Mbrf Global Foods Company S.a. · BMFBOVESPA:MBRF3
Mbrf Global Foods — Marfrig Global Foods — Q1 2014 Earnings Presentation
39 slides from Mbrf Global Foods's earnings presentation, May 2014
Slide 1: 1Q14 Earnings
FOCUS TO WIN 1Q14 Earnings 1 Focus to Win
Slide 2: Financial Targets | Consolidated
Financial Targets |Consolidated 2014 % 1Q14 Target Range Achieved Revenues (1) 4.8 21.0 – 23.0 23% - 21% R$ billion EBITDA Margin 8.4 7.5 – 8.5 112% - 99% % CAPEX 143 600 24% R$ million Free Cash Flow to Breakeven Shareholders (2) 16 to 100 R$ million Notes: (1) 2014 target range revenues stated i
Slide 3: Analysts Estimates
Analysts Estimates Broker Revenues EBITDA EBITDA (R$ million) (R$ million) Margin (%) BOFA MERRILL LYNCH 5,171 419 8.1% BRADESCO 4,857 394 8.1% DEUTSCHE 4,854 406 8.4% JP MORGAN 4,793 400 8.3% ITAÚ 4,762 387 8.1% CONSENSUS 4,887 401 8.2% Marfrig 1Q14 4,788 403 8.4% Change -2.0% 0.5% + 20 b.p. Source
Slide 4: 1Q14 Highlights
1Q14 Highlights Solid performance across all businesses - FOCUS TO WIN - Marfrig showing consistency of improved operational performance for a third consecutive quarter. We are pleased to deliver a critical milestone: FREE CASH FLOW (after Capex and Interest Expense). Working Capital Managemen
Slide 5: 1Q14 Highlights
1Q14 Highlights Performance of Business Units The international operations recorded one of the best first quarters in the Group’s recent history: Moy Park recorded the highest first-quarter EBITDA margin of recent years, explained by strong growth in added value convenience products in the UK, o
Slide 6: Strategy | Business Transformation
Strategy | Business Transformation Who we were Where we are headed What have we done so far Strong customer focus but Destination channels are being Strong customer focus keeping a tight grip on margins optimized Focus on profitable growth Significant margin expansion in Rapid growth and
Slide 7: Financial Performance | Consolidated
Financial Performance | Consolidated Net Revenue (R$ million) + 9,4% 4.944 4.978 Growth vs. 1Q13: 4.788 4.455 4.375 Keystone: + 14.7% Moy Park: + 27.3% Marfrig Beef: - 2.3% 1Q13 2Q13 3Q13 4Q13 1Q14 7 Focus to Win
Slide 8: Financial Performance | Consolidated
Financial Performance | Consolidated Gross Profit & Gross Margin Breakdown by Business (R$ million and %) (%) 13.1% 13.3% 12.9% 11.1% 11.9% 1Q13 1Q14 660 619 68% 59% 23% 17% 571 586 493 16% MOY PARK KEYSTONE 18% MARFRIG 1Q13 2Q13 3Q13 4Q13 1Q14 BEEF Gross Profit growth at Keystone of 23% in relati
Slide 9: Financial Performance | Consolidated
Financial Performance | Consolidated SG&A & SG&A/Net Revenue Breakdown by Business (R$ million and %) (%) 7.4% 7.4% 7.5% 7.5% 6.9% 1Q13 1Q14 373 357 60% 57% 342 24% 31% 322 331 16% MOY PARK KEYSTONE 12% MARFRIG 1Q13 2Q13 3Q13 4Q13 1Q14 BEEF SG&A expenses as a ratio of net revenue increased 10 bps
Slide 10: Financial Performance | Consolidated
Financial Performance | Consolidated Adjusted EBITDA & Margin Breakdown by Business (R$ million and %) (%) 8.4% 8.5% 8.4% 7.6% 1Q13 1Q14 422 6.3% 403 369 375 61% 17% 49% 24% 280 22% MOY PARK KEYSTONE 28% MARFRIG 1Q13 2Q13 3Q13 4Q13 1Q14 BEEF Adjusted EBITDA Margin of 8.4%, near to the top of the F
Slide 11: Liquidity & Debt | Consolidated
Liquidity & Debt | Consolidated Net Debt - 4Q13 x 1Q14 (R$ million) 7,128 249 6,862 143 (234) (15) (408) Net Debt Cash Flow Capex Accrued Exchange Other Net Debt 4Q13 before Capex Interest Rate Changes 1Q14 in Debt & Cash 11 Focus to Win
Slide 12: Liquidity & Debt | Consolidated
Liquidity & Debt | Consolidated Debt (R$ million) Indicators 4Q13 1Q14 Gross Debt/ EBITDA LTM 3.77x 4.07x Long Term Net Debt/ EBITDA LTM 3.00x 3.02x 12,998 Short Term Net Debt/ Adj. EBITDA 11,097 4.22x 4.25x Annualized 9,127 9,255 Net Debt/ Total Assets 0.4x 0.4x 8,940 Cash and Eq. / Short 9,357 1.6
Slide 13: Liquidity & Debt | Consolidated
Liquidity & Debt | Consolidated *Liability Management - Bonds Repurchased (April 2014) Maturity Schedule – 1Q14 2017 – US$ 57.7 million 2021 – US$ 74.7 million (R$ million) Total – US$ 132.4 million 2,393 2,325 2,162 Short Term: R$ 1.3 bn *2,094 1,533 *1,401 864 499 571 452 393 * 695 227 222 66 Cash
Slide 14: Cash Flow | Consolidated
Cash Flow | Consolidated Cash Flow Bridge – 1Q14 (R$ million) 261 408 424 265 (34) (11) (38) (99) (143) (249) 16 (96) Net Income/ Not Trade Inventories Trade Other Taxes Op. Cash Capex Op. Cash Financial Free cash Loss affecting account account Flow before Flow expense flow cash items receivables pa
Slide 15: Cash Flow | Consolidated
Cash Flow | Consolidated Free Cash Flow (after CAPEX & Interests) (R$ million) 1Q13 2Q13 3Q13 4Q13 1Q14 + 16 (135) (295) (628) (932) Positive Free Cash Flow after Interest and Capex, reaching R$16 million in 1Q14. 15 Focus to Win
Slide 16: Keystone
KEYSTONE 16 Focus to Win
Slide 17: Keystone | Key Strategic Goals
Keystone | Key Strategic Goals 1 Poultry is the main focus for growth 2 Key Accounts growth Geographic 3 expansion to secure additional processing capabilities 4 Grow and diversify beef business 17 Focus to Win
Slide 18: Poultry is the Main Focus for Growth
Poultry is the Main Focus for Growth Chicken represents 79% of Keystone’s U.S. net sales Chicken is Leading Protein Consumption Chicken QSRs are Among the Fastest Growing U.S. Per Capita Consumption U.S. Systemwide Sales – Chicken QSRs (pounds) ($Bn) 100 6 90 Chicken 5 CAGR: (1.0%) 80 70 4 60 Beef 5
Slide 19: Key Accounts Growth
Key Accounts Growth Strong reputation with a diverse and high quality customer base Attractive Growth in Key Account Sales ($MM) 475 419 16.8% 73 CAGR 327 57 264 281 54 39 49 15.6% 362 402 CAGR 225 232 273 2009 2010 2011 2012 2013 U.S. APMEA Select Key Accounts 19 Focus to Win
Slide 20: Geographic Expansion to Secure Additional Processing Capabilities
Geographic Expansion to Secure Additional Processing Capabilities Keystone supplies the rapidly growing QSR industry in APMEA APMEA Overview: 4,000+ restaurants served; Facilities: 6 further processing plants; 1 primary processing plant Growth Across All Markets APMEA Growth History (Volume) (%), by
Slide 21: Keystone 1Q14 Highlights
Keystone 1Q14 Highlights Net Revenue Adjusted EBITDA & Margin (R$ million) +15% (R$ million and %) 8.0% 6.8% 6.9% 1,483 6.4% 1,390 1,391 1,213 1,286 5.3% 111 95 96 82 68 1Q13 2Q13 3Q13 4Q13 1Q14 1Q13 2Q13 3Q13 4Q13 1Q14 Net revenue grew 15% compared to 1Q13, driven by the positive effect of exchan
Slide 22: Moy Park
MOY PARK 22 Focus to Win
Slide 23: Moy Park | Key Strategic Goals
Moy Park | Key Strategic Goals Grow core UK & Ireland retail fresh 1 poultry and convenience food sales ahead of the Continue expansion of market multi protein retail sales 2 in markets across UK, Ireland and Continental Europe Boost presence in the food service 3 distribution channel in the UK, Ire
Slide 24: Key Strengths and Investment
Key Strengths and Investment Positioned in the attractive UK ... Moy Park is a leading player The company enjoys strong 1 poultry market… 2 in both Fresh Poultry and Convenience Food 3 relationships with UK and European retailers and QSR operators… Most consumed animal protein in the #1 producer
Slide 25: Key Strengths and Investment
Key Strengths and Investment …on the back of an efficient 5 ...underpinned by a strong Clear strategy of organic 4 management team with proven track-record growth with multiple levers for further upside… 6 and well-invested production base Track record: 14% sales CAGR integrated production platf
Slide 26: Boost Presence in the Food Service Distribution Channel in the UK, Ireland and Continental Europe
Boost Presence in the Food Service Distribution Channel in the UK, Ireland and Continental Europe French Fast Food Market France and UK Largest QSR Operator (€bn) (Number of stores 2012) Store 3% 10% 3% (1)% (3)% 3% 13% 12,1 12,8 Growth¹ 11,5 9,6 10,2 10,8 2.646 8,9 9,3 7,9 8,5 7,3 1.430 07A 08A 09A
Slide 27: Solid Track Record
Solid Track Record Leading Producer of Poultry in the UK; Undisputed #1 in Fast-Growing Value-Add Categories Sales Average Bird Kill per Week YoY (£ million) Growth 1.2% 8.8% (% share) #1 Producer of organic and free range chicken 34% 1,395 1,282 27% 1,267 > 2.5 x 11% 10% 5% 2011 2012 2013 2 Sisters
Slide 28: Moy Park 1Q14 Highlights
Moy Park 1Q14 Highlights Net Revenue +27% Adjusted EBITDA & Margin (R$ million) (R$ million and %) 1,332 1,321 7.6% 7.2% 1,222 5.9% 6.4% 5.9% 1,132 101 1,038 95 78 61 66 1Q13 2Q13 3Q13 4Q13 1Q14 1Q13 2Q13 3Q13 4Q13 1Q14 Sales revenue growth driven by the positive effect of exchange variation in th
Slide 29: Marfrig Beef
MARFRIG BEEF 29 Focus to Win
Slide 30: Marfrig Beef | Key Strategic Goals
Marfrig Beef|Key Strategic Goals Improve cash 1 conversion – drive efficiencies and asset optimization Top line profitable 2 growth – focus on strategic distribution channels Leverage our beef sourcing potential in 3 South America to increase sales to US, Europe and Asia Grow in the 4 value added pr
Slide 31: Marfrig Beef 1Q14 Highlights
Marfrig Beef 1Q14 Highlights - 2% Net Revenue Adjusted EBITDA & Margin (R$ million) (R$ million and %) 2,240 2,256 10.6% 2,124 10.0% 2,038 2,075 9.5% 9.0% 225 7.1% 226 202 197 145 1Q13 2Q13 3Q13 4Q13 1Q14 1Q13 2Q13 3Q13 4Q13 1Q14 Net revenue decrease of 2%, explained by the lower production and sa
Slide 32: Bonds and Equity
BONDS AND EQUITY 32 Focus to Win
Slide 33: Bond Performance | 2014
Bond Performance | 2014 110 2018 108 2017 6.9% 8.5% 107 108 106 106 105 104 104 103 102 102 0.3% 0.3% 101 100 100 99 98 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 117 111 2020 9.8% 115 2021 14.7% 109 113 111 107 109 105 107 103 2.1% 105 3.2% 103 101 101 99 99 Dec-13 Jan-14
Slide 34: Share Price Performance | 2014
Share Price Performance |2014 130 120 13.8% 110 2.9% 100 -1.5% 90 80 70 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 MRFG3 Ibovespa Peers Source: BM&Fbovespa Until May 2nd,2014 * Peers: based on average of JBS, BRF and Minerva 34 Focus to Win
Slide 35: Final Remarks
Final Remarks General This quarter is particularly important as we deliver a critical milestone - Free Cash Flow. Despite the seasonality aspect of this quarter (first quarters are often weaker), 1st quarter reaffirms (in line with the last two quarters) our strategic goals: margin expansion and
Slide 36: Final Remarks
Final Remarks Keystone Our more recent focus on growing Key Accounts business is yielding good results. We will continue to focus on and put additional resources on accelerating our growth in APMEA. We are close to finalizing a joint venture in Indonesia, and are moving quickly to establish a lo
Slide 37: Final Remarks
Final Remarks Financials The performance of our bonds and more recently our share price, give us confidence that we are on the right track. During 2014, short term working capital lines have been re-priced at lower levels – in most cases 1% to 2% lower than the average cost during 13. The meager
Slide 38: Disclaimer
Disclaimer This material is a presentation of general information about Marfrig This presentation includes forward-looking statements. Such Global Foods S.A. and its consolidated subsidiaries (jointly the statements do not constitute historical fact and reflect the beliefs “Corporation”) on the date
Slide 39: IR Contacts
IR Contacts Address Telephone E-mail Website +55 (11) @ Avenida Chedid Jafet, 3792-8650 222 - Bloco A – 5º andar 3792-8600 ri@marfrig.com.br www.marfrig.com.br/ri 39 Focus to Win