Mbrf Global Foods Company S.a. · BMFBOVESPA:MBRF3
Mbrf Global Foods — Marfrig Global Foods — BTG CEO Conference 2018
36 slides from Mbrf Global Foods's conference presentation, October 2018
Slide 1: BTG CEO Conference
Meeting with Investors BTG CEO Conference October 2018
Slide 2: Disclaimer
Disclaimer This material is a presentation of general information about Marfrig Global This presentation includes forward-looking statements. Such statements do Foods S.A. and its consolidated subsidiaries (jointly the “Corporation”) on not constitute historical fact and reflect the beliefs and expe
Slide 3: Agenda
1. MARFRIG at a GLANCE 2. STRATEGIC PROJECTS 3. OPERATIONS 4. BEEF INDUSTRY and Agenda OUTLOOK 5. FINAL REMARKS 3
Slide 4: Marfrig at a glance
Marfrig at a glance Established in 2000. IPO in 2007 R$ 40 billion Net revenue* US$ ~11 billion Diversified production 3.7 billion platform in the Americas R$ One of the largest global EBITDA Aj* US$ ~1 billion beef suppliers serving premium global consumer markets 33 Khead Primary processing capaci
Slide 5: Simple and focused
Strategy focused on Beef Experienced Team 2018 Simple Structure Knowledge & Performance Adequate capital structure Operational improvement Liability management Simple and Productivity agenda focused “Focus to Win” plan 2013 Long term guidance 2013-2018 5
Slide 6: Experience. Knowledge. Performance
EXPERIENCE. KNOWLEDGE. PERFORMANCE Board of Directors AUDIT Marfrig Global Foods Tang David Eduardo Miron CORPORATE CEO - Marfrig Global Foods Heraldo Geres Chief Legal Officer & HR / Compliance OPERATIONS Fabio Vasconcellos Chief Planning & Mgt Officer Marco Spada Chief Financial and IR Officer Mig
Slide 7: Strategic projects
Strategic projects
Slide 8: Marfrig Strategy of focusing on Beef
Marfrig Strategy of focusing on Beef N AT I O N A L B E E F C O N T RO L A C Q U I S I TO N • Acquisition of a 51% stake in National Beef for US$969 million • 4th largest US Beef player | most profitable and efficient company in the country • Complementary fit with Marfrig South America operations •
Slide 9: National Beef – Complementary fit to Marfrig's core
NATIONAL BEEF – COMPLEMENTARY FIT TO MARFRIG´S CORE:: Focus on the Core business and Better Capital Structure LEADING U.S. BEEF PROCESSOR ACQUISITION OF THE #4 BEEF PROCESSOR IN THE U.S. PORTFOLIO EXPANSION ACCESS TO A VARIETY OF HIGH QUALITY PRODUCTS INTERNATIONAL REACH PLATFORM IN PREMIUM EXPORT M
Slide 10: Keystone
Keystone Track record of success US$ million +127 % ▪ Value of the company Beef patty increased by ~ 2.3x plant during Marfrig’s management ▪ Improving profitability with Tyson Transaction value generation ▪ Retention of the U.S. beef patty plant which Annual Sale of the European assets to Moy Park
Slide 11: Marfrig strategy
Marfrig strategy S T R AT E G I C P I L L A R S Sustainable Sustainability Animal welfare value creation Partnership with producers and Entities Social and Environmental Responsibility Customers Higher value-added products and products Commercial and portfolio leverage Valuing brands Integration and
Slide 12: National Beef | Governance
National Beef | Governance Shareholders’ agreement key points ▪ Board of Directors: composed of nine members, of which five are nominated by Marfrig, including the Chairman, 2 by Jefferies, 1 by U.S. Premium Beef and 1 is the CEO of National Beef ▪ Approval of decisions: by majority vote of those pr
Slide 13: Keystone sale update
Keystone sale update ▪ Regulatory approvals: process with the regulatory agencies is moving as expected. If the deal is cancel Tyson would need to pay Marfrig a US$50 million fine (US only) ▪ BNDES consent: ongoing process ▪ Korea subsidiary: ❖ Supplier of the local foodservice channel ❖ Ramp up pha
Slide 14: BNDES | shareholders' agreement 3rd amendment
BNDES | shareholders’ agreement 3rd amendment Establishment of a new Financial policy with key metrics ▪ Leverage commitment: limit was reduced from 5.0x to 2.5x by the end of 2018 and to 3.5x as of 2019. In the event of a breach of the established financial leverage metrics, certain expenditures an
Slide 15: Operations
Operations
Slide 16: Marfrig Operation profile
Marfrig Operation profile South America North America 2nd largest beef operations in Brazil 4th largest beef processing company in the U.S. GRASS FED PARTNERSHIP with rangers LEADER in beef production in Uruguay + One of the largest US exporters to premium markets LARGEST beef importer in Chile ACCE
Slide 17: South America | footprint
South America | footprint BRAZIL Effective slaughtering capacity per day 16.000 By State # of Plants Pará 1 Rondônia 1 Mato Grosso 4 Mato Grosso do Sul 3 Goiás 2 São Paulo 1 Rio Grande do Sul 3 In Chile, the Company is the leading beef importer. URUGUAY Locally the Company has Effective slaughtering
Slide 18: North America | footprint
North America | footprint UNITED STATES Effective slaughtering capacity per day 12.000 18
Slide 19: Marfrig Sales profile
Marfrig Sales profile 5% Net Revenue by Destination* (%) 5% 2% 7% 62% 12% 62% 3% 7% Production platform in the 5% Americas 12% 2nd largest beef company in the world 5% Slaughter capacity of (in capacity) Middle East 2% 3% around 33,000 head of cattle per day Other 4% 19 * 2Q18 data
Slide 20: Consolidated Results 2Q18
Consolidated Results 2Q18
Slide 21: Marfrig | Revenue Profile
Marfrig | Revenue Profile Due to the recent strategic movements, Marfrig is still in the integration phase. For this quarter, the Company will present its revenue in two regions: North America % Revenue Marfrig Consolidated Pro forma South America 21 Note: Not consider the revenue for the beef patti
Slide 22: Net Revenue Proforma 2Q18
Net Revenue Revenue by Proforma 2 Q 1 8 destination(%) R$ million EUA 62% +21% América do Sul 15% 929 9,944 7% 1,292 (478) 8,200 2,900 Japão 5% 2,180 Europe 5% 6,020 7,044 Middle East 2% Other 5% 2Q17 Volume Price FX 2Q18 South America North America ▪ Increased demand for beef protein globally has l
Slide 23: Indicators Proforma 2Q18
Indicators Proforma 2Q18 SLAUGHTER GrossProfit EB I T DA AdJ. (000 heads) and Margin and MARGIN (R$ million and %) (R$ million and %) 13.5% 9.4% 9.2% +21% 6.0% +75% +87% 1,791 1,346 918 769 490 1,506 2Q17 2Q18 2Q17 2Q18 2Q17 2Q18 Solid result reflects assertive strategy of geographical diversificati
Slide 24: Debt and Leverage
Debt and Leverage (Basis 2Q18) after Transactions - 51% 16.3 7.0 4.2x 5.0x LTM EBITDA and Leverage 6.0 4.0x 5.0 2.6x 3.0x 3.9 NET DEBT (R$ billion and “x”) (R$ billion) 4.0 2.0x 7.9 3.0 3.0 1.0x (8.4) 2.0 0.0x 1.0 -1.0x US$ billion 4.2 (2.2) 2.1 0.0 -2.0x ** Net Debt 2Q18 Keystone Sale* Nebt Debt Af
Slide 25: Outstanding Bonds & Ratings
Outstanding Bonds & & Ratings Bonds BondsOutstanding Outstanding Ratings Ratings Maturity Currency Out. Coupon Agency National Scale Global Scale Outlook Amount (US$ mm) 2019 USD 508.4 6.875% Standard & brAA+ BB- Stable Poor’s * 2021 USD 27.8 11.250% Fitch Ratings Abra BB- Stable 2023 USD 1,000 8.00
Slide 26: Beef industry and Outlook
Beef indust and ~ === Outlook =~
Slide 27: Beef global offer scenario
beef GLOBAL OFFER SCENARIO Cattle herd (1000 MT CWE) COUNTRY 2017 2018 India 305,600 305,000 Cattle herd growth and the perspective for higher productivity have positioned Brazil as Brazil 226,045 232,350 a key player in the global beef industry China 99,173 96,850 USA 93,585 94,400 Europe 89,078 88
Slide 28: Brazilian livestock competitive advantages
B R A Z I L I A N L I V E S TO C K competitive advantages Production with strategic advantages, such as grass- fed cattle » low fat content Hormone free Excellent sanitary conditions Abundance of land, water and labor - natural platform for supporting global demand growth Management experience, high
Slide 29: U.S. livestock competitive advantages
U . S . L I V E S TO C K competitive advantages Production with grain-finishing cattle » high marbling beef Feed ingredients to optimize cattle nutrient intake USA climate makes U.S. herd to carry a high percentage of Angus and Hereford genetics that tend to produce higher grading carcasses 29
Slide 30: Beef scenario | Brazil
Beef scenario | Brazil Cow slaughtering (% of total) ▪ After a period of retention, increase in cow slaughtering indicates cycle improvement (higher availability of animals for slaughtering) Cattle price (source: ESALQ) ▪ Cattle prices follow cycle dynamics and sector demand seasonality ▪ Competitiv
Slide 31: Beef scenario | US
Beef scenario | US ▪ US cattle cycle is expected to remain favorable until 2020 the supply of To t a l C a t t l e I n v e n t o r y slaughter-ready cattle will continue to 2017 93.7 thousand heads increase for next ~3 years and is 2018: 94.3 thousand heads expected to be supportive of continued 201
Slide 32: Perspectives
Perspectives 2nd half 2018 Expectation of Marfrig's results is in line with its annual guidance: 2H18 Revenue (R$ billion) 20 to 21 Adj EBITDA Margin (%) 9 to 10% * FX ratio of R$3,80/US$ Leverage 2018: 2.2 to 2.5x One of the lowest leverage ratio in the sector Note: Assumes completion of Keystone's
Slide 33: Final remarks
Final remarks
Slide 34: Next Steps
Next Steps Continuity in the integration process with National Beef Creation of two global Committees on Food Security and Animal Welfare & Sustainability Marfrig’s Leadership in Sustainable Production | Strategic Alliance with Embrapa - Carbon Neutral Meat and Low Carbon Meat Advancement (organic g
Slide 35: Final Comments
Final Comments The conclusion of the two strategic projects should contribute to improve the value generation for all shareholders Consolidated production footprint in the Americas, with access to key consumer markets worldwide shall create value The outlook for the global animal protein industry re
Slide 36: Investor Relations October 2018
Investor Relations October 2018