4Q12 Conference Call Presentation
Transcript of 4Q12 Conference Call Presentation
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Results Presentation2012 and 4Q12
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JBS S.A.
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Disclaimer
This release contains forward-looking statements relating to the prospects of the business,
estimates for operating and financial results, and those related to growth prospects of JBS.These are merely projections and, as such, are based exclusively on the expectations ofJBS management concerning the future of the business and its continued access to capitalto fund the Companys business plan. Such forward-looking statements depend,substantially, on changes in market conditions, government regulations, competitivepressures, the performance of the Brazilian economy and the industry, among other factorsand risks disclosed in JBS filed disclosure documents and are, therefore, subject to changewithout prior notice..
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JBS S.A. at a Glance
JBS posted consolidated net revenue of R$75.7 billion, an increase of R$13.9 billion, 22.5% higher than 2011
EBITDA of R$4.4 billion, 40.0% above 2011
2012 adjusted net income of R$1.26 billion
Proposed dividends of R$170.7 million in 2012
Positive operating cash flow of R$1.5 billion
Leverage (net debt / EBITDA) decreased to 3.4x at the end of 2012, from 4.3x at 2T12 and 3.7x at 3T12.
JBS ended the year with R$5.4 billion in cash or cash equivalent, corresponding to 90% of short-term debt.
JBS USA has available committed lines of U$1.2 billion
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Perspectives for the global animal protein
market
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Worlds Food* Surpluses and Deficits
1965
1990
1970
1995
1975
2000
1980
2005
1985
2010
Net intra-regional trade, million tonnes
150
100
50
0
50
100
150
* Cereals, rice, oilseeds, meals, oils and feed equivalent of meat.Source: The Economist
NorthAmerica
SouthAmerica
Australia
Eastern Europeand former
Soviet Union
Western
Europe Asia
Middle East
& Africa
Central
America
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59.1
76.5
58.8
75.9
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E
Beef Production and Consumption Forecasts - 2000/2021
Global Scenario
CAGR1.2%
Source: FAONote 1. Production and Consumption
Beef Production Beef Consumption
(million tons)
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69.4
127.2
69.0
127.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E
Source: FAONote 1. Consumption CAGR
Poultry Production and Consumption Forecasts - 2000/2021
Global Scenario
(million tons)Poultry Production Poultry Consumption
CAGR2.95%
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Pork Production and Consumption Forecasts - 2000/2021
Global Scenario
(million tons)Pork Production Pork Consumption
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E
126.2
125.4
90.0
89.5
CAGR1.6%
Source: FAONote 1. Consumption CAGR
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Meat Consumption Forecast (Million tons) Expected increase in meat demand by country groupsbetween 2010 - 2020
Emerging
Developed
Source: FAO - OECD
Meat Consumption Growth Forecast 2011-2020
19%
81%
Poultry Pork Sheep Beef
2020
228.1
Ave 2008-10
278.2
2001
338.3
67.595.1
122.5
90.8
105.7
126.658.6
64.6
73.6
11.2
12.7
15.6
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11PAGESource: USDA 2012 (Estimated)*Buffaloes / **Excluding Brazilian exports
Global Protein Trade Largest Exporters
JBS is present in the main exporter markets
Canada 5%
New Zealand 6%
Mercosul** 9%
Others 13%
USA 14%
India* 20%
Brazil 17%
Australia 17%
Chicken Exports
Beef Exports
Pork Exports
Turkey 3 %
Thailand 5%
Argentina 3%
E.U. 12%
Others 7%
Brazil 36%
USA 34%
Chile 2%
Brazil 9%
China 4%
Canada 17%
Others 4%
USA 34%
E.U. 30%
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12PAGEBeef and Veal exports Average Price (US$/Ton)
Australian Beef Exports (tons)
0
500
1.000
1.5002.000
2.500
3.000
3.500
4.000
4.500
5.000
5.500
6.000
6.500
0
200.000
400.000
600.000
800.000
1.000.000
1.200.000
1.400.000
2007 2008 2009 2010 2011 2012
-12.3%
15.6%
Brazilian Beef Exports (tons)
0
500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
4.500
5.000
5.500
0
200.000
400.000
600.000
800.000
1.000.000
1.200.000
1.400.000
2007 2008 2009 2010 2011 2012
15.3%
-4.4%
US Beef and Veal Exports (tons)
Source: USDA, MLA & Secex
Brazil, Australia and the US continue to lead global beef exports
0
500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
4.500
5.000
5.500
0
200.000
400.000
600.000
800.000
1.000.000
1.200.000
1.400.000
2007 2008 2009 2010 2011 2012
0.3%
1.4%
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13PAGESource: USDA & Secex
Brazilian Chicken Exports (tons) USA Chicken Exports (tons)
Chicken Exports Average Price (US$/Ton)
0
200
400
600
800
1.000
1.200
1.400
1.600
1.800
0
500.000
1.000.000
1.500.000
2.000.000
2.500.000
3.000.000
3.500.000
4.000.000
4.500.000
2007 2008 2009 2010 2011 2012
4.1%
10.1%
Chicken Exports Brazil vs US
1.600
1.800
2.000
2.200
1.300.000
1.400.000
1.500.000
1.600.000
1.700.000
1.800.000
1.900.000
1S11 2S11 1S12 2S12
-3.4%
6.0%
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0
500
1.000
1.500
2.000
2.500
3.000
3.500
0
300.000
600.000
900.000
1.200.000
1.500.000
1.800.000
2007 2008 2009 2010 2011 2012
Source: USDA & Secex
Brazilian Pork Exports (tons) USA Pork Exports (tons)
-8.2%
0
500
1.000
1.500
2.000
2.500
3.000
3.500
0
300.000
600.000
900.000
1.200.000
1.500.000
1.800.000
2007 2008 2009 2010 2011 2012
Pork Exports Average Price (US$/Ton)
14.4%
6.4%
-2.9%
Pork Exports Brazil vs US
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2012 and 4Q12 Highlights
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2012 Highlights
EBITDA margin (%)
Net Revenue (R$ billion) Net Income* (R$ million)EBITDA (R$ million)
*Adjusted (excluding deferred income tax liabilities generated due to goodwill at the holding Company).
Leverage (net debt / EBITDA) decreased to 3.4x at the end of 2012.
61.875.7
2011 2012
3,151.0
4,410.35.1 5.8
-12,0
8,0
-500,0
500,0
1500,0
2500,03500,0
4500,0
5500,0
6500,0
2011 2012
-75.7
1,259.0
-12-200,0
0,0
200,0
400,0
600,0
800,0
1000,0
1200,0
1400,0
2011 2012
23% 40%
Gross Profit (R$ million) G&A (R$ million) Operating Cash Flow (R$ million)
G&A / Revenue (%)Gross Margin (%)
6,696.6
8,689.810.8
11.5
-2,0
0,0
2,0
4,0
6,0
8,0
10,0
12,0
14,0
-1000,0
1000,0
3000,0
5000,0
7000,0
9000,0
11000,0
13000,0
15000,0
2011 2012
1,739.22,057.4
2.8 2.7
-12,0
8,0
0,0
500,0
1000,0
1500,0
2000,0
2500,0
3000,0
3500,04000,0
4500,0
2011 2012
606.5
1,472.3
-12-200,0
300,0
800,0
1300,0
1800,0
2011 2012
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Operating Cash Flow of R$796 million
R$322.1 million Free Cash Flow
4Q12 Highlights
Net Revenue (R$ billion) Net Income* (R$ million)
EBITDA margin (%)
EBITDA (R$ million)
*Adjusted (excluding deferred income tax liabilities generated due to goodwill at the holding Company).
940.6
1,170.9
5.6 5.4
-12,0
8,0
0,0
200,0
400,0
600,0800,0
1000,0
1200,0
1400,0
1600,0
1800,0
2000,0
4Q11 4Q12
16.9
21.9
4Q11 4Q12
29%26%
25.6
310.4
-120,0
50,0
100,0150,0
200,0
250,0
300,0
350,0
4Q11 4Q12
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18PAGESource: JBS
JBS Consolidated Results 4Q12
EBITDANet Revenue (R$ million) EBITDA (R$ million) and EBITDA Margin
EBITDA Margin (%)
940.6
696.5
1,012.8
1,378.8
1,170.9
5.64.3
5.5
7.1
5.4
-12,0
8,0
0,0
200,0
400,0
600,0
800,0
1000,0
1200,0
1400,0
1600,0
1800,0
4Q11 1Q12 2Q12 3Q12 4Q12
16,934.516,011.1
18,468.319,366.6
21,850.7
4Q11 1Q12 2Q12 3Q12 4Q12
4.9%12.8%
-5.5% 15.3%
36.1%-15.1%
-26.0% 45.4%
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Performance by Business Unit
Source: JBS
Quarterly Analysis
EBITDA Margin (%)
Net sales (R$ billion) Net sales (US$ billion) Net sales (US$ million) Net sales (US$ billion)
EBITDA (R$ million) EBITDA (US$ million) EBITDA (US$ million) EBITDA (US$ million)
JBS Mercosul JBS USA
(Including Australia and Canada)
JBS USA JBS USA (PPC)
1.8 1.92.0 2.1
2.2
4Q11 1Q12 2Q12 3Q12 4Q12
4.5
4.14.3 4.3
4.9
4Q11 1Q12 2Q12 3Q12 4Q12
22.6
104.0 125.7 105.6
67.4
1.2%
5.5% 6.4% 5.1%3.1%
-20,0%
-15,0%
-10,0%
-5,0%
0,0%
5,0%
10,0%
0
100
200
300
400
500
4Q11 1Q12 2Q12 3Q12 4Q12
407.7508.6
630.3 665.6 664.8
10.7%13.3% 14.6% 14.5%
12.6%
-10,0%
-8,0%
-6,0%
-4,0%
-2,0%
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
12,0%
14,0%
16,0%
0,0
100,0
200,0
300,0
400,0
500,0
600,0
700,0
800,0
900,0
4Q11 1Q12 2Q12 3Q12 4Q12
3.8 3.8
4.34.6
5.3
4Q11 1Q12 2Q12 3Q12 4Q12
223.6
-45.4 -9.1
175.1
103.3
5.0%
-1.1%-0.2%
4.1%2.1%
-30,0%
-28,0%
-26,0%
-24,0%
-22,0%
-20,0%
-18,0%
-16,0%
-14,0%
-12,0%
-10,0%
-8,0%
-6,0%
-4,0%
-2,0%
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
12,0%
14,0%
16,0%
-100
0
100
200
300
400
500
4Q11 1Q12 2Q12 3Q12 4Q12
923.1855.4 844.0 846.1
955.5
100,0
180,0
260,0
340,0
420,0
500,0
580,0
660,0
740,0
820,0
900,0
980,0
1060,0
1140,0
1220,0
1300,0
4Q11 1Q12 2Q12 3Q12 4Q12
77.055.8 49.2 40.4 42.7
8.3% 6.5% 5.8% 4.8% 4.5%
-23,0%
-19,0%
-15,0%
-11,0%
-7,0%
-3,0%
1,0%
5,0%
9,0%
13,0%
0,0
100,0
200,0
4Q11 1Q12 2Q12 3Q12 4Q12
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20PAGESource: JBS
JBS Mercosul
Performance by Business Unit
Net revenue at JBS Mercosul came in at R$5,270.2 million in 4Q12,
increase of 39.5% in comparison with 4Q11.
EBITDA totaled R$664.8 million in 4Q12, stable over the last quarter.
EBITDA margin at JBS Mercosul was 12.6% in the quarter.
The Positive results of this business unit in 2012 reflect the
operational improvements and efficiencies implemented by the
management and reinforces the strategic view adopted.
24%
% Net Revenue JBS S
Net Revenue (R$ billion)
EBITDA (R$ million)
EBITDA Margin (%)
39.5%
3.8 3.8
4.34.6
5.3
4Q11 1Q12 2Q12 3Q12 4Q12
407.7508.6
630.3 665.6 664.8
10.7%13.3% 14.6% 14.5%
12.6%
-10,0%
-8,0%
-6,0%
-4,0%
-2,0%
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
12,0%
14,0%
16,0%
0,0
100,0
200,0
300,0
400,0
500,0
600,0
700,0
800,0
900,0
4Q11 1Q12 2Q12 3Q12 4Q12
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21PAGESource: JBS
JBS USA Beef (including Australia and Canada)
Performance by Business Unit
Net revenue for this business unit was US$4,856.0 million in thequarter.
EBITDA at JBS USA Beef unit totaled US$103.3 million in theperiod, with an EBITDA margin of 2.1%.
Despite adverse market conditions, the Company improved itsoperating metrics through better management of working capitaland efficiency gains and is strengthened to operate in a morefavorable supply and demand scenario.
The reduction of restrictions imposed by Japan to import U.S.beef will promote U.S. exports and contribute to increase the
profitability per animal processed.
Net Revenue (US$ billion)
EBITDA (US$ million)
EBITDA Margin (%)
% Net Revenue JBS S
8.1%
4.5
4.14.3 4.3
4.9
4Q11 1Q12 2Q12 3Q12 4Q12
223.6
-45.4 -9.1
175.1
103.3
5.0%
-1.1%-0.2%
4.1%2.1%
-30,0%
-28,0%
-26,0%
-24,0%
-22,0%
-20,0%
-18,0%
-16,0%
-14,0%
-12,0%
-10,0%
-8,0%
-6,0%
-4,0%
-2,0%
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
12,0%
14,0%
16,0%
-100
0
100
200
300
400
500
4Q11 1Q12 2Q12 3Q12 4Q12
46%
JBS USA P k9%
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22PAGESource: JBS
JBS USA Pork
Performance by Business Unit
Net revenue in the pork business for the quarter totaled
US$955.5 million, an increase of 3.5% year on year. Compared to
3Q12, there was a 12.9% growth.
EBITDA was US$42.7 million in 4Q12 with an EBITDA margin of
4.5%.
This quarter's results reflect an increase in the number of
animals slaughtered and better inventory management. 2012 result
was impacted by increased sales volumes and lower sales prices.
The highlight of the operation was exports, which increased by
5.1% in 2012 compared to 2011.
Net Revenue (US$ million)
EBITDA (US$ million)
EBITDA Margin (%)
% Net Revenue JBS S
3.5%
923.1855.4 844.0 846.1
955.5
100,0
180,0
260,0
340,0
420,0
500,0
580,0
660,0
740,0
820,0
900,0
980,0
1060,0
1140,0
1220,0
1300,0
4Q11 1Q12 2Q12 3Q12 4Q12
77.055.8 49.2 40.4 42.7
8.3% 6.5% 5.8% 4.8% 4.5%
-23,0%
-19,0%
-15,0%
-11,0%
-7,0%
-3,0%
1,0%
5,0%
9,0%
13,0%
0,0
100,0
200,0
4Q11 1Q12 2Q12 3Q12 4Q12
JBS USA P lt (Pil i P id C ti )
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23PAGESource: JBS
JBS USA Poultry (Pilgrims Pride Corporation)
Performance by Business Unit
Net revenue in the 4Q12 for this business unit came in atUS$2,189.7 million, 19.7% higher than the same period of 2011.
Adjusted EBITDA in 4Q12 was US$67.4 million, 198.2% higher than4Q11.
Net income in the 4Q12 was US$22.8 million, reversing the negativeUS$85.4 million in 4Q11.
23% reduction in the PPCs net debt between December 2011 to2012, as a consequence primarily, from the US$200 million operating
cash flow.
Net Revenue (US$ billion)
EBITDA (US$ million)
EBITDA Margin (%)
% Net Revenue JBS S
21%
1.8 1.92.0 2.1
2.2
4Q11 1Q12 2Q12 3Q12 4Q12
22.6
104.0 125.7 105.667.4
1.2%
5.5% 6.4%5.1%
3.1%
-10,0%
-8,0%
-6,0%
-4,0%
-2,0%
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
0
100
200
300
400
500
4Q11 1Q12 2Q12 3Q12 4Q12
19.7%
JBS C lid t d E t Di t ib ti i 2012
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24PAGESource: JBS
JBS Consolidated Exports Distribution in 2012
Approximately US$9.8 billion, an increase of 22.7% in relation to 2011
Mexico 14.6%
China, Hong Kong eVietnan 14.0%
Japan 11.0%
Africa e Middle East10.3%
Russia 7.4%E.U. 6.2%
Korea 5.4%
Canada 5.4%
Venezuela 3.3%
Chile 3.1%
Taiwan 2.0%
Others 17.4%
US$9,830.2
million
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Debt Profile
Debt Profile
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Debt Profile
JBS net debt to EBITDA decreased to 3.4x in the 4Q12, substantially lower than in the first semester
In January 2013, JBS issued a US$500.0 million Bond, due in 2023 and with a yield of 6.5%
4,004,30 4,27
3,683,43
0
1
2
3
4
5
-100
100
300
500
700
900
1100
1300
1500
4Q11 1Q12 2Q12 3Q12 4Q12
30%
27%
23%
27%
70%
73%
77%
73%
4Q12
3Q12
2Q12
1Q12
Bonds40%
Others60%
4Q12
Leverage ST / LT Debt Profile
Bonds / OtherBreakdown by Currency and Company
. Leverage EBITDA (R$ million) Short Term Long Term
R$ 26% USD 74%4Q12
Source: JBS
JBS S.A.59%
Subsidiaries41%
4Q12
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Sustainability and
Social Responsability
Cattle Traceability System
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JBSs Traceability System
JBS has been developing, since 2010,
an environmental system to monitor
its cattle suppliers located in theAmazon bioma which is based on
satellite images, geospatial data of
farms and official information in order
to analyze more than 30,000 cattle
suppliers located in this region of the
country.
Responsible Purchase
JBS is committed to purchase cattle onlyfrom suppliers who respect and comply
with the Company's social andenvironmental criteria.
We reject deforestation
We reject the invasion of indigenous landsand protected areas
We reject to working conditions analogousto slavery
We reject violence and conflicts in ruralareas
Cattle Traceability System
Stakeholders
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29PAGE
JBS actively participates in
the main discussion
forums onsustainable
livestock
Stakeholdersengagement
JBS received top marks in 7 units of leather forenvironmental and sustainability practices in theproduction process by the international organizationLeather Working Group (LWG). Totaling 7 unitsreceived gold medal and 2 Silver, all with "A" gradeon traceability.
Stakeholders
JBS Institute funds Germinare School
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30PAGE
Germinare School is a social initiative of the JBS Institute whichlooks at Education as the principal instrument to transform society.
Laboratory
Social
GERMINARE SCHOOL
Purpose: to prepare well-educated and well-rounded citizens with abroad cultural repertoire, sound ethical values and a positiveattitude toward life and society.
Number of students: 450 (2013)Capacity of 630 students.
Area: 6,000 m2Sport complex, swimming pool, computer lab and chemistry lab.
Amount invested: R$15 million
Selection process: tests and group dynamics.
Top Brazilian professors.
JBS Institute funds Germinare SchoolSocial Responsibility
Source: JBS
Started in 2010.
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Mission
To be bestin what we set out to do, totally focusedonour business, ensuring the best products and services
for our customers, solidityfor our suppliers,satisfactory profitabilityfor our shareholders and the
certainty of a better future to all our employees.