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1Q08 Results Presentation

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JBS RI
JBS RI

This document summarizes the 1Q08 results presentation by JBS S.A., a global meat processing company. It highlights that JBS's net revenue grew 439.4% in 1Q08 compared to 1Q07. EBITDA margin increased 85.9% compared to the previous quarter. JBS USA saw a 20.3% gain in net revenue versus 1Q07 and increased gross margin. The results of JBS MERCOSUL were negatively impacted by EU restrictions and the Argentine economy. The presentation discusses results by business units and markets, and analyzes trends in global cattle prices and meat margins.

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JBS S.A. 1Q08 Results May 15, 2008
Presenters Joesley Mendonça Batista CEO Sérgio Longo Finance and IR Director Rodrigo Gagliardi Investor Relations Manager 1
Highlights  In the 1Q08 JBS’s net revenue grew by 439.4% when compared to the 1Q07, from R$1,086.1 (1Q07) to R$5,859.1 million (1Q08).  JBS’s consolidated EBITDA margin for the 1Q08 was 3.0%, a 85.9% jump compared to the previous quarter.  JBS USA’s gross margin (including JBS Australia) increased by 3.2% to 5.0% in the 1Q08, compared with the 4Q07.  JBS USA (including JBS Australia) had an EBITDA margin of 0.6% in the 1Q08, up from the -1.4% margin on the 4Q07.  JBS USA (including JBS Australia) had a 20.3% gain in net revenue in the 1Q08 versus the 1Q07 figure.  JBS MERCOSUL’s result was negatively impacted by the European Union restrictions on its activities and by the economic conjuncture in Argentina.  With operations in four important production and distribution platforms (USA, MERCOSUL, Australia and Europe), JBS shall capture strong advantages in comparison to its regional competitors, taking into consideration the current momentum of increase in demand and low protein offer, in addition to the scenario of convergence of margins due to the highest globalization of the industry. 2
AGENDA CONSOLIDATED RESULTS RESULTS BY BUSINESS UNITS MARKET SCENARIO QUESTIONS AND ANSWERS 3
JBS CONSOLIDATED RESULTS – Net Revenue, EBITDA and EBITDA Margin Net Revenue (R$ million) EBITDA and EBITDA Margin EBITDA Margin (%) 14.2% 9.6% 14,141.6 4.2% 3.0% 1.4% 564.9 591.1 6,650.7 5,859.1 3,967.6 345.1 3,577.1 176.3 63.7% 4.6% 94.8 10.9% 256.4% 12M05 12M06 12M07 4Q07 1Q08 12M05 12M06 12M07 4Q07 1Q08 Source: JBS Without considering the acquisitions of National Beef, Smithfield Beef and Tasman. 4
EVOLUTION OF THE GUIDANCE PUBLISHED IN 01/27/2008 (Without considering the INALCA and recent acquisitions) Net Revenue (R$ million) EBITDA and EBITDA Margin EBITDA Margin (%) 25,500.0 14.2% 9.1% 9.6% 4.2% 2.9% 1,275.0 14,141.6 564.9 591.1 5,554.2 3,967.6 345.1 3,158.0 3,577.1 286.8 22% 159.3 20.3% 63.7% 4.6% 13.3% 10.9% 256.4% 12% 12M04 12M05 12M06 12M07 1Q08 12M04 12M05 12M06 12M07 1Q08 Source: JBS Without considering the acquisitions of Inalca, National Beef, Smithfield Beef and Tasman. 5
JBS CONSOLIDATED Net Debt over EBITDA Net Debt/EBITDA* (R$ million) 3.3x 3.7x 2.9x 2.5x 2.3x 2,329 2,368 2,083 1,474 1,413 1Q07 2Q07 3Q07 2007 1Q08 Source: JBS • Consolidated Pro-forma LTM 6
JBS CONSOLIDATED – Sales Distribution Sales Distribution by Division 1Q08 Sales Distribution by Market 1Q08 Beef Beef Italy Argentina 5% 2% Beef Australia 12% Exports 34% Beef USA 44% Pork USA 15% Domestic Market 66% Beef Brazil Impacted by the 21% USA domestic market Source: JBS Source: JBS 7
JBS CONSOLIDATED – Exports Distribution Exports Distribution 1Q08 Others E.U. 19% 18% Taiwan 3% Hong Kong Japan 5% 14% Canada 5% South Korea 5% Mexico China 12% 6% USA Russia 6% 7% JBS Exports 1Q08: US$ 1.2 billion Source: JBS 8
JBS – PERFORMANCE BY BUSINESS UNITS JBS USA (Beef) JBS USA (Pork) JBS Australia INALCA JBS (3) JBS MERCOSUL Net Revenue Net Revenue Net Revenue Net Revenue Net Revenue (US$ million) (US$ million) (US$ million) (€$ million) (R$ million) 5,604 5,579 5,461 4,892 3,968 3,577 1,865 2,243 2,070 2,175 1,634 1,871 1,745 1,914 1,319 1,271 598 1,006 1,045 1,041 536 503 342 275 264 FY05 FY06 FY07 4Q07 1Q08 FY05 FY06 FY07 4Q07 1Q08 FY05 FY06 FY07 4Q07 1Q08 FY05 FY06 FY07 4Q07 1Q08 FY05 FY06 FY07 4Q07 1Q08 (1) (2) (1) (2) (1) (2) EBITDA (US$ mi) EBITDA (US$ mi) EBITDA (US$ mi) EBITDA (€ $ mi) EBITDA (R$ mi) EBITDA Margin EBITDA Margin EBITDA Margin EBITDA Margin EBITDA Margin Margin (%) Margin (%) Margin (%) Margin (%) Margin (%) -1.2% -0.4% -1.3% -1.7% 6.8% 5.7% 6.1% 6.0% 5.6% 14.2% 14.2% 1 % 5.1 5.4% 3.5% 2.9% 4.3% 4.9% 3.5% 10.4% 1 .3% 1 9.6% 2.4% 4.8% 692.5 3.2% 122.1 1.7% 565.0 -5.3% 106.0 73.3 70.3 345.0 -19.8 -21.8 45.6 51.0 40.5 44.0 45.0 199.1 -65.1 29.5 20.9 15.7 17.7 16.5 14.7 132.7 143.7 -97.1 -99.3 FY05 FY06 FY07 4Q07 1Q08 FY05 FY06 FY07 4Q07 1Q08 FY05 FY06 FY07 4Q07 1Q08 FY05 FY06 FY07 4Q07 1Q08 FY05 FY06 FY07 4T07 1Q08 1Q08* (1) (2) (1) (2) (1) (2) (4) Source: JBS FY of Swift used to be from June to May and INALCA period is from January to December. (1) 14 weeks ended in 12/30/2007. (2) 13 weeks ended in 03/30/2008. (3) Values referring to 100% of INALCA JBS Pro Forma. (4) EBITDA Normalization of JBS Argentina to 3% and maintenance of EBITDA in JBS Brazil. 9
Global Cattle Prices US$/@ Converging Prices 55.00 50.00 45.00 40.00 35.00 30.00 25.00 20.00 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 BRA AUS ARG USA Source: JBS Converging Margins 10
Beef Price vs. Cattle Price in USA 157 70 60 50 152 40 30 20 147 10 0 -10 142 -20 -30 -40 137 -50 -60 -70 132 -80 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Margin/Head Cattle Price Beef Price Source: Bloomberg 11
QUESTIONS & ANSWERS 12
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. 13

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1Q08 Results Presentation

  • 1. JBS S.A. 1Q08 Results May 15, 2008
  • 2. Presenters Joesley Mendonça Batista CEO Sérgio Longo Finance and IR Director Rodrigo Gagliardi Investor Relations Manager 1
  • 3. Highlights  In the 1Q08 JBS’s net revenue grew by 439.4% when compared to the 1Q07, from R$1,086.1 (1Q07) to R$5,859.1 million (1Q08).  JBS’s consolidated EBITDA margin for the 1Q08 was 3.0%, a 85.9% jump compared to the previous quarter.  JBS USA’s gross margin (including JBS Australia) increased by 3.2% to 5.0% in the 1Q08, compared with the 4Q07.  JBS USA (including JBS Australia) had an EBITDA margin of 0.6% in the 1Q08, up from the -1.4% margin on the 4Q07.  JBS USA (including JBS Australia) had a 20.3% gain in net revenue in the 1Q08 versus the 1Q07 figure.  JBS MERCOSUL’s result was negatively impacted by the European Union restrictions on its activities and by the economic conjuncture in Argentina.  With operations in four important production and distribution platforms (USA, MERCOSUL, Australia and Europe), JBS shall capture strong advantages in comparison to its regional competitors, taking into consideration the current momentum of increase in demand and low protein offer, in addition to the scenario of convergence of margins due to the highest globalization of the industry. 2
  • 4. AGENDA CONSOLIDATED RESULTS RESULTS BY BUSINESS UNITS MARKET SCENARIO QUESTIONS AND ANSWERS 3
  • 5. JBS CONSOLIDATED RESULTS – Net Revenue, EBITDA and EBITDA Margin Net Revenue (R$ million) EBITDA and EBITDA Margin EBITDA Margin (%) 14.2% 9.6% 14,141.6 4.2% 3.0% 1.4% 564.9 591.1 6,650.7 5,859.1 3,967.6 345.1 3,577.1 176.3 63.7% 4.6% 94.8 10.9% 256.4% 12M05 12M06 12M07 4Q07 1Q08 12M05 12M06 12M07 4Q07 1Q08 Source: JBS Without considering the acquisitions of National Beef, Smithfield Beef and Tasman. 4
  • 6. EVOLUTION OF THE GUIDANCE PUBLISHED IN 01/27/2008 (Without considering the INALCA and recent acquisitions) Net Revenue (R$ million) EBITDA and EBITDA Margin EBITDA Margin (%) 25,500.0 14.2% 9.1% 9.6% 4.2% 2.9% 1,275.0 14,141.6 564.9 591.1 5,554.2 3,967.6 345.1 3,158.0 3,577.1 286.8 22% 159.3 20.3% 63.7% 4.6% 13.3% 10.9% 256.4% 12% 12M04 12M05 12M06 12M07 1Q08 12M04 12M05 12M06 12M07 1Q08 Source: JBS Without considering the acquisitions of Inalca, National Beef, Smithfield Beef and Tasman. 5
  • 7. JBS CONSOLIDATED Net Debt over EBITDA Net Debt/EBITDA* (R$ million) 3.3x 3.7x 2.9x 2.5x 2.3x 2,329 2,368 2,083 1,474 1,413 1Q07 2Q07 3Q07 2007 1Q08 Source: JBS • Consolidated Pro-forma LTM 6
  • 8. JBS CONSOLIDATED – Sales Distribution Sales Distribution by Division 1Q08 Sales Distribution by Market 1Q08 Beef Beef Italy Argentina 5% 2% Beef Australia 12% Exports 34% Beef USA 44% Pork USA 15% Domestic Market 66% Beef Brazil Impacted by the 21% USA domestic market Source: JBS Source: JBS 7
  • 9. JBS CONSOLIDATED – Exports Distribution Exports Distribution 1Q08 Others E.U. 19% 18% Taiwan 3% Hong Kong Japan 5% 14% Canada 5% South Korea 5% Mexico China 12% 6% USA Russia 6% 7% JBS Exports 1Q08: US$ 1.2 billion Source: JBS 8
  • 10. JBS – PERFORMANCE BY BUSINESS UNITS JBS USA (Beef) JBS USA (Pork) JBS Australia INALCA JBS (3) JBS MERCOSUL Net Revenue Net Revenue Net Revenue Net Revenue Net Revenue (US$ million) (US$ million) (US$ million) (€$ million) (R$ million) 5,604 5,579 5,461 4,892 3,968 3,577 1,865 2,243 2,070 2,175 1,634 1,871 1,745 1,914 1,319 1,271 598 1,006 1,045 1,041 536 503 342 275 264 FY05 FY06 FY07 4Q07 1Q08 FY05 FY06 FY07 4Q07 1Q08 FY05 FY06 FY07 4Q07 1Q08 FY05 FY06 FY07 4Q07 1Q08 FY05 FY06 FY07 4Q07 1Q08 (1) (2) (1) (2) (1) (2) EBITDA (US$ mi) EBITDA (US$ mi) EBITDA (US$ mi) EBITDA (€ $ mi) EBITDA (R$ mi) EBITDA Margin EBITDA Margin EBITDA Margin EBITDA Margin EBITDA Margin Margin (%) Margin (%) Margin (%) Margin (%) Margin (%) -1.2% -0.4% -1.3% -1.7% 6.8% 5.7% 6.1% 6.0% 5.6% 14.2% 14.2% 1 % 5.1 5.4% 3.5% 2.9% 4.3% 4.9% 3.5% 10.4% 1 .3% 1 9.6% 2.4% 4.8% 692.5 3.2% 122.1 1.7% 565.0 -5.3% 106.0 73.3 70.3 345.0 -19.8 -21.8 45.6 51.0 40.5 44.0 45.0 199.1 -65.1 29.5 20.9 15.7 17.7 16.5 14.7 132.7 143.7 -97.1 -99.3 FY05 FY06 FY07 4Q07 1Q08 FY05 FY06 FY07 4Q07 1Q08 FY05 FY06 FY07 4Q07 1Q08 FY05 FY06 FY07 4Q07 1Q08 FY05 FY06 FY07 4T07 1Q08 1Q08* (1) (2) (1) (2) (1) (2) (4) Source: JBS FY of Swift used to be from June to May and INALCA period is from January to December. (1) 14 weeks ended in 12/30/2007. (2) 13 weeks ended in 03/30/2008. (3) Values referring to 100% of INALCA JBS Pro Forma. (4) EBITDA Normalization of JBS Argentina to 3% and maintenance of EBITDA in JBS Brazil. 9
  • 11. Global Cattle Prices US$/@ Converging Prices 55.00 50.00 45.00 40.00 35.00 30.00 25.00 20.00 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 BRA AUS ARG USA Source: JBS Converging Margins 10
  • 12. Beef Price vs. Cattle Price in USA 157 70 60 50 152 40 30 20 147 10 0 -10 142 -20 -30 -40 137 -50 -60 -70 132 -80 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Margin/Head Cattle Price Beef Price Source: Bloomberg 11
  • 14. 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. 13