Slide 1: 4Q11 and 2011 Earnings Release
MARFRIG 4Q11 and 2011 Earnings Release
Slide 2: Disclaimer
Disclaimer This presentation may include statements representing expectations about future events or results according to the Brazilian and international securities regulation. These statements are based on certain assumptions and analyses made by the Company according to its experience and the econ
Slide 3: 4Q11 Highlights
4Q11 Highlights Key Financial Highlights Net Revenue reached R$5.8 billion, up 8.8% from R$5.3 billion in 4Q10; Reduction in SG&A margin of 240pb compared to 4Q10 and 70pb compared to 3Q11; Adjusted EBITDA of R$520.2 million, with margin of 9.0% Positive Cash Flow from Operating Activities of R$703.
Slide 4: 2011 Highlights
2011 Highlights Key Financial Highlights Record Net Revenue of R$21.9 billion, 37.8% up from R$15.9 billion in 2010; Reduction in SG&A margin of 200pb: 10.4% in 2011 compared to 12.4% in 2010; Consolidated EBITDA of R$1,773.8 million, with EBITDA margin of 8.1%; Net loss of R$746.1 million, reflecti
Slide 5: Segment Performance Consolidated Results
SEGMENT PERFORMANCE CONSOLIDATED RESULTS 5
Slide 6: Business Segments
Business Segments The Group’s organizational structure was divided into two major business segments , comprising all divisions. Marfrig Alimentos S.A. SEARA MARFRIG FOODS BEEF Brazil Argentina Uruguay 6
Slide 7: Marfrig's Strategy 2007-2011: Focus on Diversification and Profitability
Marfrig’ s Strategy 2007 - 2011: Focus on Diversification and Profitability Transform and diversify the product mix to match protein consumption trends, globally and in Brazil. Marfrig Revenue Breakdown per segment 2007 2011 Marfrig Beef (beef, lamb, leather and food service) Marfrig Beef Seara Food
Slide 8: Seara Foods
SEARA FOODS 8
Slide 9: Seara Foods Key Takeaways
Seara Foods Key Takeaways • Encourages integration and focus SEARA FOODS - Keystone: Global food services platform - Moy Park: Leading European private label player - Seara: Renowned global consumer brand 1 Op. Excellence & Supply Chain 2 Talent Management • Captures synergies through 6 multifunctio
Slide 10: Seara Foods – Seara Brasil Key Takeaways
Seara Foods – Seara Brasil Key Takeaways • Seara has strategic plan to grow revenue & profits • 6 levers will enable this turn-around in performance 1) Accelerated product mix shift towards higher - value processed products in Brazil 2) Focused brand and product architecture & innovation efforts 3)
Slide 11: Seara focusing product and brand architecture and innovation
Seara Foods Seara is focusing its product & brand architecture and innovation efforts Review of brand & product structure Product innovation EXAMPLES OF CURRENT BRANDS Premium Main- stream Fighter Packaging redesign • Review/simplify brand architecture • Streamline product portfolio • Clarify produc
Slide 12: Customer base
Seara Foods Wider distribution will allow Seara to take full advantage of its product revamp Challenge: Implications Fully capture new assets • Wider presence raises brand Seara Brasil (POS) Customer base customer base profile and sales potential • Greater margin opportunity in less organized channe
Slide 13: The creation of Seara Foods fosters accountability and focus within 3 distinct BUs
The creation of Seara Foods fosters accountability & focus within 3 distinct BUs SEARA FOODS Renowned global Leading European Global food consumer brand Private Label player services platform Focus: Focus: Focus: Increasing distribution of higher value-added Continue to efficiently serve large retai
Slide 14: Seara Foods: Focus on Elaborated and Processed Products
Seara Foods: Focus on Elaborated and Processed Products Revenue Reconciliation – Poultry & Pork Segment (R$ Million) + 58.0% 723 14,237 3,174 275 816 9,013 237 2010 Brazil Brazil International International Other Products 2011 Revenues Domestic Exports Operations Operations Revenues Market Domestic
Slide 15: Seara Foods: Financial and Operational Highlights
Seara Foods: Financial and Operational Highlights Adjusted EBITDA Margin rose 130 pbs in the quarter, compared to 3Q11 EBITDA e EBITDA Margin (R$ Million) • Focusing on processed and elaborated products; 10.5% • Expansion and better positioning of the Seara 8.2% 7.0% 6.5% 6.9% brand in the domestic
Slide 16: Seara Foods: Synergies
Seara Foods: Synergies R$ 201 million in Synergies (annualized) from SEARA, as expected Synergies: Breakdown by Segment (Last 12 months) (R$ Milllion) 201.1 161.7 23.5 8.6 25.2 57,3 22.6 24.5 Agriculture Supply chain Purchase Industrial Grains G&A Last 12 Annualized Months 4Q11 Synergies: Breakdown
Slide 17: Seara Foods: Market Share
Seara Foods: Market Share SEARA: Focus on more profitable markets and share gains in the domestic market Seara Market Share in Frozen Meats – Brasil (1) Seara Market Share in Prepared and processed meat products (%) (%) 17,3 15,8 New Brands: New Brands: potential to potential to 7.6 9.6 increase inc
Slide 18: Marfrig Beef
MARFRIG BEEF (Y MARFRIG
Slide 19: Marfrig Beef: Main Integration Synergies
MARFRIG BEEF: MAIN INTEGRATION SYNERGIES Creation of a “new company” that leverages the strengths of the integrated companies and operates under the principles of being “simple, lean and agile”. Synergies in Chain Development and Genetics Programs Higher Value Slaughter Sales / Products Logistics Ma
Slide 20: Beef, Lamb and Leather: Brazil Scenario
Beef, Lamb and Leather: Brazil Scenario Beef Production Brazil’s Cattle Herd thousand tonns thousand tonns Source: based on MAPA data. Source: SCOT Consultoria. Beef Consumption Beef Consumption per capita Kg / hab / year thousand tonns Source: based on MAPA data. Source: based on FAPRI data. 20
Slide 21: Beef, Lamb and Leather: Brazil – Export Market
Beef, Lamb and Leather: Brazil – Export Market Scenario 2012 USA •Upward trend in cattle prices Australia •Stable market India •Buffalo Iran •2nd largest market in 2011 Chile •Important market Venezuela •Complicated situation Russia •Largest market 21
Slide 22: Marfrig Beef – Main Integrations (1/3): Management
Marfrig Beef – Main Integrations (1/3): Management Marfrig MERCOSUL MAIN INTEGRATIONS Strengthen company by creating an integrated organization Logistics (maritime shipping) Single IT platform (ERP) Unified production plan Critical 4 Factors Consolidation is integration that lets us join o
Slide 23: Marfrig Beef – Main Integrations (2/3): Commercial
Marfrig Beef – Main Integrations (2/3): Commercial Marfrig MERCOSUL MAIN INTEGRATIONS Unified model for positioning brands and commercial activities Expansion and unification of sales teams Use of European/U.S. trading houses - Distribution Critical Unified service 4 Factors Market intelli
Slide 24: Marfrig Beef – Main Integrations (3/3): Industrial
Marfrig Beef – Main Integrations (3/3): Industrial Marfrig MERCOSUL MAIN INTEGRATIONS KPI (“best practice”) – Adopt best operating practices and industrial models Continue and unify industrial projects Raw material use – privileged location – Pampeano Produce cans in Rio Grande do Sul, Brazi
Slide 25: Marfrig Beef – Critical Factors
Marfrig Beef – Critical Factors Marfrig Government concern with FX rate MERCOSUL Change in rules for transaction tax (IOF) MAIN INTEGRATIONS Cuts in basic interest rate (SELIC) Tax refunds for exporters (Reintegra) Continued growth of middle class (“C” class) Improvement in sanitary safe
Slide 26: Marfrig Beef – Footprint
Marfrig Beef – Footprint Marfrig MERCOSUL OPERATIONAL PLATFORM Uruguay Argentina Brazil Chile 26
Slide 27: Beef: Focus on Profitability
Beef: Focus on Profitability Revenue Conciliation – Beef Segment (R$ Million) + 11.4% 262 7,648 69 163 97 192 6,865 2010 Brazil Brazil International International Lamb 2011 Revenues Domestic Exports Operations Operations Leather and Revenues Market Domestic Markets Exports Other Products Market shar
Slide 28: Marfrig Beef: Financial and Operational Highlights
Marfrig Beef: Financial and Operational Highlights Reduction in COGS and SG&A generated an 120bp increase in Ajusted EBITDA margin in the quarter. EBITDA and EBITDA Margin • Operational adjustments implemented over the course (R$ million) of the year; 10.6% 9.1% 8.9% 9.4% • Better prices practiced i
Slide 29: Segment Performance Consolidated Results
SEGMENT PERFORMANCE CONSOLIDATED RESULTS 29
Slide 30: Net Operating Revenue Breakdown - 2011
Net Operating Revenue Breakdown - 2011 Revenue Breakdown per Product (R$ Million) 21,884 Processed Products 15,878 37% Fresh Meat 28% Others 9,624 6,204 28% 50% 60% 3,340 22% 63% 12% 68% 78% 12% 13% 10% 10% 9% 2007 2008 2009 2010 2011 Net Revenue per Market Consolidated Exports Consolidates Exports
Slide 31: Net Operating Revenue Breakdown – 4Q11
Net Operating Revenue Breakdown– 4Q11 Consolidated Exports Consolidated Exports 4Q10 Rising exports to Asia, compensating a 4Q11 small decrease in Europe exports. 7.8% 7.9% 5.2% 5.7% 11.7% 41.4% 10.1% 39.2% Europe Asia 15.8% Middle East Central / South America 14.8% 18.1% Russia Other 22.3% 5,524 5,
Slide 32: Operational and Financial Highlights
Operational and Financial Highlights Increase in Ajusted EBITDA margin of 10pb e 120pb in 4Q11, compared to 4Q10 and 3Q11 EBITDA and EBITDA Margin (R$ Milhões) • Higher participation of processed and elaborated 7.9% 8.9% 7.8% 9.0% products on total revenues; 7.3% 1,600.0 • Organic growth of the oper
Slide 33: CAPEX: Focus on Optimizing Operational Structure and Generating Results
CAPEX: Focus on Optimizing Operational Structure and Generating Results Capex concentrated in the first half of 2011. Investment activities 4Q11 3Q11 2Q11 1Q11 Total 2011 (R$ millions) Investments in Fixed Assets 228.4 161.7 238.2 284.5 912.8 Fixed 161.6 92.9 156.3 221.6 632.5 Breeding stock 66.8 68
Slide 34: Liability Management
Liability Management Focus on managing long-term capital structure and debt profile Debt Maturity Breakdown (R$ Million) Short Term 2,288 2,225 Long Term 1,292 1,386 1,199 951 905 474 422 247 43 1 0 1Q12 2Q12 3Q12 4Q12 2013 2014 2015 2016 2017 2018 2019 2020 2021 Perfil da Dívida Debt and Cash and E
Slide 35: Cash Flow and Operational Cash Generation
Cash Flow and Operational Cash Generation Focus on operational improvements and positive opartional cash generation of R$703,9 million in the 4Q11. Simplified Cash Flow 4Q11 (in R$ million) Net income (loss) in period (138.5) Itens not afecting cash 563.7 Working capital changes - operating accounts
Slide 36: Assets Swap with Brasil Foods
Assets Swap with Brasil Foods Before After Main Assets Contributed by BR Foods Main Assets Contributed by BR Foods • 7 processed food plants; 1 hog slaughter unit; 2 poultry • 8 processed food plants; 1 hog slaughter unit; 2 poultry slaughter units; 2 poultry incubators; 4 poultry breeding units; sl
Slide 37: Final Message and 2012 Priorities
Final Message and 2012 Priorities Costs and expenses reduction and improvements in working capital management; Conservative debt profile; Further increase share of value-added products in the sales mix; Optimization the global production platform; Increase presence in food service market through Key
Slide 38: Contacts – Investor Relations Department
Contacts – Investor Relations Department Ricardo Florence CFO and Investor Relations Officer Remi Kaiber Junior www.marfrig.com.br/ir Investor Relations Director ri@marfrig.com.br Marfrig Alimentos S/A Av. Chedid Jafet, 222 Bloco A 1º andar CEP: 04551-065 – Vila Olímpia Fone: (55 11) 3728-8600/8650