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Institutional Presentation
November, 2014
Marfrig Global FoodsProfile
History and Overview
1986: Startup of operations in Brazil with the distribution of premium beef cuts
1986-2005: Diversification into new regions across Brazil and start of exports
2005-2006: International expansion through acquisitions in South America
2007: IPO in Novo Mercado segment of BM&FBOVESPA
2008: Acquisition of Moy Park, one of the largest food companies in the UK
2009: Acquisition of Seara, one of the largest food companies in Brazil
2010: Acquisition of Keystone, one of the world's largest food suppliers torestaurant chains and quick service restaurants
2012: Divestment of Keystone's logistics services business and focus directedto the protein business
1H13: Divestment of the Seara and Zenda business units
3
History and Overview
2H13: Launch of strategic plan “FOCUS TO WIN”
Note: (1) Revenue calculated in R$ billion based on FX rate of R$2.40/US$ in 2014 and stable going forward, with no projected inflation.(2) Excludes non-recurring items.
2014Target Range
9M14 % achieved
Net Revenue (1) R$21.0bn to R$23.0bn
R$15.1bn 72% - 66%
EBITDA Margin (2) 7.5% - 8.5% 8.2% 109% - 96%
Investment(CAPEX)
R$600MM R$447MM 75%
Free Cash Flow to Shareholders
Breakeven to R$100MM
R$71MM
2018Target Range
7.5% to 9.5% (CAGR 2012-18)
8.5% to 9.5%
n/d
R$650MM to R$850MM
4
Corporate Profile
Marfrig is one of the largest and most diversified global foodcompanies
One of the largest
poultry-based
processed products
suppliers in the UK
and Europe
World’s 3rd largest
beef producer and
one of South
America’s largest
lamb suppliers
Diversified presence
in animal protein,
serving the Retail and
Food Service
Channels
One of the world’s
largest providers of
processed food to
major restaurant
chains
Presence in
countries in the
Americas, Europe,
Asia and
Oceania
16 Serving global retail
and food chains in
over
countries
More than
employees45,000
78 commercial
production and
distribution
units110
5
1.0 1.3 1.4 2.13.3
6.2
9.6
15.9
21.923.7
18.8
21.0 – 23.0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014*
Corporate Profile
Net Revenue(R$ billion)
6
* Guidance 2014
Revenue Breakdown - 9M14
Marfrig Beef
Keytone
Moy Park
46% 28% 26%
USDEUR/GBPBRLOther
42% 26% 21%11%
Processed
Fresh
Other
46% 44%10%
% by Business % by Currency % by Product
Andrew Murchie
Marfrig Beef Brasil
Martin Secco
Marfrig Beef Southern
Cone
Janet McCollum
Moy Park
Corporate Governance Structure
Sergio RialCEO - Marfrig Global Foods
CEOs Business Units
Frank Ravndal
Keystone Foods
Marcello ZappiaVP – Human Resources
Ricardo FlorenceVP – Finance and IRO - CFO
Jaime Singer
VP – Strategic Planning
Heraldo GeresVP - Legal
Marcos MolinaChairman of the Board
Audit Board
Corporate Vice-Presidents
7
Corporate Governance Structure
Variable compensation plan
Individual targets for each area
Financial targets connected with guidance
Weights:
• CEO, Vice Presidents, Officers: 70% Financial Targets and 30% Individual Targets
• Managers: 50%-40% Financial Targets and 60%-50% Individual Targets
8
Net Revenue
Weight 20%
EBITDA Margin
Weight 20%
CAPEX
Weight 10%
Free Cash Flow
Weight 50%
Commitment to Sustainability
Greenpeace Pact: higher exports to European marketand sales of canned meat at Tesco
Rainforest Alliance Certified: sales of beef with socialand environmental responsibility seal to Carrefour and ofsustainable leather to Gucci
Carbon Disclosure Project and GHG EmissionInventory: first company in industry to report Scope 3emissions
The Nature Conservancy: participation on theorganization's board for Latin America
Business Benchmark on Farm Animal Welfare(BBFAW): elected one of the world’s leading companiesin animal welfare in 2013
9
Marfrig Beef
Marfrig Beef | Overview
11
One of the world's largest beef and lamb producers
Strong expertise in supplying food service chains in Brazil
Pioneer in the development of new export markets
Geographic diversification in South America helps mitigatesanitary risks
Brands recognized for quality and diversified productportfolio
World’s 3rd largest beef producer and Brazil's 2nd largestbeef operation
Uruguay's leading primary processor and Chile's largestmeat importer
Marfrig Beef | Overview
12
Revenue Breakdown – 3Q14
19 units
17,200 employees
3.7 million head of cattle/year
Brazil Domestic Brazil Export
Uruguay/Chile Argentina
44% 36% 15%5%
Fresh Beef
Processed
Lamb, Leather and Other
76%7% 17%
% by Channel/Market % by Protein
Production Structure
Brazil Uruguay/Chile Argentina
7 units
3,300 employees
930,000 head of cattle/year
2.0 million lamb/year
2 units
1,400 employees
390,000 head of cattle/year
Stronger exports from Brazil
Continued good performances at the Uruguay and Chile operations
Lower average price in Brazil's domestic market due to the shift in the productmix
Marfrig Beef | 3Q14 Highlights
Net Revenue(R$ million)
2,240 2,256
2,075
2,365
2,482
3T13 4T13 1T14 2T14 3T14
+ 11%
9M14: R$6.9bn
13
3Q13 4Q13 1Q14 2Q14 3Q14
Marfrig Beef | 3Q14 Highlights
14
Adjusted EBITDA and Margin(R$ million and %)
Higher raw material (cattle) costs passed through to export sales
The Productivity Agenda Project in Brazil yielded initial savings of over R$13million from the implementation of a series of actions to improve expensemanagement
9M14: R$653MM
9.4% 202
226
197 203
253
9.0%
10.0%9.5%
8.6%
10.2%
3T13 4T13 1T14 2T14 3T14
+ 25%
3Q13 4Q13 1Q14 2Q14 3Q14
Marfrig Beef | Strategic Goals
15
Productivity Agenda Project in Brazil
Rigorous monthly budget with diminishing cost targets
Better management of overtime, attendance and shifts
Restructuring of the sales/marketing team and redesign of route map
Greater control of travel/transportation expenses
Review and renegotiation of various contracts
Review of procurement/expense model for maintenance, laundry, uniforms,etc
Use of cheaper energy sources (steam) and reduction of cold-storagetemperature losses
Raise performance and optimization levels at production units to meet thecompany’s internal benchmarks
Estimated annual savings of R$30MM
Marfrig Beef | Strategic Goals
16
Segmentation of service to Food Service channel
Service Providers
Specialized relationship
Negotiations
Pricing dynamics
Product customization
Delivery times
Logistics management
Large Chains
Street Business
Independent Establishments
Marfrig Beef | Strategic Goals
17
Retail
Higher sales to small retailers
Partnerships with large retailers for portioned cuts based onspecific consumer demands
Pilot Project
Marfrig Beef | Outlook & Scenario Brazil
18
Brazil enjoys a very competitive position in world beef exports
Cattle Price(USD/KG – Carcass Weight)
$3.68
$3.27
$5.44
$3.72
Jan-1
0
Jun-1
0
Nov-1
0
Apr-
11
Sep-1
1
Feb-1
2
Jul-
12
Dec-1
2
May-1
3
Oct-
13
Mar-
14
Aug-1
4
BRASILAUSTRÁLIAEUAURUGUAI
330
209
104
88
88
52
30
28
India
Brazil
China
EU
USA
Argentina
Colombia
Australia
CAGR 10-14
1.0%
3.0%
-0.3%
-0.6%
-1.5%
1.6%
-0.6%
0.4%
Beef Cattle by Country(million head)
USA
BRAZIL
URUGUAY
Marfrig Beef | Outlook & Scenario Brazil
19
The opening up of new markets to Brazilian beef should driveexport growth
Share in Exports
Marfrig Beef Brazil (R$ million and % of Revenue)
Exports by Destination 3Q14
Marfrig Beef Brasil (% of Revenue)
1,473
1,734
1,97133%
42%45%
3T12 3T13 3T143Q12 3Q13 3Q14
Europe
Asia
South/Central America
Middle East
Russia
Other
Marfrig Beef | Outlook & Scenario Brazil
20
Despite its competitive advantages, Brazil still lacks access tothe world's largest beef importers
Main import marketsImport volume
(‘000 tons/year)Share of world imports Restrictions on Brazil
USA 1,055 13.6% Negotiation
Russia 1,020 13.1% Open
Japan 760 9.8% Closed
Hong Kong 575 7.4% Open
China 550 7.1% Negotiation
European Union 380 4.9% Open / Hilton
South Korea 360 4.6% Closed
Venezuela 300 3.9% Open
Canada 290 3.7% Closed
Chile 255 3.3% Open
Mexico 235 3.0% Closed
Marfrig Beef | Outlook & Scenario Uruguay
21
Uruguay enjoys access to mainbeef import markets
Share of ExportsMarfrig Beef Uruguay (R$ million and % of Revenue)
Exports by destination 3Q14Marfrig Beef Uruguay (% of Revenue)
Main import markets
Restrictions onUruguay
USA Open
Russia Open
Japan Negotiation
Hong Kong Open
China Open
European Union Open
South Korea Open
Venezuela Open
Canada Open
Chile Open
Mexico Open
268
347379
55%49%
56%
3T12 3T13 3T14
Europe
Asia
South/Central America
Middle East
Russia
Other
3Q12 3Q13 3Q14
Marfrig Beef | Outlook & Scenario Argentina
15% tax levied on all exports from the country
Each export transaction must be informed to and approved bythe Trade Department
Some items in the domestic market have price caps set bythe government
Marfrig Beef temporarily cut back its operations to twoproduction units
22
Keystone Foods
Keystone Foods | Overview
24
Tradition stretching back over 50 years
A leading global supplier of products to the food service industry and QSR chains
Over 30,000 clients in North America and APMEA (Asia, Pacific, Middle East and Africa)
Important protein supplier to McDonald's (61% of unit’s sales in 3Q14)
Committed to the highest food safety and quality standards
Long-standing history of innovation
Keystone Foods | Overview
25
Revenue Breakdown - 3Q14
7 units
6,200 employees
190 million birds/year
400,000 tons of processed food/year
USA
APMEA
76% 24%
Further processed poultry
Further processed beef
Other
74% 22% 4%
% by Channel/Market % by Protein
Production Structure
United States
7 units
5,400 employees
40 million birds/year
150,000 tons of processed food/year
APMEA
1,4831,390 1,391 1,414 1,412
3T13 4T13 1T14 2T14 3T14In the USA:
Pricing model adopted with our main client whereby product prices reflect drops inraw material costs
Change in sales mix to QSRs
In APMEA:
Sales mix was impacted by an incident involving a competitor food supplier to ourmain client in China
Keystone Foods | 3Q14 Highlights
26
Net Revenue(R$ million)
9M14: R$4.2bn
- 5%
3Q13 4Q13 1Q14 2Q14 3Q14
95 96
111100
87
6.4%6.9%
8.0%7.1%
6.1%
3T13 4T13 1T14 2T14 3T14
Keystone Foods | 3Q14 Highlights
27
Adjusted EBITDA and Margin(R$ million and %)
Impact of mark-to-market adjustments of unrealized hedge losses
Higher outside meat costs
Lower feed costs
9M14: R$298MM
7.1%
- 9%
3Q13 4Q13 1Q14 2Q14 3Q14
Keystone Foods | Strategic Goals
Comprehensive product portfolio for food service industry and QSR chains
Nuggets Chicken patties
Beef patties
Poultry-based products Beef-based products
Other
Fish patties
Grilled strips
DessertsBacon and
“Halal” Bacon Coated seasoned cuts
28
Keystone Foods | Strategic Goals
Integrated production chain allows greater control and ensuresproduct availability, consistency and quality
Bird SelectionSelection of breeds
based on performance
Pullet FarmsHens raised until they reach sexual maturity
Breeder FarmsHens lay eggs that
are taken to the hatchery
Fertile HatcheryFertile hatching eggs
are incubated and hatched.
Broiler FarmsBroilers are raised until they reach the targeted
weight.
Primary ProcessingPoultry slaughter with the carcass forwarded
to the further processing units
Further ProcessingCreation of chicken-
based fully-cooked, par-fried and marinated
products.
Feed PlantHigh quality feed is produced to
optimize the performance of chickens.
29
Vertical integration
corresponding to
70% poultry supply
in Keystone’s
operation in the U.S.
China30%
Japan13%
Malaysia12%
South Korea12%
Middle East11%
Singapore8%
Australia6%
United Arab Emirates
5%
Other3%
Keystone Foods | Strategic Goals
Established a Broad Footprint in APMEA Supplying 19 Countries Across the Region
APMEA Sales Well Diversified(% of revenue by country of destination - 2013)
Volume growth in all markets where we have production presence(‘000 pounds)
12.4% CAGR
30
109
313
2004 2013
Australia
South Korea
Thailand
Malaysia
China
Keystone Foods | Outlook & Scenario
31
Potential QSR segment growth in USA
Source: Euromonitor / U.S. Fast Food, QSR 50 Report 2012
35.9
12.7 11.78.8 8.5
Sales of major QSR chains (US$ billion)
185 188195
204214
225236
250
265
09 10 11 12 13 14E 15E 16E 17E
Expected market growth(US$ billion)
5.5% CAGR
3.7% CAGR
Keystone Customer
Keystone Foods | Outlook & Scenario
Potential QSR segment growth in APMEA
Per-capita poultry consumption by country(2013)
Higher per-capita GDP
Population growth
Growing middle class
Rural flight
0 10 20 30 40 50
Malaysia
Saudi Arabia
Turkey
Korea
Vietnam
China
Thailand
Philippines
Indonesia
Pakistan
India
Kg / inhabitant / year
Source: OECD-FAO Agricultural Outlook 2014-2023
Growth drivers
32
Keystone Foods | Outlook & Scenario
Source: websites of Yum Brands and McDonald’s
Yum Brands expects to open 700 new stores in China in2014
KFC chain has over 4,500 restaurants in over 1,000 cities inChina
Pizza Hut chain has over 1,200 restaurants in over 300 citiesin China
McDonalds’ has opened an average of 190 stores per yearsince 2008 in China, and currently has 2,000 stores
McDonalds’ has opened an average over 300 stores peryear since 2008 in APMEA, and currently has some 10,000stores
Potential QSR segment growth in APMEA
33
Moy Park
Moy Park | Overview
Over 70 years of tradition and growth
One of the 15 largest food companies in the UK and largest company in Northern Ireland
Relationships with leading retailers and food service operators in UK and continental Europe
Unique and comprehensive poultry production platform with high quality standards
Clear opportunities for growth and operational excellence to drive margin expansion
Pioneer in the production of free range and organic poultry
35
Moy Park | Overview
36
Revenue Breakdown - 3Q14
14 units
12,000 employees
240 million birds/year
270,000 tons of processed food/year
% by Market % by Protein
Production Structure
UK and Continental Europe
Processed
Fresh
Other
UK
Continental Europe
Other
Retail
Food Service
Other
% by Channel
53% 40% 7%74% 25% 61% 29% 10%1%
1,222
1,332 1,3211,338 1,345
3T13 4T13 1T14 2T14 3T14
Sales growth in the retail channel in UK and Ireland, led by fresh meats
Positive contribution from currency variation in the period (7%)
Consolidation of Marfrig's convenience beef business in Europe
Moy Park | 3Q14 Highlights
37
Net Revenue(R$ million)
9M14: R$4.0bn
+10%
3Q13 4Q13 1Q14 2Q14 3Q14
Moy Park | 3Q14 Highlights
38
Adjusted EBITDA and Margin(R$ million and %)
Grantham Project for optimizing the further processing unit in England: lowerproduction and labor costs
Lower grain costs
Higher freight expenses resulting from the consolidation at Moy Park of Marfrig BeefBrazil's beef business in Europe
78
10195 94 96
6.4%
7.6%7.2% 7.0% 7.1%
3T13 4T13 1T14 2T14 3T14
9M14: R$284MM
7.1%
+24%
3Q13 4Q13 1Q14 2Q14 3Q14
Moy Park | Strategic Goals
Moy Park has leading positions in the highest value, growing retail segments in poultry
39
Fresh poultry
Source: Kantar Worldpanel, Euromonitor
25%
75%
Second largest producer in the UK
Chilled ready-to-eat Chilled fresh coated
52%
48%
46%
54%
Leading market positions in higher growth convenience food categories
(growth of over 6% p.y.)
Moy Park | Strategic Goals
Unique Comprehensive Poultry Farming Production Platform
40
• Grandparent stock
• Parent hatchery
• Parent rearing
• Parent laying
• Broiler hatchery
• Broiler housing
• Feed mill
• Slaughterhouse/Portioning
• Further processing
• Commercial/Marketing
Completely vertical integration High animal welfare
Free range and organic
45% of Moy Park’s broiler housing is less than 10 years old, vs. 8% for
the industry
Moy Park | Strategic Goals
Longstanding relationships with customer base
Working to enhance product offerings
Developing partnership for future growth opportunities
41
Retail Food Service
Key Clients Competitive advantages
Long-term relationships
Focus on win-win profitability with customers
Enhanced risk management
Developing deep customer access and insights
Drive growth in new channels and with new, innovative products
Sustainabilityv
Innovation and food development
Delivered an average of 1 to 2 new innovations per year during thelast 10 years with growing NPD pipeline
Moy Park | Strategic Goals
42
Menu launched in supermarkets
High-quality meals made with Irish
ingredients
Convenient snacking products
Ready meals in convenient pouches
2011Jamie Oliver
2012Meals
2013 Snacks
2014Kitchen
Moy Park | Outlook & Scenario
43
UK poultry dynamics
Retailer and consumer focus on UK provenance
Growth in demographics: UK population forecasted to grow from 63 to 70 million by 2030
Consumer preference for fresh, convenience and locally farmed products
Most versatile and healthy protein, also consumed by most religions
Moy Park | Outlook & Scenario
44
UK protein productionKill per week (million head)
Origin of UK poultry
Source: DEFRA UK broiler slaughter (rolling weekly average)¹ Pork and Beef in ‘000 tons, indexed to 2008
UK production expected to
increase 4% p.a.
62%38%
UK producedImported
13
14
15
16
17
18
19
20 Birds
Hogs¹
Cattle¹
Jan-08 Dec-16Jan-14
19.1
14.7
17.2
Moy Park | Outlook & Scenario
45
Poultry is the most affordable protein Cost per ton (£)1
Evolution of UK consumption2007-2012 (‘000 tons)
Source: Euromonitor, USDA1 Production price
UK sales volume(‘000 tons)
1,300 1,590
4,420
Chicken Pork Beef
175
38
-125
Chicken Pork Beef
778
746
442
314
200
300
400
500
600
700
800
2012A 2013A 2014E 2015E 2016E 2017E
Chicken Fish Beef Pork
CAGR 1.6%
CAGR 1.6%
CAGR 0.1%
CAGR 0.1%
67
175
121
62
0
100
200
300
400
6,5 7,0 7,5 8,0 8,5 9,0 9,5 10,0 10,5 11,0 11,5
EBIT
DA
20
14
E (
USD
MM
)
EV/EBITDA
HILTON
GREENCORE
CRANSWICK
SCANDI STANDARD
Moy Park | Outlook & Scenario
Peer comparison – EV/EBITDA14E(Circle size = Enterprise Value)
46
Source: Factset
EBITDA LTM MOY PARK
USD 170 MM
Moy Park | Outlook & Scenario
Pricing Dynamics of UK IPOs
47
2013 1Q14 2Q14 3Q14
Under Bottom Middle Top Upper
Source: Dealogic
Consolidated Financial Performance
Financial Performance | Consolidated
49
+ 6%
Net Revenue(R$ million)
Breakdown by Business(%)
25%
30%
45%
Receita por Negócio - 3T13
26%
27%
47%
Receita por Negócio - 3T14
Compared to 3Q13:
Moy Park +10% to R$1,345MM
Keystone -5% to R$1,412MM
Marfrig Beef +11% to R$2,482MM
3Q13 3Q14
22%
13%
65%
Lucro por Negócio - 3T14
21%
16%
63%
Lucro por Negócio - 3T13
Financial Performance | Consolidated
50
+ 11%
Gross Income and Gross Margin(R$ million and %)
Breakdown by Business(%)
3Q13 3Q14
Gross margin growth vs. 3Q13:
Moy Park + 80 bps to 10.7%
Keystone - 60 bps to 6.0%
Marfrig Beef + 50 bps to 16.9%
29%
13%
58%
Financial Performance | Consolidated
51
+ 5%
SG&A and SG&A/NOR(R$ million and %)
Breakdown by Business(%)
3Q13 3Q14
30%
12%
58%
SG&A/NOR vs. 3Q13:
Moy Park + 20 bps to 8.2%
Keystone stable at 3.0%
Marfrig Beef - 50 bps to 8.4%
EBITDA Margin vs. 3Q13:
Moy Park + 70 bps to 7.1%
Keystone - 30 bps to 6.1%
Marfrig Beef + 120 bps to 10.2%
Financial Performance | Consolidated
52
+16%
Adjusted EBITDA and Margin(R$ million and %)
Breakdown by Business(%)
3Q13 3Q14
21%
25%
54%
EBITDA por Negócio - 3T13
22%
20%
58%
EBITDA por Negócio - 3T14
Consolidated adjusted EBITDA margin of 8.2% in 9M14, reaching
the upper level of the target range in the FOCUS TO WIN strategy
Strong BRL depreciation at end-3Q14 increased net debt, with no cash effect
BRL depreciation of 11% (R$2.20/US$ at end-2Q14 vs. R$2.45/US$ at end-3Q14)
Operating income has yet to capture the BRL depreciation that occurred late in 3Q14, sincethe average FX rate in the quarter was R$2.28/US$, virtually flat from R$2.23/US$ in2Q14
Liquidity and Debt | Consolidated
53
Debt(R$ million)
Marfrig’s debt in USD remained stable
Liquidity and Debt | Consolidated
54
Net Debt in USD(US$ million)
Leverage ratio for bank and marketfinancing excludes FX effects,resulting in a ratio of 3.64x at end-3Q14
EBITDA LTM does not yet fully reflectBRL depreciation
Average exchange rate in LTM ofR$2.29/US$, vs. R$2.45/US$ at end-3Q14
Liquidity and Debt | Consolidated
55
Indicators 3Q14 2Q14
Net Debt / EBITDA LTM 4.84x 3.71x
Net Debt / Annualized Adjusted EBITDA
4.33x 4.23x
Net Debt / Total Assets 0.37x 0.37x
Cash and Equivalents / Short-Term Debt
2.47x 2.52x
Current Liquidity (*) 2.18 2.18
Duration (months) 50 54
Average Cost ** (p.y.) 7.6% 7.0%
Short Term (%) 11.7% 11.2%
Long Term (%) 88.3% 88.8%
In BRL (%) 5.8% 4.1%
Other Currencies (%) 94.2% 95.9%* Current Liquidity = Current Assets / Current Liabilities** Excludes the interest paid on the mandatorily convertible debentures
Liquidity and Debt | Consolidated
56
Maturity Schedule in 3Q14(R$ million)
Short Term: R$1.2bn
Longer debt maturity profile, with first large maturity due only in 2018
Liquidity and Debt | Consolidated
Transaction Period Amount (million) Coupon Maturity
2020 Bond Re-tap 1Q14 US$ 275 9.500% 2020
Moy Park Bond Issue 2Q14 GBP 200 6.250% 2021
2019 Bond Issue 2Q14 US$ 850 6.875% 2019
Repurchase 2016 2Q14 US$ 191 9.625% 2016
Repurchase 2017 2Q14 US$ 349 11.250% 2021
Repurchase 2021 3Q14 US$ 448 9.875% 2017
Liability Management Operations - 2014
Bond issue of US$850MM: company'slargest ever and Brazil's largest until May2014
Order book (US$4.9bn) exceeded the issueby 5.6x, which allowed for lowering the costto 6.875% p.y.
Repurchase of 2017 and 2021 Senior Notes,significantly reducing the cost and realigningthe maturity profile
Demand breakdown
% by region
% investor type
Europe US Asia
LatAm Other
44% 39% 5% 4% 8%
Asset Mgmt Hedge FundPrivate Bank BankOther
45% 17%14%12%13%
57
Better working capital management, especially at Marfrig Beef Brazil
Improvement in trade accounts receivable term from 28 days in 2Q14 to 27 days in 3Q14
Incident involving a supplier to our main client in China contributed to the temporary increasein inventories
The line “Other” increased, mainly due to non-cash items related to market transactions, suchas swap and commodity contracts
Cash Flow | Consolidated
58
Cash Flow Bridge – 3Q14 (R$ million)
Cash Flow | Consolidated
59
Free Cash Flow (after CAPEX and Interest)(R$ million)
Free cash flow was positive R$84 million in the quarter, despite the higher exportvolumes and payments related to the renegotiation of tax liabilities under REFIS
In 9M14, free cash flow was positive R$71 million, reaffirming our commitment to deliverpositive free cash flow in 2014
(628)
(932)
(295)
(135)
16
(30)
84 1T13 2T13 3T13 4T13 1T14 2T14 3T141Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
(194,1)
(83,4) (96,4)
(55,1)
(303,3)
3Q13 4Q13 1Q14 2Q14 3Q14
Cash Flow | Consolidated
60
Net Income (R$ million)
- 56%
Currency variation(R$226MM)
REFIS expenses(R$93MM)
Cash Flow| Consolidated
61
Investments(R$ million)
3Q14 2Q14 1Q14 4Q13 3Q13
Investments in fixed assets 119.3 172.7 139.0 236.1 204.7
Fixed Assets 75.0 130.8 95.5 192.8 165.7
Breeding stock 44.3 41.9 43.5 43.3 39.0
Investments in intangible assets 8.0 4.1 3.6 3.3 3.2
Total investment in the period 127.3 176.8 142.6 239.4 207.9
Ownership Structure and Capital Markets
Treasury0.1%
Officers/ Management
0.1%
Ownership Structure | October 2014
Share Capital520,747,405 shares1
Free-float255,183,732 shares
1 In January 2007, up to 100 million shares will be issued following maturity of the mandatory convertible bond
23.7%
30.7%
15.2%
11.0%
8.2%
Other42.7%
BNDES19.6%
MMS Part.
31.2%
6.3%
Other11.1%
63
Sell-Side Assessment
Covered by 14 institutionsManter
38%
Average TP: R$7.71
Buy Hold Sell
46% 39% 15%
Recommendation
64
Share Performance | 2014
MRFG3 Peers* IbovespaSource: BloombergTo November 12, 2014 *Peers: average of JBS, BRF and Minerva
52%
27%
3%
-20%
0%
20%
40%
60%
80%
100%
dez-13 jan-14 fev-14 mar-14 abr-14 mai-14 jun-14 jul-14 ago-14 set-14 out-14 nov-14
52%
3%
27%
65
Bond Performance | 2014
66
Source: BloombergTo November 12, 2014* Peers: average of bonds issued by JBS, BRF and Minerva with same maturities
2018 2020 2021
MRFG3 Peers*
13%
1%
-4%
0%
4%
8%
12%
16%
20%
24%
jan-
14
fev-
14
mar
-14
abr-
14
mai
-14
jun-
14
jul-1
4
ago-
14
set-
14
out-
14
nov-
14
13%
2%
-4%
0%
4%
8%
12%
16%
20%
24%
jan-
14
fev-
14
mar
-14
abr-
14
mai
-14
jun-
14
jul-1
4
ago-
14
set-
14
out-
14
nov-
14
15%
1%
-4%
0%
4%
8%
12%
16%
20%
24%
jan-
14
fev-
14
mar
-14
abr-
14
mai
-14
jun-
14
jul-1
4
ago-
14
set-
14
out-
14
nov-
14
Final Remarks
Final Remarks | Consolidated Results
We are on track to delivering our 2014 guidance, which is animportant milestone for Marfrig and for our shareholders
We delivered another quarter of steady performance that included:(i) an undivided commitment to Free Cash Flow (FCF); (ii) a totallyre-designed debt maturity profile (with the first material paymentonly in 2018); and (iii) improved operating performance
All businesses posted EBITDA margins above 7% in the year to date,which has allowed the group to stay on the high end of its 2014EBITDA target margin
The business portfolio is well positioned to capture this unique highmargin/price environment in the animal protein industry, which isfurther supported by a potentially stronger dollar in the near future
68
Final Remarks | Marfrig Beef
The world needs beef and we are well positioned (world's third-largest beef producer) to capture this opportunity
Our shift to a much higher share of exports in our Beef business inBrazil (45% in 3Q14, vs. 41% in 3Q13 and 33% in 3Q12) isunderpinned by our belief in the current supply and demandsituation in the international market
We believe there are plenty of opportunities to improve resultsfurther, especially in terms of FCF and margin. We assumed acommitment to a serious productivity agenda at Marfrig Beef Brazil,which is starting to pay off, as seen in this quarter with theimprovement in cost management. Note that the same productivityagenda is being rolled out in Uruguay, Argentina and Chile
69
Final Remarks | Marfrig Beef
The gains captured in the third quarter signal a good probability ofdelivering annual cost savings (in Brazil alone) greater than the initialtarget of R$30 million
Uruguay continues to post strong results, but we believe the best isyet to come in the fourth quarter of the year
We do not see any short term concerns, with cattle prices most likelyremaining under pressure, but with relatively strong internationaldemand helping to keep domestic margins at reasonable levels
70
Final Remarks | Keystone Foods
Our further processing operations in the US will benefit as meat costsare moving toward seasonal lows
Lower grain costs are flowing through our integrated operations in theUS leading to improved cost
We have secured new volumes in APMEA and expect to see an impactin Q4 2014 as consumer confidence begins to return
We are focused on managing costs and expect to drive SG&A savingsin the 4th quarter
We expect growth in EBITDA in the 4th quarter due to improvingmarket dynamics in both the US and Asia
71
The fourth quarter should be strong, with turkey sales adding to thebottom line and a better grain environment
We will also focus more intensely on SG&A expenses, but whilekeeping an eye on making good inroads in terms of innovation andservice quality
Moy Park is an unquestionable growth story. Annual sales increasedfrom £800 million in 2008 (at the time of its acquisition by Marfrig) toapproximately £1.45 billion estimated for 2014, which confirms theenormous potential of the European market, which remains promising
Final Remarks | Moy Park
72
Final Remarks | Capital Structure
Our operating performance has not yet benefitted from the stronger dollar, but the fourth quarter will hopefully provide some signs of this
In 2015, if market conditions permit, we will carry out Moy Park’s IPO
73
Final Remarks
We will remain very focused on our full-year results. We wantto finish 2014 with strong operating performance andmeeting all targets in our 2014 guidance
We see ourselves as a multi-year deleveraging story markedby (i) improved operating performance; (ii) lower interestexpenses (and consequently expanding FCF); and (iii)attracting equity through the subsidiaries to accelerate debtreduction in absolute terms
74
Next Steps
1. Continue expanding margins by fully capitalizing on the current positive trendsin the animal protein industry
2. Share our two-year plan (part of our current Focus to Win strategy), which willset more comprehensive targets that will enable a better assessment of theGroup’s operating performance and capital structure
3. We are planning a Marfrig Day event in the first half of 2015 to sharemanagement's views for the next two years, culminating in January 2017. Onthat occasion, the BNDES will convert its R$ 2.1 billion mandatory convertiblebond into equity, which should provide annual cash flow relief of around US$100million (based on the exchange rate of R$2.50/US$), representing anotherconcrete step towards strengthening our capital structure
4. Management, across all businesses, remains highly committed and aligned toimproving current performance. Worth sharing that management 2014 currentvariable compensation program, is tied up to meeting our 2014 guidance. We areon track
75
Questions and Answers
This material is a presentation of general information about Marfrig GlobalFoods S.A. and its consolidated subsidiaries (jointly the “Corporation”) on thedate hereof. The information is presented in summary form and does notpurport to be complete.
No representation or warranty, either expressed or implied, is made regardingthe accuracy or scope of the information herein. Neither the Company nor anyof its affiliated companies, consultants or representatives undertake anyresponsibility for any losses or damages arising from any of the informationpresented or contained in this presentation. The information contained in thispresentation is up to date as of September 30, 2014, and, unless statedotherwise, is subject to change without prior notice. Neither the Corporationnor any of its affiliated companies, consultants or representatives have signedany commitment to update such information after the date hereof. Thispresentation should not be construed as a legal, tax or investmentrecommendation or any other type of advice.
The data contained herein were obtained from various external sources andthe Corporation has not verified said data through any independent source.Therefore, the Corporation makes no warranties as to the accuracy orcompleteness of such data, which involve risks and uncertainties and aresubject to change based on various factors.
This presentation includes forward-looking statements. Such statements donot constitute historical fact and reflect the beliefs and expectations of theCorporation’s management. The words “anticipates,” “hopes,” “expects,”“estimates,” “intends,” “projects,” “plans,” “predicts,” “projects,” “aims” andother similar expressions are used to identify such statements.
Although the Corporation believes that the expectations and assumptionsreflected by these forward-looking statements are reasonable and based onthe information currently available to its management, it cannot guaranteeresults or future events. Such forward-looking statements should beconsidered with caution, since actual results may differ materially from thoseexpressed or implied by such statements. Securities are prohibited from beingoffered or sold in the United States unless they are registered or exempt fromregistration in accordance with the U.S. Securities Act of 1933, as amended(“Securities Act”). Any future offering of securities must be made exclusivelythrough an offering memorandum. This presentation does not constitute anoffer, invitation or solicitation to subscribe or acquire any securities, and nopart of this presentation nor any information or statement contained hereinshould be used as the basis for or considered in connection with any contractor commitment of any nature. Any decision to buy securities in any offeringconducted by the Corporation should be based solely on the informationcontained in the offering documents, which may be published or distributedopportunely in connection with any security offering conducted by theCompany, depending on the case.
Disclaimer
IR Contacts
Website
www.marfrig.com.br/ri
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