1st Quarter 2010 Results

0 0

May 14th, 2010

Presenters

Joesley Mendona Batista

Chief Executive Officer

Jeremiah OCallaghan
Investor Relations Director

Guilherme Arruda
Investor Relations

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.

Our Mission
To be the best at 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 for all our employees.

Our Values
Excellence Planning Determination Discipline Availability Openness Simplicity

Agenda

Company Overview

Market Overview

1Q10 Highlights

Short Term Outlook

Company Overview

JBS S.A. at a Glance

Founded in the 1950s in Central West Brazil IPO in 2007 Ibovespa ticker: JBSS3 ADR ticker: JBSAY Leading protein producer in the World Production platform in South America, North America, Europe and Oceania 125,000 employees worldwide Market cap of approximately R$19 billion *
*Source: Bloomberg 13/05/2010 6

Shareholders

PROT - FIP 8%

Market 19.1%
Controlling Holding 55.5%

BNDESPAR 17.3%

JBS S.A. Growth Through Acquisitions

EBITDA (R$mm)

CAGR (2001-2009): 62%

Bertin Merger Pilgrim s Pride JBS Hides 5 new units

Tasman Smithfield Beef Five Rivers

Venado Tuerto Pontevedra (CEPA)

Inalca Swift Foods Co. SB Holdings

2001
% of total revenues of R$1,212mm

2006 pre IPO

% of total revenues of R$4.3bn

2009
% of total revenues of R$55.2bn

Industrialized/ Further Processed 100%

Poultry 23% 52% 77% Beef Beef 13% Pork 6% Industrialized/ 29% Further Processed

Beef

Global Low Cost Production Platform

3
8 33 3 1

Total Number of Plants

65 33 3 6
44 10 5

World Beef Producers

Others
34% Brazil

World Pork Producers

Others 17%
US Brazil 3% China 48%

World Chicken Producers

Brazil Others 34%

16% 10% China

15% 17%
22% 12% EU

10%
22% EU

China

14% EU 21% 5% US India

US

Leading, Sizeable and Diversified Business Platform

Beef Ranking 1st

Global
Production Units

Chicken 2nd
Global 33 mm heads/day:

Pork 3rd
U.S.A. 3 000 heads/day:

Hides / Leather 1st

Global 26 000 hides/day: 55.6

Dairy 3rd
Brazil 7 000 tons/day: 1.4

Lamb 1st
Global 6 000 heads/day:

65 000 heads/day: 41.2 1.1

Geographic Presence and Installed Capacity

6.7 28.6 8.7 3.0 6.9 48.5 28.6 6.0 4.5 23.0

1.0
Total: 90.3

0.7
Total: 7.6 Total: 48.5

1.2 Total: 91.4 Total: 1.4 Total: 27.5

WellRecognized Brands

10

Our Strategy

Rationale
Branding
Associating quality and branding

to increase client loyalty

Customized and further

Value added products

processed products for the end users

Expanding a global distribution

Sales and distribution platform

platform to reach end clients

Developed an efficient

Production platform
Cost reduction, process optimization

and diversified global production platform

EBITDA Margin

Financial structure

Experienced management

Risk management

JBS Value & Strategy

11

Distribution Platform with Access to Key Markets

Growth 1 -2 % 3% 4% Growth 1

9%
13 % 8%

Growth 1

Growth
2% 8%

7% 25 % 16 %

5%

53 Distribution Centers

Protein Consumption in Key Markets (millions of Ton, 2009E)

Asia & Middle East Europe 28% 17% 22% North America 33% Asia & Middle East Europe

13

8
Latin America

12
16% 41% 15% 28% Latin America

Asia

Europe 24% 59% 3% 13%

30

51

21
Latin America

11
North America

3
North America

10

15 Total: 46 mm ton
1 Real growth of total consumption in tons 2010E to 2015E Source OECD-FAO

21 Total: 74 mm ton
12

11 Total: 86 mm ton

Market Overview

13

Market Highlights

Domestic growth in Brazil remains strong Grain prices are competitive Signs of growing importance of international trade with increased demand in all major importing markets Increase in US Exports Declining production in Europe

14

Per capita food consumption curve (Kg / Year)

Source: FAO

15

Brazilian Beef exports (Thousand Tons)

1,600 1,491 1,425 1,400

1,263

1,218
1,086

1,200 1,000 800 600 400

780

1,095

231 200 0 2003

E.U.
Source: Secex * Until March
16

258

2004
Russia Egypt

2005
Venezuela

2006
Algeria

2007
USA

2008
Hong Kong

2009
Others

2010*
Until March

US Beef and Veal Exports (Million Pounds)

3,000 2,520

2,500

2,412

2,467 2,269

2,449

2,000

1,888

1,867

1,500 1,146 1,000 697 500 461

1,433

478
384

0 1999
Mexico

2000
Canada

2001
South Korea

2002
Japan

2003
Vietnam

2004
China
17

2005
Hong Kong

2006

2007

2008
Others

2009
Until March

* 2010

Netherlands

Source: USDA ERS * Until March

US Pork Exports (Million Pounds)

5,000 4,667
4,500 4,128

4,000 3,500
2,995

3,142

3,000 2,500
2,000

2,667 2,181 1,560

1,612

1,717

1,500 1,278 1,000 500 0 1999

Japan

1,287 1,047
1,034

2000
China

2001
Hong Kong

2002
Mexico

2003
Russia

2004
Canada
18

2005
South Korea

2006

2007

2008

2009

* 2010

Australia

Others

Until March

Source: USDA ERS * Until March

US Poultry Exports (Million Pounds)

8,000 7,109 7,000 6,070 6,000 4,980 5,000 4,000 3,000 2,000 1,754 1,000 0 1999
Russia

6,906

5,738
5,138

5,333 4,942 5,013 4,997

5,367

1,508

2000

2001
Iraq

2002
Mexico

2003
Canada

2004
Cuba
19

2005

2006

2007
Others

2008
Until March

2009

* 2010

China (Mainland)

Other Chicken

Source: USDA ERS * Until March

Beef & Veal Supply and Demand in 2020

Global Surplus (Deficit) of Beef & Veal (Million metric tons)

1.5 12.7
Production Imports

USA 1.2
13.0
Exports Consumption

Europe 0.2 0.8

8.0
Production Imports

China
8.6 8.6
Production Imports

0.5 8.1

Exports Consumption

Exports Consumption

Argentina & Uruguay 0.4

3.6
Production Imports

3.2
Exports Consumption

0.2 14.3
Production

Brazil
5.1 9.4 4.1
Production

India
0.5 3.6
Imports Exports Consumption

Australia

2.4
Production Imports

1.6

0.8

Imports

Exports Consumption

Exports Consumption

Source: Goldman Sachs

20

Chicken Supply and Demand in 2020

Global Surplus (Deficit) of Chicken (Million metric tons)

Europe
1.1 8.9
Production Imports

Russia
0.9 1.2 9.1 2.2
Production Imports

China 0.2
19.2
Production Imports

3.4
Exports Consumption

20.0
Exports Consumption

Exports Consumption

USA
4.1 19.1
Production Imports

Surplus Deficit
15.1

Exports Consumption

Brazil
6.9 16.2
Production Imports

India

Thailand
0.8 1.0
Imports Exports Consumption

9.4
Exports Consumption

3.7
Production Imports

3.7
Exports Consumption

1.9
Production

Source: Goldman Sachs

21

Pork Supply and Demand in 2020

Global Surplus (Deficit) of Pork Meat (Million metric tons)

Canada
0.3 2.2
Production Imports

Europe
0.1 1.3 1.2 22.7
Production Imports

Russia 1.1
21.6 2.7
Production Imports

1.1
3.8
Exports Consumption

Exports Consumption

Exports Consumption

USA 0.5
11.9
Production Imports

Surplus Deficit
2.5 9.9

Exports Consumption

Mexico 0.7
1.6
Production Imports

Brazil
0.2 2.1 4.2
Production Imports

0.3 1.2
56.9 3.0

China

0.8 56.4

Exports Consumption

Exports Consumption

Production

Imports

Exports Consumption

Source: Goldman Sachs

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1Q10 Highlights

23

Highlights for the 1st Quarter 2010

Net Revenue increased by 35.4%, from R$9,267.9 million in 1Q09 to R$12,550.3 million in 1Q10, mainly due to the incorporation of Bertin and acquisition of Pilgrims Pride. The 1Q10 consolidated EBITDA increased 307.5% compared to the same period in 2009, from R$211.5 million to R$862.0 million. The EBITDA margin was 6.9% for the period, compared with 2.3% for 1Q09. Net Profit of R$99.4 million in 1Q10, compared to a net loss of R$322.7 million in 1Q09. Beef US posted EBITDA of US$170.5 million, on margin of 6.0%, a record for 1Q. In Mercosul, JBS posted EBITDA of R$352.6 million, with 11.9% margin.

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JBS Consolidated Results

Net Revenue (R$ million)

EBITDA and EBITDA Margin (R$ million)

-0.1%

-9.5%

-11.6%

69.4% 81.6% -24.0% 36.3% 95,2%

Source: JBS EBITDA Margin (%) 25

Performance by Business Units

JBS MERCOSUL
Net Sales
(R$ billion)

INALCA JBS
Net Sales
( million)

EBITDA (R$ mi) EBITDA margin

EBITDA ( mi) EBITDA margin

Source JBS EBITDA Margin (%)

26

Performance by Business Units

JBS USA (Beef)
Including Australia

JBS USA (Pork)

Net Sales
(US$ million)

JBS USA Poultry

Net Sales
(US$ million)

Net Sales
(US$ billion)

EBITDA (US$ mi) EBITDA margin

EBITDA (US$ mi) EBITDA margin

EBITDA (US$ mi) EBITDA margin

Source JBS EBITDA Margin (%)

27

Debt

Net debt / EBITDA ratio remained at 3.1x q-o-q. Gross debt declined 5.7%, while Net Debt increased 12.2%, reflecting working capital requirements to ramp up recent acquisitions, as well as investments in fixed assets, further impacted by FX fluctuations. The vast majority of the companys short debt is composed of revolving trade finance credit lines. As demonstrated below, the percentage of short term debt was 40% in 1Q10, compared with 37% in 4Q09 and 47% in 1Q09.
Net Debt / EBITDA Pro Forma per Quarter Gross debt Profile (R$ million)

Source: JBS Net Debt/ EBITDA EBITDA pro-forma * LTM including Bertin and Pilgrims Pride pro-forma.

28

Revenue Distribution by Market

1Q10

1Q09

Exports 23% Domestic Market 77%

Exports 22%
Domestic Market 78%

Source: JBS
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Source: JBS

JBS Consolidated Exports Distribution

JBS Exports 1Q10

JBS Exports 1Q09

US$ 1,765.4 Million

US$ 901.4 Million

Taiwan 2%

Middle East 4% Canada 4% Hong Kong 5%

China 5%

Others 14%

Japan 16%

E.U. 16% South Korea 6% USA 11%

Russia 8%

Mexico 9%

Source: JBS

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Short Term Outlook

31

A Closer look at synergies Pilgrims Pride

Pilgrims Pride Acquisition: Synergies of over US$220mm/year Description Transportation Suppliers Corporate
Review of contract terms with carriers

Size
US$35mn US$30mn US$35mn US$50mn US$50mn US$20mn US$220mn

Timing

Review of contract terms with packaging and other suppliers

Streamlining of corporate structure and headquarters closure Review of service contracts (e.g. Legal, insurance and IT) Increase efficiency in average weight per truck Reach-out to end clients through JBS existing sales network

1H10 1H10 2 years

G&A
Logistics optimization Exports Total

2010

32

A Closer look at synergies Bertin S.A.

Association with Bertin: Synergies to Achieve at Least R$485mm/year Description Corporate/G&A

Offices, personnel, services contracts and third parties Maximization of the combined sales channels and review of freight contracts Value enhancement through further processing Review of transportation contracts Review contract terms of non core suppliers (e.g. packaging) Optimization of fixed costs and rationalization of existing contracts

Size
R$40mn R$100mn R$45mn R$20mn R$35mn R$245mn R$485mn

Timing

Exports
Hides / Leather Logistics Suppliers Industrial Processes Total

1H10 1H10 2 years 2010

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IR Contacts: ir@jbs.com.br +55 11 3144 4055 www.jbs.com.br/ir

Final Considerations
In God We Trust, Nature We Respect
34 34

IR Contacts: ir@jbs.com.br +55 11 3144 4055 www.jbs.com.br/ir

Q&A
In God We Trust, Nature We Respect
35 35