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JBS S.A.
JBS S.A.
JBS S.A.December, 2009
“In God we trust, nature we respect”
JBS S.A.
Our Values
The Foundation Of Our Culture
Planning
Determination
Discipline
Availability
Openness
Simplicity
1
88
The Global Beef Industry
Global Market
Largest beef importers
Others
38%
South Korea
4% EU-27
8%
Japan
10%Mexico
5%
United States
19%
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%
Brazil
23%
Australia
19%
Largest beef producers
Others
31%
India
4%
China
10%
EU-27
14%
Argentina
5%
United States
21%
Brazil
15%
3
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*
Po
pu
lati
on
(m
illi
on
)
0
20
40
60
80
100
120
140
Co
nsu
mp
tio
n (
mil
lio
n t
on
s)
Population - Developed countries Population - Developing countries Beef Consumption**
Population growth, a beef
consumption driver.
4
Per capita food consumption (Kg / Year)
5
0
20
40
60
80
100
120
140
160
180
Cereals Roots and
Tubers
Beans, Peas
and Lentils
Sugar Oils Crops
and its
products
Meat Milk and its
products
1969/ 71
1979/ 81
1989/ 91
1999/ 01
2030
2050
Source: FAO
US Beef and Veal Exports (Million Pounds)
6
Source: USDA ERS
14421349
1,349
1,888
1,433
1,146
697
461
2,5202,449
2,269
2,4672,412
0
500
1,000
1,500
2,000
2,500
3,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Mexico Canada South Korea Japan Vietnam China Hong Kong Netherlands Others Until September
US Pork Exports (Million Pounds)
7
Source: USDA ERS
3,619
3,003
3,003
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 September
US Poultry Exports (Million Pounds)
8
Source: USDA ERS
5,208
7,109
6,070
5,3675,333
4,9975,0134,942
5,738
5,1384,980
5,2085,324
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 September
Brazilian beef exports (USD billion)
Source Secex
9
88
Our Strategy
Our Strategy
2005/2006Adequate Financial Structure
2007/2008Global Production
Platform
2009/2010Global Sales &
Distribution Platform
2011/2012Value Added Products &Branding
- Access to raw material supply globally.
- Leader in countries with surplus 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 and distribution platform to serve efficiently, local and external markets, small retailers, food processors, restaurants, and other customers globally.
- Sales force distributed over the globe.
- Efficiency on selling the best product, to the best market, with the best price.
- Cost reduction on sales and transport.
- Margin improvements.
- High liquidity level.- Debt equalized to cash
generation.- Strong cash position.- Access to international
capital markets to finance growth.
- Development of long term financing plan.
- Use of export platform to grow.
- Hands-on working capital management.
South America
North America
Australia
European Union
Asia
Russia
Africa
Middle East
South America
North America
Australia
European Union
Debt forWorkingCapital
Equity to
FinanceGrowth
Cooked Products
Case ReadyProducts
Global Brands
MarketingInvestments
Minced Products
Fresh Products
Cured Products
Ready to EatProducts
- High technology investments to produce value added products.
- Increase value added products portfolio.
- Customized products to each market.
- Convenience to consumers day to day.
- Brand and Quality recognition and leadership.
- Marketing investments to be present in consumer minds.
- Margin improvements. 11
Our Strategy
Branding
Value Added
Products
Sales & Distribution
Platform
Production Platform
Foundation
Financial
Structure
Experienced
Management
Cost Reduction,Productivity,
Process Optimization
Risk
Management
Consolidated
Average
EBITDA
Margin
4%
8%
12%
50%
12
• JBS’ History has been built through
more than 30 acquisitions in 15 years
with appropriated capital structure and
management
JBS’ History
13
Cáceres
(Frigosol)
Iturama
(Frigosol)
Araputanga
(Frigoara)
Barretos (Anglo)
Pres. Epitácio (Bordon)
Campo Grande (Bordon)
Pedra Preta
(Frigo Marca)
Rosário
(Swift ARG)
San Jose
(Swift ARG)
Inalca
Swift Foods Co.
Maringá (Amambay)
Berazategui
(Rio Platense)
Colonia Caroya
SB Holdings
JV Beef Jerky
Venado
Tuerto
Pontevedra
(CEPA)
Rio Branco
Cacoal 1
Cacoal 2
Porto Velho
Vilhena (Frigovira)
Andradina
(Sadia)
Barra do
Garças
(Sadia)
Tasman
Smithfield
Beef
Five Rivers
R$/US$ end of the year quotation
Bertin Association*
Pilgrim’s Pride*
JBS Hides
5 new units
(1) (2) (3)
Net Sales (in US$ billion)
Companies and assets acquired
Source: JBS(1) Pro Forma JBS S.A. LTM Dec07(2) Pro Forma JBS S.A. LTM Dec08(3) Pro Forma JBS S.A. LTM Jun09 (including 5 new units and hides operation); Pilgrim’s Pride Sep09 (Estimated); Bertin LTM Jun09* Transactions subject to customary conditions for this type of business
0.3 0.4 0.4 0.5 0.5 0.4 0.7 1.2 1.5 1.9
12.7
19.8
30.3
1996 1997 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
JBS’ main units and markets
x =
x
=
Legend
Slaughterhouse (Beef)
Slaughterhouse and Industry
Distribution Center
Vegetable Canning Plant
Beef Canning Plant
Beef Jerky Plant (Beef Snack’s)
Slaughterhouse (Pork)
Slaughterhouse (Lamb)
Beef and Pork Processing Plant
Wet Blue Processing Plant
Headquarters Office
Feed Lot
Package Industry
Inland Container Terminal
Commercial Office
Global Production and Distribution Platform
14
Production Units Employees
28,600 B
48,500 P
4,500 S
8,690 B
15,000 S
73 ,940 B
48 ,500 P
19 ,500 S
Daily Slaugther Capacity
2,019
6,995
24,295
B
B
B
6,700 5,059
JBS Australia
Inalca JBS
Tota l JBS 65 55 ,361
10
8 3,000
JBS Brasil 25 16,993 26,950
JBS Argentina
JBS USA
6
16
Global Production Platform
Additional Distribution Platform
AlgeriaAngola Congo PolandRussia Dem. Rep. of the Congo
(B) Beef; (P) Pork; (S) Smalls;
United Kingdom
Brief Description
15
JBS Consolidated Net Revenue Distribution
Source: JBS
Revenue Distribution by Market 3Q09
16
Italy5% Argentina
2%
Brazil17%
Beef USA50%
Pork USA12%
Australia14%
Sustainability Policies
JBS is aware of its responsibilities as the largest beef Company in the world and all the impacts its operations
generates in every region. The Company has a appropriate sustainability program in each of its units including:
Environmental Policy
Procedures Adopted
Informative Policy
Community Relationship and Environmental Investments
Sustainability
Sustainability Principles
• Ecological feasability
• Ecological correctness
• Social concern
• Cultural acceptance
Priorities
• Sustainable use of materials
• Partnership with organizations equally
concerned
• Health and Quality of Life
• Climate
• Waste
Actions
50% Effluent reutilization
50% Solid waste recycling
Energetic Matrix development
Use of certified wood
25% Consume reduction
Flora conservation
Animal origination control
Laws Legislative compliance
Environmental awareness
Physical activities
Health Care
Formal education
Em
issi
ons,
Efflu
ents
and
Wa
ste
Energ
y
Reduction of Greenhouse
Gases emission (GHG)
Wa
ter 35% Consume reduction
(2m3 per head)
So
cie
tyB
iod
ivers
ity
Ma
teri
als Focus on environmentally
friendly materials
JBS is the first and only beef Company to register a CDM project at the
UNFCCC (United Nations Framework Convention on Climate Change).
The project is in validation phase at the designated national authority.
Natural Resources Usage
Social-environmental Actions
Waste Treatment
The environmental and social responsibility have always been part of JBS´s development and business growth.
The Company’s extensive experience proves the importance of the reduction of environmental impacts and the
improvement of its relations with the community, throughout constant investments that focus these issues. 17
Novo Mercado
JBS is part of the of BM&FBOVESPA´s Novo Mercado, is in accordance with all requirements of this market and with the obligations imposed by the
current Brazilian legislation.
Management and Board of Directors
Board of Directors - JBS’ Board of Directors is formed by 7 members – a president, a vice-president, 2 effective councils without specific
denomination and 3 independent effective councils.
Audit Board - The Audit Board shall consist of at least 3 and at most five 5 sitting members and alternates in the same number, shareholders or not,
liable to be elected or dismissed at any time of the General Meeting.
Board of Executive Officers - The members of the Company’s board of executive officers are elected by the board of directors, for three-year terms,
and are eligible for reelection.
Board of Directors’ Committees
The Board of Directors has approved the establishment of the following Committees: Audit, Financial, Personnel Management and Corporate
Strategy, that incorporates the Sustainability matters.
Publishing and Use of Information
JBS is completely in accordance with the CVM 358 instruction that revised and consolidated the requirements regarding the disclosure and use of
information related to material facts and acts of publicly held companies, including the disclosure of information in the trading and acquisition of
securities issued by publicly held companies.
Conduct and Ethic Manual
JBS Executive Officers have developed a Conduct and Ethic Manual according to the corporate governance best practices concept. The conduct
code embraces the relationship between the members of the board, shareholders, employees, suppliers and all the other stakeholders.
Corporate Governance
JBS has embraced a Corporate Governance model with a view to implant the best practices in the Company. The view is that the model
demonstrates transparency and confidence to the public, guaranteeing the best products and services for customers, solidity for
suppliers, satisfactory return for shareholders and the certainty of a better future for all JBS collaborators.
18
The Bank of New York Mellon, has been selected by JBS S.A. as the depositary bank for its
American depositary receipt (ADR) program. Each JBS ADR represents two common shares
and they are traded on the over-the-counter market under the symbol “JBSAY“.
On May 2009, JBS became the first Brazilian Company to have its ADRs traded under the
OTCQX, a kind of “Novo Mercado” of the North American over-the-counter market. Since then,
the JBS’ ADRs (JBSAY) appreciated in value by 172.1%.
ADRs’ traded volume (JBSAY)
JBS American Depositary Receipt (JBSAY)
19
11,000
1,300 500 1,500
10,000
41,970
14,600
23,730
4,500
99,075
60,827
4.23 4.13 3.96
4.60
6.00 6.08
7.26
7.92 7.95
10.51
11.51
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09
Volume Closing Price (U$)
JBS American Depositary Receipt (JBSAY)
20
88
3rd Quarter 2009 Results
Net Revenue (R$ million) EBITDA and EBITDA Margin (R$ million)
22
Source: JBS
EBITDA Margin (%)
-9.5%
-24.0%
24.0%
-44.0%
-3.8%
-20.4%
-0.1%
81.6%
JBS Consolidated Results
9,255.0
8,379.9 4.460.7 4.486.8
2Q09 3Q09 2Q09 3Q09
Net Revenue (Million)
0.6%
Source: JBS
Source: Banco Central
23
Currency effects in the net revenue
R$ US$
Exchange rate
average of the period:
2Q09 – 2.0748
3Q09 – 1.8677
-9.5%
• Excluding the exchange rate effect in
the period, net revenue increased
0.6% over 2Q09.
24
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 (%)
2.72.8
2.7
2.9 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
143 144 146
3Q08 4Q08 1Q09 2Q09 3Q09
9.7
6.67.6
8.3
5.6
6.6%4.6%
3.9%
5.1%5.3%
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
• The net debt / EBITDA ratio increased from 2.6x in 2Q09 to 3.3x in 3Q09, reflecting
the 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)
25
Debt
5,971.8 6,226.45,877.1
1T09 2T09 3T09
Short term Long term
JBS continues to reduce its working capital needs, which decreased from 37 days in 2Q09 to 33
days in 3Q09.
26
Working Capital
Production & Stock
21 diasCLIENT = 33 days
SUPPLYER = 21 days
Product
Delivery
Supplyer
payment
Client’s payment
to JBS
WORKING CAPITAL &
INTERESTS
33 days
3º Quarter 2009
Client’s order
to JBS
Production & Stock
21 diasCLIENT = 37 days
SUPPLYER = 21 days
Product
Delivery
Supplyer
payment
Client’s payment
to JBS
WORKING CAPITAL &
INTERESTS
37 days
2º Quarter 2009
Client’s order
to JBS
Exports Distribution 2Q09
Source: JBS
JBS Consolidated Exports Distribution
Revenue Distribution by Market 2Q09
Exports Distribution 3Q09
Revenue Distribution by Market 3Q09
Japan18%
E.U.15%
USA9%
Africa and Middle East
8%
Russia7%
Mexico7%
South Korea6%Canada
5%
Hong Kong5%
China4%
Taiwan2%
O thers14%
JBS Exports 2Q09
US$ 1,169.1 Million
27
Domestic
Market
74%
Exports
26%
Domestic Market
76%
Exports
24%
Japan19%
E.U.12%
Russia9%USA
8%Mexico
7%
Canada6%
Africa and Middle East
6%
Hong Kong5%
South Korea4%
China4%
Indonesia3%
Others18%
JBS Exports 3Q09US$ 1,127.4 Million
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 suggested by 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'' or similar expressions.
29
