2008 Conference Call Presentation
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The document summarizes JBS's consolidated results for 2008. It shows that JBS reduced its net debt to EBITDA ratio from 3.74x in 2007 to 1.95x in 2008 through an intense deleveraging process. Net revenue increased 114.5% to R$30.3 billion while EBITDA grew 95.6% to R$1.156 billion. JBS also proposed a threefold increase in dividend distribution to R$51.1 million. The company integrated several major acquisitions to grow its global production platform.
2008 Conference Call Presentation
- 1. 2008 Consolidated Results 3.74 Leverage 2.89 2.77 2.31 1.95 1.96 JBS lives an intense process of deleverage reducing the net debt / EBITDA ratio from 3.74x in 2007 to 1.95x in 2008. 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 February 20th, 2009 JBS S.A. “In God we Trust”
- 2. Presenters Joesley Mendonça Batista CEO Jeremiah O’Callaghan Investor Relations Director Rodrigo Gagliardi Investor Relations Manager 1
- 3. Our Values The Foundation Of Our Culture Planning Determination Discipline Availability Openness Simplicity 2
- 4. Agenda 2008 Highlights Debt Profile Consolidated Results Questions and Answers 3
- 5. 2008 Highlights • JBS lives an intense process of deleverage reducing the net debt / EBITDA ratio from 3.74x in 2007 to 1.95x in 2008. • Adjusted pro forma net income in 2008 of R$1.05 billion, if adjusted by the exchange variation of foreign investments and excluded the goodwill amortization. • Net revenue increased 114.5% YoY from R$14.1 billion in 2007 to R$30.3 billion in 2008. • EBITDA YOY increased 95.6% from R$591.1 million in 2007 to R$1,156.1 million in 2008. • Proposed dividend distribution has increased threefold from R$17.5 million in 2007 to R$51.1 million in 2008. • Integration of the Tasman Group, of Smithfield Beef and the Five Rivers Feedlot grew the global production platform of JBS as well as increasing penetration in the world market while introducing cost cutting synergies. • Distribution network of INALCA JBS enhanced the contact with customers in Africa and Eastern Europe. • Proven risk control and management policy preserved the financial health of JBS during a period of uncertainty and high volatility particularly during the second semester of 2008. 4 4
- 6. Debt Profile – 4Q08 • The Administration of the Company is secure that even if the present financial crisis has not abated, the Company will not have difficulties in refinancing its short term debt and believes that in the final analysis there will be a possible increase in the cost of the debt. JBS S.A. Consolidated (R$ million) Probable Scenario Short Term Debt Short Term Debt 1Q09 2Q09 3Q09 4Q09 Total %** 1Q09 2Q09 3Q09 4Q09 Financing for purchase of fixed assets FINAME / FINEM - Enterprise financing 11 11 11 59 91 100% 11 11 11 59 Notes Payable 1 1 1 2 5 100% 1 1 1 2 Subtotal 1 12 12 11 61 96 100% 12 12 11 61 Loans for working capital purposes ACC - Exchange advance contracts 214 322 150 29 715 0% - - - - EXIM - BNDES export credit facility 72 0 0 0 72 100% 72 - - - Fixed Rate Notes with final maturity in February 2011 9 - - - 9 100% 9 - - - Working Capital - American Dollars * 33 71 0 0 104 0% - - - - Working Capital - Australian Dollars 86 74 0 - 160 0% - - - - Working Capital - Euros *** 1 11 2 288 302 0% - - - - Working Capital - Reais 51 - - - 51 0% - - - - Export prepayment 160 16 16 16 208 0% - - - - Fixed Rate Notes with final maturity February 2016 (144-A) - 30 - - 30 100% - 30 - - NCE / COMPROR 330 - 100 37 467 0% - - - - Subtotal 2 957 524 268 371 2.119 5% 81 30 0 0 Total 969 536 279 431 2.215 9% 93 42 11 61 Amortization of Short Term Debt 2.215 207 Cash, cash equivalents and Short-term investments 12/31/2008 2.292 2.199 2.157 2.145 2.085 Working Capital 2.704 * Including Finimp ** Percentual to be paid in the period. *** Working Capital due short term and automatically renewable. 5
- 7. 2008 Consolidated Results Net Sales Revenue (R$ million) Net Sales Revenue (R$ million) EBITDA and EBITDA Margin (R$ million) EBITDA and EBITDA Margin (R$ million) 14.2% 30,340.3 9.6% 1,156.1 4.2% 3.8% 14,141.6 564.9 591.1 345.1 95.6% 114.5% 3,577.1 3,967.6 63.7% 4.6% 10.9% 256.4% 12M05 12M06 12M07 12M08 12M05 12M06 12M07 12M08 Source: JBS EBITDA Margin (%) 6
- 8. 2008 Consolidated Results by Quarter Net Sales Revenue (R$ million) Net Sales Revenue (R$ million) EBITDA and Margin (R$ million) EBITDA and Margin (R$ million) 6.1% 4.1% 3.0% 2.8% 1.4% 9,633.2 470.5 7,771.5 7,129.5 6,650.7 5,859.1 290.8 265.9 176.3 -11.9% 21.7% 9.0% 24.0% 94.8 86.0% 64.9% 61.8% -43.5% 4Q07 1Q08 2Q08 3Q08 4Q08 4Q07 1Q08 2Q08 3Q08 4Q08 180.5% Source JBS EBITDA Margin (%) 7
- 9. Performance by Business Unit JBS USA (Beef) Including Australia JBS USA (Pork) INALCA JBS JBS MERCOSUL Net Sales Net Sales Net Sales Net Sales Net Sales Net Sales Net Sales Net Sales (US$ million) (US$ million) (€ million) (R$ million) (US$ million) (US$ million) (€ million) (R$ million) 2.8 2.8 682 1.8 2.6 162 2.3 620 600 1.6 598 536 140 143 1.4 1.9 132 1.3 1.3 4Q07 1Q08 2Q08 3Q08 4Q08 4Q07 1Q08 2Q08 3Q08 4Q08 1Q08 2Q08 3Q08 4Q08 4Q07 1Q08 2Q08 3Q08 4Q08 EBITDA (US$ mi) EBITDA (US$ mi) EBITDA (US$ mi) EBITDA (US$ mi) EBITDA (€ mi) EBITDA (€ mi) EBITDA (R$ mi) EBITDA (R$ mi) margin EBITDA margin EBITDA margin EBITDA margin EBITDA margin EBITDA margin EBITDA margin EBITDA margin EBITDA 5.1% 5.6% 7.6% 6.8% 1 % 5.1 5.6% 5.1% 4.3% 4.7% 5.3% 2.2% 2.9% 3.2% 10.4% -0,1% 5.6% 4.1% 4.3% -3.7% 155.6 132.9 52.1 7.6 8.3 199,1 7.4 60.4 40.5 6.6 132.7 25.6 102.2 -0.9 19.9 69.4 15.7 58,2 -84.5 4Q07 1Q08 2Q08 3Q08 4Q08 4Q07 1Q08 2Q08 3Q08 4Q08 1Q08 2Q08 3Q08 4Q08 4Q07 1Q08 2Q08 3Q08 4Q08 Source JBS 8 EBITDA Margin (%)
- 10. Debt Profile • JBS’s Net debt in relation to its Net Debt / EBITDA Pro Forma per TRIMESTER EBITDA (last twelve months pro forma) is affected by weak results in Net Debt = R$ 3,325 MM Net Debt = R$ 3,325 MM = 1,95 1.95 = 1.95 EBITDA pro forma = R$ 1,706 MM the 4th quarter 2007 and 1st EBITDA pro forma = R$ 1,706 MM quarter 2008. 3.74 • Good results expected for 1st quarter 2009 will reduce the 2.89 2.77 relation between Net Debt over Ebtida. 2.31 * 1.95 Exchange Rate: R$ / US$ = 2.34 – 12/31/2008 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 US$ / €$ = 1.39 – 12/31/2008 Source: JBS Net Debt / EBITDA 9
- 11. JBS USA Beef EBITDA Margin Evolution EBITDA Margin (%) EBITDA Margin (%) Peers Average Beef USA 6.4% JBS Beef USA 4.2% 3.6% 5.3% 2.3% 2.0% 3.2% 1.3% 1.3% 0.9% 0.9% 0.9% 0.7% -0.4% 1.1% -0.4% -0.7% -0.9% -1.2% -1.3% 7.3 p.p Gain -1.7% -5.3% FY03* FY04* FY05* FY06* FY07* 3Q07** 4Q07** 1Q08** 2Q08** 3Q08** 4Q08** Previous Management JBS S.A. Management Source: JBS and estimates of JBS based upon public data from peers EBITDA margins of the Companies taking into consideration beef only in the US *Fiscal years for the Companies differ one from the other: FY Tyson: October to September FY Smithfield: May to April FY National Beef: September to August FY JBS USA: June to May (altered after the acquisition) **The relevant quarterly period and adjustments made to the calendar year 10
- 12. Consolidated Gross Revenue Distribution Revenue Distribution by Business Units 12M08 Revenue Distribution by Business Units 12M08 Revenue Distribution by Market 12M08 Revenue Distribution by Market 12M08 Beef Italy Beef Australia 5% Beef Argentina 12% 3% Pork USA Beef Brazil Exports 32% 14% 19% Domestic Market 68% Beef USA 47% Source: JBS Source: JBS 11
- 13. Consolidated Exports Distribution Exports Distribution 12M08 Exports Distribution 12M08 China Others Mexico USA 3% 15% 18% 3% Russia Taiwan 13% 4% E.U, Middle East Canada Japan 11% South Korea 7% 8% 9% 4% Hong Kong 5% Source: JBS Exports JBS 12M08: US$ 5.6 billion 12
- 14. Enterprise Value and EBITDA Multiple SMITHFIELD BEEF ACQUISITION SMITHFIELD BEEF ACQUISITION SWIFT USA ACQUISITION SWIFT USA ACQUISITION EV / EBITDA EV / EBITDA US$565.0 mm US$1,458.8 mm 15.1x 8.1x 370.5 3.5x 3.9x 163.1 96.3 70.0 133% 285% Oct-07 Dec-08 Jul-07 Dec-08 Source: JBS 13
- 15. Final Considerations • Commitment from the Management to reduce the leverage of the Company. • Appropriate liquidity level. • We will continue to grow. We see the present crisis as an immense opportunity. • Regardless of the negative aspects of the present macroeconomic scenario, the Management of this Company forecasts substantially improved consolidated operational results for 2009. • Planning and discipline contributed to risk reduction. 14
- 16. Questions & Answers 3.74 Leverage 2.89 2.77 2.31 1.95 1.96 JBS lives an intense process of deleverage reducing the net debt / EBITDA ratio from 3.74x in 2007 to 1.95x in 2008. 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 February 20th, 2009 JBS S.A. “In God we Trust”
- 17. Disclaimer 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.