Highlights on acquisitions in Brasil

3rd February 2015

Società soggetta a direzione e coordinamento di B.S.A. S.A.

The Market: Big opportunities to be explored in Brazil

Brazil is a major producer with +30 mn ton./yr

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Milk supply can be found in most regions in Brazil

(mn ton.) 2011 2012 2013E

Milk Supply:Milk Production 32.0 33.1 34.0

Industrialized 21.7 22.9 23.0Informal 10.4 10.2 10.0

Imports 1.2 1.4 1.5Exports 0.1 0.1 0.1

Total 33.3 34.4 35.5

Brazil’s market is sizable, underpenetrated and highly informal

Source: FAO Statistical Yearbook 2013

Source: FAO/Faostat, CONAB and IBGE, World Bank

Local statistics bureau’s 2009 milk production heat map

2011 2012 2013E

Population (mn. people) 194.9 196.5 198.0Consumption per capita (L/yr) 173 177 181

Annual vol. produced (mn ton.)

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GDP in absolute terms amounted to 2,245 bln US$ in 2013, making Brasil the 7o worldwide economy in terms of GDP and 5o in terms of population size.(source: Worldbank database)

Local market characteristics

Dairy is consumed as UHT, powder milk and cheese

Geography plays a critical role in milk production

UHT26%

Cheese31%

Powdered Milk24%

Pasteurized Milk

6%

Others13%

Milk is mostly produced by smallholders

Cow / Farm Milk Production Dairy Farms

Liters / Farm/ Day Nº 000 ton. % Nº %

 2,000 212 7,032 22% 6,255 1%TOTAL 19 32,451 100% 1,209,022 100%

Source: LEITE BRASIL, CNA, OCB, CBLC and Embrapa/Gado de Leite Source: Embrapa 3

Current market share of dairy players

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25%

Nestle Danone BRF Vigor LBR

• Current competitive scenario in dairy sector in Brasil sees BRF as third player and LBR as fifth player.

• The joint acquisition of BRF’s dairy business and LBR’s UPI’s will allow for an efficient mix of product range , as described on the next pages

based on Nielsen data

Brazil’s competitive landscapesnapshot by dairy segment: market share1 of top 5

Cheese

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30%

Danone Nestle Brf Vigor Yakult

Refrigerated Products

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16%

LBR BRF Tirol Italac Piracanjuba

UHT

00%05%10%15%20%25%30%35%40%45%

Nestle Vigor Embare la serenissima BRF

Powder Milk

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12%

Polengui BRF Tirolez LBR Quata

1) Shares in terms of sales in 2014 YTD according to Nielsen data 5

Acquisition of LBR’s UPIs

UPI  Plants

UPI 7  Fazenda Villa Nova

Main products Notes 

UHT milk Parmalat brand

UPI 8  Barra Mansa UHT milk

UPI 11  Curral NovoPouso Alto

Cheese

UPI 12  N/A Requeijão (cream cheese)

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Parmalat brand

BRF’s indicative portfolio and sales mix (value)

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How Parmalat acquisitions could shape competitive landscapeExpected snapshot of top players by dairy segment in Brazil

Cheese Refrigerated Products

UHT Powder Milk

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Parmalat Polenghi Tirolez Quata Danone Nestle Parmalat Vigor

Parmalat Tirol Italac Piracanjuba Nestlé Vigor Embaré La Serenisima Parmalat

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Estimated(*) overall market share of key dairy players

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Danone Nestle Parmalat Vigor

Overall, Parmalat could become the Nr 3 player in the Brazilian dairy market

(*) Based on aggregation of different product categories

Industrial footprint

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Parmalat will have a total of 17 plants:

• 2 existing (Balkis) – cheese

• 4 from LBR – mainly UHT and cheese

• 11 from BRF – entire product mix for dairy

The best part of the industrial footprint is concentrated in the central/southern states, which are:• The ones with more abundant/cheaper milk• The ones with the highest purchasing power

Brazil demographic figures by region

11CONFIDENTIAL

Region  Pop.(mn)% of Brazil 

popGDP

(R$ bn)% of Brazil 

GDP

Southeast 80.4 42.1% 2,296 55.4%

Northeast 53.1 27.8% 555 13.4%

South 27.4 14.4% 672 16.2%

North 15.9 8.3% 224 5.4%

Midwest 14.1 7.4% 396 9.6%

Source: IBGE (Considers IBGE census figures on 2010 resident population and IBGE census figures on 2011 GDP at current prices)

Brazil

Pop: 190.8 mnGDP: R$ 4,143 bn

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(*) 2013

LBR BRF Total

Net Sales Euro (mn) 190 825 1,015

Enterprise Value Euro (mn) 83 570 653

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Key figures for the combined business

(*) Pro‐forma indicative figures for acquired business

• Management of acquired LBR’s assets (UPIs) started on 1st November 2014. Actual payment ofpurchase price executed in January 2015.