earnings results 2q07
TRANSCRIPT
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Conference Call –Results 2Q07
August 16, 2007
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Presenters
André Gustavo MenezesInvestor Relations Manager
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José Paulo MacedoDirector
Joesley Mendonça BatistaCEO
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We continued with our strategy of growing slaughtering capacity, increasing sales, focusing on cost reductions, efficiencies in yield/internal processes and adding value through the optimization of the sales mix in each market;
Higher cattle acquisition costs, which is being handled by the Company’s capacity to realign businesses and by market dynamics;
Inauguration of an industrial plant for the production of beef jerky located in Santo Antonio da Posse, state of São Paulo;
Start-up of operations in the units of Teófilo Otoni, Minas Gerais, Brasil; Pontevedra and Berazategui, Argentina;
Acquisition of a slaughtering plant in Maringá, Paraná, Brasil;
Acquisition of a cattle confinement unit in the state of São Paulo with an annual capacity for 150,000 animals;
We continued to invest in the expansion of the slaughtering capacity of our plants in Brazil;
As of the next Extraordinary Shareholders Meeting, the Investor Relations Department will become independent from the Financial Department.
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Period Overview
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Acquisition of Swift Foods Company, making JBS the world’s largest beef producer;
Capital increase and entrance of BNDESPar as a shareholder of JBS;
Important part of the adjustment has already been made through the capital structure for the acquisition, reducing Swift’s net debt considerably;
Opportunity to add value through the improvement of Swift’s operational results;
New management is already implementing a series of actions;
We continue confident on the recovery of Swift’s operational results.
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Subsequent Events
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Quarterly Slaughtering – ‘000 Heads of CattleQuarterly Slaughtering – ‘000 Heads of Cattle
701760
596530
724809745758
831936
830817947886
1Q 2Q 3Q 4Q
2004 2005 2006 2007
Cattle Slaughtering – ‘000 Heads of CattleCattle Slaughtering – ‘000 Heads of Cattle
1833.41647.4
886.4947829.9
2Q06 2Q07 1Q07 1H06 1H07
14.1%
11.3%
6.8%
Slaughtering Volumes
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Total Net Revenue (R$ million)
1821.91086.11171.2935.8
2257.4
2Q06 2Q07 1Q07 1H06 1H07
25.2%23.9%
Total Volume (‘000 tons)
496.5292.7322.2252.4
614.9
2Q06 2Q07 1Q07 1H06 1H07
27.6%23.8%
Average Sales Price (R$/Kg)
3.67 3.71 3.64 3.71 3.67
2Q06 2Q07 1Q07 1H06 1H07
-1.9% 0.0%-2.0%
10.1%
7.8%
Results – 2Q07
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Net Revenue Distribution – Total
41.4%42.4%41.7%39.4% 42.0%
58%58.6557.6%58.3%60.6%
2Q06 2Q07 1Q07 1H06 1H07
Domestic Market Exports
Net Revenue Distribution
Net Revenue Distribution – Domestic Market
Net Revenue Distribution – Exports
67.4%67.9%67.8%65.3% 67.8%
14.3%14.6%14.1% 15.5%17.1%17.8%17.1%17.5%18.2%17.7%
2Q06 2Q07 1Q07 1H06 1H07
Fresh Beef Processed Beef Others
70.6%69.7%71.1%76.1% 70.4%
29.6%30.3%28.9% 29.4%23.9%
2Q06 2Q07 1Q07 1H06 1H07
Fresh Beef Processed Beef
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Results – Domestic Market
Net Revenue – Domestic Market (R$ million)
753.4 460.2 487.9 368.8
948.1
2Q06 2Q07 1Q07 1H06 1H07
32.3%25.8%
Volume – Domestic Market (‘000 tons)
329.8
189.2 210.0 161.9
399.2
2Q06 2Q07 1Q07 1H06 1H07
29.7%
21.0%
Average Sales Price – Domestic Market (R$/Kg)
2.28 2.43 2.32 2.28 2.38
2Q06 2Q07 1Q07 1H06 1H07
2.0% 4.0%-4.5%
11.0%
6.0%
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Net Revenue – Exports (R$ million)
Volume – Exports (‘000 tons)
166.7 103.6 112.2 90.5
215.7
2Q06 2Q07 1Q07 1H06 1H07
23.9%29.4%
Average Sales Price – Exports (per kilogram)
2.97 2.92 6.04
3.07 2.86
6.09 6.26 6.07 6.41
2.87
2Q06 (R$)
2Q07 (R$)
2Q06 (US$)
2Q07 (US$)
1Q07 (R$)
1Q07 (US$)
1H06 (R$)
1H07 (R$)
1H06 (US$)
1H07 (US$)
-2.7%7.3%
-5.3%1.5%
1,068.5
626.0 683.3 567.0
1,309.2
2Q06 2Q07 1Q07 1H06 1H07
20.5%22.5%
9.2%
8.3%
0.8%7.2%
Results – Exports
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Export Destinations
Source : JBS
Exports Destinations – 2Q07Exports Destinations – 2Q07
United Kingdom
12%
Holland11%
Russia10%
Italy9%
Others29%
Spain3%
Hong Kong9%
Egypt4%
USA9%
Germany4%
United Kingdom
11%
Russia10%
Holland8%
Italy8%
USA7%
Egypt7%
Others29%
Saudi Arabia
5%Hong Kong
5%
Bulgaria5%
Germany5%
Exports Destinations – 2Q06Exports Destinations – 2Q06
Source: JBS
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EBITDA and EBITDA Margin
2.3x2.5x
3.6x
3.1x
2.6x2.8x
2.2x
2002 2003 2004 2005 2006 1Q07 2Q07
Net Debt/EBITDANet Debt/EBITDAEBITDA and EBITDA MarginEBITDA and EBITDA Margin
321.4
260.2
156.2 165.2
139.6
14.2%14.4% 14.3%14.1%
14.9%
2Q06 2Q07 1Q07 1H06 1H07
EBITDA Margin (%)
18.3%
23.5%
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During the quarter, a total of R$112.7 million were invested on the following projects…
CAPEXCAPEX
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Increase of the production capacity of its processed beef plant located in Andradina, São Paulo, from 30 tons to 100 tons per day;
Increase of the production capacity of its plant located in Barra do Garças, Mato Grosso from 1,300 to 2,500 head of cattle slaughtered and deboned per day;
Increase of the production capacity of its plant located in Campo Grande, MatoGrosso do Sul from 1,300 to 3,000 head of cattle slaughtered and deboned per day;
Increase of the production capacity of its plant located in Vilhena, Rondônia, from 900 to 2,200 head of cattle slaughtered and deboned per day;
Conclusion of a beef jerky production plant in Santo Antônio da Posse, São Paulo, which was opened in June, with production capacity for 250 tons per month;
Increase of the production capacity of its plant located in Barretos, São Paulo from 1,600 to 2,500 head of cattle slaughtered and deboned per day;
Other investments such as acquisition of new equipment and maintenance of the Company’s facilities;
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Disclaimer
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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.
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Thank You
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