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1Focus to Win
INSTITUTIONAL
PRESENTATION June.2014
FOCUS TO WIN
2Focus to Win
Why Marfrig
Focus to Win
• Simpler Company
• Positive Cash Flow
• Expanded Margins
Diversification
• Geographically dispersed
• Presence in 16 countries
• Products in more
than 110 countries
Value Focused
Management
• Incentives aligned with
‘14 guidance
• Experienced local
leadership in several
countries
• Split the roles of CEO
and Chairman
Sustainability
• One of the best
companies in animal
welfare by BBFAW
• Signatory of policies in
social and environmental
critical care
• Monitoring system in the
Amazon Biome
Client Focused
Culture
• Strong partnership with
key QSR´s customers
• Capacity to innovate
3Focus to Win
STRATEGIC
OVERVIEW
4Focus to Win
1Q14 breakdownby business
1Q14 breakdownby currency
1Q14 breakdownby product
Who we are | Marfrig at a glance
Net Revenue(R$ bn)
4.4
4.8
1Q13 1Q14
+ 9.4%
28%
29%
43%
MOY PARKKEYSTONEMARFRIG BEEF
44%
25%
20%
12%
USDEURO/POUNDREALOTHER
48%
43%
9%
FURTHER PROCESSED
FRESH
OTHER
One of the world’s
largest providers of
processed food to
major restaurant
chains
FoodService
One of the largest
poultry-based
processed products
suppliers in the UK
and Europe
Retail and Food Service
World’s 3rd largest
beef producer and
one of South
America’s largest
lamb suppliers
Diversified
DiversifiedAnimal
Protein Player
Strong focuson Food Service
Marfrig Group
Main Sales
Channels
Business
Description
5Focus to Win
Non-financial Highlights
Corporate Governance: conclusion of
the transition process to separate the
roles of Chief Executive Officer and
Chairman of the Board of Directors.
Animal Welfare:
Marfrig was recently elected one the
world’s best companies in animal
welfare (source: Business Benchmark on
Farm Animal Welfare, 2013), which
reflects our firm commitment to
sustainability in our business chain.
Marfrig sustainability coordinator,
Stavros Platon Tseimazides, was
recognized as a Benchmark
Professional in Animal Welfare by the
BeefPoint magazine at the Animal
Welfare BeefSummit.
6Focus to Win
STRATEGIES AND
OBJECTIVES
7Focus to Win
High single digit margins in beef business. Consistent cash generation and stricter cost management
Solid beef business
Who we were
Strong customer focus but keeping a tight grip on margins
Strong customer focus
Rapid growth Focus on profitable growth and margin expansion
Debt financed acquisitions
Accelerated organic growth
Broad based meat company
Easier to connect and to focus
Earnings volatility Earnings stability
Cash consumption Positive free cash flow
Where we are headed What have we
done so far
Uruguay returned to profitability, reduced losses in Argentina
Destination channels are being optimized
Significant margin expansion in both Moy Park and Keystone
Working to finalize JV in Indonesia and in the Middle East (Keystone)
SKU simplification in Beef Brazil, Uruguay makes up 100% ofKeystone China’s South American beef purchases
Results in line over the lastthree quarters
Positive free cash flow in 1Q14
Strategy | Business Transformation
8Focus to Win
Highlights
29% of Marfrig Group sales
One of the world’s leading suppliers
for the food service industry, QSR players
Presence in the US, Asia and Oceania
Leading protein supplier to McDonalds
(60% of Keystone sales in 1Q14)
Employer of over 11,500 people
Keystone | Business Unit Overview
Footprint
Diversified food company, focused on processed meat
products and food service with footprint in US and APMEA
Legend
Slaughter
Processed food
Other
9Focus to Win
Keystone | Business Unit Overview
Geographic Presence
24%
76%
APMEA
US
Geographic Coverage
Production Infrastructure
Sales ChannelsProductsProduction Structure
ProductsSales
Channels
• 13 further processing
plants
• 3 poultry vertical
integration complexes
• 1 primary processing
plant + 1 grain operation
• 1 research &
development facility
• 19 pullet farms + 61
breeder farms + 296
broiler farms
• Focused on food
service channel and
developing retail
channels
• Leading supplier to
McDonald´s
USA: #1 beef, #2
poultry and #2 fish
APMEA: #2 protein
supplier in China, sole
protein supplier to
Malaysia, Thailand
and Korea; #2 in
Australia
• Poultry, beef and fish
processed products
75%
20%5%
Poultry
Beef
Fish
1Q14(%)
1Q14(%)
10Focus to Win
Poultry is the main
focus for growth1Key Accounts
growth2
Geographic
expansion to secure
additional processing
capabilities
3
Grow and diversify
beef business4
Keystone | Key Strategic Goals
11Focus to Win
Poultry is the Main Focus for Growth
0
1
2
3
4
5
6
U.S. Systemwide Sales – Chicken QSRs
($Bn)
0
10
20
30
40
50
60
70
80
90
100
U.S. Per Capita Consumption
(pounds)
Chicken
Fish
Turkey
Pork
Beef
Chicken represents 79% of Keystone’s U.S. net sales
CAGR: (1.0%)
Chicken is Leading Protein Consumption
Source: USDA / National Chicken Council, QSR 50 Report 2012
Chicken QSRs are Among the Fastest Growing
12Focus to Win
Key Accounts Growth
Strong reputation with a diverse and high quality customer base
225 232 273362 402
39 4954
5773
264 281327
419475
2009 2010 2011 2012 2013U.S. APMEA
16.8%
CAGR
15.6%
CAGR
Select
Key
Accounts
Attractive Growth in Key Account Sales
($MM)
13Focus to Win
Geographic Expansion to Secure
Additional Processing CapabilitiesKeystone supplies the rapidly growing QSR industry in APMEA
APMEA Overview: 4,000+ restaurants served; Facilities: 6 further processing plants; 1 primary processing plant
30%
13%12%
12%
11%
8%
6%5%
2%
1% 0%
Japan
Thailand
China
Malaysia
Korea
(%), by End-Market Country 2013
Australia
Singapore
EUOthers
Middle East
Growth Across All Markets
(MM pounds)
0
50
100
150
200
250
300
350
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
109
137
168
196
226239
257
274299
313
APMEA Growth History (Volume)
14Focus to Win
Keystone|Financial Projections
CAGR %
2012-18Revenue
Growth(2)
EBITDA
Margin
7.5 9.0
8.0 9.0
2018 Target range
10.0(2013/2012)
6.4(3)
2013(1)
%
Note:
(1) Growth and margin for full year 2013
(2) Revenues stated in R$, FX rate considered of R$/U$=2.40 in 2014 and flat onwards, no projected inflation
(3) Does not consider non-recurring items
15Focus to Win
LegendSlaughter
Processed food
Other
Moy Park | Business Unit Overview
28% of Marfrig Group sales
One of Europe’s leading poultry companies
Top 20 UK food business and leader in
convenience products
Northern Ireland’s largest company
14 production sites in Northern Ireland,
England, France and Holland
70 years of history
Employer of 12,000 people
HighlightsFootprint
Diversified protein based food company with
presence in poultry, turkey, beef and pork
16Focus to Win
Moy Park | Business Unit Overview
Production Structure
Products
• Poultry, savory, bakery,
pork, agriculture, turkey
and sliced corned beef
Brand Positioning
Premium
Mainstream
Daily
Use
Sales Channels
• Vertical poultry
integration
10 further processing
plants
4 slaughter plants
3 feed plants
7 hatcheries
700 farms
• 235 million chicken heads
per year
• 1.5 million turkey heads
per year
• 0.25 million tons of
processed food per year
1Q14(%)
• Strong presence in retail
and food service:
2012
62%27%
11%
Retail
Fast food / Food Service
Other
1Q14(%)
40%53%
7%
FreshProcessed Poultry/ BeefOthers (Agri + Meat Free)
17Focus to Win
Continue expansion of
multi protein retail sales
in markets across UK,
Ireland and
Continental Europe
2
Boost presence in
the food service
distribution channel
in the UK, Ireland
and Continental
Europe
3
Moy Park | Key Strategic Goals
1
Grow core UK &
Ireland retail fresh
poultry and
convenience food
sales ahead of the
market
4Become Marfrig
global distribution
platform in Europe
18Focus to Win
Key Strengths and Investment
Positioned in the attractive UK poultry market…1
... Moy Park is a leading player in both Fresh Poultry and Convenience Food
2The company enjoys strong relationships with UK and European retailers and QSR operators…
3
Most consumed animal protein in the
UK with 728 kton sold in 2013A
Fastest growing animal protein and the
most affordable (£1,300 per ton vs.
£4,420 for Beef)
Preference for local products: 8 out of
10 shoppers would buy British when
available
#1 producer of fresh coated and
ready-to-eat poultry
It is the second largest producer in the
UK
Moy Park has brands covering the full
market
Poultry has higher growth
UK poultry production
Fresh coated poultry
Ready-to-eat poultry
#2
#1
#1
(2012A–17E CAGR in consumption volume) Retail Food Service
Larger market share in “winning”
categories and formats
Supplier to the major UK and French
QSR operators
Fast growing QSR market in France and
UK with 13-17E CAGR of 5.6% and 1.3%
Customized product solutions with Moy
Park personnel located on site of largest
clients’ facilities
1.62% 1.60%
0.13% 0.09%
Poultry Fish Pork Beef and
Veal
19Focus to WinSource: Euromonitor
UK convenience
Agri-fresh
EU convenience
Breeding Grounds
Geographical location of breeding
farms in West-Europe ensures for a
“natural” biosecurity barrier
Track record: 14% sales CAGR
since 2008 / +2.7% EBITDA margin
uplift since 2011
Strong operating cash flows
generated and re-invested to
drive future growth
Combined, the team has over
100 years of food industry
knowledge
InitiativesRelevance for
investors
Leverage poultry and beef footprint in Europe acrossUK franchise
2. Increase Presence inFood Service
Explore an increasing sales channel that will lead to sustainable growth
Tap significant opportunity with low risk and investment
1. Grow Core Business
Grow core retailfresh poultry and conveniencefood sales
3. Innovation and ChannelDevelopment
Outpace competition and increase profitability
Deliver leading consumer insights to customersDrive growth via new channels
Key Strengths and Investment
...underpinned by a strong management team with proven track-record
4Clear strategy of organic growth with multiple levers for further upside…
5…on the back of an efficient and well-invested production base6
integrated production platform
including unique poultry rearing
ensuring integrity of supply
Production footprint in Ireland
acting as natural bio-security barrier
£180m invested over the last 5 years
20Focus to Win
Boost Presence in the Food Service Distribution
Channel in the UK, Ireland and Continental
Europe
9,6
2012A
French Fast Food Market Key considerations
Market value (€bn)
Moy Park supplies all large French and UK Quick Service Restaurant (QSR) operators
Source: Euromonitor
The French fast food market has a size of c €10bn and is expected to grow at a 2.3% CAGR to 2018
Moy Park is well positioned to benefit from future market growth:
28% of Moy Park’s LTM revenues to Foodservice companies
Acquisition of Keystone European assets provides a strong platform and the expertise of a global food supplier
The Group’s strategy is to leverage long-standing relationships with major QSR players in order to develop a distribution platform in the UK and across Continental Europe
The UK Fast Food market has a size of c €18bn and is expected to grow at a 1.3% CAGR to 2017
We believe that Moy Park can benefit from such growth by utilising our poultry production platform in the UK and our multi-product foodservice expertise in Continental Europe
UK Fast Food Market
Market growth
17,6
2012A
Market value (€bn) Market growth
2013 2018
2.3%
2012 2017
1.3%
21Focus to Win
2nd Largest Overall Poultry Producer in the UK
and More Than Twice the Size of the Number 3
25%
B
C
D
E
A
% of total UK average bird processing per week
Market Share of Total UK Poultry Production
Source: DEFRA UK broiler slaughter, rolling 12 months to December 2013, averaged per week
Market shares are Company estimates based on third-party industry sources
Total: 17.4m birds per week
Key observations
#2 UK poultry producer provides scale and efficiency benefits which enhance Moy Park’s competitive position
Integrated supply of British-produced poultry into the convenience retail and foodservice markets provides a competitive advantage as well as a driver for growth, as end consumers value British-sourced meat
Our market share in the sale of fresh poultry to retailers offers attractive opportunities for future growth
22Focus to Win
Leading Market Shares in the Highest
Value, Growing Retail Segments in Poultry
UK Market Growth of Chilled Ready-to-Eat Poultry UK Market Share Chilled Ready-to-Eat Poultry
UK Market Growth of Chilled Fresh Coated Poultry UK Market Share Chilled Fresh Coated Poultry
Source: Kantar Worldpanel, year-end April
Historical strong growth in core categories in which Moy Park is twice as large as the second largest competitor
UK market value (£m)
52%
Others
A
46%
Others
A
UK market value (£m)
Source: Company estimates based on third-party sources, for the
year ended December 2013
225254
281301
325
10A 11A 12A 13A 14A
237 232256
277 287
10A 11A 12A 13A 14A
23Focus to Win
Moy Park | Financial Projections
%
CAGR %
2012-18Revenue
Growth(2)
EBITDA
Margin
8.5 10.0
7.5 8.5
2018 Target Range
17.9(2013/2012)
6.5(3)
2013(1)
Note:
(1) Growth and margin for full year 2013
(2) Revenues stated in R$, FX rate considered of R$/£=3.80 in 2014 and flat onwards, no projected inflation
(3) Does not consider non-recurring items
24Focus to Win
Marfrig Beef | Business Unit Overview
Highlights
43% of Marfrig Group sales
(c.34% in Brazil)
Focus on beef and lamb
Products sold in the local and
international markets
31 production sites in Brazil, Argentina,
Uruguay and Chile
2nd largest beef operation in Brazil
Leader in Uruguay slaughter
#1 Chilean meat importer
+21,000 employees
Legend:
Slaughter
Processed food
Other
25Focus to Win
Marfrig Beef| Business Unit Overview
Beef and lamb, fresh and
processed
Sale of potatoes,
vegetables, fish and other
imported foods
Uruguay: 62% export, 38%
domestic
Argentina: 86% export, 14%
domestic
Chile: biggest supplier of
local catering companies
43%
33%
24%
20 plants in Brazil
(16 slaughtering,
4 processing)
3 plants in Argentina
(3 slaughtering)
5 plants in Uruguay
(slaughtering and
processing)
2 plants in Chile
(slaughtering)
Production Structure
ProductsBrand
PositioningSales
Channels
Super
Premium
Premium
Daily
Use
Processed
Beef
Export
Domestic Market
Food Service
In Natura
Processed
Lamb, leather and other
1Q14(% Brazil)
2013(%)
74%17%
9%
26Focus to Win
Improve cash
conversion – drive
efficiencies and asset
optimization
1Top line profitable
growth – focus on
strategic distribution
channels
2
Leverage our beef
sourcing potential in
South America to
increase sales to US,
Europe and Asia
3
Marfrig Beef|Key Strategic Goals
Grow in the
value added
product segment4
27Focus to Win
Marfrig Beef |Financial Projections
%
CAGR %
2012-18
Revenue
Growth(2)
EBITDA
Margin
7.0 9.0
8.0 10.0
Faixa Alvo 2018
X.X%(2013E/2012A)
X.X
2013E
13.5(2013/2012)
9.2(3)
2013(1)
7.0 9.0
8.0 10.0
2018 Target Range
Note:
(1) Growth and margin for full year 2013
(2) Revenues stated in R$, FX rate considered of R$/U$=2.40 in 2014 and flat onwards, no projected inflation
(3) Does not consider gains from asset sales (Zenda) and non-recurring items
28Focus to Win
1Q14
FINANCIAL
PERFORMANCE
29Focus to Win
EBITDAMargin
Notes:
(1) 2014 target range revenues stated in BRL based on FX rates of R$/U$=2.40 and R$/₤=3.80.
(2) Operating cash flow after capex, working capital changes, interest expenses and income tax.
Revenues (1) 21.0 – 23.0
2014
Target Range
7.5 – 8.5
%
Achieved
%
R$ billion
Financial Targets |Consolidated
1Q14
23% - 21%
112% - 99%
4.8
8.4
CAPEX
Breakeven
to 100
R$ million
Free Cash Flow toShareholders (2)
16
600 24%143
R$ million
30Focus to Win
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 Management: another quarter where we signal our attention and
focus to this critical lever. We continue to improve in many fronts (inventory
management in the fourth quarter) but this quarter, lower trade receivables,
decreasing our DSO1 from 36 days to 31 days – helped us to manage our working
capital.
Hitting the high end of our margin goal despite 1st quarter being seasonally weaker,
as evidenced by revenues.
Most balance sheet ratios reasonably unchanged, with our liquidity and debt
repayment schedule continuing on a very positive trend.
Note:
(1) DSO = Days of Sales Outstanding
31Focus to Win
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,
operating efficiencies and better carcass utilisation.
Keystone was impacted in the US in 1Q14 by one of the most extreme winters in
the country's history, with lower food service consumption and weaker sales and
orders by clients, offset by lower raw material costs. In Asia and the Middle East,
sales and prices benefitted from the increased activity in the food service
segment.
Marfrig Beef was impacted by the drought in the period, and, even though
cattle supply has remained stable, producers have held the supply of finished
cattle. However, this had little impact on margins, due to the effective
management of sales channels and the recovery in the Uruguay operations.
Adjusted EBITDA in 1Q14 was R$403.3 million (up 9.4% from 1Q13), with margin of 8.4%,
in line with 2014 Guidance.
32Focus to Win
Net Revenue(R$ million)
Keystone: + 14.7%
Moy Park: + 27.3%
Marfrig Beef: - 2.3%
Growth vs. 1Q13:
+ 9.4%
Financial Performance | Consolidated
4.3754.455
4.944 4.9784.788
1Q13 2Q13 3Q13 4Q13 1Q14
33Focus to Win
Breakdown by Business(%)
Adjusted EBITDA & Margin(R$ million and %)
1Q13 1Q14
Financial Performance | Consolidated
Adjusted EBITDA Margin of 8.4%, near to the top of the FOCUS TO WIN Guidance.
In relation to 1Q13:
120 bps increase at Keystone to 8.0%.
130 bps increase at Moy Park to 7.2%.
110 bps decrease at Marfrig Beef to 9.5%.
17%
22%
61%
MOY PARK
KEYSTONE
MARFRIGBEEF
369
280
375
422403
8.4%
6.3%
7.6%8.5% 8.4%
1Q13 2Q13 3Q13 4Q13 1Q14
24%
28%
49%
34Focus to Win
Liquidity & Debt | Consolidated
Net Debt - 4Q13 x 1Q14(R$ million)
7,128
6,862 143
249
(408)
(234) (15)
Net Debt4Q13
Cash Flowbefore Capex
Capex AccruedInterest
ExchangeRate Changes
in Debt &Cash
Other Net Debt1Q14
35Focus to Win
Liquidity & Debt | Consolidated
Debt(R$ million)
* Current Ratio = Current Assets / Current Liabilities
** Not included interest paid by mandatory convertible
debentures
Indicators 4Q13 1Q14
Gross Debt/ EBITDA LTM 3.77x 4.07x
Net Debt/ EBITDA LTM 3.00x 3.02x
Net Debt/ Adj. EBITDA
Annualized 4.22x 4.25x
Net Debt/ Total Assets 0.4x 0.4x
Cash and Eq. / Short
Term Debt1.61x 1.85x
Current Ratio * 2.0 2.1
Duration (months) 54 52
Average Cost ** (p.y.) 8.0% 7.9%
Short Term (%) 12.6 % 14.0%
Long Term (%) 87.4% 86.0%
BRL (%) 4.5% 3.8%
Other Currencies(%) 95.5% 96.2%
3,6412,169 1,492 1,123 1,295
6,862
9,357
8,9287,635 7,817 7,960
2,393
12,998
11,097
9,127 8,940 9,255
Gross Debt1Q13
Gross Debt2Q13
Gross Debt3Q13
Gross Debt4Q13
Gross Debt1Q14
Cash andEquivalent
Net Debt1Q14
Long Term
Short Term
36Focus to Win
1,813
503
125 155340
685 582
1,578
2,473
9
1,597
893
Caixa 1T14 2T14 3T14 4T14 2015 2016 2017 2018 2019 2020 2021
Liquidity & Debt | Consolidated
Maturity Schedule – 1Q14(R$ million)
Short Term: R$ 1.1 bn
Maturity Schedule – 4Q13(R$ million)
Cash 1Q14 2Q14 3Q14 4Q14 2015 2016 2017 2018 2019 2020 2021
Short Term: R$ 1.3 bn
*Liability Management - Bonds Repurchased (April 2014)2017 – US$ 74.7 million2021 – US$ 57.7 million
Total – US$ 132.4 million
*2,094
*1,401
* 695
6
2,393
452 227
393 222
499 571
1,533
2,325
6
2,162
864
Cash 2Q14 3Q14 4Q14 1Q15 2015 2016 2017 2018 2019 2020 2021
37Focus to Win
(96)
424
261
(99)(34) (11)
(38)
408
(143)
265
(249) 16
Net Income/Loss
Notaffecting
cash items
Tradeaccount
receivables
Inventories Tradeaccountpayables
Other Taxes Op. CashFlow beforeInvestiments
Capex Op. CashFlow
Financialexpense
Free cashflow
Cash Flow Bridge – 1Q14 (R$ million)
Improvement in working capital management due to lower trade account receivables,
triggering a R$261 million reduction in working capital needs in 1Q14.
Cash Flow | Consolidated
38Focus to Win
Cash Flow | Consolidated
Free Cash Flow (after CAPEX & Interests)
(R$ million)
(628)
(932)
(295)
(135)
16 1Q13 2Q13 3Q13 4Q13 1Q14
Positive Free Cash Flow after Interest and Capex, reaching R$16 million in 1Q14.
+
39Focus to Win
Net revenue grew 15% compared to 1Q13, driven by the positive effect of exchange variation.
Positive EBITDA performance in US Proteins, in spite of extreme winter weather throughout the US, isdue to the lower cost of outside meat purchases and lower feed costs.
In Asia, Keystone sales increased by favorable customer and product mix in Korea and Thailandand strong exports to Middle East and the UK.
Reduction in SG&A expenses due to continued cost reduction and efficiency initiatives.
Adjusted EBITDA in 1Q14 grew to R$111.1 million, with margin of 8.0%, 120 bps higher than in 1Q13.
Keystone 1Q14 HighlightsNet Revenue(R$ million)
Adjusted EBITDA & Margin (R$ million and %)+15%
1,213 1,286
1,4831,390 1,391
1Q13 2Q13 3Q13 4Q13 1Q14
8268
95 96111
6.8%
5.3%
6.4%6.9%
8.0%
1Q13 2Q13 3Q13 4Q13 1Q14
40Focus to Win
Sales revenue growth driven by the positive effect of exchange variation in the period and UK
and Ireland sales including strong growth in added value convenience products.
Increase of 55% in Adjusted EBITDA and 130 bps in margin in relation to 1Q13.
Moy Park 1Q14 Highlights
Net Revenue(R$ million)
Adjusted EBITDA & Margin (R$ million and %)
+27%
61 6678
101 95
5.9% 5.9%6.4%
7.6% 7.2%
1Q13 2Q13 3Q13 4Q13 1Q14
1,0381,132
1,2221,332 1,321
1Q13 2Q13 3Q13 4Q13 1Q14
41Focus to Win
Net Revenue(R$ million)
Net revenue decrease of 2%, explained by the lower production and sales in Brazil, due to higher
cost of raw material in Brazil, not yet fully reflected in prices during the quarter and partially offset
by higher exports from Uruguay and by the improved performance of Brazil's food service market.
Continuous improvement in the Uruguay business, since 4Q13, demonstrating a reversal in the
adverse scenario of the first half of 2013.
Adjusted EBITDA decrease of 12% with a margin reduction of 110 bps from 1Q13.
Marfrig Beef 1Q14 Highlights
Adjusted EBITDA & Margin (R$ million and %)
- 2%
225
145
202
226
197
10.6%
7.1%
9.0%10.0%
9.5%
1Q13 2Q13 3Q13 4Q13 1Q14
2,124 2,0382,240 2,256
2,075
1Q13 2Q13 3Q13 4Q13 1Q14
42Focus to Win
BONDS AND
EQUITY
43Focus to Win
0.5%
0.7%
Shareholder Structure|April, 2014
Total capital
520,747,405 shares47% Free float
244,766,309 shares
Source: Marfrig
BNDES
19.6%
MMS Part.
33.2%
Treasury0.1%
Board/Management
0.1%
6.3%
Other
40.7%
32.0%
25.8%
16.4%
1.4%
9.7%
5.7%
2.2%
0.4%
0.3%
Others
1.1%
3.3%
0.5%
44Focus to Win
99
100
101
102
103
104
105
106
107
108
109
110
Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14
99
101
103
105
107
109
111
113
Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-1499
101
103
105
107
109
111
113
115
117
119
Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14
98
100
102
104
106
108
110
112
Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14
Bond Performance | 2014
9.9%11.0%
18.1%12.8%
1.0% 1.8%
3.1%
3.8%
2017 2018
20212020
Source: Bloomberg - Until May 22nd
* Peers: based on average of bond issues by JBS, BRF and Minerva for same maturities
Marfrig Peers
45Focus to Win
70
80
90
100
110
120
130
Jan-14 Feb-14 Mar-14 Apr-14 May-14
Share Price Performance |2014
MRFG3 Ibovespa Peers
-1.4%
19.5%
Source: BM&Fbovespa
Until May 22nd,2014
* Peers: based on average of JBS, BRF and Minerva
2.5%
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FINAL REMARKS
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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
organic growth, all underpinned by better operational performance in the three
businesses.
Our actions to improve the profitability of both Keystone and Moy Park are paying off.
Beef
Our Beef businesses continue to strengthen their performance: high margins, better control
of its working capital as evidenced in the last two quarters, improved performance in most
industrial KPI´s, closer alignment with our supply chain partners – cattle farmers, optimizing
our destination channels (higher margins with smaller retailers).
As mentioned in the third quarter of 13, Uruguay Beef posted a strong performance, having
not only produced high margins but a strong cash flow generation.
Our Argentina operation is running smoothly, moving towards break-even as we re-open a
second plant in the second quarter.
48Focus to Win
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 local manufacturing presence in the Middle East.
We continue to build risk management skills within the business, embedding this capability
as a value of our business model and customers we serve.
Moy Park
Another quality quarter, reinforcing EBITDA margin growth and attractive returns.
The investments made in the last five years, are paying off as poultry continues to be the
fastest growing protein option in the UK today.
Our leadership position in both ready-to-eat products (number # 1) and fresh coated
(number # 1) should benefit with changing demographics: singles, workforce participation.
49Focus to Win
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 decline of our average
interest cost to 7.9% should intensify over time.
We remain strongly focused on control of working capital and cash generation.
The re-tap of our 20 bond is a small testimony of the fixed income support to our story, for
which we are thankful.
Nothing to report on the possible listing of both subsidiaries.
50Focus to Win
EBITDA
Margin
Note:
(1) Revenues stated in R$, FX rate considered of R$/U$=2.40 and R$/₤=3.80 in 2014 and flat onwards, no projected inflation
(2) Operating cash flow after capex, working capital changes, interest expenses and income tax
Revenues(1) 21.0 – 23.0
2014Target Range
7.5 – 9.5(CAGR% 2012-18)
7.5 – 8.5 8.5 – 9.5
2018Target Range
Free Cash
Flow to
Shareholders (2)
600 –
%
R$ billion
R$ millionCAPEX
Breakeven
to 100600 – 850 R$ million
Consolidated Financial Projections
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Disclaimer
This material is a presentation of general information about MarfrigGlobal Foods S.A. and its consolidated subsidiaries (jointly the“Corporation”) on the date hereof. The information is presented insummary form and does not purport to be complete.
No representation or warranty, either expressed or implied, ismade regarding the accuracy or scope of the information herein.Neither the Corporation nor any of its affiliated companies,consultants or representatives undertake any responsibility for anylosses or damages arising from any of the information presented orcontained in this presentation. The information contained in thispresentation is up to date as of March 31, 2014, and, unless statedotherwise, is subject to change without prior notice. Neither theCorporation nor any of its affiliated companies, consultants orrepresentatives have signed any commitment to update suchinformation after the date hereof. This presentation should not beconstrued as a legal, tax or investment recommendation or anyother type of advice.
The data contained herein were obtained from various externalsources and the Corporation has not verified said data throughany independent source. Therefore, the Corporation makes nowarranties as to the accuracy or completeness of such data,which involve risks and uncertainties and are subject to changebased on various factors.
This presentation includes forward-looking statements. Suchstatements do not constitute historical fact and reflect the beliefsand expectations of the Corporation’s management. The words“anticipates,” “hopes,” “expects,” “estimates,” “intends,”“projects,” “plans,” “predicts,” “projects,” “aims” and other similarexpressions are used to identify such statements.
Although the Corporation believes that the expectations andassumptions reflected by these forward-looking statements arereasonable and based on the information currently available to itsmanagement, it cannot guarantee results or future events. Suchforward-looking statements should be considered with caution,since actual results may differ materially from those expressed orimplied by such statements. Securities are prohibited from beingoffered or sold in the United States unless they are registered orexempt from registration in accordance with the U.S. SecuritiesAct of 1933, as amended (“Securities Act”). Any future offering ofsecurities must be made exclusively through an offeringmemorandum. This presentation does not constitute an offer,invitation or solicitation to subscribe or acquire any securities, andno part of this presentation nor any information or statementcontained herein should be used as the basis for or considered inconnection with any contract or commitment of any nature. Anydecision to buy securities in any offering conducted by theCorporation should be based solely on the information containedin the offering documents, which may be published or distributedopportunely in connection with any security offering conductedby the Corporation, depending on the case.
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IR Contacts
ri@marfrig.com.br
Website
www.marfrig.com.br/ir
Address
Avenida
Chedid Jafet, 222
Bloco A - 5th floor
São Paulo - SP - Brasil
+55 (11)
3792-8650
3792-8600
Telephone
@
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