Pilgrim's Pride Corporation · NASDAQ:PPC

Pilgrim's Pride — Investor Day (September 2019)

143 slides from Pilgrim's Pride's investor day presentation, Sep 18, 2019

Slide 1: Pilgrim's Pride Company Analyst Day September 18, 2019
PILGRIM’S PRIDE COMPANY ANALYST DAY September 18, 2019
Slide 2: Cautionary Notes and Forward-Looking Statements
CAUTIONARY NOTES AND FORWARD-LOOKING STATEMENTS  Statements contained in this presentation that share our intentions, beliefs, expectations or predictions for the future, denoted by the words “anticipate,” “believe,” “estimate,” “should,” “expect,” “project,” “plan,” “imply,” “intend,” “foresee” an
Slide 3: Welcome and Business Overview
WELCOME AND BUSINESS OVERVIEW Jayson Penn President and CEO, Pilgrim’s
Slide 4: Today's Agenda
TODAY’S AGENDA Tim Stiller Charles VonDerHeyde U.S. Chicken Pilgrim’s Mexico Kristina Lambert Joe Waldbusser U.S. Prepared Foods & Innovation Commodities and Risk Management Laston Charriez Kendra Waldbusser U.S. Marketing Food Safety & Quality Assurance Andrew Cracknell Fabio Sandri Tulip Europe Fi
Slide 5: Our Vision & Strategy
OUR VISION & STRATEGY Become a more valued Relentless pursuit of partner with our key operational excellence customers Safe people, safe Unique portfolio of products and healthy diverse, complementary attitudes business models Pilgrim's © Copyright 2019 | All Rights Reserved.
Slide 6: Leadership Position with Global Footprint
LEADERSHIP POSITION WITH GLOBAL FOOTPRINT BUSINESS UNITS NEARLY FRESH PROCESSING CASE READY OUT OF UK ADDED-VALUE PROCESSING SMALL BIRD EVERY EU ADDED-VALUE PROCESSING BIG BIRD/COMMERCIAL 1 5 CHICKENS IN THE U.S.COMES FROM GRANDPARENT BREEDING GROUNDS PREPARED FOODS FRESH FOODSERVICE IN MEXICO OUT O
Slide 7: Building Global Platforms
BUILDING GLOBAL PLATFORMS Unique portfolio of Pilgrims has made 3 acquisitions over the last 5 diverse, complementary years, to expand our geographic footprint and add business models capabilities, products and brands TYSON DE MEXICO JULY 2014 JANUARY 2017 SEPTEMBER 2017 ANNOUNCED AUGUST 2019¹ $400m
Slide 8: Achieving Both Top and Bottom Line Growth
ACHIEVING BOTH TOP AND BOTTOM LINE GROWTH Sales ($MM) Operating Income Margin (%) 9.5% $12,380 64% Growth $7,536 4x 2.2% 2011 2019 PF 2011-2013 2014-2018 ___________________________ Source: PPC 2019 annualized + Tulip for the entire year Pilgrim's © Copyright 2019 | All Rights Reserved. 8
Slide 9: Innovation at the Center of Global Prepared Foods Growth
INNOVATION AT THE CENTER OF GLOBAL PREPARED FOODS GROWTH GLOBAL COLLABORATION, INSIGHTS AND TRENDS BALANCED WITH LOCAL OWNERSHIP Unique portfolio of diverse, complementary business models Pilgrim's © Copyright 2019 | All Rights Reserved.
Slide 10: People at the Forefront of Our Strategy
PEOPLE AT THE FOREFRONT OF OUR STRATEGY Internal Promotions DART Safety Rate 1600 3.5 Internal 1416 2x better 2.87 1400 promotions 3 than the doubled 1229 industry since 2016 1200 2.5 average 1001 1000 2 1.56 1.41 800 710 1.5 1.24 600 1 400 .5 200 0 2017 2018 2019 Industry 0 2016 2017 2018 2019 ann
Slide 11: Key Themes Today
KEY THEMES TODAY We have the Vision and We have the right Strategy to strengthen Team in place to our position as a leading produce results food company We have the right Key We have the right business Customer strategy to model of product and support growth geographic diversification through innova
Slide 12: U.S. Chicken
pilgrims Tim Stiller U.S. CHICKEN
Slide 13: Industry Leading Team Member Safety
INDUSTRY LEADING TEAM MEMBER SAFETY DECREASED OUTPERFORMED U.S. Poultry and SEVERE INCIDENTS industry averages in Egg Association 2019 Safety and TRIR DART Awards: 28% rate COMPARED TO 5% and 63% Distinction - 19 2016 Honor - 16 respectively Merit - 8 Pilgrim's © Copyright 2019 | All Rights Reserved
Slide 14: Culture and Talent Development
CULTURE AND TALENT DEVELOPMENT “…creating the opportunity of a better future for our team members.” . 42 Supervisor . 21 Management . 2700 . 950 Participants . January 2020 Development Trainees Participants Trainees . Classroom, . Creating The . Annual . Classroom, Coaching & Opportunity For . 10 Me
Slide 16: Our U.S. Footprint & Business Units
OUR U.S. FOOTPRINT & BUSINESS UNITS 8 + LBS LARGE 6 - 7 L B S RETAIL 4 - 5 LBS SMALL PROCESSING TEAM BIRDS PER FEED HATCHERIES K M 26 MILLS 31 PLANTS 33 ~37 MEMBERS ~33 WEEK 4 PROTEIN CONVERSION + LBS PER 4 PET FOOD 9 B YEAR Pilgrim's © Copyright 2019 | All Rights Reserved. 16
Slide 17: Our Unique Portfolio
OUR UNIQUE PORTFOLIO • Partially Fried/Fully Cooked • List Pricing • Foodservice/Retail/Deli • 6 lb. Live Weight Prepared Foods • Program Pricing • Retail/Consumer Brands Tray Pack • 8+ lb. Live Weight • Commodity Price Big Bird Correlation • Foodservice/Industrial Small Bird • 4 lb. Live Weight • C
Slide 18: Case Ready Business Unit
CASE READY BUSINESS UNIT Pilgrim’s Tray Pack 3-Yr CAGR . Key Customer Strategy . Service / Quality Pilgrim’s . Live Portfolio 3.6x . Organic . ABF . Veg-fed . Traditional . Product Portfolio . Regular / Jumbo Tray Pack . Private Label Industry . Saddle Pack . Just BARE Pilgrim's © Copyright 2019 | A
Slide 19: Large Bird Business Unit
LARGE BIRD BUSINESS UNIT 2010 2016 2017 2018 2019 Zero Large Bird Share Large Bird is 30% of Live Improve Operational Efficiency Mix Upgrade Focus Production Increased boneless dark meat Converted facility to No Entered the portioned production by 15% in Q2 YoY Antibiotic Ever boneless breast busine
Slide 20: Small Bird Business Units
SMALL BIRD BUSINESS UNITS 3 Year CAGR 11 plants, 16 MILLION + BIRDS PER WEEK 3.3X 7.7X Chicken Sandwich* Deli Rotisserie*** *Pilgrim’s volume growth vs. QSR servings growth, calendar years 2015-2018; servings include crispy chicken and grilled chicken sandwich ***Dollar sales growth Pilgrim's © Copy
Slide 21: Export Business
EXPORT BUSINESS 75 Countries 9% of USA Broiler Exports Canada 5% CIS 9% Caribbean 3% Mexico 24% Southeast Middle East Asia West Africa 7% 31% 8% Latin America 13% Pilgrim's © Copyright 2019 | All Rights Reserved. 21
Slide 23: Supporting Key Customers with a Differentiated Portfolio
SUPPORTING KEY CUSTOMERS WITH A DIFFERENTIATED PORTFOLIO Grew 44.7% and 84% Organic Claims #1 77% of Consumers state that in dollars and volume CAGR over Past 5 Years 'When buying chicken at a vs. conventional. (Compounded Annual grocery store I think it's Growth Rate) important to see a label that
Slide 24: Our Methods to Achieve Operational Excellence
OUR METHODS TO ACHIEVE OPERATIONAL EXCELLENCE • Called “ZBB” • ALL expenses justified for each new • The “ZBB” for Labor (~ 55%-60% of Plant Cost) period • 16 Full-time Industrial Engineers • Starts from a ZERO base • Workload Analysis/Each Position • Built around what’s NEEDED • Create Perfect Staf
Slide 25: Investment in Automation
INVESTMENT IN AUTOMATION . Team Member Safety . Ergonomic Improvements . Product Quality . Animal Welfare . Labor Cost Reduction . Efficiency Gains Pilgrim's © Copyright 2019 | All Rights Reserved.
Slide 26: Key Takeaways
KEY TAKEAWAYS • Our commitment to safety, people and quality has allowed us to build a strong foundation. • Our diverse portfolio in big bird, retail and small bird allows us to capture upside commodity markets while minimizing downside. • Our key customer strategy has allowed for our growth to outp
Slide 27: U.S. Prepared Foods and Innovation
Kristina Lambert U.S. PREPARED FOODS AND INNOVATION
Slide 28: Prepared Foods Room to Grow
PREPARED FOODS ROOM TO GROW Industry Revenue Mix Moorefield, WV Mt. Elberton, Pilgrim's Total Industry Pleasant, TX GA Waco, TX Fresh Prepared Foods Source: Agri Stats 2018 Pilgrim's © Copyright 2019 | All Rights Reserved.
Slide 29: Why Grow Prepared Foods?
WHY GROW PREPARED FOODS? Prepared Foods reduces profit variability of total portfolio Industry Operations Profits 50.00 20 45.00 18 40.00 16 35.00 14 30.00 12 25.00 10 C/LB 20.00 8 C/LB 15.00 6 10.00 4 5.00 2 0.00 0 Jul-14 Jul-15 Jul-16 Jul-17 Jul-18 Jan-18 Jan-14 Jan-15 Jan-16 Jan-17 Jan-19 Sep-15
Slide 30: Prepared Growing in Foodservice & Retail
PREPARED GROWING IN FOODSERVICE & RETAIL Prepared Foods Revenue Growth 13% 12% Growth Growth 2017 2018 2019LE Pilgrim's © Copyright 2019 | All Rights Reserved. 30
Slide 31: Brands & Portfolio Diversification
BRANDS & PORTFOLIO DIVERSIFICATION FOODSERVICE RETAIL Our Newest Brand to Foodservice! #1 Fresh Chicken Brand on Amazon Fresh! HIGH HIGH All Natural, Clean Label Chicken All Natural, Clean Label Chicken Raised with Raised with No Antibiotics Ever No Antibiotics Ever #1 Breaded Wings in Foodservice -
Slide 32: Disciplined Innovation Pillars
DISCIPLINED INNOVATION PILLARS CONSUMER INNOVATION CUSTOMER GLOBAL FIRST PLATFORMS CENTRIC ENABLERS Knowledge Sharing Trend Adoption Alignment Global Platforms Lift & Launch Technology Enablers Private Label Pilgrim's © Copyright 2019 | All Rights Reserved.
Slide 34: Innovation: Healthy and Natural Choices
INNOVATION Healthy and Natural Choices Just Bare Just Bare Functional products with high standards of traceability and low social and environmental impact All natural*, ABF, ABF, clean label and sourced and made for from family farms Foodservice *Minimally Processed, No Artificial Ingredients Pilgri
Slide 35: Innovation: Cook, Prepare and Eat
INNOVATION Cook, Prepare and Eat Just Bare Gold Kist Products that are quick and easy to make and offer high nutritional performance ABF and no Ready-to-heat artificial & Clean label ingredients for Foodservice Pilgrim's © Copyright 2019 | All Rights Reserved. 35
Slide 36: Innovation: Family and Connection Pleasers
INNOVATION Family and Connection Pleasers Ready to Cook Retail Private Label Easy to cook food for eating with family and friends Flavorful and Flavorful and Convenient Convenient Pilgrim's © Copyright 2019 | All Rights Reserved.
Slide 37: Innovation: Indulgence and Sensory
INNOVATION Indulgence and Sensory Menu Expansion Traffic Driver High-quality foods that enchant the senses and provide unique experiences Flavorful menu Unique LTO renovation Pilgrim's © Copyright 2019 | All Rights Reserved. 37
Slide 38: Key Takeaways
KEY TAKEAWAYS . Expanded TEAM is in place . Existing PLANT footprint ready for more . BRAND and CUSTOMER focus continues to build . GROWTH will continue to be led by INNOVATION Pilgrim's © Copyright 2019 | All Rights Reserved. 38
Slide 39: Marketing
pilgrims Laston Charriez MARKETING
Slide 40: Key Customer Joint Business Planning Process
KEY CUSTOMER JOINT BUSINESS PLANNING PROCESS Insights Innovation Category Growth • Objective • Cross- • New product alignment functional launch to fuel • Gather ideation growth insights and • Product data Development • Consumer test Pilgrim's © Copyright 2019 | All Rights Reserved. 40
Slide 41: Key Customer Joint Business Planning
KEY CUSTOMER JOINT BUSINESS PLANNING Customer A Customer B Customer C Grow Deli Sales Grow Deli Sales Grow Frozen Chicken Sales Challenge (Hot & Cold) Presenting Frozen Bringing concepts to life Presenting Deli innovation Action Innovation Category Insights Innovation Growth Pilgrim's © Copyright 20
Slide 42: Building Just Bare
BUILDING JUST BARE Extending Reach and Relevance Case Ready Fast Prep Quick Meals Lunchmeats #1 Brand on Amazon Fresh Launch 2019 Launch 2019 Launch 2020 Pilgrim's © Copyright 2019 | All Rights Reserved.
Slide 43: Meet Kate: The Just Bare Shopper
MEET KATE: THE JUST BARE SHOPPER Female Age 25-54 Head of her household, married with kids Willing to pay more for all natural, organic, and sustainable products Wants meal options that do not sacrifice on health or taste Always purchases fresh food Pilgrim's © Copyright 2019 | All Rights Reserved.
Slide 45: On-Line/Digital Grocery
On-Line/Digital Grocery https://www.cnbc.com/2017/01/30/online-grocery-sales-set-surge-grabbing-20-percent-of-market-by-2025.html https://www.cnbc.com/2017/06/21/dont-worry-wal-mart-amazon-buying-whole-foods-is-just-a-drop-in-the-bucket.html Pilgrim's © Copyright 2019 | All Rights Reserved. ©2018 Pi
Slide 51: Key Takeaways
KEY TAKEAWAYS . Pilgrim’s is the Total Chicken Solutions Partner . We bring together private label, captive brands and brands, insights, innovations and corporate resources, and we put them at full disposal of our Key Customers. Pilgrim's © Copyright 2019 | All Rights Reserved. 51
Slide 52: Tulip, Europe
Andrew Cracknell TULIP, EUROPE
Slide 54: Tulip Ltd - Unique Integrated Pork Supply Chain
TULIP LTD - UNIQUE INTEGRATED PORK SUPPLY CHAIN The biggest, lowest cost and most sustainable farming business in UK • Farmer partner focus on welfare, efficiency and quality • We own the livestock, supply the feed, veterinary inputs and management No. of owned pigs produced p.a. Tulip Ltd – 2.5m pi
Slide 55: Tulip Ltd - Food Safety, Animal Welfare and Quality Standards
TULIP LTD. - STRONG FOCUS ON FOOD SAFETY, ANIMAL WELFARE AND QUALITY STANDARDS DELIVERS COMPETITIVE ADVANTAGE Agricultural Animal Antibiotic Research and Food integrity Food infrastructure welfare stewardship development and quality defence and and awards security operations Best in Class Recognised
Slide 56: Tulip Ltd - Market Leading Asset Base
TULIP LTD - MARKET LEADING ASSET BASE Investments of more than £250m since 2010 6,100 team members Revenue £1bn 4 abattoirs/deboning 8 active processing sites Heritage of quality Formed from the best companies: Abattoir Abattoir & Deboning Hygrade, Flagship, Roach, Dalehead, Processing Processing Id
Slide 57: Tulip Ltd – Investing in Competitive Advantages
TULIP LTD – INVESTING IN COMPETITIVE ADVANTAGES Investments of more than £250m since 2010 Well invested assets High welfare pig abattoirs Acquisition of Easey farming Investments in worlds largest Scotch egg production facility Centre of Excellence for curing and slicing Bacon and Gammon Pilgrim's ©
Slide 58: Tulip Ltd – Opportunity to Grow in Retail
TULIP LTD – OPPORTUNITY TO GROW IN RETAIL 24% UK slaughter share compared to 13% of Retail market share % of UK Pigs Slaughtered Key player revenue: Other Tulip Ltd Tulip Ltd 22% 24% £1bn 13% Cranswick £1.4bn Tulip % of Retail Karro £0.5bn Karro 24% 30% Cranswick Pilgrim's © Copyright 2019 | All Rig
Slide 59: Tulip Ltd – Our Sales Segments and Customers
TULIP LTD – OUR SALES SEGMENTS AND CUSTOMERS Opportunity to grow in retail from wholesale and capitalise on export WHOLESALE WHOLESALE 19% 46% RETAIL 45% Annual Tonnes Annual Revenue 2018A ~1.1m FOOD 2018A SERVICE ~ US$1.3bn 12% RETAIL 69% FOOD Clear customer growth strategy SERVICE 9% Pilgrim's © C
Slide 60: Tulip Ltd - Export Growth Opportunities
Tulip Ltd - China TULIP LTD - EXPORT Export Growth +84% GROWTH OPPORTUNITIES Net Sales Driven by spread of ASF in China ASF Outbreak in China: ASF Outbreaks in 2019 Q1 Q2 Q3 Q4 Q1 Q2 Source: World Organization for Annimal Health https://www.oie.int/wahis_2/public/wahid.php/Diseaseinform 2018 2019 •
Slide 61: Tulip Ltd - Product Segments and Market Share
TULIP LTD - PRODUCT SEGMENTS AND MARKET SHARE Opportunities to grow and add value in high margin categories Product Market Value Tulip Value Share Higher Margin Cooked Meats £2,627m 6% Snacking £748m 12% Slow Cooked £204m 12% Bacon £867m 28% Sausages £672m 8% Gammon £276m 32% Lower Margin Fresh Pork
Slide 62: Tulip Ltd – Health, Safety & Environment
TULIP LTD – HEALTH, SAFETY & ENVIRONMENT Strong focus drives significant improvements Year on year reduction in lost time accidents Year on year reduction in green house gasses Year on year reduction in water Intensity Year on year reduction in electricity Intensity Food waste of total production Pi
Slide 63: Tulip Ltd - Focusing on Our People
TULIP LTD - FOCUSING ON OUR PEOPLE The best management team in the industry; • Driving accountability and ownership to the right levels across the Company, through restructuring, right sizing and removing the reliance on external consultants • A strong Apprenticeship Programme, covering a range of d
Slide 64: Tulip Ltd - What's Next
TULIP LTD - WHAT’S NEXT… Optimize footprint Drive best in class Capitalise on export and complete operational opportunities turnaround excellence Drive innovations in Strengthen and Integrating with areas of under grow business with Pilgrim’s and indexed and high key customers harvest synergies marg
Slide 65: Key Takeaways
KEY TAKEAWAYS • Our commitment to safety, people, sustainability, animal welfare and quality has allowed us to build a strong foundation. • Our unique integrated supply chain with our own high welfare pigs provides a competitive advantage and real point of differentiation. • Our asset base and curre
Slide 66: Moy Park, Europe
Chris Kirke MOY PARK, EUROPE
Slide 67: Moy Park's Year Journey
MOY PARK'S 75 YEAR JOURNEY Celebrating 75 years Joined Top 15 Pilgrim’s UK food Company Joined Creation of JBS Moy Park Europe Acquisition Joined of O’Kane Purchase Marfrig of GW Padley Group and Dove Acquired by Valley Primary the OSI processing Group Moy Park plant / EEC established export license
Slide 68: People Safety
PEOPLE SAFETY 133 95% 75 Severe Accident Reduction 2013-2019 36 29 24 13 Safe people, safe products 7 & healthy attitudes 2013 2014 2015 2016 2017 2018 2019 156 Lost Workdays YTD 2019 70% 594 YE 2017 5530 YE 2013 Days Lost Reduction 2017-2019
Slide 69: Moy Park's Annual Operating Income Progression
MOY PARK'S ANNUAL OPERATING INCOME PROGRESSION £75m £71m 4.7% £68m 4.6% 4.8% £50m £49m 3.5% 3.4% £38m 2.8% £26m 2.0% £12m 1.0% 2011 2012 2013 2014 2015 2016 2017 2018 Pilgrim's © Copyright 2019 | All Rights Reserved.
Slide 70: Moy Park at a Glance
MOY PARK AT A GLANCE Diversified European Top 5 leading European poultry company protein-based food Joined Pilgrim’s Pride September 2017 4 8 FRESH ADDED-VALUE PROCESSING company with presence Top 15 UK food business and leader in PROCESSING FACILITIES convenience products FACILITIES in poultry, bee
Slide 71: Unique Integrated Farm-to-Fork Supply Chain
UNIQUE INTEGRATED FARM-TO-FORK SUPPLY CHAIN, WITH WELL INVESTED FARMS AND HATCHERIES 0 – 18 MONTH MOY PARK SUPPLY CHAIN FEED MILLS GRANDPARENT REAR Young farming estate GRANDPARENT LAY Facilities capable of supplying PARENT HATCHERY the next generation Strongest European 200 PARENT REAR Hot water he
Slide 72: Food Safety Is at the Heart of Our Strategy
FOOD SAFETY IS AT THE HEART OF OUR STRATEGY, ALONG WITH QUALITY, INTEGRITY AND TRUST. WE ARE SHAPING THE FUTURE OF FOOD SAFETY AND QUALITY WITHIN OUR INDUSTRY. BROAD EXECUTIVE ADVISORY BODY INDUSTRY LEADING PERFORMANCE ON REPRESENTATION CAMPYLOBACTER AND ANTIBIOTICS Technical Leadership Patented pro
Slide 73: Our Strength Is in Our People and Values
OUR STRENGTH IS IN OUR PEOPLE, OUR VALUES, OUR QUALITY IS IN OUR WELL INVESTED FACILITIES ENSURING A GOOD EMPLOYEE EXPERIENCE THROUGH AWARD WINNING PORTFOLIO OF DEVELOPMENT Modern recruitment system PROGRAMMES On boarding programmes Graduate Management Trainees Engagement programmes Apprenticeships
Slide 74: Leading Insight and Development Resources for Customers
OUR GOAL IS TO PROVIDE LEADING INSIGHT AND DEVELOPMENT RESOURCES TO OUR CUSTOMERS, SO WE CAN INNOVATE TOGETHER TO MEET CONSUMERS’ NEEDS. MOY PARK BRANDS SIGNIFICANT DEPTH OF MARKET DATA covering total grocery & 19+ specialist categories BRANDS IN DEVELOPMENT LEADING CULINARY AND INNOVATION EXPERTISE
Slide 75: Big Themes Changing Channel Dynamics
BIG THEMES CHANGING CHANNEL DYNAMICS EVOLVING SUPPLY DYNAMICS IN THE Discounters turning the screw Renewed Price competition Online 8% UK MARKET: Discounters 7% QSR 4% EXPANSION ACQUISITION Convenience 3% EXPANSION Total Food… 2% AN EVOLVING Supermarkets 1% LANDSCAPE Hypermarkets 0% CAGR by channel:
Slide 76: Market Dynamics: UK Processing Growth
MARKET UK PROCESSING GROWTH GROWTH RELATIVE TO OTHER PROTEINS DYNAMICS 23 52 Week Retail Growth 22 5yr CAGR +4.7% 21 to end of 2018 7% 20 5% 19 4% 3% 3% 18 2% 17 1% 16 15 Chicken Fish Beef Lamb0% Pork -1% -2% Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Jul-18 Jan-14 Jan-13 Jan-15 Jan-16 Jan-17 Jan-18 Oct-14
Slide 77: Market Dynamics: UK Weekly Kill Share
MARKET Average UK weekly kill for YTD is 20.2m birds DYNAMICS Moy Park has the 30.2% potential to go to 6.5m 0.5 2.0 0.5 6.1 2 Sisters 28.2% 0.9 Moy Park Avara Banham Cranswick 22.2% 4.5 Salisbury Others 4.5% 2.5% 2.5% 5.7 10.0% Source: DEFRA UK Averaged Weekly Kill YTD, to end June 2019; Moy Park m
Slide 78: Market Dynamics: Annual Slaughter Growth
MARKET Annual Slaughter Growth DYNAMICS 25,000 1,200 1,000 20,000 800 15,000 600 10,000 Chicken (m Birds) Chicken 400 Beef, Pork, Lamb Pork, (‘000Head) Beef, 5,000 200 0 0 Beef Lamb Pork Chicken Source: DEFRA 1994 - 2018 Pilgrim's © Copyright 2019 | All Rights Reserved.
Slide 79: Moy Park Key Customers Offer Growth, Volume and Premium Shoppers
MOY PARK KEY CUSTOMERS OFFER ~ GROWTH, VOLUME AND PREMIUM SHOPPERS
Slide 80: Market Dynamics: What Makes a Key Customer Relationship
MARKET DYNAMICS What makes a key customer relationship
Slide 81: Moy Park Has the Most Respected Dedicated E-Commerce Team
MOY PARK HAS THE MOST RESPECTED DEDICATED CAGR% 2019 - 2024 0.08 E-COMMERCE TEAM IN THE INDUSTRY* 7.5% 7.0% 0.07 PRODUCT ENVIRONMENT CONTENT ACTIVATION NAVIGATION 0.06 0.05 0.04 3.1% 0.03 0.02 0.01 0.6% -0.2% 0 -0.01 Pilgrim's © Copyright 2019 | All Rights Reserved. Source: IGD UK Channel Opportunit
Slide 82: Consumer Trends
CONSUMER HEALTH VALUE FOR MONEY TRENDS % Of Consumers Considering Protein Types Healthy Chicken 75% 10.00 8.97 8.00 Fish 72% 7.75 Actual - 6.00 Beef 31% 4.62 4.00 3.94 (£)/(kg) Lamb 25% Price Average 2.00 Pork 25% Chicken Beef Pork Lamb CONVENIENCE PROVENANCE Raw Primary Added Value UK % Poultry is
Slide 83: Innovation: Examples of 2019 Innovation
INNOVATION Examples of 2019 innovation delivering against consumer trends HEALTH SNACKING CONVENIENCE EXCITEMENT MEAT FREE Waitrose & Jack Links Branded Sainsbury’s: KFC Vegan Tesco Free partnership: Microwaveable Pineapple, Rum Burger trial From Chicken Bites Wings and Coconut Kebabs
Slide 84: Innovation: 2019/2020 Innovation Pipeline
INNOVATION Looking forwards – 2019/2020 Innovation Pipeline CARB REPLACERS PROTEIN KICK EXCITEMENT PREMIUMISATION Chicken Sausages Chicken Mince Pastry Drum Fillet Flexitarian Flexitarian Flexitarian Chicken Burgers Chicken Beet Balls Chicken & Greens Bake
Slide 85: Key Take Aways
KEY TAKE AWAYS • A fast-growing multi-protein business • A unique, embedded agricultural base • Industry-leading technical standards • Culture of continuous improvement and operational excellence • Solid key customer portfolio, offering growth, volume and premium opportunities • A strong track recor
Slide 86: Pilgrim's Mexico
Charles VonDerHeyde PILGRIM’S MEXICO
Slide 88: Industry: Sales Channels
INDUSTRY: SALES CHANNELS SALES CHANNELS IN MEXICO POULTRY INDUSTRY: + LIVE SALES 37 % + WHOLESALES 35 % + RETAIL 14 % + FOODSERVICE 7 % + ROTISSERIE CHAINS 8 % Pilgrim's © Copyright 2019 | All Rights Reserved. 88
Slide 89: Pilgrim's México Main Info
PILGRIM’S MÉXICO / MAIN INFO: PPMEX MAIN INFO: MAIN FACILITIES: Procesing Distribution 2ND +8 Million Plants Centers MEX PRODUCER Weekly Prepared Future CD Food Plants 6 Processing Plant +11,000 Employees 2 Value Added Plant 34 Distribution centers FROM FARM TO THE TABLE! 4
Slide 91: Pilgrim's Mexico HR Strategy – People
PILGRIM’S MEXICO HR STRATEGY – PEOPLE!
Slide 92: Pilgrim's Mexico HR Strategy – People
PILGRIM’S MEXICO HR STRATEGY – PEOPLE! 0 . 0 2
Slide 94: Strategic Objectives
STRATEGIC OBJECTIVES 1)- Greater profitability (Margin) of the industry in a sustainable way Goal: Achieve a greater profitability than our main competitor. 2)- Increase Market share. Margin Goal: To grow faster than market pace 3)- Enhance brand's (Marca) portfolio value (brand equity) Market Brand
Slide 95: Key Customers & Channels
KEY CUSTOMERS & CHANNELS CLIENTS Channels LIVE CHICKEN WHOLESALERS RETAIL ROTISERIE CHAINS QSR 7
Slide 97: Portfolio Solutions for the Different Segments
PORTFOLIO SOLUTIONS FOR THE DIFFERENT SEGMENTS Solution for each segment: A/B/C+ 17% We made a Typical C solution adapted 13% for each channel and for each C-/D+ 29% social economic level of the population. 41% D/E Population Distribution in Mexico and how our brands are aligned in each segment Sour
Slide 98: Value Creation for Key Customers
VALUE CREATION FOR KEY CUSTOMERS
Slide 99: Commercial Strategy / Fresh BU
COMMERCIAL STRATEGY / FRESH BU Increase our participation in Modern Chanel with branded products that allow us to have a more stable profitability and at the same time to develop our brands. + Retail & clubes + Foodservice + QSR’s Branded + Rotisserie Chain Products Commodity Products Spot Market Mo
Slide 100: Commercial Strategy / Prepared Food BU
COMMERCIAL STRATEGY / PREPARED FOOD BU To provide the best food experience, nutrition and taste to connect people. We want to inspire you give the most to the ones you love. Essence QSR Premium Value Purpose The best sensory experience The best value/price Your best ally in of the category equation.
Slide 101: Innovation
INNOVATION “R&D center (IDEA) has been the connecting place between opportunities and the productive elements (marketing-suppliers-plants- process) to make al the projects real and successful” Pilgrim's © Copyright 2019 | All Rights Reserved. 101
Slide 103: Innovation Processes
INNOVATION PROCESSES Thermo 2 15
Slide 108: Key Takeaways
KEY TAKEAWAYS • Our commitment to safety, people and quality has created the conditions for long term sustained growth • The diversification of our portfolio, steadily moving from commodity to prepared foods and branded products, is creating more steady results (YOY) • Our key customer strategy, as
Slide 109: Gracias!
pi pilgrims. Gracias!
Slide 110: Commodities and Risk Management
Joe Waldbusser Commodities and Risk Management
Slide 112: US Corn Stocks
US CORN STOCKS WASDE CORN STOCKS (Million bushels) Production estimated to decline over 600 3,000 million bushels but offset by lower demand 2,500 2,000 1,500 1,000 500 0 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 Pilgrim's © Copyright 2019 | All Rights Reserved.
Slide 113: US Soybean Stocks
US SOYBEAN STOCKS WASDE SOYBEAN STOCKS (Million bushels) 1,200 1,000 Production is forecasted to be down over 900 million bushels 800 600 400 200 0 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 Pilgrim's © Copyright 2019 | All Rights Reserved. 113
Slide 116: Trends in Grain Markets
TRENDS IN GRAIN MARKETS • Price discovery for corn is much more dependent on global production and trade than in previous years • Strong dollar, relatively cheap ocean freight will keep encouraging production growth outside of the US • US trade and ethanol policy is becoming more uncertain for soybe
Slide 117: Key Takeaways
KEY TAKEAWAYS • Risk management team uses an adaptive strategy to give our businesses a competitive advantage in feed costs • Pilgrims is uniquely positioned with a global buying footprint to source grains in every production region • Partnership with farmers allows for more direct sourcing and redu
Slide 118: Food Safety and Quality Assurance
Kendra Waldbusser FOOD SAFETY AND QUALITY ASSURANCE
Slide 119: Sustainability at Pilgrim's
SUSTAINABILITY AT PILGRIM’S At Pilgrim’s, our view of sustainability is guided by our vision to become the best and most respected company in our industry, creating the opportunity of a better future for our team members. We believe sustainability involves improving short- and long-term profitabilit
Slide 120: Our 2020 Targets
OUR 2020 TARGETS ENVIRONMENT WATER USE GHG EMISSION ELECTRICITY NATURAL GAS INTENSITY INTENSITY INTENSITY USE INTENSITY 10% 14% 12% 14% TEAM MEMBER SUPPLY CHAIN ANIMAL HEALTH & WELFARE SAFETY 100% 15% 90%
Slide 121: Animal Welfare
ANIMAL WELFARE We recognize that, to achieve meaningful progress, we must partner with customers, stakeholders and organizations that share our values and commitment to a sustainable future.
Slide 122: Product Integrity
PRODUCT INTEGRITY Uncompromising food safety and quality. Global Food Safety Initiative (GFSI) scheme audits at all facilities. Pilgrim's © Copyright 2019 | All Rights Reserved.
Slide 124: Key Takeaways
KEY TAKEAWAYS • Comprehensive sustainability strategy that addresses priority issues critical to the long-term success of our business and the interests of our key stakeholders • Ensuring the well-being of the animals under our care is an uncompromising commitment at Pilgrim’s. • Continue to invest
Slide 125: Financials
pilgrims Fabio Sandri FINANCIALS
Slide 127: Our Vision - Market Value
OUR VISION - MARKET VALUE Share Price Evolution Competitor 1 Competitor 2 ___________________________ Note: share price increase since December 2011
Slide 128: Our Vision - Total Shareholder Return
OUR VISION - TOTAL SHAREHOLDER RETURN $707 $412 ___________________________ *$100 invested on 12/25/11 in stock or 12/31/11 in index, including reinvestment of dividends. Indexes calculated on month-end basis Pilgrim's © Copyright 2019Peer | All Group Rights includes Reserved. Hormel Foods Corp, San
Slide 130: Our Vision – Operational Benchmarks
OUR VISION – OPERATIONAL BENCHMARKS Operating Income Outperformance In All Geographies 38% 38% 8.8% Higher Higher 6.9% 26% Higher 4.4% 6.4% 5.0% 3.5% Competition PPC Competition PPC Competition PPC Competition in USA includes Sanderson Farms and Tyson Foods Poultry Division; in Mexico includes Bacho
Slide 131: Our Vision – Operational Benchmarks
OUR VISION – OPERATIONAL BENCHMARKS Based on Agristats C/lb profit Vision: The Best 2015: PPC Top Third 2013: PPC 2011: above PPC AVG below AVG Pilgrim's © Copyright 2019 | All Rights Reserved.
Slide 132: Strong Operations Allowed Us to Grow
STRONG OPERATIONS ALLOWED US TO GROW Sales ($MM) $12,380 64% Growth $7,536 2011 2019 PF ___________________________ Source: PPC Pilgrim's © Copyright 2019 | All Rights Reserved. 132
Slide 133: Strong Operations Allowed Us to Grow Both in U.S. and Abroad
STRONG OPERATIONS ALLOWED US TO GROW …BOTH in the U.S. and Abroad U.S. Domestic Sales +22% ($ in millions) $7,311 $7,057 $7,053 $7,167 $6,811 $6,814 $6,336 $6,378 $5,986 International Sales (Export + Mexico + Europe) +320% ($ in millions) 2011 2012 2013 2014 2015 2016 2017 2018 2019 YTD $4,963 $3,77
Slide 134: Strong Operations Allowed Us to Improve Results
STRONG OPERATIONS ALLOWED US TO IMPROVE RESULTS Operating Income Margin (%) 9.5% ~4x average Operating Income Margin improvement during 4x 2014-2018 vs. 2011-2013 2.2% $125mm 2019 targeted operational improvements 2011-2013 2014-2018 ___________________________ Source: PPC Pilgrim's © Copyright 2019
Slide 135: Strong Free Cash Flow and Balance Sheet
WE HAVE STRONG FREE CASH FLOW AND BALANCE SHEET Cash Flow from Operations ($MM) ($ in millions) 835 Close Management of working capital 2.6x 316 Net debt / LTM EBITDA 2.1X as of June 2019 Significant room for growing the company 2011-2013 2014-2018 ___________________________ Source: PPC Pilgrim's ©
Slide 136: Significant Investment in Our Business
SIGNIFICANT INVESTMENT IN OUR BUSINESS Capex ($ MM) Nearly $2.0B invested in the last 9 years. 341 340 349 300 Priority on projects with rapid payback 190 and projects targeting safety, quality 171 and sustainability 136 116 90 Strategic projects that support key customers growth and de-emphasize ou
Slide 137: Building Global Platforms
BUILDING GLOBAL PLATFORMS TYSON DE MEXICO JULY 2014 JANUARY 2017 SEPTEMBER 2017 ANNOUNCED AUGUST 2019¹ $400mm $350mm $1,300mm $350mm • Improve geographic • Expand geographic • Geographic expansion • Further expansion reach in Mexico footprint in the Midwest U.S. in the U.K. and Europe in the U.K. •
Slide 138: Creating a Stronger Portfolio
CREATING A STRONGER PORTFOLIO Pro Forma Sales by Geography Pro Forma Sales by Product(2) Europe Fresh Mexico 11% 13% Europe 27% Mexico Fresh 11% 2019 2019 PF Sales PF Sales (1) (1) $12.3B $12.3B USA Fresh 55% Prepared/ Value-added US 62% 21% ___________________________ Note: GBP converted to USD at
Slide 139: Stronger Portfolio That Can Reduce Volatility
STRONGER PORTFOLIO THAT CAN REDUCE VOLATILITY Operational Income Margins (indexed to 2013) STD Deviation 200% USA 43.3% 180% MEX 24.7% 160% Euro 24.5% 140% 120% Consolidated 33.2% 100% 80% Having the 3 60% geographies 40% reduces the STDV by 23% 20% 0% 2013 2014 2015 2016 2017 2018 2019YTD Pilgrim's
Slide 140: Our Vision - Better Future for Team Members
OUR VISION - BETTER FUTURE FOR TEAM MEMBERS! . Healthy company growing : New opportunities, internal promotions . Better, more stable results: Higher variable compensation . Attract the best teams, suppliers, partners, customers and investors . Creating Shareholder Value Pilgrim's © Copyright 2019 |
Slide 141: Key Takeaways Today
KEY TAKEAWAYS TODAY We have the Vision and We have the right Strategy to strengthen Team in place to our position as a leading produce results food company We have the right Key We have the right business Customer strategy to model of product and support growth geographic diversification through inn
Slide 142: Our Vision & Strategy
OUR VISION & STRATEGY Become a more valued Relentless pursuit of partner with our key operational excellence customers Safe people, safe Unique portfolio of products and healthy diverse, complementary attitudes business models Pilgrim's © Copyright 2019 | All Rights Reserved.
Slide 143: Thank You
eae pilgrims. Thank you

Pilgrims Pride — Investor Day (September 2019) on 6ix

Pilgrim's Pride — Investor Day (September 2019)

Slide 1: Pilgrim's Pride Company Analyst Day September 18, 2019

Slide 2: Cautionary Notes and Forward-Looking Statements

Slide 3: Welcome and Business Overview

Slide 4: Today's Agenda

Slide 5: Our Vision & Strategy

Slide 6: Leadership Position with Global Footprint

Slide 7: Building Global Platforms

Slide 8: Achieving Both Top and Bottom Line Growth

Slide 9: Innovation at the Center of Global Prepared Foods Growth

Slide 10: People at the Forefront of Our Strategy

Slide 11: Key Themes Today

Slide 12: U.S. Chicken

Slide 13: Industry Leading Team Member Safety

Slide 14: Culture and Talent Development

Slide 15: Internal Promotions

Slide 16: Our U.S. Footprint & Business Units

Slide 17: Our Unique Portfolio

Slide 18: Case Ready Business Unit

Slide 19: Large Bird Business Unit

Slide 20: Small Bird Business Units

Slide 21: Export Business

Slide 22: Driving Growth with Key Customers

Slide 23: Supporting Key Customers with a Differentiated Portfolio

Slide 24: Our Methods to Achieve Operational Excellence

Slide 25: Investment in Automation

Slide 26: Key Takeaways

Slide 27: U.S. Prepared Foods and Innovation

Slide 28: Prepared Foods Room to Grow

Slide 29: Why Grow Prepared Foods?

Slide 30: Prepared Growing in Foodservice & Retail

Slide 31: Brands & Portfolio Diversification

Slide 32: Disciplined Innovation Pillars

Slide 33: Innovation Leading Growth

Slide 34: Innovation: Healthy and Natural Choices

Slide 35: Innovation: Cook, Prepare and Eat

Slide 36: Innovation: Family and Connection Pleasers

Slide 37: Innovation: Indulgence and Sensory

Slide 38: Key Takeaways

Slide 39: Marketing

Slide 40: Key Customer Joint Business Planning Process

Slide 41: Key Customer Joint Business Planning

Slide 42: Building Just Bare

Slide 43: Meet Kate: The Just Bare Shopper

Slide 44: JBC Rotisserie at Retail

Slide 45: On-Line/Digital Grocery

Slide 46: Who Makes Your Food – Adam

Slide 47: Who Makes Your Food – Social

Slide 48: Sponsorships That Connect with Kate

Slide 49: USA Cycling

Slide 50: Just Bare Thighs Video/TV

Slide 51: Key Takeaways

Slide 52: Tulip, Europe

Slide 53: Tulip Ltd – An Introduction

Slide 54: Tulip Ltd - Unique Integrated Pork Supply Chain

Slide 55: Tulip Ltd - Food Safety, Animal Welfare and Quality Standards

Slide 56: Tulip Ltd - Market Leading Asset Base

Slide 57: Tulip Ltd – Investing in Competitive Advantages

Slide 58: Tulip Ltd – Opportunity to Grow in Retail

Slide 59: Tulip Ltd – Our Sales Segments and Customers

Slide 60: Tulip Ltd - Export Growth Opportunities

Slide 61: Tulip Ltd - Product Segments and Market Share

Slide 62: Tulip Ltd – Health, Safety & Environment

Slide 63: Tulip Ltd - Focusing on Our People

Slide 64: Tulip Ltd - What's Next

Slide 65: Key Takeaways

Slide 66: Moy Park, Europe

Slide 67: Moy Park's Year Journey

Slide 68: People Safety

Slide 69: Moy Park's Annual Operating Income Progression

Slide 70: Moy Park at a Glance

Slide 71: Unique Integrated Farm-to-Fork Supply Chain

Slide 72: Food Safety Is at the Heart of Our Strategy

Slide 73: Our Strength Is in Our People and Values

Slide 74: Leading Insight and Development Resources for Customers

Slide 75: Big Themes Changing Channel Dynamics

Slide 76: Market Dynamics: UK Processing Growth

Slide 77: Market Dynamics: UK Weekly Kill Share

Slide 78: Market Dynamics: Annual Slaughter Growth

Slide 79: Moy Park Key Customers Offer Growth, Volume and Premium Shoppers