2q09 conference call presentation

7/30/2019 2Q09 Conference Call Presentation

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JBS S.A.

2nd Quarter 2009 Results

August 13th, 2009

In God we TrustJBS S.A.


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Jeremiah OCallaghan

Investor Relations Director

Joesley Mendona BatistaCEO

1

Presenters


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Our ValuesThe Foundation Of Our Culture

Planning

Determination

Discipline

Availability

Openness

Simplicity

2


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Agenda

Market OverviewMarket Overview

2Q09 Highlights2Q09 Highlights

Questions and AnswersQuestions and Answers

3

Our StrategyOur Strategy

Final ConsiderationsFinal Considerations

Consolidated ResultsConsolidated Results


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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


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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%


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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


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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


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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.


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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


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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


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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


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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


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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


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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.


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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


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Performance by Business Units

17

Net Sales(US$ million)

Net Sales(US$ million)

EBITDA (US$ mi)EBITDA margin


JBS USA (Beef)

Including Australia

Net Sales

(US$ million)

Net Sales

(US$ million)



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


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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


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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


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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


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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


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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


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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


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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.

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25

Questions and Answers


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JBS S.A.

Questions and Answers

August 13th, 2009

In God we TrustJBS S.A.

DISCLAIMERDISCLAIMERDISCLAIMERDISCLAIMER


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.

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2q09 conference call presentation

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