Slide 1: Institutional Presentation April/2012
MARFRIG Institutional Presentation April/2012
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: Company Overview and Strategy
Company Overview and Strategy 3
Slide 4: Marfrig Worldwide
Global Platform Provides Market and Cost-Saving Opportunities Marfrig MORE THAN WORLDWIDE (*) Marfrig is one of the LARGEST and MOST DIVERSIFIED global food companies, long 85,000 EMPLOYEES term oriented on increasing further PROCESSED PRODUCTS share in sales and WITH strongly CLIENT FOCUSED 150 PRO
Slide 5: Growth Strategy Towards a Global Platform
Growth Strategy Towards a Global Platform 2006 2007 2008 2009 2010 2011 2012 Protein diversification Consolidation of global Increased capacity Brand and Value Strategy Phases Regional diversification Focus on processed foods platform with international Added Products Organic growth in beef segment
Slide 6: 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 7: Structure Made of 2 Large Business Streams
Structure Made of 2 Large Business Streams BNDESPar Controlling shareholder Others 13.89% 47.39% 38.72% Marfrig Alimentos S.A. SEARA MARFRIG FOODS BEEF Brazil Argentina Uruguay 7
Slide 8: Marfrig Beef
MARFRIG BEEF (VY) > PH Tacuarembé KK GROUP
Slide 9: Marfrig Beef: Main Synergies From the Integration
Marfrig Beef: Main Synergies From the Integration Creation of a “new company”, able to leverage strengths of the integrated companies, operating under the principle of being “simple, lean and agile”. Synergies across the chain Incentive / Slaugthering Factories for Sales / Genetics added-value Logis
Slide 10: Marfrig Beef: Brazil
Marfrig Beef: Brazil Scenario Brazil’s Cattle Brazil’s Cattle Herd Herd Beef Production Source: based on MAPA data. Source: SCOT Consultoria. Beef Consumption per capita Beef Consumption Beef Source: based on MAPA data. Source: based on FAPRI data. 10
Slide 11: Marfrig Beef: Brazil – Export Market
Marfrig Beef: 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 11
Slide 12: Marfrig Beef Operating Platform
Marfrig Beef OPERATING PLATFORM Uruguay Argentina Chile Brazil 12
Slide 13: Seara Foods
SEARA FOODS 13
Slide 14: 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 multifuncti
Slide 15: Seara Foods committees will identify and capture synergies
6 Seara Foods committees will identify and capture synergies across the group Potential synergies: R$ 230 – R$ 330 million annually within the Process initiated next 5 years. (Mar 13th) Joint value creation Capture of synergies to be guaranteed by 6 Seara Foods Committees 1 Operational Excellence &
Slide 16: Seara Foods fosters accountability 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 17: Seara Foods: Seara Brazil - Key Takeaways
Seara Foods: Seara Brazil - 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 18: Seara Foods: Seara Brazil
Seara Foods: Seara Brazil 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 •
Slide 19: Seara Brazil: Wider distribution and customer base
Seara Foods: Seara Brazil 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 or
Slide 20: Seara Foods: Seara Brazil - Synergies
Seara Foods: Seara Brazil - 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 Synerg
Slide 21: Seara Foods: Moy Park - Company Overview
Seara Foods: Moy Park - Company Overview Moy Park focuses on large retail chains and food service clients in the European domestic market Moy Park: Geographic Footprint and Capacity Moy Park: Highlights • Operations: Europe • # of Plants: 13 Ballymena Craigavon • # of Employees (Dec/ 2011): 9,316 An
Slide 22: Moy Park: developing new business and international foods
Seara Foods: Moy Park is focused on developing new business and international foods Key priorities • Brand development Licensed • Innovation and new products Brand • Marfrig product sales PRICING • Expand sales Primary Brands Local / International Tertiary Brands - Price and Quality 22
Slide 23: Moy Park - strategic objectives to achieve its full potential
Seara Foods: Moy Park - 5 strategic objectives to achieve its full potential PLAN TO LEAD (2012-16) 1 New Profitability Revenue & Business & & Cash Flows International Market Share Foods Effective High Efficient Performing Safe People & Organisation Teams Profits, performance & people 23 23
Slide 24: Moy Park - strategic objectives (Plan to Lead 2012-16)
Seara Foods: Moy Park - 5 strategic objectives to achieve its full potential PLAN TO LEAD (2012-16) Profits, performance & people Profitability • Drive profitability and cash flows to fund continued and Cash Flows investment and future expansion to deliver Total Shareholder Return Grow Profitable Sa
Slide 25: Seara Foods – Keystone – Company Overview
Seara Foods – Keystone – Company Overview Keystone Foods: Market leader in the U.S. (East Coast), France and in the APMEA A Global Company focused on prepared products and direct distribution to Food Service Chains Capacity Main Brand Chicken (1) 600,000 Processed Products (2) 50,337 (1) Capacity
Slide 26: Keystone: key drivers of strategy
Seara Foods: Keystone - 6 key drivers of Keystone’s strategy • 1 Sale of distribution business - Singular focus on protein • 2 Food service expertise + cost structure driven by McDonald’s • 3 Global growth of protein consumption… +5% - Accelerating due to China • 4 Value orientation of key costumers
Slide 27: Keystone - Opportunity in China
Seara Foods: Keystone - Opportunity in China Asia is the main growth driver in the global meat market Per Capita Income (USD/year) 20,000(f) 8,500(f) 3,000 350 1,000 1990 2000 2008 2020 2030 Source: FAO, FAPRI, OECD, USDA • Population growth, changes in nutritional habits and Production Plants incre
Slide 28: Financial and Operating Highlights
Financial and Operating Highlights 28
Slide 29: 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 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$746.1 million, reflecting non-
Slide 30: Net Operating Revenue Breakdown - 2011
Net Operating Revenue Breakdown - 2011 Revenue Breakdown per Product (R$ 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: 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 35: 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