2Q08 Earnings Release

7/30/2019 2Q08 Earnings Release

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So Paulo, July 31, 2008JBS S.A. (JBS) (Bovespa: JBSS3), the worlds largest producer and exporter ofbeef announces today its results for the second quarter of 2008 (2Q08). For purposes of comparison and

analysis, this report also references the results for the periods ending March 31, 2008 (1Q08), June 30, 2008(2Q08) and June 30, 2008 (2Q07).

JBSs consolidated results are presented in accordance with BR GAAP (Brazilian Corporation Law accountingpractices) and in Reais (R$), including those of its American subsidiary, JBS USA, which includes its operationsin Australia, for the 13-week period ending June 29, 2008. When isolated for analysis these results arepresented according to US GAAP and in USD. A 50% portion of the results from INALCA JBS in Italy, addedwith the 5.64% remaining that where not considered in 1Q08, were also integrated and are consolidated inBR GAAP and in Reais (R$), unless analyzed in isolation, in which case they are presented Euros ().

HIGHLIGHTS In 2Q08, JBS gained market share in mature markets. Notwithstanding the fact that 78% of revenue was

generated in development markets such as USA, Europe and Australia, the company presented 21.7%growth in its consolidated net revenue when compared with the previews quarter, going from R$5,859.1million to R$7,129.5 million.

The Beef Unit of JBS USA (including Australia)performed well in: EBITDA margin growth from 0% in the first quarter to 5.1% in the second quarter, or an increase in the

EBITDA from US$0.9 million to US$132.9, respectively. Increase in its net revenue from US$1,976.9 million in 1Q08 to US$2,630.0 million in 2Q08

representing 33.0% growth.

The consolidated EBITDA of the Company increased 64.9% in the 2Q08 in relation to 1Q08 going fromR$176.3 million to R$290.8 million.

The net revenue of JBS Brasil increased 13.9% in the period in comparison with the previews quarter,regardless of the adverse conditions of the industry, allowing the Company to continue its growth strategyin this market.

JBS expectations for the next semester are positive considering that diversified global production platformminimizes regional negative impacts JBS USA in operating this quarter positively and is exporting twice asmuch as the average of the sector. The Company believes that if the present conditions prevail relevantmargins will be sustained during this second semester.


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MESSAGE FROM THE PRESIDENTThe second quarter of 2008 is remembered as the beginning of a new positive cycle in the beef sector in theAmerican market. And by the total recovery of the results of JBS USA. Besides the good results obtained in theAmerican market exports are also a highlight taking into considerations strong global demand, the devaluationof the American dollar against other currencies and the high costs of raw material in Brazil which arepenalizing the competitiveness of Brazil on the global market, creating space for countries like The UnitedStates, Australia and Argentina.

The turn-around of the operations in the USA is further proof of the experience and competence of theadministration of JBS, guided by our efficient strategy:

Argentine exports where jeopardized as a result of the difficulties encountered in that market. Towards the endof 2Q08 Argentina exports restarted with emphasis on industrialized beef products, a category where JBS is themarket leader.

Regarding JBS Brasil and as a result of the increased in value of the Brazilian product, the absolute EBITDA perhead (see chart I) has been maintained relative stable regardless of the reduced margins in the market. Thecombination of: (i) the lack of availability of finished cattle, (ii) the increase in the value of Real, (iii) thereduction in sales to the European Union and (iv) the high level of unused capacity of the industry caused anincrease in the costs of raw materials. JBS proved capable of growing in this market and of continuing itsgrowth strategy in Brazil, regardless of the adversities mentioned above and of the converging global margins.


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Our expectations for the second semester are positive considering the JBS diversified global production

platform which helps minimize regional negative factors. In the Mercosul, we plan to continue our growthstrategy and to defend our participation in this market. JBS USA is operating positively in 3Q08 with emphasison exports which are twice the US market average which, in prevailing these conditions will sustain relevantmargin levels during the second semester. Allied to the above, during 4Q08 JBS could benefit from theimplementation of the synergies resulting from the new acquisitions as long as there is the approval of theUnited States Department of Justice to integrate this operation for the period.

We thank the confidence that our clients and suppliers have demonstrated in us and we close our presentationremembering the efficiency and dedication of our workforce of more than 46 thousand collaborators at JBS,highlighting the confidence that investors have recognized in the strategy of our administration to succeed inbeing the pioneer in the global beef industry.

Joesley Mendona BatistaPresident


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ANALYSIS OF RESULTSConsolidated Analysis of the Principal Operational Indicators of JBSThe consolidated EBITDA of JBS increased 65.0% in 2Q08 compared with the result of 1Q08, increasing fromR$176.3 million to R$290.8 million. This improvement is largely due to the recuperation of the beef unit ofJBS USA (including JBS Australia) whose EBITDA margin of 5.1% (in US$ and in US GAAP). Add to this theresult of the pork business unit of JBS USA with an EBITDA margin of 3.2%, JBS Brasil with 4.9%, JBSArgentina with -5.4% and of INALCA JBS with 4.8%.

As forecast by the Company in the previews quarter, the converging costs of raw materials in the countrieswhere JBS has productions platforms, (see chart VII), resulted in margins converging in the various businessunits during 2Q08.

R$ million 2Q08 % 2Q07 % Var.%2Q08/2Q07 1Q08 % Var.%2Q08/1Q08 1S08 1S07 Var.%1S08/1S07Net Sales Revenue 7129.5 100.0% 1,171.2 100.0% 508.7% 5,859.1 100.0% 21.7% 1 2,9 88.6 2,25 7.4 475.4%Cost of Goods Sold -6435.7 -90.3% -890.3 -76.0% -622.9% -5,348.8 -91.3% -20.3% -11,784.6 -1,718.8 -585.6%

Gross Margin 693.8 9.7% 280.9 24.0% 147.0% 510.2 8.7% 36.0% 1,204.0 538.5 123.6%Selling Expenses -363.9 -5.1% -106.6 -9.1% -241.3% -305.1 -5.2% -19.2% -669.0 -206.5 -224.0%

General and Adm. Expenses -96.4 -1.4% -27.9 -2.4% -245.4% -79.8 -1.4% -20.7% -176.2 -48.5 -263.3%

Net Financial Income* -508.8 -7.1% -72.7 -6.2% -599.9% -76.8 -1.3% -562.5% -585.6 -129.6 -351.9%

Amortization of Goodwill* -45.1 -0.6% -0.9 -0.1% -4914.6% -44.3 -0.8% -1.8% -89.4 -0.9 -9838.2%

Non-recurring Expenses 0.0 0.0% 0.0 0.0% - 0.0 0.0% - 0.0 -50.6 -

O perating Income -320.4 -4.5% 72.8 6.2% -540.1% 4. 1 0.1% -7833.2% -316.2 102.4 -408.8%Non-Operating Income 4.2 0.1% 0.8 0.1% 449.5% -0.5 0.0% 896.9% 3.7 0.8 334.8%

Taxes and Social Contribution -48.4 -0.7% -35.7 -3.0% -35.6% -10.6 -0.2% -354.9% -59.0 -55.3 -6.8%

Minority Interest 0.2 0.0% 0.9 0.1% -80.9% 0.4 0.0% -59.6% 0.6 1.4 -60.4%

Net Income (Loss) -364.4 -5.1% 38.7 3.3% -1041.2% -6.6 -0.1% -5408.6% -371.1 49.4 -851.4%EBITDA 290.8 4.1% 165.2 14.1% 76.0% 176.3 3.0% 65.0% 467.1 321.4 45.3% [(*)The financial income for the six month period ended June 30, 2008 is negatively affected, by a significant amount, by exchange variation rate of the permanentinvestments in foreign currency and by losses with derivative financial instruments for exchange rate variation protection of the amount to be invested in Smithfield Beef andNational Beef, companies that are in the acquisition process as described in the explanatory note 24. The impact of the referred exchange variation rate in the consolidatedfinancial income is R$ 180.415 and the impact of the consolidated losses with derivative financial instruments for exchange rate variation protection is R$ 260.627, both didnot affected the EBITDA.

The net revenue of the Company increased 21.7% in 2Q08 when compared with 1Q08 increasing fromR$5,859.1 million to R$ 7,129.5 million, as a result of:

JBS Brasil An increase of 13.9% in the net revenue in Brazil, equal to R$160.0 million which was generated by

greater slaughter capacity utilization and by the partial passing on of the increase of raw material costsof the products sold.

JBS Argentina A reduction of the net revenue of the Argentine operation equal to $4.4 million Argentine Pesos as a

result of the exports restrictions of beef which prevailed to until the end of 2Q08.

JBS Beef USA (including JBS Australia) An increase of US$653.1 million, 33.0% of the net revenue of the beef unit of JBS USA (including JBS

Australia) considering: (i) an increase at the value of the product sold, (ii) an increase in American beefexports, (iii) the integration of the results of Tasma Australia as form may 2, 2008 and (iv) an increasein the revenue of Australian exports.


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JBS Pork USA An increase of US$619.9 million in consolidated JBS, with an increase of 15.8% relative to the

previous quarter (US$84.4 million) the main reason being an increase of 24.5% achieved in salesprices.

INALCA JBS The positive performance of the operations in Angola and Russia, could results in the production and

sales of hamburgers from Italy to McDonalds Russia, increasing the consolidated result of theCompany in 155.2 million.

When comparing the first semester of 2008 with the corresponding period in 2007, there was an increase of475.4% in the consolidated net revenue of JBS, reaching R$13.0 billion in 2008 against R$2.3 billion in2007. This increase is a result of the strategy of the Company in growing thru acquisition and in transforming

these acquisitions in profitable business units.

The consolidating results of the first and the second quarters of 2008 were influenced by accounting aspects(exchange variation of investments abroad and amortization of goodwill resulting from the purchase of JBSUSA remembering that these issues do not affect dividends payments) and of financial aspects (losses incurredin derivative financial instruments for the exchange protection of the amount to be invested in the acquisitionsof Smithfield Beef and National Beef). The administration of the Company considers this lost as part of thevalue of the acquisitions. It is important to remember that part of this lost is compensated by the cheaper dollarwhen paying the acquisitions pending.

When we exclude the factors mention here above, the losses of R$364.4 million and R$6.6 million incurred in

the second and first quarter of 2008 respectively, demonstrated a net profit of R$136.6 million and R$19.8million for the quarters. These numbers demonstrates the good operational performance of the Companyduring the second quarter of 2008.

Consolidated DebtR$ million 6/30/08 3/31/08 Var.%Total Debt 4,667.6 4,766.8 -2.1%

Cash and Marketable Securities 2,469.9 2,684.2 -8.0%

Total Net Debt 2,197.7 2,082.6 5.5%Net Debt/EBITDA 2.8x 2.9x

The Company's gross debt is primarily composed of financing facilities, export financing contracted withfinancial institutions, and Notes (Reg. S and 144A) with face value of US$575 million, maturing in 2011 and2016 (US$275 million issued at an interest rate of 9.375% per annum payable on a quarterly basis, andUS$300 million at an interest rate of 10.50% per annum payable on a semiannual basis).


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JBS Brasil Business UnitR$ million 2Q08 2Q07 Var.% 2Q08/2Q07 1Q08 Var.% 2Q08/1Q08 1S08 1S07 Var.% 1S08/1S07Net Revenue 1,310.0 1,077.2 21.6% 1,150.0 13.9% 2 ,4 60 .1 2 ,0 84 .0 18.0%EBITDA 64.4 157.9 -59.2% 140.1 -54.0% 204.5 313.5 -34.8%EBITDA Margin % 4.9% 14.7% 12.2% 8.3% 15.0% The strong reduction in the margins of JBS Brasil reducing from 12.2% in 1Q08 to 4.9% in 2Q08 is a result ofBrazilian margins converging at international levels as a result of the increase in cattle prices. JBS Brasilincreased its slaughter in to 861.4 thousand head increasing from 650.2 thousand head slaughter at the firstquarter.

The Brazilian product has increased in value on the domestic and international market. This allowed the sectorto remunerate better the production chain. Due to this, although the Company has operated with lowerpercentage profit margins when compared with previews years, the absolute EBITDA per head slaughtered hasbeen maintained at relatively higher levels (see chart I).The pressure on profit margins in Brazil is due mainly to higher raw material costs provoked by: (i) the reducedavailability of slaughter ready cattle, (ii) the increase in value, (iii) reduction of sales to the European Unionand (iv) the high percentage of unused capacity of the industry.

These margin reductions seen in the last quarters in Brazil will not affect the growth strategy of JBS, since thediversified global production platform of the Company will compensate margin reductions in Brazil until thereis a recovery of the availability of raw material.

JBS Argentine Business Unit$ Argentine Peso million 2Q08 2Q07 Var.% 2Q08/2Q07 1Q08 Var.% 2Q 08/1Q08 1S08 1S07 Var.% 1S08/1S07Net Revenue 215.7 158.2 36.3% 220.1 -2.0% 435.8 278.1 56.7%EBITDA -11.7 12.0 -198.0% -13.4 -12.2% -25.1 12.7 -298.4%EBITDA Margin % -5.4% 7.6% -6.1% -5.8% 4.6% JBS business unit in Argentina had a negative EBITDA margin of 5.4% in 2Q08 against -6.1% in the 1Q08.Argentine exports where jeopardized due to external factors which lasted during most of the semester.

The Company expects that the results of JBS Argentina will recover during the second semester of the yearconsidering that the flow of exports increased towards the end of 2Q08 primarily of industrialized meat

products, a sector in which JBS is the market leader.


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INALCA JBS Business Unit million 2Q08 1Q08 Var% 2Q08/1Q08Net Revenue 155.2 117.1 32.6%EBITDA 7.5 6.5 14.4%EBITDA Margin % 4.8% 5.6%

INALCA JBS accounted for a net revenue of155.2 million (R$402.0 million) in the consolidated result of the2Q08 and had its EBITDA margin reduced from 5.6% in the 1Q08 to 4.8% in 2Q08.

During 2Q08 the factory at Piacenza was closed and all the corresponding production was transferred to thefactory at Ospedaletto. This change will result in the more efficient usage of the plant structure at Ospedaletto

resulting in a reduction of production costs. The costs of this change added to the increase in raw materialcosts and the difficulty in passing on these increased in the prices of the products where the main reasons forthe impact of the margins in this business unit.

JBS USA Pork Business UnitUS$ million 2Q08 1Q08 Var% 2Q08/1Q08Net Revenue 619.9 535.5 15.8%EBITDA 19.9 15.7 26.8%EBITDA Margin % 3.2% 2.9%

The pork business unit of JBS USA showed a substantial increase in its net revenue when compared with theprevious period, increasing from U$535.5 million in 1Q08 to US$619.9 million in 2Q08 or 15.8%.

The EBITDA of this operation increased 26.8% in 2Q08 reaching US$19.9 million against US$15.7 million in1Q08. During this quarter the Company performed well in its pork business with an average price increase of24.5% in its sales prices.

JBS USA Beef Business Unit (including JBS Australia)US$ million 2Q08 1Q08 Var% 2Q08/1Q08Net Revenue 2,630.0 1,976.9 33.0%EBITDA 132.9 -0.9 14866.7%EBITDA Margin % 5.1% 0.0%

The highlight of the results of 2Q08 is the transformation of the JBS beef business unit into a profitablebusiness to the Company. Besides the considerable increase of 33.0% in the net revenue compared with thepreviews quarter this business unit also recover its EBITDA margin from 0% in 1Q08 to 5.1% in 2Q08representing an increase in the EBITDA from US$0.9 million to US$ 132.9 million.

This important recovery in the margins are a result of the success obtained by the JBS administration team inimplementing its strategy, primarily by reducing costs and increasing the productivity and the expansion ofvalue added products in these operations.


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Fixed Cost per Head Beef JBS USA

The cost per head includes packaging costs, sales, general and administrative expenses, A&D, taxes and depreciation.Excluding the raw material cost and freight expenses.

Thru the increasing margins the net revenue growth, JBS has grown and increased its market share in maturemarkets confirming its originality and leadership in the global beef market.


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2T08 CAPITAL EXPENDITURESIn the 2Q08, the Companys total capital expenditure on property, plant and equipment, not includingacquisitions, was R$120.6 million.

JBS Brasil Increasing the slaughtering and deboning capacity of the unit in Barra do Garas, Mato Grosso, from

1,300 heads/day to 2,500 heads/day. The first phase of the expansion has already been concludedand its current capacity is 2,000 heads/day.

Increasing the slaughtering and deboning capacity of the unit in Campo Grande, Mato Grosso do Sulfrom 1,300 heads/day to 3,000 heads/day.

Increasing the slaughtering and deboning capacity of the unit in Vilhena, Rondnia, from 900heads/day to 2,200 heads/day. Deboning operations are already under way.

Other investments, such as the acquisition of new equipment and maintenance of production facilities.INALCA JBS

Investments on a new factory in Odinzovo (Moscow, Russia) dedicated to food service operations andthe production of hamburgers for Mc Donalds. The starting of the operations are expected to the firsttrimester of 2009.

Investments in the Ospedaletto plant to assume the Realfood 3 production facility in Piacenza used fordebonig that was closed in the end of May 2008 and small investments in the Castelvetro plant.

Enlargement of the distribution center of Piacenza used to deboning and the production of case readyproducts to Italian retail companies.

Increase capacity for slicing ham and cured meets at the Gazoldo Degli Ippoliti (Mantova) plant, whichis owned by the subsidiary Montana Alimentari S.p.A..

Increasing production capacity at the Busseto (Parma) facility. Small investments in logistics facilities in Angola (Luanda) and in the Democratic Republic of Congo

(Kinshasa) to increase its storing capacity.

Other investments, such as the acquisition of new equipment and maintenance of production facilities.

JBS USA Pork Business Unit Investments in the Marshalltown and Louisville units, in their casing plant, production line and general

maintenance.

Investments in a pork deboning system that utilizes carbon gas in the Worthington unit, and inimprovements to generate production efficiency gains.


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TABLES AND CHARTSChart I - Brazil Preserving Margin per Head in Dollar

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

0.0

20.0

40.0

60.0

80.0

100.0

120.0

2005 2006 2007 1S08

U

SDperKg

USDperHead

EBITDA per Head (US$) Cattle Price (US$/Kg) Chart II - JBS Consolidated Sales Distribution 2T08

Beef USA43 %

Bee f Brazil20 %

Pork USA16 %

Beef Australia14 %

Bee f Italy5%

Beef Argentina2%

Domestic Market63 %

Exports37 %

Sales Distribution by Division 2Q08 Sales Distribution by Market 2Q08


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Chart III - JBS 2Q08 Consolidated Exports Distribution

Hong Kong3%

Others16%

Japan18%

E.U.16%

Russia10%

Mexico10%

South Korea6%

China6%

Canada6%

US A5%

Taiwan4%

Chart IV - Domestic Market Net Revenue Distribution JBS MERCOSUL 2Q08

Fresh Beef68 %

Processed Beef14 %

Others18 %

Fresh Beef60 %Processed Beef13 %

Others27 %

Fresh Beef73 %

Processed Beef15 %

Others12 %

Chart V Net Revenue Distribution JBS MERCOSUL 2T08

Fresh Beef71 %

Processed29 %

0%

Fresh Beef78 %

Processed22 %

0%

Fresh Beef78 %

Processed22 %

0%

Exports JBS 2Q08: US$1.6 billion

2Q07: R$488.0 million 2Q08: R$644.0 million 1Q08: R$508.5 million

2Q07: R$683.0 million 2Q08: R$760.0 million 1Q08: R$762.8 million


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Chart VI - Beef Price vs. Cattle Price in the U.S.

115

125

135

145

155

165

175

Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08

US$/100pounds

-80

-70

-60

-50

-40

-30

-20

-10

0

10

20

30

40

50

60

70

80

90

100

M

argin(US$/Head)

Margin/Head Cattle Price Beef Price Source: Bloomberg

Chart VII - Global Cattle Prices US$/Kg Converging Prices, Converging Margins

1.25

1.75

2.25

2.75

3.25

3.75

4.25

Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08

BRA AUS ARG USA

Source: JBS


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Table I - Consolidated Comparison of Heads Slaughtered and Volumes JBS 2Q082Q08 % 2Q07 % Var .% 2Q08/2Q07 1Q08 % Var.% 2Q08/1Q08

Slaughtered Cattle1 3,120.0 947.0 229.5% 2,228.3 40.0%

Sales Volumes2 1,201.7 100.0% 322.2 100.0% 273.0% 1,052.4 100.0% 14.2%Domestic Market 780.5 64.9% 210.0 65.2% 271.7% 703.6 66.9% 10.9%

Exports 421.2 35.1% 112.2 34.8% 275.4% 348.8 33.1% 20.8% Table II - Heads Slaughtered and Volumes JBS MERCOSUL 2Q08

MERCOSUL 2Q08 1Q08 Var.% 2Q08/2Q08Gross Revenue1 1,563.2 1,388.0 12.6%Domestic Market 775.0 597.4 29.7%Exports 788.2 790.6 -0.3%

Slaughtered Cattle2 962.0 763.2 26.1%1In million of R$

2In thousand of heads

Source: JBS


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Table III - Brazil, a more detailed AnalysisHerd (000) 2004 2005 2006 2007 2008*

North 29,525 30,657 31,234 32,265 33,672

Northeast 25,176 25,748 26,033 26,504 27,044

Southwest 37,646 36,964 34,994 33,553 33,737

South 25,170 24,487 23,889 23,926 24,113

Center-west 58,597 57,200 53,751 51,276 51,194

Total 176,114 175,056 169,900 167,524 169,761

Slaughter in heads (000) 2004 2005 2006 2007 2008*

North 5,360 5,955 6,607 6,149 6,196

Northeast 5,392 5,680 6,018 5,592 5,666

Southwest 10,923 11,743 12,791 11,257 9,624

South 7,138 7,418 7,191 6,409 6,343

Center-west 12,283 13,524 14,483 12,703 11,053

Total 41,096 44,320 47,089 42,110 38,883

Intensive Fateness 2004 2005 2006 2007 2008*

Total (M Heads) 5,983 5,658 5,396 5,705 6,454

Price to the Producer 2004 2005 2006 2007 2008*

(US/@ - 15 kilos) 20.7 23 24.7 31.8 47.3

(US/Kg) 1.4 1.5 1.6 2.1 3.2

Slaugther Rate of Cows 2004 2005 2006 2007 2008*

RO 48.8% 53.0% 56.9% 53.4% 46.9%

AC 41.3% 41.9% 45.6% 43.5% 40.3%

PA 35.5% 35.2% 36.4% 35.3% 31.8%

TO 49.3% 49.6% 51.9% 49.9% 49.0%

MG 50.3% 53.6% 59.2% 56.2% 53.1%

SP 45.9% 48.1% 49.5% 48.0% 45.9%

MS 49.8% 54.5% 57.4% 55.3% 52.0%

MT 33.7% 32.1% 30.5% 29.8% 29.4%

GO 49.7% 54.8% 58.7% 55.2% 47.5%

Brazilian Output Rate 2004 2005 2006 2007 2008*

23.3% 25.3% 27.7% 25.1% 22.9%

* EstimativesSource:AngraFNP


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RECENT EVENTSConfirmation of Capital IncreaseThe general assembly of share holders approved the subscription of the totality of 360.678.926 newnominative ordinary shares, whose emission was approved at the extraordinary general assembly which tookplace on April 11, 2008. The totality of the shareholders present authorized the corresponding social capitalincrease of the Company.

As a result of the authorization of the capital increase, the social capital of the Company increased fromR$1,945,580,962.12 (one billion, nine hundred and forty-five million, five hundred and eighty thousand, ninehundred and sixty-two reais and twelve cents) to R$4,495,580,968.94 (four billion, four hundred and ninety-five million, five hundred and eighty thousand, nine hundred and sixty-eight reais and ninety-four cents),

divided in R$1,438,078,926 (one billion, four hundred and thirty-eight million, seventy-eight thousand, ninehundred and twenty-six reais ) ordinary registered nominative shares, without nominal value.

Shareholders Number of Shares %J&F Participaes Ltda. 632,781,603 44.00%ZMF Fundo de Investimento em Participaes 87,903,348 6.11%

PROT - FIP 205,365,101 14.28%

Shares in Treasury 19,650,100 1.37%

Free Float 492,378,774 34.24%

- BNDES Participaes S.A. - BNDESPAR 186,891,799 13.00%

- Minority Stockholders 305,486,975 21.24%Total 1,438,078,926 100.00%


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CONTACTS

Head OfficeAvenida Marginal Direita do Tiet, 500

CEP: 05118-100 So Paulo SPBrasil

Phone: (55 11) 3144-4000Fax: (55 11) 3144-4279

www.jbs.com.br

Jeremiah OCallaghanInvestor Relations Director

Phone: (55 11) 3144-4147E-mail: [email protected]

Rodrigo GagliardiInvestor Relations ManagerPhone: (55 11) 3144-4055

E-mail: [email protected]
http://www.jbs.com.br/mailto:[email protected]:[email protected]:[email protected]:[email protected]://www.jbs.com.br/


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FINANCIAL STATMENT JBS S.A. CONSOLIDATED

(In thousands of Reais)

June, 2008 March, 2008 June, 2008 March, 2008ASSETSCURRENT ASSETSCash and cash equivalents (Note 5) 82,476 1,818,412 318,054 1,999,129Short-term investments (Note 6) 2,046,278 589,452 2,151,833 685,093Trade accounts receivable, net (Note 7) 561,742 537,890 1,828,260 1,412,286Inventories (Note 8) 828,692 652,904 2,144,677 1,922,830Recoverable taxes (Note 9) 405,228 363,198 559,451 513,188Prepaid expenses 2,913 1,973 56,564 48,342Other current assets 10,738 14,822 202,136 101,810

TO TAL CURRENT ASSETS 3,938,067 3,978,651 7,260,975 6,682,678

NON-CURRENT ASSETSLong-term assetsCredits with related parties (Note 10) 342,990 18,396 25,780 19,272Judicial deposits and others 9,532 8,405 41,498 51,073Deferred income taxes (Note 18) 17,666 16,529 290,123 35,171Recoverable taxes (Note 9) 35,064 30,521 51,682 44,221Total long-term assets 405,252 73,851 409,083 149,737Permanent assetsInvestments in subsidiaries (Note 11) 3,531,627 3,514,823 1,036,849 1,081,822Other investments 10 10 5,456 5,370Property, plant and equipment, net (Note 12) 1,457,037 1,427,685 3,440,831 3,202,305Intangible assets, net 9,615 9,615 183,342 223,619Deferred charges 2,650 1,400 4,506 3,172Total Permanent assets 5,000,939 4,953,533 4,670,984 4,516,288TO TAL NON-CURRENT ASSETS 5,406,191 5,027,384 5,080,067 4,666,025

TO TAL ASSETS 9,344,258 9,006,035 12,341,042 11,348,703

The accompanying notes are an integral part of the financial statements

Balance sheetsJBS S.A.

Company Consolidated


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June, 2008 March, 2008 June, 2008 March, 2008LIABIL ITIES AND SHAREHO LDERS' EQUITYCURRENT LIABILITIESTrade accounts payable ( Note 13) 257,552 216,434 1,303,079 995,446Loans and financings (Note 14) 1,298,887 1,414,759 2,322,907 2,396,607Payroll, social charges and tax obligation (Note 15) 74,673 69,022 254,635 197,530Declared dividends (Note 19) - 17,465 - 17,465Other current liabilities 96,595 119,160 212,094 155,931

TOTAL CURRENT LIABILITIES 1,727,707 1,836,840 4,092,715 3,762,979

NON -CURRENT LIABIL ITIESLoans and financings (Note 14) 2,221,459 2,186,048 2,344,707 2,370,172Deferred income taxes (Note 18) 58,091 58,848 409,019 146,063Provision for contingencies (Note 16) 45,979 45,979 53,959 57,246Debit with third parties for investment (Note 17) 162,909 179,439 162,909 179,439Other non-current liabilities 22,050 22,612 172,970 157,784

TOTAL NON-CURRENT LIABILITIES 2,510,488 2,492,926 3,143,564 2,910,704

MINO RITY INTEREST - - (1,300) (1,249)

SHAREHOLDERS' EQU ITY (Note 19)Capital stock 4,495,581 3,676,132 4,495,581 3,676,132Capital reserve 858,204 883,410 858,204 883,410Revaluation reserve 121,643 123,113 121,643 123,113Retained earnings (369,365) (6,386) (369,365) (6,386)

5,106,063 4,676,269 5,106,063 4,676,269TOTAL SHAREHOLDERS' EQUITYTO TAL LIABILITIES AN D SHAREHO LDERS' EQ UITY 9,344,258 9,006,035 12,341,042 11,348,703


JBS S.A.

Balance sheets



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(In thousands of Reais)

2008 2007 2008 2007GROSS OPERATING REVENUESales of products:Domestic Sales 681,089 516,363 4,617,110 576,634Foreign Sales 584,144 560,782 2,676,912 716,192

1,265,233 1,077,145 7,294,022 1,292,826SALES DEDUCTIONSReturns and discounts (42,747) (34,179) (78,639) (41,305)Sales taxes (73,582) (64,628) (85,847) (80,305)

(116,329) (98,807) (164,486) (121,610)NET SALE REVENUE 1,148,904 978,338 7,129,536 1,171,216Cost of goods sold (960,262) (721,607) (6,435,740) (890,337)GROSS INCOME 188,642 256,731 693,796 280,879OPERATING INCOME (EXPENSE)General and administrative expenses (25,412) (16,131) (96,380) (27,904)Selling expenses (116,467) (94,576) (363,876) (106,630)Financial income (expense), net (Note 20) (392,367) (53,620) (508,796) (72,657)Equity in subsidiaries (Note 11) 17,131 (19,689) - -Goodwill amortization (45,131) (867) (45,131) (867)Initial Public Offering expenses - (27) - (27)

(562,246) (184,910) (1,014,183) (208,085)OPERATING INCOME (LOSS) (373,604) 71,821 (320,387) 72,794NON-OPERATING INCOME (EXPENSE), NET 2,326 (78) 4,176 772INCOME (LOSS) BEFORE TAXES (371,278) 71,743 (316,211) 73,566Current income taxes 5,692 (32,884) (18,274) (34,500)Deferred income taxes 1,137 (131) (30,128) (1,232)

6,829 (33,015) (48,402) (35,732)INCOME (LOSS) BEFORE MINORITY INTEREST (364,449) 38,728 (364,613) 37,834

Minority interest (expense) income-

-164

894

NET INCOME (LOSS) (364,449) 38,728 (364,449) 38,728NET INCOME (LOSS) PER THOUSAND SHARES (256.94) 45.56 - -Statement of EBITDA (Earnings before income taxes, interest,depreciation and amortization and non-operating income(expense), netIncome (loss) before taxes (371,278) 71,743 (316,211) 73,566Financial income (expense), net (Note 20) 392,367 53,620 508,796 72,657Depreciation and amortization 16,220 13,946 57,250 18,852Non-operating income (expense), net (2,326) 78 (4,176) (772)Equity in subsidiaries (Note 11) (17,131) 19,689 - -Initial Public Offering expenses - 27 - 27Goodwill Amortization 45,131 867 45,131 867AMOUNT OF EBITDA 62,983 159,970 290,790 165,197



Statements of income for the period of three months ended June 30, 2008 and 2007

JBS S.A.


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This release contains forward-looking statements relating to the prospects of the business, estimates for operating andfinancial results, and those related to growth prospects of JBS. These are merely projections and, as such, are basedexclusively 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 marketconditions, 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 priornotice.

2Q08 Earnings Release

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Transcript of 2Q08 Earnings Release