2q14 presentation

8/11/2019 2Q14 Presentation

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2Q14 Results PresentationAugust 15th, 2014


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This release contains forward-looking statements relating to the prospects of the business, estimates for

operating and financial results, and those related to growth prospects of JBS. These are merely projections and,as such, are based exclusively on the expectations of JBSmanagement concerning the future of the businessand its continued access to capital to fund the Companys business plan. Such forward-looking statementsdepend, substantially, on changes in market conditions, government regulations, competitive pressures, theperformance of the Brazilian economy and the industry, among other factors and risks disclosed in JBS fileddisclosure documents and are, therefore, subject to change without prior notice.

Disclaimer


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Summary of 2Q14 Results

Net revenue of R$29.0 billion, an increase of R$7.0 billion, or 32.1% higher than 2Q13.

Gross profit of R$4.25 billion, expansion of R$1.3 billion, or 44.3% higher than 2Q13.

Consolidated EBITDA of R$2.4 billion, an increase of 45.9% over 2Q13. EBITDA margin was 8.4%.

Net income of R$254.3 million, which corresponds to an EPS of R$0.09.

The consolidated 2Q14 exports grew 45% compared 2Q13, reaching US$4.3 billion.

JBS ended 2Q14 with leverage (Net Debt/EBITDA LTM) of 3.15x, compared to 3.26x in 1Q14.


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Businesses Units Highlights 2Q14

JBS Foods recorded net revenue of R$3,084.5 million and EBITDA of R$440.4 million, with an EBITDA margin of 14.3%.

JBS Mercosul posted net revenue of R$6,291.4 million in 2Q14, 15.8% higher than 2Q13 and EBITDA of R$634.3 million, withEBITDA margin of 10.1%.

JBS USA Beef posted net revenue of US$5,331.4 million, 10.9% higher than 2Q13. EBITDA was US$108.6 million, with an

EBITDA margin of 2.0%

Net Revenue of JBS USA Pork totaled US$1,028.3 million, 18.4% higher than 2Q13, and EBITDA of US$113.8 million, with anEBITDA margin of 11.1%.

JBS USA Chicken (PPC) reported net revenue of US$2,186.8 million, stable compared to 2Q13. EBITDA was US$338.6 million,with a margin of 15.5%.


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Recent Events and Exports


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Recent Events

Footprint of Acquired Assets

Tyson de Mxico

Acquisition Price: US$400 mm

3 Vertically integrated processingfacilities

7 Distribution Centers

Tyson do Brasil

Acquisition Price: US$175 mm

3 Integrated Poultry Units

6 Distribution Centers

Cu Azul

Acquisition Price: R$246 mm

2 Integrated Poultry Units

3 Hatcheries

2 Feed mills

3 poultry units in Brazil and 3 in Mexico, in addition to 6distribution centers in Brazil and 7 in Mexico

Acquisition of Macedo (BR), and Del Dia (MEX) brandsTyson is the 3rdlargest poultry producer in Mexico, with ~10%of Market Share

Tyson is the 4thlargest poultry exports in Brazil, responsible for3.2% of exported volume in 2H14Cu Azul has 2 poultry units, including hatcheries, feed milland processing facilities

Distribution network for fresh poultry products in the State ofSo Paulo

Assets Description

Post 2Q14, JBS announced the acquisition of Tyson Foods, Inc. Poultry businesses in Brazil and Mexico

and the assets of Cu Azul in Brazil

These acquisitions are pending regulatory approval.


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JBS Consolidated Exports Breakdown in 2Q14 and 2Q13

Growth of 45% in 2Q14 exportscompared to 2Q13

Note 1. China and Hong Kong

Greater China18%

South America13%

Africa and Middle East12%

Mexico11%

Japan9%

E.U.7%

Russia6%

South Korea4%

Canada3%

Others17%

2Q14US$4,305.1

million

Greater China 27.5%

Mexico 18.0%

Africa and Middle East10.1%

South America 5.9%

Russia 5.5%

E.U. 5.1%

South Korea 4.9%

Canada 4.2%

Japan 3.9%

Taiwan 2.2%

Others 12.7%

2Q13US$2,975.7

million


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CAPEX, Cash Generation

and Debt Profile


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Cash

Generation

CAPEX

Capex and Cash Generation

In 2Q14, total capital expenditure (CAPEX) was R$760.0 million, of which 40% in acquisitions,

expansion and facilities modernization and 60% in maintenance.

In addition, JBS recorded the payment of Massa Leve, which was made through the transfer of

shares held in treasury (R$203.5 million) and part in cash (R$55.1 million), in the statement of cash

flow in neteffect of working capital from acquired companies,which totaled R$266.6 million.

In 2Q14 the Company generated net cash flow from operations of R$147.3 million, due to an

increase in sales prices and an expansion of sales in general, besides the robust expansion of JBS

exports during the quarter.


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JBS S.A.63%

Subsidiaries37%

Debt Profile

USD77%

R$23%

Leverage EBITDA (R$ million)

JBS ended 2Q14 with leverage of 3.15x, compared to 3.26x in 1Q14.

In June 2014, JBS announced the issuance of Bonds in the amount of

US$750.0 million through its wholly-owned subsidiaries JBS USA, LLC

and JBS USA Finance, Inc. with maturity in 2024 and coupon of 5.875%

per annum.

This operation allowed JBS to reduce its financial costs and to extend

its debt profile.

Breakdown by Currency and Costs

Breakdown by Company

Leverage (Net Debt/EBITDA LTM)

11.25% per annum

5.67% per annum

3.28

4.033.70

3.26 3.15

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2Q13 3Q13 4Q13 1Q14 2Q14


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-403

1,952

4,713

1,365

4,723

52

4,749

2,509

5,054

Short term netof cash

2015 2016 2017 2018 2019 2020 2021 After 2021

The Company ended the quarter with R$10,297.7 million

in cash, equivalent to approximately 104% of its short-term debt.

JBS USA has US$1.27 billion fully available under

revolving credit facilities which, if added to the current

cash position, represents 133% of short term debt.

The percentage of short term debt (ST) in relation to total

debt dropped to 28% in 2Q14.

Debt Profile

Short term Long termDebt maturity (R$ million)

28%

29%

29%

35%

35%

72%

71%

71%

65%

65%

2Q14

1Q14

4Q13

3Q13

2Q13


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Business Units


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1

JBS Foods


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1

Europe29%

Asia/Oceania24%

Africa and MiddleEast24%

Americas21%

Others2%

JBS Foods

Footprint 2Q14 Revenue Breakdown

Exports by Region

Main Brands

Products

Overview

Domestic46%

Exports54%

AC

AM

RR

RO

PA

AP

MT

MS

GO

TO

MA

PI

CE

RN

PBPEALSE

BA

MGES

RJSP

PR

RS

SC

Production facilities

% NR JBS S.A.
http://www.seara.com.br/seara/linha/margarinas/


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1

2.9 2.8 3.1

4Q13 1Q14 2Q14

JBS Foods

Net Revenue (R$ billion)

EBITDA (R$ million)

6.7%

EBITDA Margin (%)

11%

24%

40%

8%

18%

Net revenue of R$3,084.5 million in the quarter.

Improvement in sales volumes in both domestic and export markets.

Increase in prices in the domestic market, thanks to brands andcategories repositioning efforts.

Increase of 11.0% in pork export prices.

EBITDA reached R$440.4 million, with an EBITDA margin of 14.3%:

Relevant improvement in yields and productivity gains, in addition tocost reduction in the processing facilities.

Redesign and rationalization of the logistics network, which permittedcost reductions and increase in volume delivered.

Renewed go-to-market strategy, which provided efficiency gains inthe sales channels.

Increase in margins from prepared and convenient products

Increased access to customers abroad through synergies capturedand know-how already existing at JBS Group.

227.3379.8 440.4

7.9%

13.7% 14.3%

-20.0%

-18.0%

-16.0%

-14.0%

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0 .0 %

2 .0 %

4 .0 %

6 .0 %

8 .0 %

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

26.0%

28.0%

0.0

200.0

400.0

600.0

800.0

1000.0

1200.0

1400.0

1600.0

4Q13 1Q14 2Q14


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1

JBS Mercosul


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1

Domestic53%

Exports47%

JBS Mercosul

Beef facilities

Feedlots

Distribution Centers

Hides facilities

Main Brands

New Products in Brazil


Asia/Oceania

36%

Europe9%

South America34%

North and CentralAmericas

3%

Others7%


Overview

Exports by Region

JBS M l% NR JBS S.A.


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1

5.4

6.2 6.35.7

6.3

2Q13 3Q13 4Q13 1Q14 2Q14

JBS Mercosul

Net Revenue (R$ billion)

EBITDA (R$ million)

15.8%

EBITDA Margin (%)

10%

22%

40%

8%

18%

Note 1. Includes JBS Aves

Net revenue of R$6,291.4 million in 2Q14, 15.8% higher than 2Q13:

Compared to 1Q14, net revenue increased 9.9%.

Increase of 21.9% in beef exports.

EBITDA totaled R$634.3 million, with EBITDA margin of 10.1%:

Increase in raw material prices, partially offset by an increase in salesprices.

Operations in Paraguay and Uruguay presented an increase inexports average price, which contributed to the increase in sales in

addition to fixed costs dilution. In Brazil, the Company foresees an increase in sales volume to the

international market and an improvement in sales in the domesticmarket as a result of marketing investments to promote the Friboibrand.

543.5687.5 692.4

596.1 634.3

10.0% 11.1% 11.0% 10.4% 10.1%

-20.0%

-18.0%

-16.0%

-14.0%

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0 .0 %

2 .0 %

4 .0 %

6 .0 %

8 .0 %

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

26.0%

28.0%

0.0

200.0

400.0

600.0

800.0

1000.0

1200.0

1400.0

1600.0

2Q13 3Q13 4Q13 1Q14 2Q14


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1

JBS USA Beef

JBS USA Beef (incl ding A stralia and Canada)


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2

Domestic

72%

Exports28%

JBS USA Beef (including Australia and Canada)

Africa and Middle

East4%

Asia/Oceania68%

Europe2%

South America2%


14%

Others10%

Main Brands


Overview

Exports by Region

Production facilities and DCs

Notae1. Distribution Centers in Australia

JBS USA Beef (including Australia and Canada)% NR JBS S.A.

8%


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2

4.8 4.7 4.8 4.5

5.3

2Q13 3Q13 4Q13 1Q14 2Q14

JBS USA Beef (including Australia and Canada)

Net Revenue (US$ billion)

EBITDA (US$ million)

10.9%

EBITDA Margin (%)

Net revenue of US$5,331.4 million, an increase of 10.9% compared

to 2Q13:

Increase in sales volume in both domestic and export markets.

Increase in prices in domestic market.

Compared with 1Q14, net revenue posted an increase of 17.9%, dueto higher seasonal demand in the period and an increase in salesprices.

EBITDA was US$108.6 million, with an EBITDA margin of 2.0%:

The reduction in beef supply combined with an increased demandcontributed to the increase in beef prices and partially offset theincrease in cattle prices during the period.

Compared with 1Q14, the improved EBITDA margin is due to higherbeef prices and strong demand seasonally.

Export growth supported by strong sales to Asia.

161.7125.3 113.9

-22.5

108.6

3.4% 2.7% 2.4%-0.5%

2.0%

-20.0%

-18.0%

-16.0%

-14.0%

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0 .0 %

2 .0 %

4 .0 %

6 .0 %

8 .0 %

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

26.0%

28.0%

-30.0

70.0

170.0

270.0

370.0

470.0

570.0

670.0

2Q13 3Q13 4Q13 1Q14 2Q14

10%

24%

42%

8%

18%


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2

JBS USA Pork

JBS USA Pork


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2

Domestic

85%

Exports15%

JBS USA Pork

Products

Processing Facilities

Case Ready

Main Brands

Swift Premium

Dry Rubbed Ribs

Swift Premium Dry

Rubbed Loin Filet

Swift Premium

Dry Rubbed Boneless Backrib

Swift Premium

Saddle Pack Boneless

Pork Chops

Swift Premium

Ground Pork

Asia/Oceania59%

Europe1%

South America1%


39%


Overview

Exports by Region

JBS USA Pork% NR JBS S.A.

8%


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2

868.5 903.3 904.9 896.91,028.3

2Q13 3Q13 4Q13 1Q14 2Q14

JBS USA Pork

Net Revenue (US$ million)


18.4%

EBITDA Margin (%)

Net revenue of US$1,028.3 million, an increase of 18.4% compared

to 2Q13:

Increase of 24.3% in sales prices in the domestic market and anincrease of 16.7% in export prices.

Compared with 2Q14, net revenue growth was 14.7%.

EBITDA of US$113.8 million, with an EBITDA margin of 11.1%:

In comparison with 2Q13, EBITDA grew 124.3%.

Hog supply remained tight and, combined with a strong demanddomestically and in the main consumer markets such as Hong Kong,Japan and South Korea, contributed to a better pricing of pork in the

US.

50.7 43.886.3 82.9

113.8

5.8% 4.8%

9.5% 9.2%11.1%

-20.0%

-18.0%

-16.0%

-14.0%

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0 .0 %

2 .0 %

4 .0 %

6 .0 %

8 .0 %

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

26.0%

28.0%

-30.0

20.0

70.0

120.0

170.0

220.0

270.0

320.0

370.0

2Q13 3Q13 4Q13 1Q14 2Q14

10%

24%

40% 18%


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2

JBS USA Chicken

(Pilgrims Pride Corporation)

JBS USA Chicken (Pilgrims Pride Corporation - PPC)


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2


Asia/Oceania11%


80%

Others2%

JBS USA Chicken (Pilgrim s Pride Corporation PPC )

Domestic

80%

Exports9%

Mexico11%

Main Brands Products

Other products: boneless/skinless, wings, breast, whole birds, breaded,marinated, strips, cooked, par-fried, others.


Overview

Exports by Region

Production Facilities

JBS USA Chicken (Pilgrims Pride Corporation - PPC)% NR JBS S.A.

8%


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2

2.2 2.1 2.0 2.0 2.2

2Q13 3Q13 4Q13 1Q14 2Q14

JBS USA Chicken (Pilgrim s Pride Corporation PPC )

Net Revenue (US$ billion)


0.1%

EBITDA Margin (%)

Net revenue of US$2,186.8 million in 2Q14, stable compared to

2Q13: Increase in sales volume, partially offset by a decrease in sales price

both in the US and Mexico, due to a slightly change in sales mix.

Compared with 1Q14, PPC revenue grew by 8.4%, thanks to anincrease in chicken prices in both domestic and export markets.

EBITDA was US$338.6 million, with EBITDA margin of 15.5%:

Reduction of US$89.0 million in feed costs.

Reduction of US$6.4 million in labor costs.

Reduction of US$4.6 million in freight and warehousing costs in the

US. Improvements in costs and sales mix, all rooted on operational

excellence.

265.0226.1 197.2 205.2

338.6

12.1%10.6% 9.6% 10.2%

15.5%

-20.0%

-18.0%

-16.0%

-14.0%

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0 .0 %

2 .0 %

4 .0 %

6 .0 %

8 .0 %

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

26.0%

28.0%

-30.0

70.0

170.0

270.0

370.0

470.0

570.0

670.0

2Q13 3Q13 4Q13 1Q14 2Q14

10%

24%

40% 17%


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Mission

To be the best in what we set out to do, totally focusedonour business, ensuring the best products and

services for our customers, solidity for our suppliers,satisfactory profitabilityfor our shareholders and the

certainty of a better future to all our employees.

2q14 presentation

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