7
FINANCIAL
PERFORMANCE



SCENARIO

According to the UN’s report entitled World Economic Situation and Prospects 2016 , the global economy grew 2.4% in 2015. Developed countries led this growth, unlike in previous years, when developing countries - and China in particular, with its large demand for commodities - dictated the pace of growth.

The trends in the United States were similar to the global average, according to the Bureau of Economic Analysis. The 2.4% growth in GDP in 2015 was the same as the previous year, reflecting the maintenance of consumer spending in the domestic economy.

In relation to proteins, there has been a gradual recovery in the cattle herd in the US, which will contribute to a reduction in live cattle prices. With regard to poultry, 2015 was a more challenging year due to the bird flu cases registered in the country, which resulted in the imposition of embargoes (total and partial) against exports. Given the increased product supply in the domestic market, there was pressure on prices, impacting margins. With regard to pork, slaughter levels remained slightly above the historical average throughout the year, and in the second half there was an increase in exports, mainly to China, which contributed positively to the industry.

The Brazilian economy, in turn, suffered a 3.8% decline in the period, according to the Brazilian Institute of Geography and Statistics (IBGE), the largest fall since 1996. Meanwhile, inflation NET REVENUE PROFIT is expected to reach 10.8%, according to the Central Bank. Food and beverages are expected to exceed this average, reaching 12.9%.

In the proteins sector, there was a 3% increase in the price of cattle in Brazil. In terms of exports, beef experienced a weaker performance, down 12.1% from 2014. In terms of revenue, exports grew 13.9% in reais, mainly due to the devaluation of the currency against the US dollar. In relation to poultry, production reached 13.1 million tons in 2015, according to the Brazilian Association of Animal Protein (ABPA), establishing Brazil as the second largest producer worldwide. Per capita consumption increased 1.1%, and exports grew in volume and revenue, at rates of 6.6% and 28.0%, respectively. Meanwhile, frozen and prepared products are gaining more market share among the foods consumed by Brazilians. According to a report by the O Globo news agency, consumers have opted for cheaper items and prioritized meals at home, rather than outside the home. These new habits are triggering an increased demand for prepared and frozen foods.



NET REVENUE

In 2015, JBS’s consolidated net revenue totaled R$162,914.5 million, an increase of R$42,444.8 million, up 35.2% over 2014.



Approximately 70% of JBS’s global sales occurred in the domestic markets in which the Company operates and 30% came through exports.



Net Revenue by business unit (% share)
JBS USA Beef 45.5%
JBS USA Pork 7.2%
JBS USA Poultry 16.8%
JBS Mercosul 17.7%
JBS Foods 11.5%
JBS Europe* 1.4%
*Based solely on 4Q15


PROFIT

In 2015, the Company recorded net income of R$4,640.1 million, equivalent to earnings per share (EPS) of R$1.60.



CONSOLIDATED NET INCOME


Consolidated Gross Profit

Gross profit for the period totaled R$22.6 billion, up 21.0% over 2014. The gross margin, in turn, fell by 1.6 percentage points.



CONSOLIDATED GROSS PROFIT (R$ BILLION)


EBITDA

Adjusted EBITDA totaled R$13.3 billion, up 19.9% over 2014. The EBITDA margin was 8.2%.



R$ million 2015 2014 Chg. %
Net income for the fiscal year (including minority interest) 5,128.60 2,406.40 113.10%
Net financial result 1,300.60 3,637.60 - 64.2%
Income tax and social contribution - current and deferred 2,750.00 1,785.40 54.00%
Depreciation and amortization 3,692.80 2,546.80 45.00%
Equity income -58.9 -26.1 125.80%
Restructuring, reorganization, donations and indemnity 487.2 745.5 -34.60%
Early settlement by premium paid by JBS USA 0 -5.6 -
(=) Adjusted EBITDA 13,300.40 11,090.00 19.90%


EBITDA BY BUSINESS UNIT (% SHARE)



CASH FLOW

The Company generated R$21,206.4 million in cash from operating activities in 2015. Free cash flow before the acquisitions of Tyson Mexico, Primo Group, Moy Park and Cargill Pork was R$17.0 billion in 2015, up 169.3% over 2014.



OPERATING CASH FLOW (R$ MILLION)


FREE CASH FLOW EX-ACQUISITIONS (R$ MILLION)


DEBT

JBS ended the year with net debt of R$47,038.7 million and leverage of 3.18x. Including the pro forma results of the recent acquisitions, leverage was 2.91x. In dollar terms, the debt ranged from US$9,475.5 million to US$12,046.4 million.



R$ million 2015 2014 % Chg.
Gross Debt 40,079.10 65,882.70 64.4
(+) Short-term 13,687.00 20,906.60 52.7
(+) Long-term 26,392.20 44,976.10 70.4
(-) Cash 14,910.40 18,844.00 26.4
Net debt 25,168.70 47,038.70 86.9
Net debt/EBITDA 2.1x 3.18x


NET DEBT (R$ MILLION) AND LEVERAGE


NET DEBT IN US$ (MILLION)


Debt profile

At the end of the year, 68% of JBS’s debt had a long-term profile. The other 32% was short-term, essentially unchanged from 2014.



ST/LT debt profile

Short-term Long-term
2014 34% 66%
2015 32% 68%


With regard to the composition of the debt, 91% is denominated in US dollars, with an average cost of 5.24% per annum. The 9% of the debt in reais, in turn, has an average cost of 13.99% a year. Commercial banks are the main source of funding for the Company (56.3%).



CURRENCY AND COST BREAKDOWN



SOURCE BREAKDOWN



COMPANY BREAKDOWN



Value Added Statement (VAS) (R$ ‘000)
Personnel
Direct compensation 13,997,920
Benefits 2,487,582
FGTS 234,230
TOTAL 16,719,732
 
Taxes and contributions
Federal 3,712,101
State 2,601,278
Municipal 25,117
TOTAL 6,338,496
 
Third-party capital remuneration
Interest and exchange rate variations 21,001,386
Leasing 587,156
Other 695,325
TOTAL 22,283,867
 
Equity compensation
Net income attributable to controlling shareholders 4,640,114
Non-controlling share in retained earnings 488,533
TOTAL 5,128,647
 
TOTAL 50,470,742


CAPITAL MARKETS

Shares of JBS S/A, traded on the BM&FBovespa under the code JBSS3, ended 2015 quoted at R$12.34, up 10.3% from the close of 2014.

The Company’s shares also outperformed the Bovespa Index (Ibovespa), which fell 13.3% last year.

The Company’s market value totaled R$35.3 billion, placing it among the 15 companies with the highest market value on the Ibovespa, an index that includes its shares.


Shareholders and Investor Services

JBS has a specific area dedicated to serving its shareholders and investors. The area can be reached by e-mail ir@jbs.com.br The information disclosed to the market, in turn, is available on the website www.jbs.com.br/ir.



JBSS3 SHARE AND IBOVESPA PERFORMANCE IN 2015