 -100.0%Interests and exchange variation -4.0 -4.7 -14.9% -7.0 -20.6 -66.0%Net income and social contribution taxes -7.8 -7.6 2.6% -16.7 -18.1 -7.7%Liberation of reinvestments incentives 0.0 1.6 -100.0% 0.0 1.6 -100.0%

Assets and Liabilities Variations(Increase) decrease in clients -16.6 -5.9 181.4% -41.0 -10.1 305.9%

(Increase) decrease in inventories 30.6 5.4 466.7% -21.5 -9.7 121.6%

(Increase) decrease in recoverable -6.9 -5.5 25.5% 0.6 -8.5 -107.1%

(Increase) decrease in accounts receivable 9.5 1.9 400.0% 23.3 -11.9 -295.8%

(Increase) decrease in suppliers 5.1 -15.6 -132.7% 4.1 8.4 -51.2%

(Increase) decrease in taxes and contributions payable -7.5 -8.3 -9.6% -8.5 2.0 -525.0%

Increase (decrease) in Government grants -7.0 3.5 -300.0% -3.6 5.3 -167.9%

(Increase) decrease in other accounts payable / provisions 8.1 9.9 -18.2% 4.2 7.8 -46.2%

Net Cash generated in operating activities 114.8 92.3 24.4% 162.4 171.1 -5.1%

CASH FLOW FROM INVESTMENTS ACTIVITIES

Acquisition of property, plant and equipment -18.9 -32.6 -42.0% -48.1 -71.1 -32.3%

Cash flow from subsidiary acquisition -44.8 0.0 0.0% -44.8 -58.8 -23.8%

Acquisition of treasury shares 0.0 0.0 0.0% -0.5 0.0 0.0%

Sales of treasury shares 0.0 0.4 -100.0% 0.3 2.7 -88.9%

Sales of marketable securities 0.0 0.0 0.0% 0.0 63.7 -100.0%

Net Cash used in Investment Activities -63.7 -32.2 97.8% -93.1 -63.5 46.6%

CASH FLOW FROM FINANCING ACTIVITIES

Dividends Payments -87.5 -76.3 14.7% -87.5 -76.3 14.7%New Loans 35.9 38.1 -5.8% 163.1 83.2 96.0%

Loan Principal payments -72.3 -46.2 56.5% -82.9 -71.6 15.8%

Net Cash used in Financing Activities -123.9 -84.4 46.8% -7.3 -64.7 -88.7%

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -73 .2 -24.2 202.5% 61.9 42.9 44.3%At begin of period 189.5 125.9 50.5% 54.4 58.8 -7.5%

At end of period 116.3 101.7 14.4% 116.3 101.7 14.4%

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -73 .2 -24.2 202.5% 61.9 42.9 44.3%

1H11 1H10 VariationVariation 2Q11 2Q10CASH FLOW (R$ million)CASH FLOW FROM OPERATING ACTIVITIES



Loans update 2.3 9.7 -76.3% 5.3 17.1 -69.0%























At end of period 116.3 101.7 14.4% 116.3 101.7 14.4%


1H11 1H10 VariationVariation 2Q11 2Q10 CASH FLOW (R$ million)CASH FLOW FROM OPERATING ACTIVITIES



Loans update 2.3 9.7 -76.3% 5.3 17.1 -69.0%























At end of period 116.3 101.7 14.4% 116.3 101.7 14.4%


1H11 1H10 VariationVariation 2Q11 2Q10CASH FLOW (R$ million)CASH FLOW FROM OPERATING ACTIVITIES



Loans update 2.3 9.7 -76.3% 5.3 17.1 -69.0%























At end of period 116.3 101.7 14.4% 116.3 101.7 14.4%


1H11 1H10 VariationVariation 2Q11 2Q10

2q11 and 1h11 earnings release period highlights...2q11 and 1h11 earnings release eusébio, ceará,...

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