JBS DAY
Meeting with Senior Management
So Paulo - April 06, 2011
JBS S.A.
Wesley Batista
JBS S.A.
Founded in the 1950s in West Central Brazil IPO in 2007 Leading protein producer and third largest food company in the World Revenues of over R$ 55 billion in 2010
EBITDA of R$ 3.75 billion in 2010
Organic growth of 14.2% in local currency in 2010 125,000 employees worldwide 134 production units in 5 continents
Market cap of approximately USD 11.1 billion(1)
(1) 31/12/2010
PAGE
1 Market Leader 2 Track Record
of successful acquisitions
JBS Ranking
3 Geographic and
market segment diversification
1 1
2
st
Largest global beef and lamb producer
st
4 Well-recognized
brands
Largest global leather processor
nd Largest global chicken
producer
5 Synergies &
Scale
3rd
3
Source: JBS
Largest dairy producer in Brazil
rd Largest pork producer
in the US
PAGE
1 Market Leader 2 Track Record
of successful acquisitions
Merger and Acquisition track record
More than 30 acquisitions in 15 years
2005 2007
JBS went international with the acquisition of Swift Argentina. JBS became the largest beef company in the world and the biggest Brazilian company in the food industry and entered the US pork market. Construction of a sustainable global meat production and sales platform. Diversification of market segments through the acquisition of Pilgrims Pride and merger with Bertin. JBS Swift became the leader in lamb production in Australia.
2008
Inalca Swift Foods Co.
Pilgrims Pride
Rockdale Beef Tatiara Meat (Swift Austrlia)
3 Geographic and
market segment diversification
2009 2010
Maring (Amambay) Berazategui (Rio Platense) Colonia Caroya SB Holdings JV Beef Jerky Rio Branco Venado Cacoal 1 Tuerto Cacoal 2 Porto Velho Pontevedra Vilhena (CEPA) (Frigovira) Pedra Preta (Frigo Marca) Cceres (Frigosol) Iturama (Frigosol) Rosrio San Jose (Swift Argentina)
Merger with Bertin JBS Couros 5 new units 55,1 Tasman Smithfield Beef Five Rivers
4 Well-recognized
brands
Barretos (Anglo)
34,3 30,3
5 Synergies &
Scale
Barra do Garas (Sadia) Andradina (Sadia)
Pres. Epitcio e Campo grande (Bordon)
Araputanga (Frigoara)
14,1
4,3 0,3
1996 Source: JBS
0,4
1997
0,4
1999
0,5
2000
0,5
2001
0,4
2002
0,7
2003
1,2
2004
1,5
2005 2006 2007 2008 2009 2010
Net revenue (R$ billion)
PAGE
1 Market Leader 2 Track Record of
successful acquisitions
Diversified market segments
Beef Transportation Pork
3 Geographic
and market segment diversification
Leather Chicken
4 Well-recognized
brands
5 Synergies &
Scale
Biodiesel Dairy products
Collagen
Lamb
PAGE
1 Market Leader 2 Track Record of
successful acquisitions
Presence in more than 100 countries, in 6 continents
Strategic Geographical Distribution
3 Geographic
and market segment diversification
4 Well-recognized
brands
5 Synergies &
Scale
3
60
Pork Beef
39
23
Chicken Leather
7
1
Dairy Vegetal Oil
58
7
Distribution Center Sales Office
134
u Units
Slaughterhouse and Industry
Geographic Presence and Production Capacity
Source: JBS
Beef
84,800 heads/day
Chicken
7.9 mm birds/day
Pork
50,000 heads/day
Leather
82,300 hides/day
Dairy
5,400 tons/day
Lamb
24,000 heads/day
PAGE
1 Market Leader 2 Track Record of
successful acquisitions
Well-recognized Brands, symbols of quality
Brazil
3 Geographic and
market segment diversification
Argentina
4 Well-recognized
brands
5 Synergies &
Scale
EUA
Australia
PAGE
1 Market Leader 2 Track Record 3 Geographical
of successful acquisitions
Track Record of successful acquisitions
Creating experience to become a leading Company in consolidating the food sector globally.
and market segment diversification
Geographic and market segment diversification
Access to all consumer markets and reduced trade and sanitary barriers risks.
Market Leader
Greater utilization of market and business opportunities to enhance growth.
Well-recognized brands
Market expansion and strong leadership.
4 Well-recognized
brands
SYNERGY
5 Synergies &
Scale
PRODUCTION SCALE
Production optimization Diluted of fixed costs
IMPROVED PROFITABILITY
PAGE
Our Strategy
RACIONALE Associating quality and branding to increase client loyalty
Branding
Value added products
Customized and further processed products for the end users
Sales and distribution platform Expanding a global distribution platform to reach end clients Production platform Financial Structure Experienced Management Cost reduction, process optimization Risk Management EBITDA Margin Developed an efficient and diversified global production platform
JBSs Value & Strategy
PAGE
10
JBS S.A.
Perspectives for the animal protein market
JBS is well positioned to attend the global demand for animal protein
Jeremiah OCallaghan
Global consumption of animal protein has been increasing
Consumption by region over the past ten years
North Asia North America
+7.5%
E.U. - 27 +3.0% Middle East
+47.7%
+41.4%
+23.7%
East Asia
Central America
+29%
+70.2%
Southeast Asia
+48.7%
Oceania
+32.2%
South America Africa
+23.3%
Source: Rabobank
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12
Global beef trade
JBS is present in 66,0% of Export markets
Largest Beef Exporters
Others 10.0% Brazil 27.0%
E.U. 1.0%
Uruguay 5.0% Argentina 5.0%
Canada 6.0%
Australia 18.0%
New Zealand 7.0%
India 10.0%
USA 11.0%
PAGE
Source: USDA
13
Global consumption and trade of animal protein over the past 10 years
Consumption
100.000 90.000 80.000 70.000 60.000
Trade
10.000 9.000 8.000 7.000 6.000
50.000
40.000 30.000 20.000 10.000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
5.000
4.000 3.000 2.000 1.000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
(1000 MT CWE)
(1000 MT CWE)
(1000 MT)
Source: USDA
PAGE
14
Brazil, Australia and the US continue to lead global beef exports
Brazil, Australia and US represent, respectively, 27%, 18% and 11% of global beef trade Brazilian Beef Exports (tons)
1.400.000 1.200.000 1.000.000 800.000 600.000 400.000 200.000 0 2005 2006 2007 2008 2009 2010
+2.7%
5.500 5.000 4.500 4.000
+24.4%
3.500 3.000
2.500 2.000
1.500 1.000 500 0
Australian Beef Exports (tons)
1.400.000 1.200.000 1.000.000 800.000 600.000 400.000 200.000
-1.9% +11.8%
US Beef and Veal Exports (tons)
5.500 5.000 4.500 4.000 3.500 3.000 2.500 2.000 1.500 1.000 500 400.000 200.000 0 2005 2006 2007 2008 2009 2010 Average Price (US$/Ton) PAGE 1.400.000 1.200.000
+10.9%
5.500 5.000 4.500 4.000 3.500 3.000
+19.5%
1.000.000 800.000 600.000
2.500 2.000 1.500 1.000
500
0
0
2005 2006 2007 2008 2009 2010
Beef Exports
Source: USDA, MLA and Secex
15
Chicken Exports Brazil vs US
Brazil and US represent, respectively, 39% and 34% of global chicken trade
Brazilian Chicken Exports (tons)
4.500.000 4.000.000 3.500.000 3.000.000 2.500.000 2.000.000 1.500.000 1.000.000 500.000 0 2005 2006 2007 2008 2009 2010 +26.6% +13.4% 1.800 1.600 1.400 1.200 1.000 800 600 400 200 0
US Chicken Exports (tons)
4.500.000 4.000.000 3.500.000 3.000.000 2.500.000 2.000.000 -0.7% 1.500.000 1.000.000 500.000 0 2005 2006 2007 2008 2009 2010 600 400 200 0 -4.3% 1.800 1.600 1.400 1.200 1.000 800
Chicken Exports
Average Price (US$/Ton)
Source: USDA e Secex
PAGE
16
Global Surplus (deficit)
Goldman Sachs forecast for animal protein in 2020
Surplus
Deficit
Beef & Veal Pork Chicken
Source: Goldman Sachs
PAGE
17
JBS USA
Don Jackson
JBS USA - Corporate Structure
(excluding Australia)
JBS S.A.
100%
JBS USA Holdings, Inc.
Don Jackson CEO Andr Nogueira CFO 67% 100%
Pilgrims Pride Corporation
Chicken Segment Bill Lovette
JBS USA, LLC
Beef Segment US Beef Bill Rupp Five Rivers Mike Thoren Pork Segment Marty Dooley
PAGE
19
Overview of JBS USA
(excluding Australia)
JBS USA Holdings, Inc.
Financial Information: Net sales: $ 20.35 billion
Beef Segment
Financial Information: Net Sales: $10.45 billion Leading beef processor in the U.S. with ~ 22% market share Five Rivers, the largest feedlot operation in the U.S. Cattle Processed: 6.8 million Market Share:
Pork Segment
Financial Information: Net Sales: $3+ billion Leading pork processor in the U.S. with 13% market share Hogs Processed: 12.8 million Market Share:
Chicken Segment
Financial Information: Net Sales: $6.9 billion Leading chicken processor in the U.S. with 18% market share Leading chicken processor in Mexico Chickens Processed: 1.8 billion Market Share:
Other Statistics:
Other Statistics:
Other Statistics:
Source: JBS; 2010
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20
Significant Scale Across Multiple Locations
JBS USA Beef (19) JBS USA Pork (3)
Worthington
Malta
Salt Lake City Hyrum Denver
Green Bay Depen
Chicago
JBS USA Rendering (2) Plainwell South Charleston Broadway Seaford Souderton Manalapan Moorefield JBS USA Trucking (2) Pilgrim's Pride Production (30) Pilgrim's Pride Further Processing (9)
Greeley
Marshalltown
Yuma Grand Island Ulysses Keyes
Louisville
JBS USA Case Ready (1)
JBS USA Cattle Feeding (12) JBS USA Distribution Centers (7) JBS USA Tannery (1) Pilgrims Pride Distribution Centers (14)
Mayfield Chattanooga Gainesville Batesville Boaz Ellijay Sanford Hartley Santa Fe Springs DeQueenGuntersville Marshville Cactus Mt. Pleasant Russellville Phoenix Sumter D Arlington D D Elberton McElhaney Natchitoches Dallas Tolleson Athens Carrollton Douglas Waco Nacogdoches Canton San Antonio Lufkin Enterprise D Live Oak Lakeland McAllen Monterrey Puerto Rico D San Luis Potosi D Queretaro DTampico Guadalajara D D Los Cues Tepeji del Rio Tlalnepantla
D D DVeracruz D
Lamar Dalhart
PAGE 21
21
Significant EBITDA Improvements to Come for JBS USA
Division Beef
Opportunities Plant optimization: continued yield improvements and cost reduction
Exports: improved export sales mix and market expansion
Sales mix: increased proportion of value-added/branded products
Chicken
Plant optimization: yield improvements and cost reduction Sales mix: increased proportion of value-added/branded products
Pork
Total Improvements of Over $500MM in JBS USA Projected for 2011
PAGE
22
Beef Division
Bill Rupp
JBS Beef Division
JBS domestic beef production is approximately 29 thousand head per day representing 22% domestic market share
Cargill ~29,000 - 22% market share Tyson ~29,000 - 22% market share JBS ~29,000 - 22% market share
Operate Five Rivers Feeding, the largest feedlot operations in the United States
Manage 12 cattle feed yards with a one time capacity of 950,000/hd Provides a captive cattle supply and flexibility to perform customized feeding programs
PAGE
24
JBS Swift and Packerland Beef Plants
Grand Island, NE Greeley, CO
Souderton, PA Hyrum, UT
Tolleson, AZ
Plainwell, MI
Green Bay, WI
Cactus, TX
PAGE
25
Customized Program Solutions
JBS beef plants are strategically located to optimize customer service and logistical efficiencies The most diverse program offering in the industry with customized programs targeted to each consumer segment Research and development support to optimize core product performance and develop new custom products/programs
Prime Angus
Select Angus
White Fat Cow
PAGE
26
Pork Business Unit
Marty Dooley
Pork Facility/Key Locations Map
JBS is the 3rd largest fresh pork processor in the US, processing 12.8M head per year and representing 13% of the market share, with sales of $3+ billion.
3 Pork Plants Marshalltown, IA 20,000 hd/day Worthington, MN 20,000 hd/day Louisville, KY 10,000 hd/day
1 Case Ready Plant Santa Fe Springs, CA
1 Lamb Plant Greeley, CO
PAGE
28
Strengths & Opportunities
Strengths Opportunities
Long term hog supply contracts 73.5% Capacity to convert a high percentage of loins, hams and bellies Supplier of choice with further processors such as Oscar Mayer and Boarshead Strong partnerships with key customers such as Costco, Kroger, Sysco, Shaws, Delhaize, Weis Markets and AWG Over 200MM pounds of Swift branded product sold at retail
Maintain hog supply Increase automation in the plants to improve yields and reduce labor Adding Freezer/Warehouse in Marshalltown Will be operational in May 2011 Allows for increased space for value added in 2012 Utilize source verified livestock and traceability to improve sales of chilled, frozen pork and diced/ground seasoned pork to Japanese market
Flexibility
Increase sales of converted ribs
Increase sales of value added and branded product Expand our case ready business
PAGE
29
Pork Sales Mix
2010
PAGE
30
Chicken Business Unit
(Pilgrims Pride)
Bill Lovette
Pilgrims Pride Today
JBS ownership creates uniquely positioned company with global distribution focus Net sales of $6.9 billion in fiscal 2010 Adjusted EBITDA of $481.9 million, a margin of 7.0% Produced 7.7 billion pounds of chicken 42,000 employees in the U.S. and Mexico
Major facilities in 12 states, Puerto Rico and Mexico
30 fresh plants and 9 cooking facilities Market cap of nearly $1.6 billion $1.3 billion in debt as of December 26, 2010 JBS USA currently owns 67.3% of PPC common stock
PAGE
32
Strong #2 Player in the Global Chicken Industry
US Market Share by Production
Pilgrims Geographic Sales
Mexico 9.0%
Tyson Foods 21.0%
Others 33.0%
Pilgrims Pride 18.0%
Mountaire Farms 4.0% Wayne Farms 5.0%
Perdue Farms 7.0% Sanderson Farms 7.0% Koch Foods 5.0% USA 91.0%
FY 2010 Net Sales $6.9 billion
Source: Watt Poultry USA February 2011.
PAGE
33
Margin Expansion Through Cost-Saving Initiatives
Production Initiatives
Closed 10 plants or roughly 20% of production capacity 4.8% of industry production
Overhead Initiatives
Consolidated HQ with JBS USA Closed PPC HQ in Pittsburg, offices in Dallas and Atlanta Reduced outside cold-storage warehouses from 51 to 17 Renegotiated professional service fees
Integration with JBS
Consolidated shared services functions across legal, purchasing, logistics, administrative, insurance and IT
Adopted forecasted demand planning model
Reopened Douglas, GA, in January as competitive large bird deboning plant
PAGE
34
Integration with JBS USA Provides Further Benefits
Reduced administrative and corporate expenses as a result of integration with JBS USA 458 corporate positions eliminated in 2010
(1)
Combined Synergies - $170mm (1)
Logistics 19.0%
Leverage combined purchasing power to reduce supplier and logistics expenses Additional opportunities in logistics and exports to be realized in 2011
Suppliers 28.0%
Administrative Expenses 41.0% Corporate 12.0%
(1) Captured in SG&A savings. (2) PPC share of corporate and administrative expenses captured in SG&A savings.
PAGE
35
Positioned to Capitalize on Export Opportunities
PPC is bullish on 2011 and its long-term export position
JBS ownership has improved access to markets such as Africa and Middle East
Pilgrims goal is to reduce its concentration in Russian export sales by expanding into emerging markets Expansion into key export markets with value-added processed products Leverage JBS international network to grow share in fast-growing export markets
Top Export Markets
Afghanistan Angola Canada China Cuba Hong Kong Iraq Lithuania Mexico Russia Saudi Arabia Taiwan Tajikistan Ukraine Uzbekistan
PAGE
36
JBS Australia
Iain Mars
JBS Australia plants, feedlots and distribution centers
Townsville Plant
Rockhampton Plant
Beef City Plant
7 distribution centres situated in Sydney, Melbourne, Brisbane, Perth, Adelaide, Townsville and Launceston
Dinmore Plant
Riverina
Cobram Plant Bordertown Brooklyn Plan t King Island Plant Longford Plant
6 cattle feedlots located in Queensland and New South Wales
Devonport Plant
11 beef and small stock slaughtering plants located in New South Wales, Queensland, Victoria and Tasmania
PAGE
38
JBS Australia
JBS Australia employees 8,500 people Annual Turnover A$3 billion
Competition analysis - beef
Company JBS Australia Teys Kill Numbers (head/year 000s) 1,988 938 Market Share
27%
13% 7% 6% 4%
Nippon Meat
Cargill
516
425
Bindaree
293
PAGE
39
JBS Australia Lamb (smalls)
Exports and Competition analysis
Middle East 6% E.U. 6% Japan 3% Others 1% USA 59%
China 25%
Company T&R
Kill Numbers (head/year 000s) 4.6
Market Share
15.30% 12.00% 9.33% 6.00% 4.33% 3.67%
PAGE
JBS Australia(1)
Fletcher Southern Meats (closed) Colac (sold) Castricum (closed)
3.5
2.8 1.8 1.3 1.1
(1)Considering the US facility, JBS is the largest global lamb producer.
40
Australia worlds second largest exporter of beef
Australian beef exports by destination
JBS Australia derives of its revenues from exports
China/HK 1.0% Malaysia 1.0% E.U. 1.0% Canada 1.0% Phillipines 2.0% Middle East 3.0% Singapore 1.0% Others 3.0% Japan 39.0%
Indonesia 5.0%
Russia 6.0% Taiwan 3.0%
Korea 14.0%
USA 20.0%
Source: JBS
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41
Top Ten Views Benefits of JBS Acquisition in Australia
Increased market access- more markets and customers - part of a global business Meat focused owners who have energy, passion and enthusiasm and who truly understand our business Access to capital for greater Capex / Investment spend Openness in sharing of information / ideas between different JBS businesses - benchmarking
Agility and Flexibility
Utilisation of JBS worldwide purchasing power
Focus on better execution of business fundamentals - yields , costs
Availability and access to owners and senior management at all times
Increased opportunities for professional growth
Focus on organisational structure, responsibilities and accountabilities to obtain better results
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42
JBS Mercosul
Wesley Batista
JBS Mercosul plants, feedlots and distribution centers
Production Facility in14 Brazilian States
2 - beef
34 - beef 20 - leather/ hides 7 - dairy 22 - new business units 15 - distribution centers
6 - beef 1 can making facility
1 - beef
PAGE
44
JBS Mercosul
Merger with Bertin has significantly increased market share in Mercosul Net sales of R$13.3 billion in fiscal 2010 EBITDA of $1.3 billion, a margin of 9.7% Slaughtered 6.8 million heads 54,000 employees in Brazil, Argentina, Paraguay, and Uruguay
64 Production facilities in Brazil, Argentina, Paraguay, and Uruguay
56 in Brazil 6 in Argentina 2 in Paraguay and 1 in Uruguay Organic growth for the year 2010 was 13.7%
PAGE
45
JBS Mercosul
Strengths and opportunities
Further synergy capturing in 2011 (~ R$150 million)
Beef herd gradually growing, especially in Brazil.
Strong Domestic consumption across the region
Exports continue strong Pricing power continue robust after average price increases (domestic and exports) of 20% last year
Direct Distribution continues to grow, having captured more than 100,000 new clients in the region in 2010
PAGE
46
Corporate Governance & Sustainability
Corporate Governance
JBS is listed on the Novo Mercado, a segment in which companies are committed to following a series of rules that provide better transparency and security to investors
Transparency Good Governance Practices Confidence Best services and products Solidity Profitability Future
*
Management and Board of Directors
Board of Directors Fiscal Council 4 members
Consist of shareholders or not, liable to be elected or dismissed at any time of the General Meeting.
11 members
1 president 5 permanent directors 5 permanent independent directors
Board of Executive Officers
Elected by the board of directors, for three-year terms, and are eligible for reelection.
Committees 4 committes
Audit Finance Human Resource Corporate Strategy / Sustainability
PAGE
48
Social, economic and environmental responsibility has always been a part of the development and business growth of JBS
Foundation
Economic
Risk and Crises Management Corporate Direction Knowledge Management Stakeholders Engagement
Social
Citizenship and Education Good Practices of Human Resource Human Capital Development
Environmental
Environmental Management Eco-efficiency Sustainable Cattle Breeding Climate Changes
Premises
Ecologically viable Ecologically correct Socially responsible Culturally acceptable
Priorities
Sustainable use of the materials Partnership with reputable organizations Health and Quality of life Climate Residue Treatment
* Clean Development Mechanism **United Nations Framework Convention on Climate Change
Source: JBS Sustainability Policy
PAGE
49
Strong action with appropriate programs for each one of JBS facilities
Principal initiatives
Human Resources
Variable Compensation (goal oriented) Title and Salary Policy Benefit Policy PSAG (Programa de segurana de auto-gesto) Safety Program 360 Performance Evaluation (all the levels of hierarchy of the Company) Exercises for laborers Programa Gente Nossa Mold and develop new talents through contracting trainees
Social Projects
Creation of JBS Institute Germinare School is a social initiative of the JBS Institute that views education as the principal instrument of transforming any society
Cultural support in regional and local events
Philanthropy actions Germinare School
Program of monitored plant visits (Community, Schools, Universities and Associations)
Source: JBS Sustainability Policy
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50
Strong action with appropriate programs for each one of JBS facilities
Principal initiatives
Eco-efficiency
Recycling facility at the Lins-SP and Barretos-SP plants Production of energy through sugarcane bagasse, guaranteeing lower emissions of carbon dioxide gases and reducing the consumption of non-renewable energy sources Implementation of a system to burn ingesta in 7 units and plans to expand to more units Bring all acquired units into line with JBS environmental criteria
Biodigestors at the Andradina SP unit
Relations with Suppliers
Take part in SLWGs (Sustainable Livestock-Raising Working), made up of producers, NGOs, financial institutions and retailers Signing of the international Pact on the Eradication of Child Slavery UN (2005) Partnership with Luiz de Queiroz Agricultural College (ESALQ) to minimize the emission of greenhouse gases in the production chain Signing of the Livestock Raising Pact, an Ethos Institute Initiative entitled Sustainable Connections Sao Paulo Amazon (2008) Field Day Partnership with EMBRAPA (the Brazilian Agriculture Institute) to provide technical support to the suppliers
Source: JBS Sustainability Policy
PAGE
51
Mission
To be best in what we set out to do, totally focused on our business, ensuring the best products and services for our customers, solidity for our suppliers, satisfactory profitability for our shareholders and the certainty of a better future to all our employees.
