Syn Prop e Tech SA · BMFBOVESPA:SYNE3
Syn Prop e Tech SA — BRF — Q2 2019 Earnings Presentation
25 slides from Syn Prop e Tech SA's earnings presentation, Aug 9, 2019
Slide 1: 2Q19 Earnings
2Q19 Earnings August 9, 2019 1
Slide 2: Disclaimer
Disclaimer This presentation may contain statements that express BRF S.A. (“BRF”) protein and related markets; (iv) increasing competition from new management’s expectations, beliefs and assumptions about future entrants to the Brazilian and international markets; (v) ability to keep events or resul
Slide 3: Opening Remarks
OPENING REMARKS LORIVAL LUZ GLOBAL CEO 3
Slide 4: Ongoing Profitability Recovery
Ongoing Profitability Recovery 2Q19 results reflect adjustments initiated in 2Q18 and the execution of our Strategic Plan » Net Revenue up 18% y-o-y and Volumes up 0,7% y-o-y » Ongoing increase of gross margin, reaching 25.1% in 2Q19 » Adjusted EBITDA of ~R$1.5 billion and Adjusted EBITDA margin of
Slide 5: Ongoing Profitability Recovery
Ongoing Profitability Recovery 2Q19 results reflect adjustments initiated in 2Q18 and the execution of our Strategic Plan » Free cash generation of ~R$1.4 billion, including funds from divestments » Strong cash position of R$7 billion » Drop in net leverage to 3.74x » Revision of net leverage (Net D
Slide 6: Disciplined execution of the Strategic Plan
Disciplined execution of the Strategic Plan Strengthening of competences to maximize future results » 23% y-o-y evolution in marketing investments » Product launches including Mini Sausages Perdigão, Qualy Vita, Breaded Chicken Burger, among others, using innovation as growth leverage » Intensifying
Slide 7: Discipline execution of Strategic Plan
Discipline execution of Strategic Plan Ongoing turnaround path Adjusted EBITDA* (R$ million) Gross Profit (R$ million) +334% +107% Net Revenue +252% 18,6% (R$ million) 15% +38% 10,2% Ex-ICMS 1.547 Volumes +18% 25,1% 5,0% (Thousand, Tons) 20,6% 328 +13% 2.092 8,4% +1% 8.338 1.517 1.219 748 Ex-ICMS 35
Slide 8: On a positive track to recover margins
On a positive track to recover margins BRF Management Model was key to improving operating performance Gross Margin Adjusted EBITDA Margin 18,6% 25,1% 23,0% 14,6% 19,6% 18,9% 20,6% 14,6% 17,0% 9,7% 10,2% 10,2% 14,0% 7,4% 7,6% 12,5% 8,4% 5,0% 7,4% 2,295 328 1,547 328 14.098 15.697 7.802 8.289 8.338 8
Slide 9: Leverage & Debt Profile
Leverage & Debt Profile Financial deleveraging while maintaining a strong cash position Financial Leverage 2Q19 (R$ million) Debt Schedule 2Q19 | (R$ million) 6,74x 2 5,69x 5,12x 1 5,64x 1 3,74x 15.610 15.498 2.206 1.260 8.734 15.696 16.323 6.999 13.404 14.238 13.900 4.543 3.118 3.139 1.247 2Q18 3Q1
Slide 10: Industry Overview
INDUSTRY OVERVIEW 10
Slide 11: Grains & Proteins Prices
Grains & Proteins Prices Grain price inflation already showing downturn signs, benefiting outlook for 1H19 Soybean & Corn Price Whole Chicken and Pork Carcass Price B3 Cepea/ESALQ 55 100 2Q18 2Q19 +11% 2Q18 2Q19 50 90 7,5 7,5 +36% 45 80 6,5 6,5 Whole Chicken (R$/kg) Pork Carcass (R$/kg) Soybean (R$/
Slide 12: African Swine Fever (ASF) impacts
African Swine Fever (ASF) impacts Herd size reduction affecting pork prices in international markets China’s Inventory China’s Reference Price 450 (in million heads) 70 (100 Base = Jul-18) -36% 200 64,2 ∆ since -29% Jul-18: +104p.p. 409,0 -27% ∆ since lowest levels: 400 60 180 +65p.p. +35p.p. 160 +4
Slide 13: Exports to Asia
Exports to Asia Volume and price evolution to Japan and China Chicken Exports to Japan Pork Exports to China (‘000 tons & USD/Ton) (‘000 tons & USD/Ton) 2.393 2.418 2.237 1.953 2.036 1.895 1.906 1.906 1.958 51 50 1.814 37 37 38 35 35 30 25 23 Average Average abr/19 mai/19 jun/19 Average Average abr/
Slide 14: Operating and Financial Performance 2Q19
OPERATING AND FINANCIAL PERFORMANCE 2Q19 SIDNEY MANZARO VICE-PRESIDENT BRAZIL MARKET 14
Slide 15: Brazil Segment
Brazil Segment Profitable growth, aligned to the strategic planning » Net Revenue up +10,8% y-o-y » Ongoing increase in gross margin, reaching 24% in 2Q19, due to price gains, mix and operating efficiency » Adjusted EBITDA ex-ICMS effects of R$462 million and 11.3% margin, up +153% y-o-y » Evolution
Slide 16: Brazil Segment
Brazil Segment Operating and Commercial Execution on improving track » Growth in the mix of higher added value products; focus on cold cuts and margarines categories » Expansion in the mix of higher added value channel; focus on small retailers and food service » Increased operational efficiency in
Slide 17: Brazil Segment
Brazil Segment Consistent improving results Adjusted EBITDA ex-ICMS (R$ million) Gross Profit (R$ million) +153% Net Revenue +23% (R$ million) +49% 11,3% +11% +17% 9,5% Volumes (Thousand, Tons) 462 +4% 24,0% 374 21,2% 5,0% -4% 17,9% 982 183 836 +2% 4.082 660 3.940 2Q18 1Q19 2Q19 538 3.685 2Q18 1Q19
Slide 18: Brazil Segment
Brazil Segment Ongoing profitability increase Gross Margin Adjusted EBITDA Margin 19,4% 24,0% 22,7% 14,5% 20,8% 21,1% 20,9% 21,2% 17,9% 19,4% 11,7% 9,4% 9,7% 9,5% 11,3% 7,2% 10,4% 5,0% 7,0% 8.022 1,165 7.433 328 790 4.736 4.123 3.940 4.082 556 3.748 3.685 328 226 837 462 535 352 398 330 374 183 1Q18
Slide 19: Operating and Financial Performance 2Q19
OPERATING AND FINANCIAL PERFORMANCE 2Q19 PATRICIO ROHNER VICE-PRESIDENT INTERNATIONAL MARKET 19
Slide 20: International Segment - Consolidated
International Segment - Consolidated Profitable growth facilitated by focus and value-adding products Volume 2Q19 | 505 Thousand Tons Net Revenue Adjusted EBITDA (R$ MM) (Volume 2Q18 | 483 thousand tons) (R$ MM) Adj. EBITDA Margin (%) 17,4% +24.1% 11,7% 5,6% Other +24.8% 3.985 +288.9% regions 693 41
Slide 21: International Segment – Consolidated
International Segment – Consolidated Sales breakdown Volume 2Q19 | 505 Thousand Tons (Volume 2Q18 | 483 Thousand Tons) Per Geography Per Protein Per Product Other 5% FPP Poultry Whole Swine 8% 13% 34% Non-Halal 41% Swine 8% Halal 59% Poultry 87% Poultry Parts 45% 2 21
Slide 22: Halal Market
Halal Market Recovery of our full capacity to serve key markets such as Saudi Arabia coupled with better mix of channels and countries Volume 2Q19 | 298 Thousand Tons Net Revenue Adjusted EBITDA (R$ MM) (Volume 2Q18 | 295 Thousand Ton) (R$ MM) Adj. EBITDA Margin (%) +12.5% +104.0% +15.2% +30.2% 370
Slide 23: International Segment (Non-Halal)
International Segment (Non-Halal) Higher profitability impacted by a significant increase in prices due to ASF as well as a well-executed business strategy Volume 2Q19 | 207 Thousand Tons Net Revenue Adusted EBITDA (R$ MM) (Volume 2Q18 | 188 Thousand Tons) (R$ MM) Adj. EBITDA Margin (%) +46.3% +42.2
Slide 24: Q&A
Q&A 24
Slide 25: Contatos RI
Contatos RI: +55 11 2322 5377 acoes@brf-br.com 25