Marfrig Global Foods March 2016
Disclaimer This material is a presentation of general information about Marfrig Global This presentation includes forward-looking statements. Such statements do Foods S.A. and its consolidated subsidiaries (jointly the “Corporation”) on the not constitute historical fact and reflect the beliefs and expectations of the date hereof. The information is presented in summary form and does not Corporation’s management. The words “anticipates,” “hopes,” “expects,” purport to be complete. “estimates,” “intends,” “projects,” “plans,” “predicts,” “projects,” “aims” and other similar expressions are used to identify such statements. No representation or warranty, either expressed or implied, is made regarding the accuracy or scope of the information herein. Neither the Company nor any Although the Corporation believes that the expectations and assumptions of its affiliated companies, consultants or representatives undertake any reflected by these forward-looking statements are reasonable and based on responsibility for any losses or damages arising from any of the information the information currently available to its management, it cannot guarantee presented or contained in this presentation. The information contained in this results or future events. Such forward-looking statements should be presentation is up to date as of December 31, 2015, and, unless stated considered with caution, since actual results may differ materially from those otherwise, is subject to change without prior notice. Neither the Corporation expressed or implied by such statements. Securities are prohibited from being nor any of its affiliated companies, consultants or representatives have signed offered or sold in the United States unless they are registered or exempt from any commitment to update such information after the date hereof. This registration in accordance with the U.S. Securities Act of 1933, as amended presentation should not be construed as a legal, tax or investment (“Securities Act”) . Any future offering of securities must be made exclusively recommendation or any other type of advice. through an offering memorandum. This presentation does not constitute an offer, invitation or solicitation to subscribe or acquire any securities, and no The data contained herein were obtained from various external sources and part of this presentation nor any information or statement contained herein the Corporation has not verified said data through any independent source. should be used as the basis for or considered in connection with any contract Therefore, the Corporation makes no warranties as to the accuracy or or commitment of any nature. Any decision to buy securities in any offering completeness of such data, which involve risks and uncertainties and are conducted by the Corporation should be based solely on the information subject to change based on various factors. contained in the offering documents, which may be published or distributed opportunely in connection with any security offering conducted by the Company, depending on the case. 2
Agenda Marfrig Overview Business Units: Differentials and Strategy Keystone Foods Marfrig Beef Global scenario 4Q15 Financials Why Marfrig? 3
Marfrig Track Record Marfrig IPO “Novo Mercado” Diversified geographic Major Acquisitions Optimization of organizational presence in animal structure without loosing Moy Park Seara Keystone protein, serving the global footprint retail and food service channels 2007 2008 2009 2010 2011 2012 2013 2014 2015 Growth based on acquisitions International footprint Seara Moy Park High Leverage Sale Sale #3 global “Focus to Win” One of the beef “Productivity agenda” world’s producer Operational improvements at BU’s largest and one of Liability management and debt suppliers of South processed reduction America’s food to largest lamb food service suppliers 4
Strategic Actions FOCUS TO WIN LEVERAGE Continuous operational GREATER VALUE TO VALUE Adjusting the capital Profitable growth and improvement and structure and reducing global leadership in increased operating SHAREHOLDERS borrowing costs foodservice cash flow • Closing of Moy Park • Prioritizing organic • Searching for sale growth productivity + opportunities at synergies • Implementing Keystone ongoing Liability • Streamlining Beef ACTIONS Management • Consolidating Brazil production operating units improvements at Marfrig Beef • Improving Brazil sales mix • Selling non core assets 5
Marfrig at a Glance 45 11 R$ billion* Presence in Serving global retail commercial Market Cap: 3.2 countries in the and food chains production and countries 100 Americas, Europe, Asia in close to distribution Enterprise Value: 10.4 and Oceania units Marfrig’s strategy is to continue growing globally in value- added protein products, increasing its focus on the food service segment, and taking advantage of its highly competitive and geographically diversified basis to supply beef from Production Plants South America Distribution Centers Commercial Units 6 * As of February 25, 2016
Corporate Profile 23.7 Net Revenue (1) (R$ billion) 21.9 18,9 18.8 15.9 15,2 9.6 6.2 3.3 2.1 1.3 1.4 1.0 * * 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Note: (1) historical figures and guidance for 2015 include continued and discontinued operations. (*) figures excludes discontinued operations (Moy Park, Argentina, Marfood e MFG Agropecuária) Continued Operations Revenue Breakdown – 2015 % by Business % by Currency 18% 21% 41% 48% 60% 11% BRL Marfrig Beef Brazil USD Marfrig Beef Int'l 7 Others Keystone
Global Scenario Highlights
Global Beef Growth Beef consumption growth is expected to be driven by emerging markets, especially in Asia and Middle East, where beef demand should remain robust and is expected to be supported by strong growth in imports China has become a relevant beef consumer, going from 1 million tons/year in 1990 to more than 7 million tons/year in 2015, representing 13% of world consumption, and growth is expected to continue Selected Countries Beef Imports Selected Countries Beef Consumption Thousand Tons Million tons/year 16% of world total 10 8.9 700 CAGR 1990-2014: 7.0% 600 8 6 417 68% 6% 285 270 270 38% 4 250 235 205 6% 165 170 160 22% 1.7 145 125 105 2 0 China Egypt Iran Malaysia Saudi Arabia 1990 1993 1996 1999 2002 2005 2008 2011 2014 2014 2015E 2016E China Egypt Iran Malaysia Saudi Arabia 9 Source: USDA
South America Beef Export Platform Brazil, Argentina and Uruguay together form the world's largest beef production region with the greatest growth potential Extensive production with strategic use of feedlot operations Excellent sanitary conditions with tracking Abundance of land, water and labor Management expertise, well adapted breeds and growing use of genetic enhancement Australia beef cattle herd reducing given drought issues US is a net importer of beef Beef Cattle Herd Beef Production Extraction Rate (million heads) (million tons) (slaughter/herd/year) Argentina Australia Brazil 36% Argentina Australia Brazil 34% US Uruguay US Uruguay 15 250 24% 200 19% 18% 10 150 100 5 50 0 0 Australia USA Argentina Brazil Uruguay 10 1990 1995 2000 2005 2010 2015E 1990 1995 2000 2005 2010 2015E Source: FAO and FAS/USDA
Global Poultry Growth Poultry is the fastest growing protein in developed and emerging markets - Growth in developing markets is expected to be 2x the growth in developed markets Strong consumer demand due to poultry’s lean / low fat profile, adaptability / versatility in preparation and relative cost advantage versus other proteins Poultry Meat Consumption U.S. Chicken Consumption 2014-2023 CAGR % Million Tons 17 15.2 15 2.7% Developing 13 11 World 2.3% 9 7.7 7 Developed 1.5% 5 1990 1995 2000 2005 2010 2011 2012 2013 2014 2015E 2016E 11 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% Source: USDA, National Chicken Council and OECD-FAO Agricultural Outlook 2014-2023 via Watt Global Media
Global QSR Industry The Global Fast Food market is expected to grow from a US$635 billion market in 2013 to US$860 billion market in 2018, a 6.2% CAGR North America is the largest market in the industry and is projected to remain the largest by 2018 Asia-Pacific share of the global market is set to rival North America in size by 2018 Global Fast Food Market Global Fast Food Market 2013 – 2018 CAGR % 2018E US$860bn Australasia 1.5% 4% North America Western Europe 4.4% Latin America North America 4.9% 35% Eastern Europe 34% Global 6.2% Western Europe Latin America 7.2% Australasia Asia-Pacific 7.4% Asia Pacific 9% 2% Eastern Europe 10.3% Middle East & Africa 12% 3% Middle East & Africa 11.6% 12 Source: Euromonitor International, November 2014
Keystone Foods
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