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Vigor Alimentos S.A.
April, 2013
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This presentation contains forward-looking statements relating to the prospects of the business, estimates for operating and financial results, and those related to growth prospects of Vigor Alimentos. These are merely projections and, as such, are based exclusively on the expectations of Vigor’s management concerning the future of the business and its continued access to capital to fund the Company’s 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 Vigor’s filed disclosure documents and are, therefore, subject to change without prior notice.
Disclaimer
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Introduction
Market and Strategy Overview
Financial Performance
Appendix
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Future
94 years of growth in the Brazilian food market
1917 operations start
1982
Vigor reaches installed capacity of 1.0 million
liters/day and acquires Leco 1
99
0 a
19
95
20
09
19
84
a 1
98
6
19
17
a 1
98
2
20
12
1995 acquisition of Refino de
Óleos Brasil
20
07
20
12
Delisting of Vigor
Combination of the activities of JBS and Bertin, and
consequently of Vigor
1984 Vigor and Leco IPO
Bertin S/A acquires control of Vigor
Acquisition of Serrabella
Corporate restructuring in which Fábrica de Produtos Alimentícios Vigor becomes a full subsidiary of
Vigor Alimentos S.A.
Relisting of Vigor
19
17
a 1
98
2
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Traditional brands operating in diverse market segments
Consumer sector
Vigor Today Main Brands
Foodservice sector
Employees 3,423
Net revenues – 2012 R$ 1.330,2 MM / +8%1
Gross Profit – 2012 R$ 394,7 MM / +27%1
Note: 1. Growth compared to same period last year.
EBITDA – 2012 R$ 68,0 MM / +54%1
EBITDA Margin – 2012 5,1% / +1,5 p.p.
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Resilient market with strong growth potential
Approximately 50% of total distribution through independent retailers
Strengths and competitive advantages
Brands with excellent reputation and high expansion potential
Experienced and independent management team, with solid corporate governance standards
Diversified portfolio with high value-added products
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Introduction
Market and Strategy Overview
Financial Performance
Appendix
8 8
High value-added and diversified products mix
Note: 1. Dairy (yogurt, fermented milk, desserts and petit suisse, “requeijão” cheese spread, parmesan, special cheese, “minas” cheese, cream cheese, fondue and creams) / 2. Spreads (margarines, blend, butter, fats and mayonnaise) / 3. Milk: UHT milk and pasteurized / 4. Others (pastas, sauces, juices, chocolate milk and others).
Dairy1
Higher margins (%) Leading brands in categories Focus in innovation and product launching
Spreads2
High household penetration level Helps diversify the cost matrix Possible to add “brand” equity
UHT Milk3
Low volume Specific channels Margin under strict discipline
Others4
Juices, sauces, chocolate milk and others
Total: R$ 1.330,2 million
Net Revenue – 2012
Dairy
56%
Spreads 30%
UHT Milk 8%
Others 6%
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KA; 10%
Wholesale/Distributor
17%
Food Service;
24%
Others; 3%
Independent retailers and food service
…increasing distribution through independent channels
Net revenues by distribution channel – 2012
• Independent retailers are the fastest growing distribution channel in Brazil
• Vigor currently has c. 20,000 retail clients
• Significant opportunities in the food service segment, which currently shows low market penetration and high growth rates
Total: R$ 1.330,2 billion
49% of sales to independent
retailers
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Operational excellence by adding value to the production chain
Distribution centers
Seven distribution centers Distribution centers positioned close to large consumer markets 14 TSPs
Strategic positioning
Production units
Approximately 3,300 employees Seven plants with and installed capacity of over 47,000 tons per month Solid expansion capacity
Four milk collection centers 1,280 producers Approximately 18 million liters collected every month
Milk collection centers
Diversified supplier base
Milk collection centers
Distribution centes
Dairy production unit
Oils production unit
Mixed production unit
Point-of-sale presence
Over 20,000 active clients Sales channel and consumer profile diversification
Spread distribution in retail
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4
7
7
20k
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Market Share of Vigor’s product portfolio1
Source: Nielsen – 2012 | Brazil 1Value market share
Market Share - dairy1
Market Share - cheese1
Market share expansion in the main segments
12.6% 13.6% 15.2% 14.1%
2009 2010 2011 2012
4.7% 5.5% 5.7% 5.3%
2009 2010 2011 2012
6.1%
7.1%
7.7%7.3%
2009 2010 2011 2012
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Brazil
Reference brand in parmesan cheese
(unaudited category)
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Consolidated position in key categories
Source Nielsen - 2012 1.Based on total revenues: 2. Regular family liquid yogurt,not including functional yogurts 3. Natural yogurt, not including functional yogurts 4. “Requeijão” cheese spreads
Parmesan cheese “Requeijão” cheese spreads – market share1,4
Brazil Metropolitan area of São Paulo
15% 25%
Total market R$ 967 mm
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Natural yogurts – market share1,3
Brazil Metropolitan area of São Paulo
15% 25%
Total market R$ 315 mm
1
3
1 liter yogurts – market share1,2
Brazil Metropolitan area of São Paulo
7% 29%
Total market R$ 734 mm
2 1
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Strong presence in Brazil’s most important regions leverages Vigor for further expansion…
Importance of the macro regions to the market and to Vigor – in value
Source: Nielsen – 2012 | Brazil Considered categories: yogurt, fermented milk, dessert, petit suisse, “requeijão” cheese spread, cream cheeses and “minas” cheese
16% 15%
10%
16%18%
17%
7%
4% 4%
10%
36%
30%
9%
6%
Northeast ES + MG + RJ Countryside RJ Metropolitan area SP Metropolitan area SP Countryside + Coast South Midwest
Market Vigor
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Our vision and strategic orientation
Big food Company, one of the biggest dairy companies in Brazil
Categories and Segments • Development of innovation according to seasonal waves
• Further development of Food Service segment
Geographic expansion • Improve our presence in markets close to core market (SP)
• Lower the company’s dependence of São Paulo market
Investment Plan • Increase in productive capacity, with continuous investments in key
product lines
EBITDA Margin • Continuously increase in margins to surpass historic levels
Capital Structure
• Increase stock liquidity
• Reduction of cost of capital
• Return on Invested Capital to shareholders Policy
15 15
Introduction
Market and Strategy Overview
Financial Performance
Appendix
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Strong financial performance
Gross Profit and Gross Margin Net Revenue
(R$ million, unless otherwise stated) (R$ million, unless otherwise stated)
301.4342.8 311.9
394,7
85,9 113,3
2009 2010 2011 2012 4Q11 4Q12
33.2%
34.8% 25.4%
26.9%
32.2%
866.0
1,032.4
1,229.51.330,2
319,3 351,4
2009 2010 2011 2012 4Q11 4Q12
Excludes UHT Milk
29.7%
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52.1 57.2
(7,6)
30,7
2009 2010 2011 2012
Net Profit and Net Margin
Strong financial performance
89.3
118.2
44.2
68,0
2009 2010 2011 2012
EBITDA and EBITDA Margin
(R$ million, unless otherwise stated)
10.3%
11.4%
3.6%
6.0%
5.5%
-0.6%
(R$ million, unless otherwise stated)
2.3% 5.1%
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Net Debt (12/31/2012) – R$ million
Cash Generation and Leverage
Cash Flow 2012 – R$ million
Gross Debt Breakdown – R$ thousand
Begining Cash
Cash from Operations
Working Capital
Capex New Debt Debt Payment
Ending Cash
321,7
54,6 17,2 69,0
173,6 359,1
104,6
Line Avg. Rate Due Date Balance
C.Giro CDI + 2,5% 08/17/15 79.766
EGF 5,5% 06/19/14 56.060
Progeren BB TJLP + 3,35% py 10/15/15 48.706
Finame 8,7% 04/14/21 2.360
FCO 10% 05/02/14 1.273
BNDES_Aut. 0,97% to 1,18% pm 02/16/16 365
Total 188.530
Net Debt Cash Gross Debt
188,5
Short Term:
56%
82,7
105,9
104,6
83,9
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Investment on Itambé Alimentos S.A.
Shareholder Structure Highlights of the Transaction
•CCPR (sellers) created Itambé S.A. (Equity of
R$410 MM)
• Enterprise Value: R$960 MM
•Net Debt: R$550 MM
• Equity Value: R$410 MM
•Vigor invests R$410 MM on Itambé S.A. in
exchange for 50%
• Capital will be used to reduce debt to R$140 MM
•Operation is subject to the approval of the anti-
trust entity (CADE) Itambé S.A.
Vigor S.A.
50%
CCPR
50%
Itambé S.A.
100%
CCPR
Itambé S.A.
R$410 MM
Vigor S.A.
Shares
1 2 1
2
3
3
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Introduction
Market and Strategy Overview
Financial Performance
Appendix
21 21
Experienced Managers
Gilberto Xandó – CEO
Gilberto Xandó holds a Bachelor degree in Business Administration from Fundação Getúlio Vargas, a Masters Degree in Retail from USP/FEA and is specialized in Business Management PGA from Fundação Dom Cabral/INSEAD, in France. He has large multidisciplinary experience and has worked in the areas of Finance, Controlling, Trade Marketing, Marketing, Commercial (Brazil and other countries) and Business Unit Management at Natura, Sadia S.A. and Coopers & Lybrand. In July 2011 he became CEO of Vigor.
Maurício Hasson CFO and IRO
Maurício holds a bachelor degree in mechanic and production engineering by PUC-RJ and holds a MBA degree by The University of Chicago Booth School of Business. He has over 13 years of experience in Investment Banking and Corporate Finance, having worked for the past seven years at Rothschild and Bear Sterns in the advisory of important M&A transactions. He became the CFO of Vigor in April 2012.
Anne Napoli Marketing Director
Anne has graduated from the European Business Program and Insead and has 18 years of experience in the consumer sector. Involved in marketing strategy, innovation projects, communication planning and regional coordination, Anne has worked for seven years at Unilever and six at Danone, becoming Marketing Director of Vigor in December 2011.
Darlan Carvalho Diretor de Supply chain
Darlan holds a bachelor degree in Accountancy and a graduate degree in Administration. He also holds a MBA degree in Business Management and has worked for 29 years at Sadia, in the supply chain and logistics areas, being responsible for the whole logistics structuring of BR Foods. He became Supply Chain Director of Vigor in September 2011.
Gustavo Theodozio Administrative Director
Gustavo holds a Bachelor degree in Business Administration by PUC-PE and a MBA in Business Management by FGV-PE and Accountancy and Controlling by UF/PE. Gustavo has worked in companies such as Bompreço S/A Supermercado do NE, Grupo JCPM and Sistema do Jornal do Comércio de Comunicação. In 2010 and 2011 he worked as the CFO for JBS’ leather division and he is currently the Comptroller and Administrative Director of Vigor.
Paulo Botelho Industrial Director
Paulo has been working at Vigor for over 29 years. He started as an intern and has acted as maintenance superior, maintenance manager and industrial manager, becoming industrial director in June 2011.
Luiz Gennari Sales Director
Luiz Henrique holds a Statistics degree from UFSCar, and a masters degree in Marketing from ESPM, and has over 19 years of experience in the consumer sector, involved in market research, trade marketing and sales. Luiz has worked for 15 years at Sadia, and for 4 years at Cia J.Macedo. Last year, Luiz was appointed, at BRF’s Dairy products division “Batavo”, Sales Director (Brazil), becoming Sales Director of Vigor in June 2012.
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Wesley Batista Chairman
Joesley Batista Member elected by FB
Vicente Falconi Campo Independent member
Cristiana Arcangeli Independent member
Mr. Wesley Batista became CEO of JBS’ global operations in Feb/2011. Prior to that, he was the president and CEO of JBS USA after Swift & Company’s acquisition in 2007. Under his management, JBS USA more than doubled its revenues in 4 years, acquiring Smithfield Beef, JBS Five Rivers Feedlot, a majority stake in Pilgrim’s Pride, as well as expanding its Australian operations acquired along with Swift. During the previous fifteen years, Mr. Batista acted as Chief Operating Officer (COO) of JBS’ beef operations in Brazil and Argentina.
Mr. Joesley Batista is the current Chairman of JBS, elected on January 2nd, 2007. He was also the CEO of JBS SA between 2006 and 2011, a period in which revenues have grown by 1,200%, and the Company has made different transformational acquisitions in North America and Australia, in addition to going public in 2007. Mr. Joesley Batista has been working at the JBS Group since 1988.
Betânia Tanure de Barro Independent member
Mr. Vicente Falconi Campos is a Board member of Ambev and member of tbe Institutional Board of Managerial Development at INDG, as well as an Emeritus professor at the Federal University of Minas Gerais. Mr. Campos has been a Board member of Sadia and Unibanco and has received awards from different public organizations, both from the Executive and Legislative branches, and business associations, as well as having published six books on Business Administration. Bachelor in Mining and Metallurgy Engineering from the Federal University of Minas Gerais, as well as a M.Sc. and Ph.D. from the Colorado School of Mines (EUA).
Professor at PUC MG, PhD from the Brunel University (England), Post-graduate in Management Consulting by Henley Management College (England), specialized in management by INSEAD, psychologist by PUC – MG. Works as a BTA-certified technical consultant, and professor at national and international companies such as: ArcelorMittal, Banco Santander, Banco Central do Brasil, Banco Itaú, Brasilprev, Embraer, Gerdau, Kimberly-Clark, IBM, Natura, RBS, Sadia, Samarco, TAP, Usiminas, Vale, Via Retail and Weg. Board Member at RBS and GOL Linhas Aéreas
Mrs. Cristiana Arcangeli has graduated in Dentistry with specialization in Endodontics and has been working in the cosmetics segment for over 25 years, in which she has created brands such as Phytoervas, Éh Cosméticos and Beauty’in. Mrs. Arcangeli has received different awards for her influence in the cosmetics and fragrances segment and for her entrepreneurial actions, as well as being the first female member of the Brazilian Marketing Academy, a volunteer at Endeavor,
Board of Directors with well-known members
Marício Tiomno Tolmasquim Independent member
Luiz Antonio Rodrigues Elias Independent member
Mr. Mauricio Tiomno Tolmasquim was Executive-Secretary of the Ministry of Mining and Energy, Board Member at Itaipu Binacional and Furnas Centrais Elétricas (Hydro Powerhouses), coordinator of the technical group responsible for formulation and implementation of a wide reform of the electric energy sector regulation. Mr. Tolmasquim was honored from Itamaraty with the Great Officer from Rio Branco Order. He is also author, co-author, and organizer of over 20 books and more than 100 technical articles.
Mr. Luiz Antonio Rodrigues Elias is an Economist and Head Researcher at INPI (National Institute for Intellectual Property). Since 2007 is Executive Secretary of the Ministry of Science, Technology and Innovation. Before that, was Secretary of Technological Development and Innovation from the same Minitry (2006), Director of Federal Railroad and Co-Secretary of the Social Development Division of Rio de Janeiro Municipality.