Post on 18-Oct-2015
transcript
JBS DAY New York
4Q13 and 2013 Results Presentation
March 25th, 2014
2
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
JBS management concerning the future of the business and its continued access to capital to fund the Companys business plan. Such forward-looking statements depend, substantially, on changes in market conditions, government regulations, competitive
pressures, the performance of the Brazilian economy and the industry, among other factors
and risks disclosed in JBS filed disclosure documents and are, therefore, subject to change without prior notice.
Disclaimer
3
Management Here Today
Wesley Batista CEO of JBS Global
Andr Nogueira CEO of JBS USA
Denilson Molina CFO of JBS USA
Bill Rupp President and COO of Beef USA
Bill Lovette CEO of Pilgrims Pride
Martin Dooley President and COO of Pork USA
Miguel Gularte CEO of JBS Mercosul
Gilberto Tomazoni CEO of JBS Foods
Eliseo Fernandez Chief Control Officer
Eduardo Maciel Finance Director of JBS S.A.
Jerry OCallaghan Investor Relations Officer
4
JBS at a Glance
Leadership position in the global food industry Estimated revenues of around US$50 billion in 2014 Presence in 5 continents and sales to more than 150 countries Production facilities in the low cost geographies
Founded in the 1950s in Midwest of Brazil IPO in 2007
Source: Company
More than 185,000 employees
Production
capacity 12 million birds/day
Chicken
70 thousand hogs/day
Pork
25 thousand lambs/day
Lamb
100 thousand hides/day
Leather
100 thousand heads/day
Beef
5
JBS 4Q13 Results Highlights
Net revenue of R$27.2 billion, an increase of R$5.4 billion, or 24.6% higher than 4Q12, of which 54% came from organic growth.
Consolidated EBITDA was R$1,873.5 million, an increase of 60.0% over the same period of last year. EBITDA margin for the quarter was 6.9%.
Annualizing 4Q13 EBITDA leverage ended the period at 3.17x.
JBS ended the year with leverage of 3.70x, considering all debt assumed with Seara acquisition and only one quarter of EBITDA.
6
JBS 2013 Results Highlights
JBS net revenue increased 22.7% compared to prior year and reached R$92.9 billion.
EBITDA totaled R$ 6.1 billion in 2013, 39.0% higher than 2012. EBITDA margin was 6.6%, an increase of 80b.p. over the previous year.
JBS ended the year with Adjusted Net Income of R$1,194.0 and recorded R$926.9 million of net income, 28.9% higher than 2012 and equivalent to R$323.32 per
thousand shares.
JBS generated net cash from operating activities of R$2,541.0 million, with positive free cash flow of R$635.1 million in 2013.
7
Market Analysis
8
Net intra-regional trade, million tonnes
Worlds Food* Surpluses and Deficits
* Cereals, rice, oilseeds, meals, oils and feed equivalent of meat.
Source: The Economist
1965
1990
1970
1995
1975
2000
1980
2005
1985
2010
150
100
50
0
50
100
150
North
America
South
America Australia
Eastern Europe
and former
Soviet Union
Western
Europe Asia Middle East
& Africa
Central
America
9
Global Protein Trade Largest Exporters
JBS is present in the main exporter markets
Source: USDA 2013
*Buffaloes / **Excluding Brazilian exports
Canada 3.4%
New Zealand 5.8%
Mercosul** 9.2%
Others 16.6%
USA 11.9%
Brazil 19.2%
India* 17.6%
Australia 16.3%
Chicken Exports
Beef Exports
Pork Exports
Turkey 3.5%
Thailand 5.2%
China 4.0%
E.U. 10.5%
Others 10.0%
Brazil 34.5%
USA 32.3%
Chile 2.6%
Brazil 8.5%
China 3.5%
Canada 17.6%
Others 4.1%
USA 32.5%
E.U. 31.2%
10
67.595.2
122.5
90.8
105.7
126.7
11.2
12.8
15.6
58.6
64.6
73.6
Poultry Pork Sheep Beef
Meat Consumption Growth Forecast 2011-2020
Meat Consumption Forecast (Million tons)
Expected increase in meat demand by country
groups between 2010 - 2020
Emerging
Developed
Source: FAO - OECD
19%
81%
2020
228.1
Ave 2008-10
278.2
2001
338.3
11
0
50
100
150
200
250
300
1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013E 2015E 2017E 2019E 2021E
Global Protein Consumption Growth by Species
Strong Global Industry Fundamentals
Source: USDA FAS and FAO
(MT in mm)
12
Average global per capita meat consumption, from 1960-2030
0 5 10 15 20 25 30 35 40 45 50
2030
1997-99
1964-66
Chicken Suine Ovine Bovine
Consumption (kg/person/year)
Source: FAO
13
Consolidated Results
14
3.43 3.40 3.28
4.03 3.70
0
500
1.000
1.500
2.000
2.500
3.000
4Q12 1Q13 2Q13 3Q13 4Q13
21,9
27,2
4Q12 4Q13
1.170,9
1.873,5
5,4 6,9
4Q12 4Q13
60.0%
3.17
Leverage EBITDA (R$ million)
Highlights
Annualizing 4Q13 EBITDA leverage
ended the period at 3.17x.
JBS ended the year with leverage
of 3.70x, considering all debt assumed
with Seara acquisition and only one
quarter of EBITDA.
Consolidated EBITDA was R$1,873.5 million, an increase of
60.0% over the same period of last
year.
EBITDA margin for the quarter was 6.9%.
Net revenue of R$27.2 billion, an increase of R$5.4 billion, or
24.6% higher than 4Q12, of which
54% came from organic growth.
24.6%
4Q13 Consolidated Results
[ Net Revenue - R$ billion] [ EBITDA - R$ million] [ Leverage Net Debt/EBITDA]
EBITDA Margin
Leverage considering annualized 4Q13 EBITDA
Source: Company
15
[ EBITDA - R$ billion]
19,5 21,9 24,2 27,2
75,7
92,9
1Q13 2Q13 3Q13 4Q13 2012 2013
EBITDA
EBITDA margin (%)
EBITDA totaled R$ 6.1 billion in
2013, 39.0% higher than 2012.
EBITDA margin was 6.6%, an
increase of 80b.p. over the previous
year.
Highlights
JBS net revenue increased 22.7%
compared to prior year and reached
R$92.9 billion.
In 2013,net revenue increased more
than 10% in all quarters.
JBS Mercosul recorded net revenue of R$25,820.5 million, up 43.3% when compared to 2012.
The chicken unit in the USA (PPC) had the best year in its history in 2013 and posted a net revenue of US$8,411.1 million.
Acquisition of Seara and union with JBS Chicken Brazil forming JBS Foods.
JBS ended the year with R$926.9
million of net income, 28.9% higher
than 2012 and equivalent to R$323.32
per thousand shares.
227,9
338,5
219,8 140,7
718,9
926,9
1Q13 2Q13 3Q13 4Q13 2012 2013
22.7%
[ Net Revenue - R$ billion]
0,9
1,7 1,7 1,9
4,4
6,1 4,5
7,6 7,1 6,9 5,8
6,6
1Q13 2Q13 3Q13 4Q13 2012 2013
39.0%
[Net Income - R$ million]
28.9%
2013 Consolidated Results
16
Adjusted Net Income
Adjusted net income in 2013 was R$1,194.0 million, disregarding the portion of deferred
income tax liabilities, which refers to the goodwill held by the Parent company. Net income for
the year was R$926.9 million, R$323.32 per thousand shares.
Operational Net Cash
In 2013 the company generated net cash from operating activities of R$2,541.0. In 4Q13 net
cash from operating activities was R$357.8 million .
Capital Expenditure
In 2013 the total capital expenditure (CAPEX) was R$1,737.3 million, while in 4Q13 the
expenditure was R$585.2 million. The main investments in 4Q13 in North America were
destined to the units of Brooks in Alberta, in Canada, and in Mercosul the main investments
were concentrated on improving productivity and expanding operations in the beef business in
Brazil and JBS Foods.
2013 Consolidated Results
Source: Company
Free Cash Generation
In 2013 company generated free cash flow of R$635.1 million. In 4Q13 negative free cash flow
of R$230.4 million due to an expressive expansion of Mercosul exports in the period.
17
Greater China* 21,2%
Mexico 14,6%
Africa and Middle East 9,8%
Japan 8,0%
E.U. 6,1%
Russia 5,7%
South Korea 4,9%
Venezuela 4,4%
Canada 3,6%
Chile 2,7%
Other 19,2%
2013
US$11,760.6
million
Increase of 19.6% in 2013
exports compared to 2012
Mexico 14,6%
Greater China* 14,0%
Japan 11,0%
Africa and Middle East
10,3% Russia 7,4%
E.U. 6,2%
South Korea 5,4%
Canada 5,4%
Venezuela 3,3%
Chile 3,1%
Other 19,4%
2012
US$9,830.2
million
JBS Consolidated Exports Distribution in 2013 and 2012
*Considers China and Hong Kong
18
Debt Profile
19
3,43 3,40 3,28
4,03 3,70
0
500
1.000
1.500
2.000
2.500
3.000
4Q12 1Q13 2Q13 3Q13 4Q13
USD 76%
R$ 24%
Annualizing 4Q13 EBITDA, that includes Seara results,
leverage ended the period at 3.17x.
LTM,Net debt/EBITDA was 3.70x in 4Q13, compared
to 4.03x in 3Q13, even after the integration of a relevant
acquisition and strong foreign exchange variation.
The reduction of net debt/EBITDA reflects the
management commitment in improving financial
efficiencies, consequently, reducing its leverage.
Parent Company
63%
Subsidaries
37%
10.8% per annum
6.0% per annum
3.17
.
Leverage EBITDA (R$ million)
Leverage considering annualized 4Q13 EBITDA
Indebtedness
Leverage Breakdown by Company
Breakdown by Currency & Average Cost
20
29%
35%
35%
28%
30%
71%
65%
65%
72%
70%
4Q13
3Q13
2Q13
1Q13
4Q12
Short term Long term
JBS ended the year with R$9,013.1 million in cash,
corresponding to 96% of short-term debt,
approximately.
Considering credit lines of immediate liquidity of
US$1.55 billion from JBS USA, availabilities of the
Company represents more than 100% of short-term
debt.
The percentage of short term debt (ST) in relation to
total debt declined from 35% in 3Q13 to 29% in
4Q13.
418
3.000
4.558
1.084
5.030
32
5.073
2.651
86
1.816
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Debt Profile
Net Debt maturity (R$ million)
Source: JBS
21
Stock Performance
22
During 2013, JBSS3 substantially outperformed the
Ibovespa Index, increasing 47%, while the index
decreased 15%.
The Average Daily Traded Financial Volume in the year was
R$34.3 million, an increase of 34.1% compared to 2012.
As of December,31 2013 JBS market cap was R$25.8 billion.
During 2013, PPC stocks substantially outperformed the
S&P 500 Index, increasing 129%, while the index increased
31%.
As of December,31 2013 PPCs market cap was US$4.7
billion.
60%
80%
100%
120%
140%
160%
JBSS3 IBOV
60%
100%
140%
180%
220%
260%
300%
PPC SPX Index
Source: Bloomberg, 100% = 12/31/2013
Stock Performance
JBS Stock Performance PPC Stock Performance (Controlled by JBS)
23
JBS Mercosul
24
JBS Mercosul
Net Revenue (R$ billion)
EBITDA (R$ billion)
EBITDA Margin (%)
Net revenue was R$9,203.7 million in the quarter, up 74.6%
over 4Q12.
Incorporation of JBS Foods results in 4Q13;
Improvement in the performance of the beef business in
Brazil;
Increase in the number of processed cattle year over year;
Exports 81.8% higher when compared to 4Q12.
EBITDA totaled R$ 919.7 with EBITDA margin of 10.0%
Increase in direct distribution and customer base;
Higher demand in the international market in the beef
segment.
5,3 5,0 5,4 6,2 9,2
18,0
25,8
4Q12 1Q13 2Q13 3Q13 4Q13 2012 2013
74,6%
0,7 0,6 0,5 0,7 0,9
2,5 2,7
12,6% 11,3% 10,0% 11,1% 10,0% 13,7% 10,5%
-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%
0,0
4Q12 1Q13 2Q13 3Q13 4Q13 2012 2013
25
Geographic Footprint and Capacity
Operation platform
90,000 hides per day
~55,000 head per day
36 Distribution Centers
09 Related Businesses
ARGENTINA
BRAZIL
URUGUAY
PARAGUAY
JBS Mercosul
26
0,0
200,0
400,0
600,0
800,0
1.000,0
1.200,0
1.400,0
1.600,0
1.800,0
2.000,0
0,0
100,0
200,0
300,0
400,0
500,0
600,0
Volume ('000 tons) Revenue (MM US$)
JBS Uruguay
JBS Beef Processing Facility
European Cattle Breed: Major breeds - Hereford and Angus (British).
Focus On Niche Markets: Quality rather than quantity.
Market Access: Access to all major beef importing markets.
Uruguay has about 15,000 m (or 135,000 square feet) for each animal in the farm.
More than 80% of the Uruguayan land dedicated to livestock
Uruguay Beef Exports Footprint
JBS Tannery
Canelones
Montevideo
1 beef processing facility 900 head per day
2 Tanneries 8,400 hides per day
Source: FAO and INAC Uruguay
Note 1: Exports revenue compound annual growth rate (2003-2013)
Note 2: Exports volume compound annual growth rate (2014-2022)
CAGR
14%
CAGR
3.1%
27
0,0
100,0
200,0
300,0
400,0
500,0
600,0
700,0
800,0
900,0
1.000,0
0,0
50,0
100,0
150,0
200,0
250,0
300,0
350,0
Volume ('000 tons) Revenue (MM US$)
JBS Paraguay
JBS Beef Processing Facility
Herd Growth of 8.0% in 2013, the highest in South America.
Paraguay also registered the highest growth in beef exports, with revenue growing from US$67.7 million to US$904.3 million in the last decade, an increase of 1,237%.
High capacity utilization of processing facilities.
Production costs are very competitive.
JBS has around 25% of market share in Paraguayan Exports
Paraguay Beef Exports Footprint
02 beef processing units 1,300 head per day
Source: FAO and SENACSA
Asuncin
San Antonio
28
0,0
200,0
400,0
600,0
800,0
1.000,0
1.200,0
1.400,0
1.600,0
1.800,0
0,0
100,0
200,0
300,0
400,0
500,0
600,0
700,0
Volume ('000 tons) Revenue (MM US$)
JBS Argentina
JBS Beef Processing Facility
Argentina's exports are restricted by the government due to the "Meat For All program, created in 2011 by the present government.
Concentration of activities in one plant in order to have efficiency gains, increasing productivity levels in order to reduce operation costs.
Production focused on the domestic market due to tariffs on exports. Change in product mix and creation of customized and branded products such as beef nuggets to attend local demand.
Argentina has one of the largest beef consumption.
Concentration of activities in one plant in order to have efficiency gains
Argentina Beef Exports Footprint
5 beef processing units (only 1 active) 1,750 head per day 1 DC in Pillar
Source: FAO, IPCVA and USDA
Rosario
Venado Tuerto
Pontevedra
Berazategui
Colonia Caroya
29
42 beef processing facilities with capacity to process 45,000 head of cattle per day
06 feedlots with capacity to feed 284,000 head of cattle per period
19 hide facilities with capacity to process 73,000 hides per day
35 Distribution Centers (12 large + 23 regional)
1
1
4
15
5
3
4
6
2
1
2
2
6
2
2
2
1
1
1
1
1
2 1 3
3 1
2
2
3
3
1
4
1
1
AC
RO
PA
MA
PE
BA TO
GO
MT
MS
MG
SP
PR
SC
RS
ES
RJ
JBS is present in 17 of 26 states in Brazil, through:
JBS increased the number of heads processed by
about 20% from 2012 to 2013, while total Brazilian
slaughter increased 4%.
Beef Processing
Feedlot
Distribution Center
Tannery
JBS has 9 businesses related to its Beef Industry that
add value to by-products in Brazil.
Examples are: biodiesel, collagen, casings, etc.
Brazil has over 200 million head of cattle, the worlds largest commercial herd, with double the size of the
second largest country.
2
1
4
4
1
9
JBS Brazil
30
Export Market Highlights
JBS Brazil
Domestic Market Highlights
35 Distribution Centers (12 large + 23 regional)
Big demand from emerging markets; i.e. Greater China
Fresh Brazilian Beef to the US
JBS unique position due to its US and Brazilian footprint
Exports and revenue exports growth of 25% in 2013
A further 30% revenue growth in local currency
Successful marketing and advertising campaign 10,000 new clients in 2013 2014: growth expectations due to important events in
Brazil
31
JBS is the worlds largest hides/leather processor with capacity to process more than
91,000 hides per day with 26 tanneries and
finishing units in:
Brazil, Argentina, China, Germany, Italy,
Mexico, South Africa, Vietnam and Uruguay
Note 1. Not considering leather operations in the US and Australia
JBS has been adding value internally, reducing the sale of wet blue (first stage of production) and
boosting its sales of finished and semi-finished
leather, which contributes to an increase of the
profitability of this operation.
JBS projects processing 15 million hides in 2014,
generating revenues of more than US$1.5 billion.
JBS is the main leather supplier to the automotive industry, which shows excellent growth
perspectives. More than 90% of our production is
directed to the international market.
Overview
JBS Leather Business
32
Biosiesel
Cans
Trading
Collagen
Cleaning & Hygiene
Carriers
Vehicle Sales
Casings
Environmental Recycler
JBS Core Business
(Meat)
Capacity to produce
136,000 tons of
biodiesel per year
using beef tallow as
principal raw material
71 MM cans
manufactured
per month,
100%
recyclable
Opportunity to
leverage new
businesses
Pioneer in beef
based collagen
production
COLLAGEN Adding value to beef
tallow by producing
personal hygiene and
also cleaning products
1,200 providing
strategic logistics
resulting in cheaper
freight
CARRIERS
Complementary
to JBS Carriers
Largest producer
of sausage
casings in the
world
Recycling and reducing
carbon footprint
JBS Related Businesses in Brazil
33
Closing Remarks JBS Mercosul
34
JBS USA
35
JBS USA at a Glance
JBS USA Beef Including Australia and Canada
JBS USA Pork
JBS USA Chicken (Pilgrims Pride Corporation PPC)
WHERE
WE ARE
36
Why North America / Australia?
STRONG DOMESTIC MARKET
NATURAL RESOURCES & CAPACITY TO PRODUCE
GRAINS/OILSEEDS
WORKFORCE: QUALITY & AVAILABILITY
INFRASTRUCTURE
LOW-COST ENERGY BEST ANIMAL HUSBANDRY PRACTICES
37
Brazil20%
India19%
United States13%
Mercosul10%
Canada4%
Others18%
Source: USDA WASDE March 2014.
United States 33%
Brazil 9%
EU
31%
Canada
18%
Other
9%
T O P EXPORTERS BEEF
T O P EXPORTERS PORK
T O P EXPORTERS
CHICKEN
United
States
32%
Middle
East 3% Other 4%
Australia
17%
Why North America / Australia?
38
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
jan-8
8
jan-8
9
jan-9
0
jan-9
1
jan-9
2
jan-9
3
jan-9
4
jan-9
5
jan-9
6
jan-9
7
jan-9
8
jan-9
9
jan-0
0
jan-0
1
jan-0
2
jan-0
3
jan-0
4
jan-0
5
jan-0
6
jan-0
7
jan-0
8
jan-0
9
jan-1
0
jan-1
1
jan-1
2
jan-1
3
U.S. Meat Exports as a % of Production (Beef + Pork + Broiler)
Exports % Production: Beef + Pork + Chicken Exports % Production: Beef + Pork + Chicken, 12 Month Moving Average
Why North America / Australia?
Exports account for 1 of every 5 pounds produced in the U.S.
Source: USDA
39
449,6
670,9
2012 2013
0,19
0,50 0,51
1,03
2012 2013
Japan (US Beef exports do Japan in metric tonnes) Greater China (in million metric tonnes)
Why North America / Australia?
Examples Where Beef Exports Are Going
USA +70.4%
Australia +259%
102%
228%
Growth Rate
Australia
World
Source: USDA
40
Why North America / Australia?
Colombia +85.4%
Chile +41.8%
Taiwan +24.7%
Angola 3rd largest importer in
2013, 456K metric tonnes
Iraq + 45%
China + 38.1%
EXAMPLES WHERE PORK
EXPORTS ARE GOING
EXAMPLES WHERE CHICKEN
EXPORTS ARE GOING
2013
Source: USDA
41
55,610
7,636
5,087
2,539
424
Headcount
United States Australia Mexico Canada Puerto Rico
Our Team
71,296 EMPLOYEES IN 4 COUNTRIES & PUERTO RICO
ANDRE NOGUEIRA JBS USA
BILL RUPP JBS USA BEEF
(CANADA & AUSTRALIA)
MARTY DOOLEY JBS USA PORK
BILL LOVETTE JBS USA CHICKEN
(PILGRIMS PRIDE CORPORATION PPC)
DENILSON MOLINA JBS USA CFO
42
Human Resources
Continuously improve employee engagement and drive-down turnover
Turnover Results
REDUCTION
MORE THAN A
50% IN TURNOVER
OF HOURLY PRODUCTION E M P L O Y E E S
F R O M 2 0 0 7 - 2 0 1 3
2007 2008 2009 2010 2011 2012 2013
Company Turnover Hourly
2007 2008 2009 2010 2011 2012 2013
43
Human Resources
6,2
4,60 4,2
6,9 6,4 6,3
2010 2011 2012
JBS Industry
Safety Results Meat & Poultry Combined Recordable Rate
Consistently outperform our competitors
Source: Company
44
200 LEADERSHIP
PROGRAM
TRAINEES IN 2013
Human Resources
Next generation of leaders
45
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
2007 2008 2009 2010 2011 2012 2013
Sales Growth Historical Performance
McElhaney
Cattle Co.
Acquisitions
JBS USA Holdings Net Sales (US$ Billion)
46
Turn Around + Growth = Value Generation
63,5
1.415,0
2007 2013
JBS USA EBITDA $ MILLION
JBS USA Acquisitions
McElhaney
Cattle Co. = BILLION $4.87
Investments
2013 EBITDA = 3.44 x
47
JBS USA Pork At a Glance
12%
MARKET S H A R E
BRANDS F O O T P R I N T 3 Pork Plants
51,300 Head per Day
1 Lamb Plant
2,800 Head per Day
1 Case Ready Plant
48
48
PORK
3 Processing Facilities; 1 Case
Ready
Louisville, Kentucky Marshalltown, Iowa Worthington, Minnesota Santa Fe Springs, California (case ready)
Daily Processing Capacity: 51,300
LAMB
1 Processing Facility
Greeley, Colorado Daily Processing Capacity: 2,800
Plant
Case Ready
JBS USA Pork Where We Are
49
955,5 842,0 868,5
903,3 904,9
3.501,1 3.518,7
0,0
500,0
1000,0
1500,0
2000,0
2500,0
3000,0
3500,0
4000,0
4Q12 1Q13 2Q13 3Q13 4Q13 2012 2013
-5,3%
42,7 46,8 50,7 43,8
86,3
188,1 227,6
4,5% 5,6% 5,8% 4,8% 9,5%
5,4% 6,5%
-23,0%
-19,0%
-15,0%
-11,0%
-7,0%
-3,0%
1,0%
5,0%
9,0%
-0,023
99,977
199,977
299,977
399,977
4Q12 1Q13 2Q13 3Q13 4Q13 2012 2013
JBS USA Pork 8%
Net Revenue (US$ million)
EBITDA (US$ million)
EBITDA Margin (%)
Net Revenue was US$3.5 billion, stable over 2012:
Lower number of processed animals, which resulted in a
decrease of sales volume that was offset by an increase in
prices.
EBITDA was US$227.6 million, increase of 21% over 2012:
Increase in selling prices both in the domestic and
international markets.
EBITDA margin of 9.5% in the 4th quarter 2013.
21%
50
Strategy
BUY
Continue to focus on:
MAKE
Increase Japan chilled
Improve converted products volume
and margin
Expand case ready
Expand value-added
SELL
Safety
Turnover
Labor efficiency
All expenses elements
Yields
Additional automation
Maintain 70% contract supply
Increase supply from medium/smaller producers
Increase programs, such as paylean free, marbled, weight sorted
51
US Pork - Added Value Products
Swift Premium
Dry Rubbed Ribs
Swift Premium
Dry Rubbed
Boneless Backrib
Swift Premium Dry
Rubbed Loin Filet
Swift Premium
Saddle Pack
Boneless Pork
Chops
Swift Premium
Ground Pork
52
22%
MARKET
BRANDS F O O T P R I N T
CANADA
AUSTRALIA
9 Beef Plants
27,000 Head per Day
11 Feedlots / 1M Head Capacity
1 Hide Plant / 5,000 Hides per Day
1 Beef Plant
4,000 Head per Day
1 Feedlot / 70,000 Head Capacity
8 Beef Plants
8,300 Head per Day
5 Feedlots / 152,000 Head Capacity
5 Lamb Plants / 22,000 Head per Day
1 Hide Plant / 6,000 Hides per Day
JBS USA Beef At a Glance
34% 27%
U.S. CAN AUS
U.S.
SHARE
53
10 beef and small stock
slaughtering plants located in
New South Wales, Queensland,
Victoria and Tasmania
7 distribution centers situated in
Sydney, Melbourne, Brisbane,
Perth, Adelaide, Dinmore &
Townsville
5 cattle feedlots located in
Queensland and New South Wales
AUSTRALIA
10 beef and small stock slaughtering plants
located in Brooks, AB CA; Cactus, TX;
Grand Island, NE; Greeley, CO; Green Bay,
WI; Hyrum, UT; Omaha, NE; Plainwell, MI;
Souderton, PA; and Tolleson, AZ.
11 cattle feedlots located in Brooks,
AB, CA; Dalhart TX; Hartley, TX;
Kersey, CO; Lamar, CO; LaSalle,CO;
Malta, ID; Texhoma, OK; Ulysses,
KS; Wellton, AZ; and Yuma, CO.
U.S. &
CANADA
Daily Processing Capacity: 31,000 Daily Processing Capacity: 8,300
JBS USA Beef Where We Are
54
103,3 -25,1
161,7 125,3 113,9
223,9
375,8
2,1% -0,6%
3,4% 2,7% 2,4% 1,3% 2,0%
-30,0%
-28,0%
-26,0%
-24,0%
-22,0%
-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%
-100
0
100
200
300
400
500
600
700
4Q12 1Q13 2Q13 3Q13 4Q13 2012 2013
4,9 4,3 4,8 4,7 4,8
17,5 18,6
4Q12 1Q13 2Q13 3Q13 4Q13 2012 2013
-1,0%
EBITDA Margin (%)
JBS USA Beef (including Australia and Canada)
Net Revenue (US$ billion)
EBITDA (US$ million)
Net revenue was US$18.6 billion, increase of 6.3% compared
to 2012:
Increase in domestic sales volume and in exports in Australia.
EBITDA was US$375.8 million, increase of 67.8% compared to
2012:
Increase in domestic market beef prices during the 4th quarter,
offsetting the increased costs of raw material.
JBS maintained the positive results registered during the year of
2013, a reflection of the focus on operational efficiency, costs
reduction and expansion in deals with key customers
The operation in Australia continues to deliver solid and consistent
results, influenced by strong demand from Asian countries, especially
China.
6.3%
68%
55
Tight supplies forecast in North America as strong signs of heifer
retention & rebuilding occur due to much improved moisture conditions
Global trade for North American and Australian Beef continues to be
strong.
Higher prices will impact demand for North American beef but a
downturn in protein supplies should support.
Marketing Conditions
56
Capital investments in multiple ground beef capabilities and value
added production will improve top line revenue opportunities.
Continued alignment of cattle supplies with plants will lessen the impact
of tight supplies.
Strong plant focus on yield improvement in plants.
Continued success in aligning with customers to jointly
optimize value with the consumer.
Strategy
57
57
19%
MARKET S H A R E
BRANDS F O O T P R I N T U.S.
MEXICO
PUERTO RICO
31 Chicken Plants
6.5M Birds per Day
3 Chicken Plants
800,000 Birds per Day
1 Chicken Plant
JBS USA Chicken Pilgrims Pride Co.
58
PILGRIMS
25 U.S. & Puerto Rican Processing Facilities
3 Mexican Processing Facilities Queretaro San Luis Potosi Tepeji Del Rio
Daily Processing Capacity: 7.5 Million birds
Aibonito, PR Athens, GA Broadway, VA Canton, GA Carrollton, GA Chattanooga, TN De Queen, AR Douglas, GA Elberton, GA Ellijay, GA Enterprise, AL Gainesville, GA
Guntersville, AL Live Oak, FL Lufkin, TX Marshville, N.C. Mayfield, KY Moorefield, WV Mt. Pleasant, TX Nacogdoches, TX Natchitoches, LA Russellville, AL Sanford, N.C. Sumter, SC Waco, TX
JBS USA Chicken Where We Are
59
2,2 2,0 2,2 2,1 2,0
8,1 8,4
4Q12 1Q13 2Q13 3Q13 4Q13 2012 2013
-6,5%
67,4 117,7
265,0 226,1 197,2
402,6
805,4
3,1% 5,8%
12,1% 10,6% 9,6% 5,0%
9,6%
-30,0%
-25,0%
-20,0%
-15,0%
-10,0%
-5,0%
0,0%
5,0%
10,0%
15,0%
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
1300
1400
1500
4Q12 1Q13 2Q13 3Q13 4Q13 2012 2013
JBS USA Chicken (Pilgrims Pride Corporation - PPC) 17%
Net Revenue (US$ billion)
EBITDA (US$ million)
EBITDA Margin (%)
Net Revenue was US$8.4 billion, increase of 3.6% compared
to 2012.
Growth in sales resulting primarily from an increase in industry
prices associated with good demand for poultry products
combined with a tight supply.
EBITDA of US$805.4 million, increase of 100% over 2012 and
margin of 9.6%:
Improved pricing, improved sales mix, improved yields,
reduction in processing cost and SG&A contributed to improve
PPC results.
Operating net cash flow was US$878.5 million for the full year,
adding strength to the Company's balance sheet.
3.6%
100%
60
Strategy
Best of class quality
management systems
Employ greater use of
category management
Execute effective operator
strategy
Export dedicated assets
Export tailored products
Development of new markets
Results- oriented culture
consistent with JBS values
Delayering and downsizing
management driving lower
SG&A
Growing talent internally and
developing people
Be a valued partner with our key customers
Relentless pursuit of
operational excellence
Strategically grow valued
added exports
Accountability and ownership
culture
Be the best
managed & most
respected
company in
our industry
Best of class yields
Best of class live cost and
processing costs
Optimal sales mix and price
Quality, safety and turnover
61
On a Path Toward Growth
Were Ready Renewed Sales
& Brand Focus
Mix and
Rationalization Customer
Products
Capacity
Operational
Efficiency Improved
commitment
to quality
62
Whats Next
Continue Pushing Operational
Efficiencies
Generate Superior Returns
& Optimize Capital Structure
Capture Growth Opportunities
Higher, Less Volatile Earnings
SHAREHOLDER
VALUE
63
Whats Next
Leverage Existing Assets
Expand actual plants and
lines with high-ROIC
investment opportunities
$150 million of CapEx
expected
About half directed to
growth / increase
efficiency
Accretive Acquisitions
Chicken: Complementary
Geographies or Differentiated
Branded chicken
Prepared/ Packaged Foods:
Branded and differentiated
products
Increase Footprint in
Attractive Mexico Chicken Industry
Current footprint only covers
a portion of the country
Opportunity to expand
geographically
Evaluate bolt-on acquisitions
or greenfield opportunities
Fast
Growing Value-Added Exports
Leverage JBS capabilities to
sell direct to customers in
foreign markets
Develop brands / products
designed for local preferences
Focus on value-added
products, not just commodity
dark meat
Capture significant expected
growth in chicken demand in
foreign markets
64
JBS Foods
65
JBS Foods is the branded convenience poultry and pork business of JBS in Brazil
2nd largest meat based packaged food Company in Latin America
2nd largest producer and exporter of poultry and pork in Brazil
53 productive units, 20 distribution centers and 45,000 employees
Strong domestic and international presence with high growth potential
Integrated platform with diversified product portfolio
Fully integrated pork and poultry business
JBS Foods at a Glance
JBS Foods is a leading platform with a strong brand portfolio across value added food products in Brazil
Source: Company
Nota
1. Pending regulatory approval
JBS
Foods
66
Industrial Footprint Industrial Capacity per Product Line
JBS Foods: Footprint
National footprint with a production capacity of 4.4 mm bird / day and 85,000 tons of further processed products /
month
22,200 hogs / day
4.4 mm birds / day
80,000 tons of value added further processed products / month
Source: Company
Distribution Centers
Production Facilities Footprint
Further Processed Products
Pizza
Lasagna
Hamburger
Refrigerated
Pasta
Breaded
Products
Ready-to-eat
Meals
67
JBS Foods focus on 5 pillars to make a strong and fast turnaround of Seara
Turnaround Under Way
Management
Market Orientated
Performance
Growth Culture of
Excellence
68
Our Team and Our Culture Makes the Difference
JBS has built an exceptional team with deep knowledge in the industry
( Years of experience, occupying leadership positions in the industry)
Our Values
Determination
Simplicity
Discipline
Sincerity
Meritocracy
What We Believe
Best people in the right place
Ownership attitude
Leadership by Example
Team Work
Focus on Details
Culture of Excellence Our Team
Gilberto Tomazoni CEO (30 years)
James Cleary International Market (24 years)
Srgio Sampaio Production (20 years)
Ivo Dreher Financial/Adm (17 years)
Osrio Dal Bello Live Production (34 years)
Joanita Karoleski Supply Chain (10 years)
Almir Peruk Human Resources (25 years)
Ronaldo Muller Quality and R&D (27 years)
Ivan Siqueira Industrial (15 years)
Eduardo Bernstein Marketing (26 years)
Nelson Teixeira Domestic Sales (26 years)
69
Market Orientated: Streamlining and Repositioning of Brands
JBS Foods is currently rationalizing its brand portfolio and focusing on the quality of its products and services
JBS Foods Brands Pre-Acquisition JBS Foods Brands Repositioning
Premium
Mainstream
Source: Company
Access / Regional
70
Market Orientated: Improved Pricing Strategy
New pricing strategy, focused on results rather than volumes, with strict controls and defined responsibilities
Previous Model New Model
Structure
Commercial Team
Autonomy
Focus
Responsible for Price
Management
Decentralized, with lack of standard pricing process and management
High commercial team concentrated pricing strategy
Volumes, with low commitment to pricing and consequently financial results
Fragmented, mostly commercial department
Centralized, with standard and structured process
Defined roles and responsibilities
Medium focus on policy execution
Financial results, based on mathematical modeling
Dedicated pricing department
Source: Company, Nielsen
71
International Growth Strategy Revenue Breakdown per Category 4Q13 (%)
JBS Foods: Global Positioning and International Growth Strategy
Comprehensive strategy to explore opportunities in further processed foods and international markets
Strategic approach Instead of transactional approach
Revenue Breakdown per Region 4Q13 (%)
Source: Company
Develop strategic partnerships with importers/distributors in our key markets
Develop Seara into a recognized global brand for quality poultry, pork and further processed products
Increase our presence in the supply of FPP to global QSR customers
Improve our product mix by increasing sales of retail packs
Specific strategies for new markets (eg. Pork for Japan)
Middle East 31%
Asia / Oceania 14%
Japan 12%
Africa 11%
North Africa 10%
Europe 10%
Americas 8%
CIS / Balkans 4%
Fresh Exports
48%
FPP Exports 6%
Domestic Market 46%
72
Improved Performance from Farm to Market
Efficiency gains in live costs, manufacturing and distribution
Main Initiatives Stage of Value Chain
Improved Distribution Network
Integrated demand planning
Renewed logistics network
Live Costs and Efficient Feed Conversion
Cycle optimization through revision of practices and improved feed conversion
Implementing best practices in feed nutrition and livestock handling
Increase in Yields and Optimization of
Product Mix Focus on operational excellence with new operational standards
Optimization of product mix per industrial unit
Product mix more aligned with availability and quality of raw materials, increasing revenue generation
Renewed Go-To-Market Strategy
Marketing strategy focused on profitability and portfolio simplification
Simplification of brand architecture
Category management
73
JBS Foods has identified total potential gains of R$1.2 billion through internal management initiatives
Value Creation Through Management Initiatives in 2014
Live Animal
Total Value of Opportunities: R$1.2 billion
Price and Sales
Strategy
Industrial Domestic and
International
Logistics
Finance and
Administration
Non Core Supplies
R$287 mm R$207 mm R$472 mm R$118 mm R$30 mm R$87 mm
Value of Opportunities Identified in JBS Foods (R$ mm)
74
JBS 17%
Player A 32%
Others 51%
JBS 14%
Player A 29%
Others 57%
Growth Opportunities Through Organic and Inorganic Growth
Capacity Expansion Increase processing capacity and geographical
diversification
Product Mix Diversification Increase category diversification
Additional growth opportunities through capacity expansion and product mix diversification
Leasing of BR Frangos production unit in North of Paran
Acquisition of Massa Leve in 2013 Main products include pastas, ready-to-eat
meals, pizzas and pastry based products
Rationale Recent Movements
Strategies for Inorganic Growth
Share of Pig Slaughter in Brazil 2013 (%) Share of Birds Slaughter in Brazil LTM Until Sep13 (%)
Source: Company, SIF, SECEX, IBGE, JBS
Idle Capacity We have around 40% in idle capacity of FPP
Numerical Distribution We are servicing direct 58,000 customers and have potential to increase to 140,000
75
800 42
144 110 1,095
2,730
3,825
Dec-09 Nov-10 Jan-12 Mar-12/Nov-12 Total JBS Investment
Value Creation Current Market Value of JBS
Stake
Cost reduction
Margin improvement
SG&A control
Efficiency improvement
Integration of processes
Brand repositioning
Extensive experience in integrating and extracting synergies in acquisitions
We Are Confident That We Will Continue to Deliver Value to Our Stakeholders as Our Track Record Shows
Key Initiatives Value Creation in the Acquisition of Pilgrims Pride (US$ mm)
Pilgrims Pride
acquisition (2009)
Swift acquisition
(2007)
JBS USA
acquisition of 64%
stake in PPC
Increase
ownership to
67.3%
JBS USA
oversubscription in
PPC rights
offering
Acquisition of
additional shares
from Lonnie Bo
Pilgrim and Don
Jackson1
64.0% 67.3% 68.0% 75.5%
JBS stake in PPC
1 JBS USA acquired 18.7 mm shares from Lonnie Bo Pilgrim, the founder and former controlling shareholder of PPC (US$107.2 mm) and 455.3 thousand shares from Don Jackson, JBS USAs former CEO (US$2.7 mm)
2 PPC market value of US$4,958 mm (as of March 14, 2014)
Value Creation
of 250%
Mission
To be the best in what we set out to do, totally focused on our business, ensuring the best products and
services for our customers, solidity for our suppliers, satisfactory profitability for our shareholders and the
certainty of a better future to all our employees.