JBS 3Q14 Results Presentation

November 13th, 2014

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 of JBS management concerning the future of the business
and its continued access to capital to fund the Companys business plan. Such forward-looking statements
depend, substantially, on changes in market conditions, government regulations, competitive pressures, the
performance of the Brazilian economy and the industry, among other factors and risks disclosed in JBS filed
disclosure documents and are, therefore, subject to change without prior notice.

JBS Global

Estimated

Net Revenue of around US$50.0 billion in 2014

Revenue
2014E
US$50.0 bi

Bovines
49%

Poultry
17%

100,000 bovines per day in 73 units in seven countries

Capacity to process 72,000

Prepared
products and
others
27%

Pork
7%

Capacity to process

Capacity to process more

in the Americas

Capacity to produce

hogs per day in 11 units in Brazil and the United States

than 13 million birds per day in 57 units

more than 100 thousand hides per day in 31

units worldwide

More than 80 thousand tons of convenient and value added products per
month in the world

More than 200 thousand employees around the world

3

JBS Global
Presence in

20+ countries, Exports to 150+ countries and more than

300,000 clients
84% of JBS
Revenue is
Moscow

denominated in

US$

North America
London
Ghent

~51% of JBS revenue,

Hamburg

Toronto
Chicago
Seoul
Tokyo

Shanghai
Dubai

Caracas

16% of JBS
Revenue is

Exports
~32% of JBS revenue

So Paulo
(headquarter)

denominated in

R$

Taipei
Hong Kong

Santiago

South America
~17% of JBS revenue,3
96% from Brasil

Sales office
Sales office presence

Note 1. It considers only domestic sales

Note 2. Includes beef and lamb operations in the USA and Australia
Note 3. Includes leather and hides operations in Brazil, Uruguay, Mexico, Germany, Vietnam and China and also Rigamonti operations in Italy.

Production Platform

JBS Evolution
Net Revenue (R$ billion)
113.4
+274%

92.9
75.7

54.7
30.3

34.3

2008

2009

2010

61.8

2011

2012

2013

LTM

EBITDA (R$ million)

8.5%

EBITDA margin (%)

6.6%
6.4 %
3.8%

5.0%
6,130.3

3.7%

1,156.1

1,285.2

2008

2009

9,664.2

5.8%

4,410.3

3,497.0

3,072.0

2010

2011

2012

2013

LTM

Consolidated Results

3Q14 Highlights - Consolidated

3Q14 Highlights (R$ Million)

Net Revenue

EBITDA
Gross Profit

Adjusted EBITDA

Gross Margin (%)

Net Income

Adjusted EBITDA Margin (%)

EPS (R$)

27.1%

24,222.0

27,222.2 26,419.1

28,968.9

30,778.6

11.8

18.1
12.9
3,128.0

13.7

13.0

3,732.0

3,421.0

14.7

5,560.0

7.1

6.9

8.4
6.6

4,255.0

2,432.7
1,709.7

1,873.5

0.38

3,617.9
0.08

0.05

0.02

140.7

70.0

4Q13

1Q14

1,749.7

0.09

1,092.9

6.2%
219.8

3Q13

4Q13

1Q14

2Q14

3Q14

3Q13

4Q13

1Q14

2Q14

3Q14

3Q13

4Q13

1Q14

2Q14

3Q14

3Q13

254.3

2Q14

3Q14

Net Revenue of R$30.8 billion,

Gross Profit of R$5.6 billion, an

EBITDA of R$3.6 billion, 111.6%

Net Income of R$1.1 billion,

expansion of R$6.6 billion, or 27.1%

increase of R$2.4 billion, or 77.7%

superior than 3Q13. EBITDA

equivalent to an EPS of R$0,38.

superior than 3Q13

higher than 3Q13.

margin was 11.8%.

Operational Cash Generation of R$3.0 billion and Free Cash Generation (after Investments) of R$2.1 billion.

JBS ended the quarter with leverage of 2.54x compared to 3.15x in 2Q14.
7

3Q14 Highlights - Businesses Units

JBS Foods recorded net revenue of R$3,376.8 million, 9.5% superior over 2Q14, and EBITDA of R$576.0 million, with an EBITDA
margin of 17.1%.
JBS Mercosul posted net revenue of R$6,470.5 million, 14.8% higher than 3Q13 and EBITDA of R$554.6 million, with EBITDA
margin of 8.6%.
JBS USA Beef posted net revenue of US$5,849.3 million, 24.7% higher than 3Q13. EBITDA was US$504.9 million, with an
EBITDA margin of 8.6%
Net Revenue of JBS USA Pork totaled US$937.8 million, 3.8% higher than 3Q13, and EBITDA of US$113.2 million, with an EBITDA
margin of 12.1%.
JBS USA Chicken (PPC) reported net revenue of US$2,268.0 million, an increase of 5.8% compared to 3Q13. EBITDA was
US$435.4 million, with a margin of 19.2%.

JBS Consolidated Exports Breakdown in 3Q14 and 3Q13

Canada
2.4%

Greater China
16.8%

Others
8.2%

Mexico
11.0%

South Korea
4.7%

3Q14
US$4,361.1
million

E.U.
6.5%

Russia
9.1%

Growth of 48% in exports in the quarter

compared to 3Q13

Canada
4.2%

3Q13
US$2,954.0
million

South Korea
5.5%

South America
10.5%
MENA
10.5%

Greater China
20.4%

Others
14.1%

USA
9.5%

Japan
10.9%

Mexico
15.6%

E.U.
5.6%
Russia
5.6%
South America
8.2%

Note 1. China and Hong Kong

Japan
11.9%
MENA
9.0%

Capex, Cash Generation and

Debt Profile

10

Capex and Cash Generation

CAPEX

Cash Generation

In 3Q14, total capital expenditure (CAPEX) was R$878.6 million, of which approximately 20% in
acquisitions, 25% in expansions and facilities modernization and 55% in maintenance.

In 3Q14 the Company generated net cash flow from operations of R$3.0 billion and free cash flow
(after capex) of R$2.1 billion, due to the strong performance of JBS businesses units.

11

Debt Profile

Leverage (Net Debt/EBITDA LTM)

6,000

4.03

3.70

3.26

5,000

3.15
2.54

4,000
3,000

2,000

1,000
0
3Q13

4Q13

1Q14

Leverage

2Q14

4Q14

JBS ended the quarter with leverage of 2.54x compared to 3.15x in

2Q14.

The reduction in leverage is due to the improvement in operational

performance of JBS, combined with a strong cash generation in the
quarter.
This reduction in the leverage reflects the Management commitment in
improve continuously its capital structure in order to generate value to all
its stakeholders.

EBITDA (R$ million)

Breakdown by Currency and Costs

Breakdown by Source

11.50% per
annum

Breakdown by Company
BNDES 0.1%

R$
20%

Commercial
Banks 59.9%

US$
80%

Capital
Markets
40.0%

Subsidiaries
31%
JBS S.A.
56%
JBS Foods
13%

5.71% per
annum
12

Debt Profile and Maturity

Debt Profile

The

Company ended the quarter with R$12,578.5 million in cash,

equivalent to 110% of its short-term debt.

2Q13

35%

65%

JBS USA has US$1.33 billion fully available under

revolving credit facilities which, if added to the current cash
position, represents 121% of short term debt.

4Q13

29%

71%

1Q14

29%

71%

The percentage of short term debt (ST) in relation to total

debt was 30% in 3Q14.

2Q14

28%

72%

3Q14

30%

70%

Short Term

Long Term

Maturity (R$ million)

5,636

5,290

5,245

4,543

2,798
1,638

1,050

744

-1,095
Short Term*

* Net of Cash

2015

2016

2017

2018

2019

2020

2021

after 2021

13

Business Units

14

JBS Foods

15

JBS Foods
Leading producer of prepared foods (PFPs) and fresh poultry and pork products
Operational Platform

Brazil

+55,000 employees

5.1 million birds per day

AM

Production units located in the south,

CE

29 slaughterhouses and deboning units

southeast and mid-west regions

1

MT

21,200 hogs per day

Production units located in the south

MS
1

MG

SP

southeast, northeast and mid-west

regions

In 12 states

PR
5

23 PFP units

3
1

RS SC

Production units located in the south,

15 distribution centers

1
2
1

~80,000 tons per month

08 slaughterhouses and deboning units

DF
1

and mid-west regions

PE

BA

RJ

15 distribution centers

2nd largest producer and exporter of poultry and pork in Brazil

Large production platform, with 60 production units1,2 and nearly 55,000 employees
National distribution platform serving ~79,000 points of sale
Strong international presence, exporting to over 100 countries
Complete product portfolio with leading and well-known brands
Uniquely positioned as the natural consolidator of the sector in Brazil, allowing accelerated growth

Net Revenue 9M14

R$9.2 billion

EBITDA 9M14

R$1,396 million
15.1% Margin

Notes: 1 Industrial Complex: location with one or more units of production; 2 Includes Tyson acquired units, approved in October/14; 3 Total produced volume of PFP, poultry and pork of 182 mm tons, 359 mm tons and 54 mm
tons in 3Q14, respectively. Total export volume of 331 mm tons in 3Q14

16

% JBS Net Revenue

8%

JBS Foods

18%

40%

11%
24%

Net Revenue (R$ billion)

9.5%

2.9

2.8

3.1

Net Revenue of R$3,376.8 million in the quarter, 9.5% higher than

2Q14:

Increase of 16.8% in domestic volumes;

3.4

Increase of 2.9% in average prices of prepared products in domestic

market;
Higher volume of fresh pork exports (+17.7%);
Increase of 6.4% in average export prices.
4Q13

1Q14

2Q14

3Q14

EBITDA (R$ million)

1000.0

22.0%

13.7%

900.0

14.3%

17.1%

20.0%

18.0%

16.0%

14.0%

800.0

7.9%

12.0%

576.0

700.0

379.8

440.4

8.0%

6.0%

4.0%

2.0%

0.0%

-2.0%

400.0
-4.0%

300.0

227.3

EBITDA totaled R$576.0 million, with an EBITDA margin of 17.1%,

compared to 14.3% in 2Q14:

10.0%

600.0

500.0

-6.0%

-8.0%

Higher productivity with lower production costs, as well as a decrease in

the cost of raw materials resulted in a COGS representing 71.5% of net

revenue, compared to 74.4% in 2Q14;

-10.0%

200.0

-12.0%

-14.0%

100.0

-16.0%

-18.0%

0.0

-20.0%

4Q13

1Q14

2Q14

3Q14

Reduction in SG&A (14.4% over net revenue compared to 15.2% in the

2Q14), mainly due to lower logistics costs, reflecting the reorganization and
optimization of the companys logistics network.

EBITDA Margin (%)

17

JBS Mercosul

18

JBS Mercosul
Beef production in Brazil, Argentina, Paraguay and Uruguay, in addition to leather and other Related Business
Operational Platform

Brazil

+70,000 employees
PA
AM

~ 55,000 bovines per day

92% in Brazil, 3% in Argentina, 3% in

Paraguay and 2% in Uruguay

90,000 hides per day

AC
1
1

RO

MA

2
4

MT
6

15

3
4

3
1
9

3
2
5

China, Vietnam and Mexico

4
2
2

2
1
2

43 distribution centers

06 feedlots

MG

29 tanneries
1

PR

48 beef processing facilities

PE

3
2

6 GO

MS

2
1

BA
1

Facilities in Brazil, Argentina, Uruguay,

CE

ES

RJ
2

43 distribution centers

SP

SC

RS

11 central and 32 regional

09 related businesses

05 beef processing facilities

02 can making
01 tannery

Argentina
Leadership in beef production

Biodiesel
Can making
Collagen
JBS Carriers

Paraguay
JBS is the leader in beef processing and has around 25% of market share in
exports of Paraguay

Trading

Uruguay

Hygiene and Clean

Great access to export markets; the only country to export fresh beef to the US

Casings
TRP Complementary to JBS
Carriers

Recycling

Net Revenue LTM14

R$27.8 billion

EBITDA LTM14

02 beef processing facility

01 beef processing
02 tanneries
R$2,477.4 million
10.0% Margin
19

% JBS Net Revenue

JBS Mercosul

7%
17%

44%

11%
21%

Net Revenue (R$ billion)

14.8%

6.3
5.6

5.7

Increase in sales prices in the export market;

6.5

6.3

Compared to 2Q14, net revenue increased 2.8%;

The launching of convenience beef products reflected in an increase in the

sales volumes in this category (processed products) coupled with an

increase in prices during the period.

2.8%

3Q13

4Q13

1Q14

Net revenue of R$6.470,5 million in the quarter, 14.8% higher than

3Q13:

2Q14

3Q14

EBITDA (R$ million)

28.0%

26.0%
1600.0
24.0%

22.0%

20.0%
1400.0

18.0%

11.6%
1200.0

11.0%

10.4%

10.1%

8.6%

14.0%

12.0%

10.0%

1000.0

800.0

EBITDA totaled R$554.6 million, with EBITDA margin of 8.6%:

16.0%

Strong demand in the international market

8.0%

653.9

692.4

6.0%

596.1

634.3

4.0%

554.6

2.0%

0.0%

-2.0%

600.0
-4.0%

More products towards exports in order to maximize profitability per animal

processed

-6.0%

-8.0%
400.0
-10.0%

-12.0%

-14.0%

200.0

-16.0%

-18.0%

0.0

-20.0%

3Q13

4Q13

1Q14

2Q14

Strategy of investing in brands and product innovation in the domestic

market

3Q14

EBITDA margin (%)

20

Beef
JBS USA

21

JBS USA Beef

Beef production in the United States, Canada and Australia
Operational Platform

United States

+30,000 employees
WI

~40,000 bovines per day

1
1

ID

28,000 in the US

NE
UT

4,000 in Canada

CO

PA

1
4

8,000 in Australia

KS

09 beef processing facilities

OK

AZ

11 feedlots

11,000 hides per day

MI

01 tannery

TX

5,000 in the US

3
1

6,000 in Australia

06 carriers units

16 feedlots (bovine)

13 processing facilities

Australia

11 in the US/ Capacity of 1.0 million

4

bovines

01 in Canada / Capacity of 70,000

bovines

1
4

05 in Australia / Capacity of 152,000

bovines

07 distribution centers
1

Leadership in beef exports

Leadership in the processing of lamb (22,000 lamb per day)
#1st in the Food Industry Ranking
Growth of 112% in revenues from 2007 to LTM2014

Canada
Growth of 17% in revenues from 2013 to LTM2014

07 DCs in Australia and 06 carriers

08 bovine and 05 lamb

07 feedlots
05 bovine and 02 lamb

01 tannery
07 distribution centers
03 case ready facilities
01 beef processing facility
01 feedlot (bovine)
01 trading

units in the US

Net Revenue LTM14

Note 1. Source: Food&Drink Business Magazine

US$20.5 billion

EBITDA LTM14

US$704.9 million
3.4% Margin
22

% JBS Net Revenue

JBS USA Beef

7%
17%

44%

11%
21%

Net Revenue (US$ billion)

24.7%

Increase in sales volume in both domestic and export markets;

5.8

Increase in prices;

5.3
4.7

4.8

Net revenue of US$5,849.3 million in the quarter, 24.7% higher than

3Q13:

Compared with 2Q14, net revenue posted an increase of 9.7%;

4.5
9.7%

Main destinations of this business unit were Japan, Greater China and

South Korea;
3Q13

4Q13

1Q14

2Q14

3Q14

EBITDA (US$ million)

28.0%
1170.0
26.0%

24.0%

22.0%

20.0%
970.0
18.0%

16.0%

8.6%

770.0

14.0%

12.0%

10.0%

2.7%

2.4%

570.0

8.0%

-0.5%

2.0%

504.9

6.0%

4.0%

EBITDA totaled US$504.9 million, with EBITDA margin of 8.6%:

Company strategy regarding the purchase of cattle permitted the

improvement in COGS;

2.0%

0.0%

-2.0%

-4.0%

370.0

-6.0%

170.0

125.3

113.9

-8.0%

-22.5

108.6

-10.0%

-12.0%

-18.0%

-30.0

-20.0%

4Q13

1Q14

constraint, contributing to an increase in sales prices;

-14.0%

-16.0%

3Q13

Seasonal stronger beef demand in a scenario which beef supply remains

2Q14

3Q14

Australia operations performed well and contributed to the strong results

of this quarter.

EBITDA margin (%)

23

Pork
JBS USA

24

JBS USA Pork

Pork production in the United States
Operational Platform

United States

+6,000 employees

~ 51,300 hogs per day

100% in the US
IA
1

02 case ready facilities

Convenience products

CO

03 hogs processing facilities

1
1

KY

CA

NC
1

02 case ready facilities

~3,000 lamb per day

01 lamb processing facility

Products

Main Brands
Swift Premium
Dry Rubbed Ribs

Swift Premium
Boneless Backrib

Net Revenue LTM14

Swift Premium
Rubbed Loin Filet

Swift Premium
Boneless Pork Chops

US$3.8 billion

EBITDA LTM14

US$396.2 million
10.5% Margin
25

% JBS Net Revenue

7%

JBS USA Pork

17%

44%

11%
21%

Net Revenue (US$ million)

3.8%

903.3

904.9

896.9

1,028.3

Net revenue of US$937.8 million in the quarter, 3.8% higher than

3Q13:

Increase of 18.7% in sales prices in the domestic market and an increase

937.8

of 14.7% in export prices;

Compared with 2Q14, net revenue decrease 8.8%, due to lower volumes.

-8.8%

3Q13

4Q13

1Q14

2Q14

3Q14

EBITDA (US$ million)

28.0%

26.0%
370.0
24.0%

22.0%

20.0%
320.0
18.0%

9.5%

270.0

220.0

9.2%

11.1%

12.1%

EBITDA of US$113.2 million, with EBITDA margin of 12.1%:

16.0%

14.0%

12.0%

4.8%

10.0%

In comparison with 2Q14, EBITDA remained stable;

8.0%

6.0%

4.0%

170.0

86.3

120.0

70.0

43.8

82.9

113.8

113.2

2.0%

0.0%

-2.0%

-4.0%

-6.0%

-8.0%

-10.0%

-12.0%

The maintenance of pork prices in higher levels due to constraint supply,

coupled with a decrease in raw material costs contributed to this quarter

results.

-14.0%

20.0

-16.0%

-18.0%

-30.0

3Q13

4Q13

1Q14

2Q14

3Q14

-20.0%

EBITDA margin (%)

26

Pilgrims Pride

27

JBS USA Chicken (Pilgrims Pride Corporation - PPC)

Poultry production in the United States, Porto Rico and Mexico
Operational Platform

United States

+39,000 employees

~ 7.5 million birds per day

6.5 million in the US

24 poultry processing facilities

250,000 in Porto Rico

WV

800,000 in Mexico

TN

AR

10 distribution centers
TX
4

NC

AL

LA

VA

KY

SC
1

GA
7

Located in Mexico

FL
1

+ de 3,500 contract growers

36 hatcheries

Mexico

28 feed mills

With Tyson acquisition, PPC will have an additional of three

facilities, adding 600,000 birds per day of capacity and 9,000
employees

03 poultry processing facilities

10 distribution centers

Porto Rico

01 processing facility

Net Revenue LTM14

US$8.5 billion

EBITDA LTM14

US$1,176.3 million
13.8% Margin
28

% JBS Net Revenue

JBS USA Chicken (Pilgrims Pride Corporation - PPC)

7%
17%

44%

11%
21%

Net Revenue (US$ billion)

5.8%

Net revenue of US$2,268.0 million in the quarter, increase of 5.8%

compared to 3Q13:

In the US, sales increased 4.8%, of which 2.4% is due to an increase in

2.1

2.0

2.0

volume and 2.4% is due to an increase in prices, as a reflect of a change

in product mix, with an improvement in the participation of small and
deboned small birds, in addition to convenience products;

2.3

2.2
3.7%

In Mexico, revenue increased 15.0%, as a result of an increase in price per

3Q13

4Q13

1Q14

2Q14

3Q14

kilo, due to the restriction in the supply of eggs sets for incubation, as well
as in the number of chicks placed. This increase in revenue was partially
offset by a decrease in volume sold and by the devaluation of Mexican
Peso.

EBITDA (US$ million)

28.0%

670.0

26.0%

19.2%

15.5%

570.0

24.0%

22.0%

20.0%

18.0%

10.6%
470.0

9.6%

435.4

10.2%

16.0%

14.0%

12.0%

338.6

370.0

8.0%

6.0%

226.1

2.0%

197.2

EBITDA in 3Q14 was US$435.4 million, with EBITDA margin of

19.2%:

10.0%

4.0%

270.0

205.2

0.0%

-2.0%

Reduction of US$102.8 million in feed costs in the US and of US$12.5

million in Mexico;

-4.0%

-6.0%
170.0
-8.0%

-10.0%

-12.0%

70.0
-14.0%

-16.0%

-18.0%

-30.0

Reduction in costs with labor, freights and storage, packaging and in

contract growers, totaling US$13.8 million.

-20.0%

3Q13

4Q13

1Q14

2Q14

3Q14

EBITDA margin (%)

29

Consumer Ready USA

Production capacity in 2014: 19.8 thousand tons per month

Production capacity in 2015: 30.2 thousand tons per month

Increase in production: +52.8%

30

Mission

To be the best in what we set out to do, completely

focused on our business, ensuring the best products
and services for our customers, consistency for
our suppliers, profitability for our shareholders and the
opportunity of a better future for all our team members.