Slide 1: MARFRIG 2Q13 Results
MARFRIG 2Q13 Results • Simplification • Shrink with sharper focus and lower execution risk • Portfolio well balanced between the Brazilian and International operations • Team fully committed to profitable growth 1
Slide 2: Our word is our bond
Our word is our bond GUIDELINE – 1Q13 FOLLOW UP – 2Q13 Deleveraging of up to R$1.0 billion net debt reduction R$2 billion by 12/31/2013 already in 2Q13 Asset divestments: Seara and Zenda Done Operating improvement in 5 KPIs 4 of the 5 KPIs improved in 2Q13 of Seara Brasil Pressure on beef margins Lo
Slide 3: Divestment of Seara and Zenda
Divestment of Seara and Zenda Focus on an operation that presents lower execution risk, greater simplicity and lower leverage and is supported by a stronger capital structure and led by a results-oriented team. SHRINK FOCUS DELIVERY Seara Brasil was the Growth Food Service Operations: result of 12
Slide 4: Transaction’s Strategic Implications
Transaction’s Strategic Implications •Greater internal capacity to grow more rapidly and profitably (e.g. Asia); Greater •Reduction in the amounts of working capital, CAPEX and investment required to sustain Seara’s future growth; Focus •Reduction of risk in a complex turnaround within the current c
Slide 5: Group’s Post-Transaction Business Structure
Group’s Post-Transaction Business Structure Business Segment Leading supplier of animal protein Business Brazil’s 2nd largest poultry and pork World’s 3rd largest beef producer UK’s 2nd largest poultry producer products to major restaurant chains Description producer (USA East Coast, Europe and Asia
Slide 6: How did the stock market react to the sale?
How did the stock market react to the sale? 110% Marfrig Deal Announcement 105% June 10 Ibovespa 100% 95% 90% 85% 80% 3-Jun 8-Jun 13-Jun 18-Jun 23-Jun 28-Jun 3-Jul 8-Jul 13-Jul 18-Jul 23-Jul 28-Jul 2-Aug 6
Slide 7: How did the bond market react to the sale?
How did the bond market react to the sale? Marfrig 9.625% due 2016 Marfrig 9.875% due 2017 Deal Announcement 115 Deal Announcement 115 June 10 June 10 110 (B2) 110 (B 105 105 100 13.82% 100 ) 14.00% 95 95 90 90 85 85 80 80 Apr-13 May-13 May-13 Jun-13 Jun-13 Jul-13 Jul-13 Apr-13 May-13 May-13 Jun-13
Slide 8: Preliminary reaction by rating agencies
Preliminary reaction by rating agencies MOODY’S – B2 June 11, 2013 – Announced the transaction as positive, but has not yet removed "under review for possible downgrade" Positive: Negative: • Lower debt and higher liquidity • Loss of valuable business, with well-known • Leverage ratio falls to 5.0x,
Slide 9: 2Q13 Highlights
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Slide 10: 2Q13 Consolidated – Continued Operations
2Q13 Consolidated – Continued Operations INCOME STATEMENT - Consolidated 2Q13 vs. 2Q13 2Q12 (R$ million) 2Q12 Net Operating Revenue 4,455.3 4,071.5 9.4% Cost of Goods Sold (3,962.6) (3,509.3) 12.9% Gross Income 492.7 562.2 -12.4% Gross Margin (%) 11.1% 13.8% -270 bps SG&A (330.9) (322.2) 2.7% % of N
Slide 11: 2Q13 Consolidated – Continued Operations
2Q13 Consolidated – Continued Operations Consolidated Net Revenue growth of 9.4% (2Q13 vs. 2Q12), explained by: Improvement at Marfrig Beef Brazil in both domestic sales in the Food Service segment as well as exports; Solid performance of Moy Park, led by the Agri-Fresh and Convenience Foods U
Slide 12: Consolidated Financial Indicators: Net Revenue
Consolidated Financial Indicators Net Revenue and Growth vs 2Q12 (R$ million and %) + 9.7 % + 9.4 % + 12.0 % + 6.1 % 180 65 138 4,455 4,072 Consolidated Revenue Keystone Foods Moy Park Marfrig Beef Consolidated Revenue 2Q12 2Q13 2Q13 Revenue Breakdown Keystone BRL Processed 10% 13% 21% 2
Slide 13: Gross Income and SG&A
Consolidated Financial Indicators Gross Income and Gross Margin (R$ million and %) 13.8 % 6.0 % 9.4 % 15.1 % 11.1 % 5 19 (94) 562 493 Consolidated Gross Keystone Moy Park Marfrig Beef Consolidated Gross Income 2Q12 Income 2Q13 SG&A and SG&A/NOR (R$ million and %) 7.9 % 3.7 % 7.8 % 9.6 % 7.4 % 14
Slide 14: Debt Profile and Debt by Currency
Consolidated Financial Indicators Debt Profile (R$ million) Short-Term Debt: - 70% Trade Finance - 30% Other 2,327 2,409 2,196 (19.5% of total debt) 1,462 1,448 1,495 1,517 888 600 590 7 446 236 CAIXA CASH 3T13 3Q13 4T13 4Q13 1T14 1Q14 2T14 2Q14 2014 2015 2016 2017 2018 2019 2020 Debt by Currenc
Slide 15: 2Q13 Keystone Foods
2Q13 Keystone Foods INCOME STATEMENT - KEYSTONE 2Q13 vs. 2Q13 2Q12 (R$ million) 2Q12 TOTAL REVENUE KEYSTONE 1,285.6 1,147.4 12.0% ( - ) COGS (1,208.3) (1,075.0) 12.4% GROSS INCOME 77.3 72.4 6.8% (%) GROSS MARGIN 6.0% 6.3% -30 bps SG&A (47.1) (39.8) 18.5% (%) SG&A/NOR -3.7% -3.5% -20 bps EBITDA 61.3
Slide 16: 2Q13 Keystone Foods
2Q13 Keystone Foods USA - New chicken-based processed products introduced in 2Q13 with strong promotional and marketing activity by clients. Revenues increased 14.5%, while volumes fell 18.9% and the average price rose 41.2% (24.1% in local currency) on the change in mix and better prices for trim
Slide 17: 2Q13 Moy Park
2Q13 Moy Park INCOME STATEMENT - MOY PARK 2Q13 vs. 2Q13 2Q12 (R$ million) 2Q12 NET OPERATING REVENUE 1,131.8 1,066.7 6.1% ( - ) COGS (1,025.0) (978.6) 4.7% GROSS INCOME 106.8 88.1 21.3% (%) GROSS MARGIN 9.4% 8.3% 110 bps SG&A (88.3) (73.9) 19.4% (%) SG&A/NOR -7.8% -6.9% -90 bps EBITDA 63.9 47.5 34.6
Slide 18: 2Q13 Moy Park
2Q13 Moy Park Sales revenue growth (Moy Park + 6.1%) from the same period last year; Increase in fresh poultry sales (Moy Park + 19.6%) through successfully securing new clients and underlying market growth; Material increase in EBITDA and EBITDA margin through higher sales volumes, improved e
Slide 19: 2Q13 Marfrig Beef
2Q13 Marfrig Beef INCOME STATEMENT - MARFRIG BEEF 2Q13 vs. 2Q13 2Q12 (R$ million) 2Q12 NET OPERATING REVENUE 1,667.5 1,553.8 7.3% NOR FOOD SERVICE 370.4 303.6 22.0% TOTAL NET OPERATING REVENUE 2,037.9 1,857.4 9.7% ( - ) COGS (1,729.3) (1,455.6) 18.8% GROSS INCOME 308.6 401.8 -23.2% (%) GROSS MARGIN
Slide 20: 2Q13 Marfrig Beef and Outlook
2Q13 Marfrig Beef and Outlook SG&A expenses decreased 6.2% from 2Q12, demonstrating our commitment to exercising rigorous control of the most cyclical portion of our business. Both Uruguay and Argentina should improve in the last half of the year. The experienced and solid new management team
Slide 21: Seara Brasil KPIs 2Q13
Seara Brasil KPis 2Q13 “Ea GROUP
Slide 22: KPIs Seara
KPIs Seara Nielsen Price Index – Processed Meat Products 112.2 112.5 111.6 111.9 111.5 110.3 111.3 111.3 109.8 99.9 96.0 97.2 98.3 95.8 95.5 94.9 94.7 96.8 94.9 95.1 95.2 94.0 94.8 94.2 91.0 88.5 87.9 JAN/FEB JAN/FEV12 12 MAR/APR 12 MAR/ABR MAY/JUN12 MAI/JUN 12 JUL/AUG JUL/AGO 12 SEP/OCT 12 SET/OU
Slide 23: KPIs Seara
KPIs Seara Sales to Small/Midsize Retailers Vendas Sales topeq/med varejo small/mid (R$ MM) retailers (R$ million) Share of small/mid retailers Part. peq/med varejo (%) (%) 38.6% 32.8% SG&A and SG&A/NOR 414 371 DVG&A(R$ SG&A (R$million) MM) SG&A/NOR DVG&A / ROL(%) (%) 1T13 1Q13 2T13 2Q13 17.0% 1
Slide 24: Closing Remarks
Closing Remarks Seara transaction should be concluded in the coming months, which will finalize the debt transfer and bring the overall leverage ratio to around 3x. We plan to announce a more detailed strategic plan for our future growth in 3Q13, as previously announced. We remain committed to