7/30/2019 2Q09 Conference Call Presentation
1/28
JBS S.A.
2nd Quarter 2009 Results
August 13th, 2009
In God we TrustJBS S.A.
7/30/2019 2Q09 Conference Call Presentation
2/28
Jeremiah OCallaghan
Investor Relations Director
Joesley Mendona BatistaCEO
1
Presenters
7/30/2019 2Q09 Conference Call Presentation
3/28
Our ValuesThe Foundation Of Our Culture
Planning
Determination
Discipline
Availability
Openness
Simplicity
2
7/30/2019 2Q09 Conference Call Presentation
4/28
Agenda
Market OverviewMarket Overview
2Q09 Highlights2Q09 Highlights
Questions and AnswersQuestions and Answers
3
Our StrategyOur Strategy
Final ConsiderationsFinal Considerations
Consolidated ResultsConsolidated Results
7/30/2019 2Q09 Conference Call Presentation
5/28
7/30/2019 2Q09 Conference Call Presentation
6/28
OUR STRATEGY
FoundationFoundation
Financial
Structure
Financial
StructureExperienced
Management
Experienced
Management
Cost Reduction,Productivity,
Process Optimization
Cost Reduction,Productivity,
Process Optimization
Risk
Management
Risk
Management
ConsolidatedConsolidatedConsolidatedConsolidated
AverageAverageAverageAverage
EBITDAEBITDAEBITDAEBITDA
MarginMarginMarginMargin
4%4%4%4%
8%8%8%8%
12%12%12%12%
50%50%50%50%
5
7/30/2019 2Q09 Conference Call Presentation
7/28
6
Global Market
Largest beef importers
Others38%
South Korea
4% EU-27
8%
Japan
10%Mexico5%
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%
7/30/2019 2Q09 Conference Call Presentation
8/28
Meats Consumption Per capita (including beef, porkand poultry)
48
6269
8088
121
42
82
0
20
40
60
80
100
120
140
China
Russia
Mexico
EU-27
Brazil US
World
Developed
Source: FAO
Percapita
consumption
(k
g/capita)
RecommendedRecommendedconsumptionconsumption80Kg/capita80Kg/capita
7
W ld l h d f C
7/30/2019 2Q09 Conference Call Presentation
9/28
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)
8
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*
Pop
ulation(million)
0
20
40
60
80
100
120
140
Consum
ption(milliontons)
Population - Developed countries Population - Developing countries Beef Consumption**
CAGR2,0
%
Population growth, a beefPopulation growth, a beefconsumption driver.consumption driver.
f
7/30/2019 2Q09 Conference Call Presentation
10/28
Source: USDA
Beef MarketUSA 1991 2009 (thousand tons CWE)
9
7000
8000
9000
10000
11000
12000
13000
14000
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Production,
Consumption
0
500
1000
1500
2000
2500
3000
3500
Stocks,
Import,
Export
Ending Stocks Production Consumption Imports Exports
Exports Recovering afterExports Recovering afterBSE in 2003.BSE in 2003.
7/30/2019 2Q09 Conference Call Presentation
11/28
10
USA Beef Exports
Vietnam
13%
Hong Kong
2%
Pases Baixos
1%Egito
1%
China
4% Japo
11%
Coria do Sul
11%
Mxico
33%
Outros
7%
Canad
17%
USA beef exports (1000 tons)USA beef exports (1000 tons) USA exports destination in TonsUSA exports destination in Tons
Source: USDA Source: USDA 2Q09
309
652
520
317209
1,145
1,022
0
200
400
600
800
1000
1200
1400
2003 2004 2005 2006 2007 2008 2009Jan - May
B f M k t
7/30/2019 2Q09 Conference Call Presentation
12/28
Source: EU Commission / DG AGRI*Estimates
Beef MarketEuropean Union 1997 2013 (thousand tons - CWE)
11
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009* 2010* 2011* 2012* 2013*
Productio
n,
Consumption
0
200
400
600
800
1000
1200
1400
1600
Stocks,
Import,
Export
Ending Stocks Production Consumption Import Export
EU - 25EU - 15
Increased dependenceIncreased dependenceon imports.on imports.
B f M k t
7/30/2019 2Q09 Conference Call Presentation
13/28
0
500
1000
1500
2000
2500
3000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Production Import Export ConsumptionSource: USDA
44.4% of Russian44.4% of Russianconsumption comes fromconsumption comes from
imports.imports.
Beef MarketRussia 2000 2009 (thousand tons - CWE)
12
Beef Market
7/30/2019 2Q09 Conference Call Presentation
14/28
Beef MarketBrazil 1991 2009 (thousand tons - CWE)
2000
3000
4000
5000
6000
7000
8000
9000
10000
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Production,
Consumption(000MT)
0
500
1000
1500
2000
2500
3000
3500
4000
Exports,
Imports,Stocks(000MT)
Ending Stocks Production Consumption Exports Imports
Source: USDA13
7/30/2019 2Q09 Conference Call Presentation
15/28
Beef Brazilian Exports
Beef Brazilian ExportsBeef Brazilian Exports
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Exports JBS USD Exports Brazil USD
Source: Secex
25%25%
24%
21%
14
21%
1.11.00.8
0.60.8
1.5
2.5
3.0
3.9
4.3
5.1
USD
Billion
H hl h
7/30/2019 2Q09 Conference Call Presentation
16/28
Highlights
4
15
Net profit of R$172.7 million in the quarter.
Net revenue increased 29.8% from R$7,129.5 million in 2Q08 to R$9,255.0 million in 2Q09.
Consolidated EBITDA increased 32.1% in 2Q09 when compared with the same period last year,from R$290.8 to R$384.0 million. When compared with the 1Q09, EBITDA increased 81.5%.
Market share gain in JBS Brazil, from 14.9% in 1Q09 to 17.6% in 2Q09.
Initiated the strategy to build a sustainable, direct and efficient global distribution platform of meatand meat products both chilled and frozen.
Positive operating cash flow generation of R$311.7 million in the quarter.
Efficiency in managing working capital necessity.
Expansion of harvesting capacity in Brazil with the inclusion of the 5 new facilities.
Application for JBS USA IPO (Initial Public Offering) registration and BDR (Brazilian DepositaryReceipt) program.
7/30/2019 2Q09 Conference Call Presentation
17/28
JBS Consolidated Results
Net Revenue (R$ million)Net Revenue (R$ million) EBITDA and EBITDA Margin (R$ million)EBITDA and EBITDA Margin (R$ million)
16
Source: JBS
EBITDA Margin (%)
295.0
470.5
265.9
211.5
384.0
4.1%
6.1%
2.3%2.8%
4.1%
2Q08 3Q08 4Q08 1Q09 2Q09
7,129.57,771.5
9,633.29,267.9 9,255.0
2Q08 3Q08 4Q08 1Q09 2Q09
-0.1%
81.5%
9.0%
59.5%
24.0%
-43.5%
-3.8%
-20.4%
P f b B i U i
7/30/2019 2Q09 Conference Call Presentation
18/28
Performance by Business Units
17
Net Sales(US$ million)
Net Sales(US$ million)
EBITDA (US$ mi)EBITDA margin
EBITDA (US$ mi)EBITDA margin
JBS USA (Beef)
Including Australia
Net Sales
(US$ million)
Net Sales
(US$ million)
EBITDA (US$ mi)EBITDA margin
EBITDA (US$ mi)EBITDA margin
JBS USA (Pork)
Net Sales( million)
Net Sales( million)
EBITDA ( mi)
EBITDA margin
EBITDA ( mi)
EBITDA margin
INALCA JBS
Net Sales(R$ million)
Net Sales(R$ million)
EBITDA (R$ mi)EBITDA margin
EBITDA (R$ mi)EBITDA margin
JBS MERCOSUL
Source JBS
EBITDA Margin (%)
2.6
2.82.8
2.8
2.9
2 Q0 8 3 Q0 8 4 Q08 1Q0 9 2Q0 9
104.6
59.7132.9
155.6
60.4
5.1%5.6%
2 .2% 2.2%
3.6%
2Q0 8 3Q0 8 4 Q08 1Q09 2 T09
600682
620 526 554
2Q0 8 3Q0 8 4Q0 8 1Q09 2 T09
24.7
7.5
19.9
52.1
25.6
4.5%
1.4%
4.3%
7.6%
3.2%
2 Q0 8 3Q0 8 4 Q08 1Q09 2 T09
162143140
144 144
2Q08 3Q08 4Q08 1Q09 2T09
6.6
5.66.6
7.68.3
4.6%3.9%5.1%5.3%
4.7%
2Q0 8 3Q0 8 4Q0 8 1Q09 2 T09
1.4
1.8
1.6
1.4
1.7
2Q0 8 3Q0 8 4 Q0 8 1Q09 2 T0 9
82.6
53.5199,1
102.258,2
5.6%
4.1%
4.9%4.3%3.7%
2Q0 8 3Q08 4Q0 8 1Q0 9 2T0 9
D b
7/30/2019 2Q09 Conference Call Presentation
19/28
Debt
Considering the seasonality with the production increase in a high moment of high demandfor beef, the Company maintained its leverage on the same levels of the preview quarter.
The Company has improved its net debt in comparison to the 1Q09. The short term debtdecreased 47% in 1Q09 to 39% in 2Q09 against the total debt.
2.82.3
2.0
2.5 2.6
2Q08 3Q08 4Q08 1Q09 2Q09
Net Debt / EBITDA Pro Forma per Quarter
*
Net Debt = R$ 3,928MM
EBITDA pro forma = R$ 1,482 MM = 2.6
Source: JBS
Net Debt/ EBITDA EBITDA pro-forma
* LTM including Smithfield Beef pro-forma.
Debt Profile
50% 47% 39%
50% 53%61%
0%
20%
40%
60%
80%
100%
2Q08 1Q09 2Q09
Short term Long term
18
A il bili i
7/30/2019 2Q09 Conference Call Presentation
20/28
Availabilities
Besides the cash and cash equivalents noted above, the US and Australia subsidiaries of theCompany has availabilities of approximately US$ 560 million under their existing creditfacilities that provide additional liquidity.
Therefore the Companys total liquidity including the availabilities under its credit facilities:
19
R $ MillionR $ MillionR $ MillionR $ Million 06/30/0906/30/0906/30/0906/30/09 03/31/0903/31/0903/31/0903/31/09 Var.%Var.%Var.%Var.%Net indebtednes sNet indebtednes sNet indebtednes sNet indebtednes s 3,927.73,927.73,927.73,927.7 4,173.84,173.84,173.84,173.8 -5.9%-5.9%-5.9%-5.9%
Cash and cash equivalents 2,298.7 1,798.0 27.8%
Current 2,411.9 2,780.0 -13.2%Long term 3,814.5 3,191.8 19.5%
Gros s indebtednessGros s indebtednes sGros s indebtednessGros s indebtednes s 6,226.46,226.46,226.46,226.4 5,971.85,971.85,971.85,971.8 4.3%4.3%4.3%4.3%
R$R$R$R$ MillionMillionMillionMillion 06/30/0906/30/0906/30/0906/30/09
Additional availability 1,092.9
Cash and cash equivalents 2,298.7TotalTotalTotalTotal LiquidityLiquidityLiquidityLiquidity 3,391.63,391.63,391.63,391.6
O i l C h Fl
7/30/2019 2Q09 Conference Call Presentation
21/28
Operacional Cash Flow
The Company generated positive operating cash flow of R$311.7 million in the quarter.
20
CAS H FL OWCAS H FL OWCAS H FL OWCAS H FL OW 2Q092Q092Q092Q09E BIT 296.6taxes (34% ) -100.8NOP L ATNOP L ATNOP L ATNOP L AT 195.7195.7195.7195.7
Depreciation 87.4Gross Cas h F lowGross Cas h F lowGross Cas h F lowGros s Cas h F low 283.2283.2283.2283.2
Working Capital Variation 316.5
CAP E X -288.0Invest imentsInvest imentsInvest imentsInves t iments 28.528.528.528.5OP E R AT ING CAS H FL OWOP E R AT ING CAS H FL OWOP E R AT ING CAS H FL OWOP E R AT ING CAS H FL OW 311.7311.7311.7311.7
W ki C it l
7/30/2019 2Q09 Conference Call Presentation
22/28
Working Capital
JBS decreased its working capital necessity form 53 days in 1Q09 to 37 days in 2Q09, thatcorresponds to the lowest working capital necessity of the sector, considering that the average of thesector is 75 days. This reduction ensures the efficiency of the Companys management in managingits working capital.
21
Production & Stock = 32 days CLIENT = 42 days
SUPPLYER = 21 days
ProductDelivery
Supplyerpayment
Clients paymentto JBS
Clients orderto JBS
WORKING CAPITAL &
INTERESTS
53 days
1 Quarter 2009
Production & Stock21 dias
CLIENT = 37 days
SUPPLYER = 21 days
Product
Delivery
Supplyerpayment
Clients payment
to JBS
WORKING CAPITAL &
INTERESTS
37 days
2 Quarter 2009
Clients order
to JBS
JBS Consolidated Gross Revenue Distribution
7/30/2019 2Q09 Conference Call Presentation
23/28
JBS Consolidated Gross Revenue Distribution
Revenue Distribution by Business Units 2Q09Revenue Distribution by Business Units 2Q09 Revenue Distribution by Market 2Q09Revenue Distribution by Market 2Q09
Source: JBS Source: JBS
22
DomesticDomesticDomesticDomesticMarketMarketMarketMarket
74%74%74%74%
ExportsExportsExportsExports26%26%26%26%
ItalyItalyItalyItaly4%4%4%4% ArgentinaArgentinaArgentinaArgentina
2%2%2%2%
BrazilBrazilBrazilBrazil16%16%16%16%
Beef USABeef USABeef USABeef USA54%54%54%54%
Pork USAPork USAPork USAPork USA13%13%13%13%
AustraliaAustraliaAustraliaAustralia
11%11%11%11%
JBS Consolidated Exports Distribution
7/30/2019 2Q09 Conference Call Presentation
24/28
JBS Consolidated Exports Distribution
Exports Distribution 2Q09Exports Distribution 2Q09
Source: JBS
23
JapanJapanJapanJapan18%18%18%18%
E.U.E.U.E.U.E.U.
15%15%15%15%
USAUSAUSAUSA9%9%9%9%
Africa andAfrica andAfrica andAfrica andMiddle EastMiddle EastMiddle EastMiddle East
8%8%8%8%
RussiaRussiaRussiaRussia7%7%7%7%
MexicoMexicoMexicoMexico7%7%7%7%
South KoreaSouth KoreaSouth KoreaSouth Korea6%6%6%6%CanadaCanadaCanadaCanada
5%5%5%5%
Hong KongHong KongHong KongHong Kong
5%5%5%5%
ChinaChinaChinaChina4%4%4%4%
TaiwanTaiwanTaiwanTaiwan2%2%2%2%
OthersOthersOthersOthers14%14%14%14%
JBS Exports 2Q09JBS Exports 2Q09JBS Exports 2Q09JBS Exports 2Q09US$ 1,169.1 MillionUS$ 1,169.1 MillionUS$ 1,169.1 MillionUS$ 1,169.1 Million
Final Considerations
7/30/2019 2Q09 Conference Call Presentation
25/28
Final Considerations
The Company maintains its growth in Brazil reaching almost 18% market share, ascommented in previous presentations
The operations in the US continue to generate synergies and reduce costs maintainingmargins regardless of the economic downturn
The Company has already initiated the construction of its Global distribution network andmargins tend to improve as a result of its implementation.
The direction of JBS continues to focus on a healthy balance sheet, generating positiveoperational cash flow and maintaining the lowest leverage of the sector.
JBS continues along the path of sustainability constantly improving controls in order toguarantee the origin of its products.
JBS presented a solid financial structure and went thru the crises maintaining its liquidity.With the gradual recovery of global financial markets, global production and consumption,JBS is ready to continue strategic expansion through new acquisitions to maintain acompetitive over its rivals.
24
7/30/2019 2Q09 Conference Call Presentation
26/28
25
Questions and Answers
7/30/2019 2Q09 Conference Call Presentation
27/28
JBS S.A.
Questions and Answers
August 13th, 2009
In God we TrustJBS S.A.
DISCLAIMERDISCLAIMERDISCLAIMERDISCLAIMER
7/30/2019 2Q09 Conference Call Presentation
28/28
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 shareand 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 our
ability 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.
27