JBS S.A., the global leading producer of animal protein, has announced its results for the fourth quarter of 2010 (4Q10) and for the full year of 2010. For the purpose of analysis, this report considers the results for the quarter ended 30 September 2010 (3Q10) and 31 December 2009 (4Q09) as well as the fiscal year 2009.

The Company's consolidated financial results have been prepared for the years ending on 31 December 2010 and 2009 and are in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).

On 4 March 2011, JBS signed a 'Termination Agreement with the Cremonini Group ending its participation in INALCA (refer to Notice to the Market on 4 March 2011). The consolidated numbers for the quarter do not consider the results of INALCA JBS.

The consolidated results of JBS are presented in Brazilian Real (BRR) and when separately analysed, each business unit reports its results in the currency of the country in which it operates. The operations of JBS Australia are an integral part of the subsidiary JBS USA and both results refer to the period of 13 weeks ended 26 December 2010 (4Q10). The quantitative data, such as volumes and heads slaughtered, are not audited.

2010 highlights

These exclude the results of INALCA JBS for the last nine months of 2010.

Net revenue for 2010 was BRR55,055.8 million. JBS presented an organic growth of 14.2 per cent in net sales, in local currency. JBS USA Beef and Pork presented organic growth of 16.7 per cent and 31.7 per cent, respectively, comparing 2009 to 2010.

Consolidated EBITDA was BRR3,756.2 million in 2010 with an EBITDA margin of 6.8 per cent.

Adjusted net income in 2010 was BRR196.1 million.

4Q10 highlights

These exclude the results of INALCA JBS.

In 4Q10, the net revenue was BRR14,319.6 million. The EBITDA was BRR865.9 million with an EBITDA margin of six per cent.

JBS USA Pork presented EBITDA of US$102.4 million, 258 per cent greater than the 4Q09 and an historically high EBITDA margin of 12.8 per cent in 4Q10. JBS USA Beef presented EBITDA of US$194.8 million and EBITDA margin of 5.4 per cent.

President's Comments

Wesley Batista, President and CEO, said: "2010 was a year of various achievements. We can highlight the integration of Pilgrim's Pride into our American operations and the merger with Bertin into our Mercosul operations. As for operations, it is important to note our sales growth, which exceeded BRR55 billion, with organic growth of 14.2 per cent and an EBITDA of BRR3.75 billion, presenting an EBITDA margin of 6.8 per cent in 2010 compared to 3.7 per cent in 2009."

JBS USA

Mr Batista continued: "The acquisition of Pilgrim's Pride at the end of 2009 was concluded based on studies that proved its economic potential and its alignment with our strategy to diversify into other proteins. The USA is the largest chicken producer in the world, and has recently become very cost-competitive, thus allowing the US industry to increase its international market share. In a short time frame, we managed to integrate Pilgrim's into our American operations, capturing considerable synergies, which enabled us to achieve an EBITDA exceeding R$800 million and an EBITDA margin of 7.0 per cent. At the same time, we increased our market participation.

"Achieving these goals was only possible after a full restructuring, including positive changes in senior management and centralisation of corporate activities. Besides that, we optimised sales channels, which includes the international market as well as introducing significant improvement in our product mix, with an increased amount of value-added products."

JBS Mercosul

"The incorporation of Bertin, at the end of 2009, has increased significantly our market share in Brazil," said Mr Batista."The highlights of this segment were the efforts to integrate and to capture synergies in the administrative, commercial, operations and logistics areas of the companies. From an estimated BRR485 million of synergies in two years, we captured about two-thirds of that value. There is more potential for synergies to be captured, the most significant relating to processes optimisation, cost reduction per head processed and improvement in yield per carcass.

"The outlook for the coming year is favourable, as we are well positioned with production platforms located in the main raw material supply regions. Moreover, we are operating our plants with a higher level of capacity utilisation which enables us to be more efficient.

"In Argentina, we took several structural measures to adapt to the country's current situation. We temporarily suspended operations in four industrial units, reduced significantly the number of employees and, because of export restrictions, directed production to meet the domestic market. But investments in Argentina are expected to pay off in the long run and when the economy recovers, we believe we can add value to this platform due to the tradition of Argentine beef on the international market."

Italy

Mr Batista continued: "During the year, we have made numerous efforts to resolve pending issues between the partners of Inalca JBS. These efforts resulted in the dissolution of the partnership and signing of the Termination Agreement. The Cremonini group paid €218.9 million to JBS S.A. for our part in the company.

"Also in Italy, we took control of 100 per cent of Rigamonti, a company of which we already held 70 per cent since December 2009. The company produces about 7,000 tons of processed meat per year and has a 40 per cent market share in the segment in which it operates."

Results for 4Q10 and for 2010

"Our net revenue reached BRR55.1 billion," said Mr Batista. "This amount represents a 57.7 per cent growth over the previous year. Our EBITDA reached BRR3.75 billion, placing us in a prominent position among the leading companies in Brazil, representing a 194.2 per cent growth over the previous year.

"Increased volumes and organic growth, inevitably lead to a need for working capital. Last year, our BRR55 billion revenues, of which almost 30 per cent resulted from international trade, demanded a considerable amount of capital and yet we were able to maintain our leverage at comfortable levels. We ended the year with our net debt/EBITDA relation in 3,0X, but when eliminating non-recurring issues, this factor reduces to 2,8X.

"We decided to pay the debentures premium and, consequently extend the deadline for conversion of JBS stock until the end of this year because we believe that there will be more adequate conditions in 2011. As an alternative, we are reviewing the current debenture conditions in order to propose a solution that creates value for our shareholders."

Perspectives for 2011

"When we look back, we realise much has been done. When we look forward, we see that there is still a lot to do. In 2011, we began a phase at our Company, one of collecting the positive results on our actions and investments," continued Mr Batista.

"We will continue to work on our aim to be an integrated global food company and on our constant search for new clients and markets in order to expand our distribution channels and exports. We will be completely focused on obtaining the highest possible return on our investments, thus creating value for our shareholders.

"We are working with a macro-economic scenario of increasing global demand for proteins this year, especially in emerging economies and of stable production in our productive sector to meet such demand. We are confident that our company´s performance will improve substantially.

"Our challenge is to continue to be a Company with growing revenues while maintaining our simplicity, efficiency, concentration and traditional dynamism. To achieve this, we will work together, consistently, perennially and with a focus on growth.

"Without the effort and cooperation of all our employees we would never have reached where we are today. We thank all of those who believe and invest in our Company. We count on the support of all our partners, suppliers, clients, shareholders and other stakeholders," concluded Mr Batista.