Marfrig Global Foods Novem ber 2 0 1 6
Disclaim er 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 September 30, 2016, 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 Beef Global scenario 3Q16 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 One of the “Focus to Win” One of the world’s top “Productivity agenda” world’s beef Operational improvements at BU’s largest producers Liability management and debt suppliers of and one of reduction processed South food to America’s food service largest lamb 4 suppliers
Strategic Actions FOCUS TO W I N LEVERAGE GREATER VALUE TO Continuous operational VALUE Adjusting the capital Profitable grow th and im provem ent and structure and reducing global leadership in increased operating SHAREHOLDERS borrow ing costs foodservice cash flow • Closing of Moy Park • Prioritizing organic • Searching for sale grow th productivity + opportunities at synergies • I m plem enting Keystone ongoing Liability • Stream lining Beef ACTI ONS Managem ent • Consolidating Brazil production operating units im provem ents at Beef • I m proving Brazil sales m ix • Selling non core assets 5
Marfrig at a glance 47 12 R$ billion* Presence in Serving global retail commercial, Market Cap: 3.5 countries in the and food chains production and countries 100 Americas, Europe, Asia in close to distribution Enterprise Value: 9.5 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 6 Commercial Units * As of November, 2016
Corporate Profile Net Revenue ( 1) 23.7 ( R$ billion) 21.9 18.8 18.9 15.9 15.2 14.3 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 9M16 Notes: (1) historical figures include continued and discontinued operations. Revenue Breakdow n – 9 M1 6 % by Business % by Product % by Currency 7% 15% 21% 50% 53% 37% 56% 35% 26% Keystone USA & APMEA Processed US$ Beef Brazil Fresh Beef Real 7 Beef International Other Other
Global Scenario Highlights
Global Beef Grow th 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 I m ports Selected Countries Beef Consum ption Thousand Tons Million tons/ year 16% of world total 950 9.5 10 CAGR 1990-2015: 6.9% 825 8 663 6 128% 57% 7% 21% 20% 417 4 255 245 240 240 237 1.7 213 210 205 178 178 180 165 168 155 148 2 105 0 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017E China Chile Iran Malaysia Saudi Arabia 2014 2015 2016E 2017E China Egypt Iran Malaysia Saudi Arabia 9 Source: USDA (updated October 25, 2016)
South Am erica 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 Region is already a major global beef supplier, mainly Brazil and Uruguay Beef Cattle Herd Beef Production Beef Exports (million heads) (million tons) (million tons) Argentina Australia Brazil Argentina Australia Brazil Argentina Australia Brazil US Uruguay US Uruguay US Uruguay 250 15 2.0 200 1.5 10 150 1.0 100 5 0.5 50 0 0 0.0 1992 1997 2002 2007 2012 2017E 1992 1997 2002 2007 2012 2017E 1992 1997 2002 2007 2012 2017E 10 Source: USDA (updated October 25, 2016)
Global Poultry Grow th 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 Consum ption U.S. Chicken Consum ption 2014-2023 CAGR % Million Tons 17 15.7 15 Developing 2.7% 13 11 World 2.3% 9 7.7 7 Developed 1.5% 5 1990 1995 2000 2005 2010 2011 2012 2013 2014 2015 2016E 2017E 11 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% Source: USDA (updated October 25, 2016), National Chicken Council and OECD-FAO Agricultural Outlook 2014-2023 via Watt Global Media
Global QSR I ndustry 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$860 billion) Australasia 1 .5 % 4% North Am erica Western Europe 4 .4 % Lat in Am erica North America 4 .9 % 35% East ern Europe 34% Global 6 .2 % Western Europe Latin America 7 .2 % Australasia Asia-Pacific 7 .4 % Asia Pacific 9% 2% Eastern Europe 1 0 .3 % Middle East & Africa 12% 3% Middle East & Africa 1 1 .6 % 12 Source: Euromonitor International, November 2014
Keystone Foods
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