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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
(1) 31/12/2010
PAGE
JBS Ranking
3 Geographic and
1 1
2
st
st
4 Well-recognized
brands
5 Synergies &
Scale
3rd
3
Source: JBS
PAGE
2008
Pilgrims Pride
3 Geographic and
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)
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
PAGE
3 Geographic
4 Well-recognized
brands
5 Synergies &
Scale
Biodiesel Dairy products
Collagen
Lamb
PAGE
3 Geographic
4 Well-recognized
brands
5 Synergies &
Scale
3
60
Pork Beef
39
23
Chicken Leather
7
1
58
7
134
u Units
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
Brazil
3 Geographic and
Argentina
4 Well-recognized
brands
5 Synergies &
Scale
EUA
Australia
PAGE
Market Leader
Well-recognized brands
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
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
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
+7.5%
+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
PAGE
12
E.U. 1.0%
Uruguay 5.0% Argentina 5.0%
Canada 6.0%
Australia 18.0%
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
3.500 3.000
2.500 2.000
1.500 1.000 500 0
500
0
0
2005 2006 2007 2008 2009 2010
Beef Exports
15
Chicken Exports
PAGE
16
Surplus
Deficit
17
JBS USA
Don Jackson
JBS S.A.
100%
19
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:
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20
Worthington
Malta
Salt Lake City Hyrum Denver
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
Louisville
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
Division Beef
Chicken
Plant optimization: yield improvements and cost reduction Sales mix: increased proportion of value-added/branded products
Pork
PAGE
22
Beef Division
Bill Rupp
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
Tolleson, AZ
Plainwell, MI
Green Bay, WI
Cactus, TX
PAGE
25
Prime Angus
Select Angus
PAGE
26
Marty Dooley
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
PAGE
28
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
PAGE
29
2010
PAGE
30
Bill Lovette
PAGE
32
Others 33.0%
Perdue Farms 7.0% Sanderson Farms 7.0% Koch Foods 5.0% USA 91.0%
33
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
PAGE
34
Reduced administrative and corporate expenses as a result of integration with JBS USA 458 corporate positions eliminated in 2010
(1)
Leverage combined purchasing power to reduce supplier and logistics expenses Additional opportunities in logistics and exports to be realized in 2011
Suppliers 28.0%
(1) Captured in SG&A savings. (2) PPC share of corporate and administrative expenses captured in SG&A savings.
PAGE
35
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
PAGE
36
JBS Australia
Iain Mars
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
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
27%
13% 7% 6% 4%
Nippon Meat
Cargill
516
425
Bindaree
293
PAGE
39
China 25%
Company T&R
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
40
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
PAGE
41
42
JBS Mercosul
Wesley Batista
2 - beef
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
PAGE
45
JBS Mercosul
Strengths and opportunities
Direct Distribution continues to grow, having captured more than 100,000 new clients in the region in 2010
PAGE
46
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
*
11 members
1 president 5 permanent directors 5 permanent independent directors
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
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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
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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
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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.