3q09 conference call presentation

7/30/2019 3Q09 Conference Call Presentation

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JBS S.A.

3rd Quarter 2009 Results

JBS S.A.

November 16th, 2009In God we trust, nature we respect

JBS S.A.


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Jeremiah OCallaghan

Investor Relations Director

Joesley Mendona Batista

CEO

1

Presenters


3/27

Our Values

The Foundation Of Our Culture

Planning

Determination

Discipline

Availability

Openness

Simplicity

2


4/27

Market Overview

3Q09 Highlights

Questions and Answers

3

Our Strategy

Final Considerations

Agenda


5/27

2005/2006AdequateFinancial

Structure

2007/2008Global Production

Platform

2009/2010Global Sales &

Distribution

Platform

2011/2012Value AddedProducts &

Branding

- Access to raw materialsupply globally.

- Leader in countries withsurplus production.

- Scale.- Leader in exports globally.- Access to all meat

markets.- Exchange of best

practices.- Efficiency cost gains.- Cost reduction

opportunities.- Margin improvements.

- Integrate the sales anddistribution platform toserve efficiently, local andexternal markets, smallretailers, food processors,restaurants, and othercustomers globally.

- Sales force distributed overthe globe.

- Efficiency on selling the bestproduct, to the best market,with the best price.

- Cost reduction on sales andtransport.

- Margin improvements.

- High liquidity level.- Debt equalized to cash

generation.- Strong cash position.- Access to international

capital markets to financegrowth.

- Development of long termfinancing plan.

- Use of export platform togrow.

- Hands-on working capitalmanagement.

South America

North America

Australia

European Union

Asia

Russia

Africa

Middle East

SouthAmerica

NorthAmerica

Australia

EuropeanUnion

Debt forWorkingCapital

Equityto

FinanceGrowth

Cooked Products

Case ReadyProducts

Global Brands

MarketingInvestments

Minced Products

Fresh Products

Cured Products

Ready to Eat

Products

- High technologyinvestments to producevalue added products.

- Increase value addedproducts portfolio.

- Customized products toeach market.

- Convenience to consumersday to day.

- Brand and Qualityrecognition and leadership.

- Marketing investments to

be present in consumerminds.- Margin improvements. 4

Our Strategy


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Branding

ValueAdded

Products

Sales &Distribution

Platform

Production Platform

Foundation

Financial

Structure

Experienced

Management

Cost Reduction,Productivity,

ProcessOptimization

Risk

Management

ConsolidatedAverageEBITDAMargin

4%

8%

12%

50%

5

Our Strategy


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Market Overview

6

Agenda


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Global Market

Largest beef importers

Others

38%

South Korea

4% EU-27

8%

Japan

10%Mexico

5%

United States19%

Russia

16%

Source: USDA 2009

Largest beef consumers

Others

31%

Mexico

4%

China

10%

Brazil

13%

Argentina

5%

United States

22%

EU-27

15%

Largest beef exporters

Others

25%

New Zealand

7%

India

8%United States

11%

Canada

7%

Brazil23%

Australia

19%

Largest beef producers

Others

31%

India

4%

China

10%

EU-27

14%

Argentina

5%

United States

21%

Brazil

15%

7


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Source: UN (United Nations) and USDA*UN Estimates**Beef consumption trend considering CAGR of 2.0% (from 1960 to 2008)

World Population Growth and Beef Consumption(1960 2050)

0

2000

4000

6000

8000

10000

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010* 2015* 2020* 2025* 2030* 2035* 2040* 2045* 2050*

Population(millio

n)

0

20

40

60

80

100

120

140

Consumption(million

tons)

Population - Developed countries Population - Developing countries Beef Consumption**

Population growth, a beefconsumption driver.

8


10/27

Per capita food consumption (Kg / Year)

9

02 0

4 06 0

8 01 0 0

1 2 01 4 0

1 6 01 8 0

Cereals Roots and

Tubers

Beans, Peas

and Lentils

Sugar O ils Crops

and its

products

Meat Milk and its

products

1969/ 711979/ 811989/ 911999/ 0120302050

Source: FAO


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US Beef and Veal Exports (Million Pounds)

10

Source: USDA ERS


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US Pork Exports (Million Pounds)

11

3,279

2,650

2,650

4,667

3,1422,995

2,667

2,181

1,7171,6121,560

1,2871,278

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Japan China Hong Kong Mexico Russia Canada South Korea Australia Others Until August

Source: USDA ERS


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US Poultry Exports (Million Pounds)

12

4,621

7,109

6,070

5,3675,333

4,9975,0134,942

5,738

5,1384,980

4,6214,683

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Russia China (Mainland) Iraq Mexico Canada Cuba Other Chicken Others Until August

Source: USDA ERS


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Brazilian beef exports (USD billion)

Source Secex

13


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3Q09 Highlights

14

Agenda


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4

15

Net profit of R$151.5 million in the quarter.

7.8% net revenue growth, from R$7,771.5 million in 3Q08 to R$8,379.9 million in3Q09.

Operating cash flow of R$317.8 million in the quarter.

Despite relevant productivity gains in international operations, the impact of theglobal crisis in important consumer markets resulted in margin contractions.

Efficient working capital management.

Announcement of the association with Bertin S.A. and acquisition of Pilgrims PrideCorp.

Commitment to respect society and the environment supported by Non-governmentalorganizations.

Highlights


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Revenue Distribution by Business Units 3Q09 Revenue Distribution by Market 3Q09

Source: JBS Source: JBS

16

JBS Consolidated Net Revenue Distribution

Italy5% Argentina

2%

Brazil17%

Beef USA50%

Pork USA12%

Australia14%

Domestic Market76%

Exports24%


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Exports Distribution 3Q09

Source: JBS17

JBS Consolidated Exports Distribution

Japan

19%

E.U.

12%Russia

9%USA

8%Mexico

7%

Canada

6%

Africa and

Middle East

6%

Hong Kong

5%

South Korea

4%

China

4%

Indonesia

3%

Others

18%

JBS Exports 3Q09US$ 1,127.4 Million


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Net Revenue (R$ million) EBITDA and EBITDA Margin (R$ million)

18Source: JBS

EBITDA Margin (%)

-9.5%

-24.0%

24.0%

-44.0%

-3.8%

-20.4%

-0.1%

81.6%

JBS Consolidated Results


20/27

Net Revenue (Million)

0.6%

Source: JBS

Source: Banco Central

19

Currency effects in the net revenue

R$ US$Exchange rate

average of the period:2Q09 2.07483Q09 1.8677

-9.5%

Excluding the exchange rate effect inthe period, net revenue increased 0.6%over 2Q09.


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20

Net Sales(US$ billion)

EBITDA (US$ mi)EBITDA margin

JBS USA (Beef)Including Australia

Net Sales(US$ million)

EBITDA (US$ mi)EBITDA margin

JBS USA (Pork)

Net Sales( million)

EBITDA ( mi)

EBITDA margin

INALCA JBS

Net Sales(R$ billion)

EBITDA (R$ mi)EBITDA margin

JBS MERCOSUL

Source JBS

EBITDA Margin (%)

2.2.

2.

2. 2.8

3Q08 4Q08 1Q09 2Q09 3Q09

59.760.4104.1

104.6 108.4

5.2%

2.2% 2.2%3.6% 3.8%

3Q08 4Q08 1Q09 2Q09 3Q09

144162

143144 146

3Q08 4Q08 1Q09 2Q09 3Q09

9.7

6.67.6

8.3

5.6

6.6%

4.6%3.9%

5.15.3%

3Q08 4Q08 1Q09 2Q09 3Q09

1.81.6

1.41.7 1.7

3Q08 4Q08 1Q09 2Q09 3Q09

47.382.6

199,169.4

58,2

4.3%5.6%

2.9%3.7%

4.9%

3Q08 4Q08 1Q09 2Q09 3Q09

Performance by Business Units


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The net debt / EBITDA ratio increased from 2.6x in 2Q09 to 3.3x in 3Q09, reflectingthe EBITDA decline when compared with 3Q08.

The company projects a reduction in leverage levels by the end of the year.

The gross and net debt reduced 5.6% and 2.2%, respectively, over 2Q09.

2.32.0

2.5 2.6

3.3

3Q08 4Q08 1Q09 2Q09 3Q09

Net Debt / EBITDA Pro Forma per Quarter

*

Source: JBS

Net Debt/ EBITDA EBITDA pro-forma* LTM including Smithfield Beef pro-forma.

Gross debt Profile (R$ million)

21

Debt

5,971.86.226.4

5,877.1

1T09 2T09 3T09

Short term Long term

53%

47%

61%

39%

59%

41%


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For the second quarter consecutive, the Company generated positive operating cash flowof more than R$300 million.

22

Operational Cash Flow

CAS H FL OW 3Q09 2Q09 Var.%E B IT 210.3 296.6 -29.1%

taxes -66.1 -90.4 -26.8%NOP L AT 144.1 206.2 -30.1%Depreciation 81.6 87.4 -6.7%

Gross Cash F low 225.8 293.6 -23.1%Working Capital Variation 326.5 316.5 3.2%

CAP E X -234.4 -288.0 -18.6%

OP ER AT ING CAS H FL OW 317.8 322.2 -1.3%


24/27

JBS continues to reduce its working capital needs, which decreased from 37 days in 2Q09 to 33days in 3Q09.

23

Working Capital

Production & Stock

21 diasCLIENT = 33 days

SUPPLYER = 21 days

ProductDelivery

Supplyer

payment

Clients paymentto JBS

WORKING CAPITAL &

INTERESTS

33 days

3 Quarter 2009

Clients orderto JBS

Production & Stock

21 diasCLIENT = 37 days

SUPPLYER = 21 days

ProductDelivery

Supplyerpayment

Clients payment

to JBS

WORKING CAPITAL &INTERESTS

37 days

2 Quarter 2009

Clients orderto JBS


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Signs of economic recovery bring the prospect of better results in coming quarters.

Turnaround of Argentine operations is under way with the change in managementand the implementation of internal restructuring.

JBS maintains its focus on building a distribution platform to add value to its productsand increase its margins.

The undergoing acquisition of Pilgrims Pride and the association with Bertin adds tothe growth potential of the company.

Financial leverage continues to be our focus and we aim to keep it under control.

We are committed to building a sustainable platform respecting our customers andthe environment.

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Final Considerations


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Questions & Answers

IR Contacts:[email protected]

+55 11 3144 4055www.jbs.com.br/ir
mailto:[email protected]:[email protected]


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The forward-looking statements presented herein are subject to risks and uncertainties. Thesestatements are based on the beliefs and assumptions of our management, and on informationcurrently available to us.

Forward-looking statements are not guarantees of performance. They involve risks, uncertaintiesand assumptions because they relate to future events and therefore depend on circumstances thatmay or may not occur. Our future operating results, financial condition, strategies, market share

and values may differ materially from those expressed in or suggested by these forward-lookingstatements. Many of the factors that will determine these results and values are beyond ourability to control or predict.

Forward-looking statements also include information concerning our possible or assumed futureoperating results, as well as statements preceded by, followed by, or including the words''believes,'' ''may,'' ''will,'' ''continues,'' ''expects,' ''anticipates,'' ''intends,'' ''plans,''

''estimates'' or similar expressions.

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DISCLAIMER

3q09 conference call presentation

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