2. Disclaimer
This presentation contains forward-looking statements relating to the prospects of the
business, estimates for operating and financial results, and those related to growth
prospects of Vigor Alimentos. These are merely projections and, as such, are based
exclusively on the expectations of Vigor’s management concerning the future of the
business and its continued access to capital to fund the Company’s business plan. Such
forward-looking statements depend, substantially, on changes in market conditions,
government regulations, competitive pressures, the performance of the Brazilian
economy and the industry, among other factors and risks disclosed in Vigor’s filed
disclosure documents and are, therefore, subject to change without prior notice.
2
4. Vigor: 94 years of growth in the Brazilian food market
Vigor Today Main Brands
Consumer sector
Foodservice sector
Employees 3,427
Net revenues – 9M12 R$ 978.7 MM / +8%1
Gross Profit – 9M12 R$ 281.4 MM / +25%1
EBITDA – 9M12 R$ 53.1 MM / +109%1
EBITDA Margin – 9M12 5.4% / +2.6 p.p.
Note: 1. Growth compared to same period last year. 4
5. Vigor: 94 years of growth in the Brazilian food market
1917
operations start
Delisting of Vigor
1982
Vigor reaches installed 1995 Combination of the activities of
capacity of 1.0 million acquisition of Refino de JBS and Bertin, and
liters/day and acquires Leco Óleos Brasil consequently of Vigor
2009
1917 a 1982
1990 a 1995
Future
1984 a 1986
1917 a 1982
2012
2007
2012
1984 Corporate restructuring in which
Bertin S/A acquires Fábrica de Produtos Alimentícios
Vigor and Leco IPO control of Vigor Vigor becomes a full subsidiary of
Vigor Alimentos S.A.
Acquisition of Serrabella
5 Relisting of Vigor
6. Vigor: strengths and competitive advantages
Resilient market with strong growth potential
Diversified portfolio with high value-added products
Brands with excellent reputation and high expansion potential
Approximately 50% of total distribution through independent retailers
Experienced and independent management team, with solid corporate governance
standards
6
7. Dairy categories have shown expressive and consistent growth rates...
Sales growth – 2011
Dairy in Brazil – 2011
Total consumer1 3.8%
Alcoholic beverages 3.6%
Non-alcoholic beverages 5.8% 12.0%
9.1%
Healthcare 2.7%
Housecare 4.4%
Grocery - sweet 3.2%
Grocery - non-sweet 1.6%
Dairy Cheese
Perishable goods 7.7%
Source: Nielsen
1Base: 134 product categories – Brazil – 2010-11, in value
Dairy = yogurt, fermented milk, desserts and petit suisse | Cheese = “requeijão” cheese spread, cream
cheese, “minas” cheese and portioned cheese 7
8. ...propelled by rising social classes and increasing disposable income
2005 2011
Average Average
monthly income monthly income
R$2,484 AB - 15% ~16 million have ascended to AB - 22% R$2,907
the A / B classes
+17%
R$1,107 C - 34%
~40 million have ascended to C - 54% R$1,450
the C class
+31%
R$545 DE - 51%
R$792
DE - 24% +45%
Population Distribution (%)
8
Source: “O Observador 2012” Report – Cetelem / Ipsos – Social-economic segmentation according to Abep (Brazilian Association of Research Institutes)
12. Our product categories...
Dairy1 Spreads2
Higher margins
(%) High household
penetration level
Leading brands Net Revenue – 9M12
in categories Helps diversify
the cost matrix
Focus in
innovation and Possible to add
product “brand” equity
launching
UHT Milk3 Others4
Low volume
Juices, sauces,
Specific channels chocolate milk
and others
Total: R$ 978.7 million
Margin under
strict discipline
Note: 1. Dairy (yogurt, fermented milk, desserts and petit suisse, “requeijão” cheese spread,
parmesan, special cheese, “minas” cheese, cream cheese, fondue and creams) / 2. Spreads
(margarines, blend, butter, fats and mayonnaise) / 3. Milk: UHT milk and pasteurized / 4. Others
(pastas, sauces, juices, chocolate milk and others). 12
13. ...underpinned by our brands and market segments
Reference brands on the Consumer segment, and leadership in Food Service
Consumer Food Service
B/C
A/B/C A/B A/B A/B
Segmentation Regional Brand Business to Business
National Brand National Brand National Brand National Brand
UHT milk
Yogurt / Cheese Cheese / Parmesan Non-sweet Pastry and basic
Main products Special cheese Butter
spread Dessert cheese products ingredients
Chocolate milk
13
14. Consolidated position in key categories
1 liter yogurts – market share1,2 Natural yogurts – market share1,3
Brazil Metropolitan area of São Paulo
Brazil Metropolitan area of São Paulo
2
1 3
7% 29%
1
15% 25%
Total market R$ 651 mm Total market R$ 322 mm
“Requeijão” cheese spreads – market share1,4 Parmesan cheese
Brazil
Brazil Metropolitan area of São Paulo
Reference brand in
1
1 parmesan cheese
1
15% 24%
(unaudited category)
Total market R$ 905 mm
Source Nielsen - YTD12
1.Based on total revenues:
2. Regular family liquid yogurt,not including functional yogurts
3. Natural yogurt, not including functional yogurts
4. “Requeijão” cheese spreads 14
15. Strong presence in Brazil’s most important regions leverages
Vigor for further expansion…
Importance of the macro regions to the market and to Vigor – in value
37%
Market CAGR 09-11
Market Vigor
30%
8.3%
13.4%
7.5% 14.0% 14.0%
18%
17% 16%
15% 16% 8.7%
14.3%
11%
10% 9%
7% 6%
4% 4%
Northeast ES + MG + Countryside of Metropolitan area of RJ Metropolitan area of SP Countryside + Coast of SP South Mid-west
RJ
Source: Nielsen – YTD 12 | Brazil
Considered categories: yogurt, fermented milk, dessert, petit suisse, “requeijão” cheese spread, cream cheeses and “minas” cheese
15
16. …increasing distribution through independent channels
......................................................
Independent retailers and food service
Gross revenues by distribution channel – 9M12
• Independent retailers are the fastest growing distribution
channel in Brazil
47% of sales to
Others;
independent • Vigor currently has c. 20,000 retail clients
2%
Food retailers
Service; • Significant opportunities in the food service segment, which
24% currently shows low market penetration and high growth rates
Wholesale/
Distributor
17%
KA; 11%
Total: R$ 978.7 billion
16
17. Operational excellence by adding value to the production chain
. . . . . . Milk collection centers
............................................................... ..
Four milk collection centers
1,280 producers
4 Approximately 18 million liters collected every month
Diversified supplier base
......
Production units
Approximately 3,300 employees
Seven plants with and installed capacity of over
7 47,000 tons per month
Solid expansion capacity
......
........................
Distribution centers
Seven distribution centers
Distribution centers positioned close to large
7 consumer markets
14 TSPs
......
Strategic positioning
Milk collection centers
Distribution centes Point-of-sale presence
Dairy production unit
Over 20,000 active clients
Oils production unit
Sales channel and consumer profile diversification
Mixed production unit 20k
Spread distribution in retail
17
20. Cash Generation and Leverage
Cash Flow from Operations1 supported Capex
Net Debt (09/30/2012) – R$ million
Cash Flow Q3’12 – R$ million
103,1
39,8
115,0 238,7
Short-term:
95,2
31,9 70%
24,9 9,9 Net Debt Cash Gross Debt
211,9
Gross Debt Breakdown – R$ thousand
Line Avg Rate Due Date Balance
103,1
Working Capital CDI + 2,5% a.a. 10/24/13 50,171
EGF 5,5% a.a. 05/03/13 40,222
Working Capital CDI+2,4% a.a 03/26/13 25,012
BNDES Automatic 11,4% a.a. 11/16/12 16,833
FCO 10,0% a.a. 05/02/14 1,450
Begining Cash from Capex New Debt Debt Ending
Cash Operations Payment Cash Finame 7,0% a.a. 11/08/16 1,259
Total 134,947
1.Includes interests from Refis (tax installments) of R$ 3.8 million 20
21. What we have done, and our next steps
Initiatives already implemented Actions taken Next Steps
Strengthening of key brands
• Innovation and new product launching • Greek yogurt • Launching of
• New media campaign • Campaign “recall” SP/RJ “funcionais” yogurts
• New marketing communication aligned with new product positioning and pricing • Increase in avg. price • Constant innovation in
• Phase out of non-core produtcts • Phase-out fresh pasta our portfolio
Growth of distribution network
• Review of our go-to-market model • Beginning October 2012
• Continue expanding
geographic reach to
• New management of other regions
• Merchandising with dedicated team
trade marketing team
Excellence in Management and Corporate Governance
• Meritocracy in management, with systematic KPI’s tracking • Hiring of experienced
• Majority of Board of Directors members are independent • Keep investing in our
managers people’s development
• People and Finance, Risks and Auditing committees • Board oversight
State of art in Production processes
• Product-specific plants • Capex of R$ 38.0 million • Quality Certification
• Capex in high potential growth categories in product line expansion guaranteed in every
• Pay-for-quality program factory
• Milk producers loyalty program
for milk producers • Higher productivity
21
22. Our Vision
Big food Company, one of the biggest dairy companies in Brazil
• Development of innovation according to seasonal waves
Categories and Segments • Further development of Food Service segment
• Improve our presence in markets close to core market (SP)
Geographic expansion
• Lower the company’s dependence of São Paulo market
Investment Plan • Increase in productive capacity, with continuous investments in key
product lines
EBITDA Margin • Continuously increase in margins to surpass historic levels
• Increase stock liquidity
Capital Structure • Reduction of cost of capital
• Return on Invested Capital to shareholders Policy
22
24. Closing remarks
Resilient market with robust growth potential
Diversified portfolio with high value-added products
Brands with excellent reputation and high expansion potential
Aproximately 50% of total distribution through independent retailers
Experienced and independent management team, with solid corporate governance standards
24
27. Experienced Managers
Maurício Hasson Anne Napoli
Gilberto Xandó – CEO
CFO and IRO Marketing Director
Gilberto Xandó holds a Bachelor degree in Business Maurício holds a bachelor degree in mechanic and
Administration from Fundação Getúlio Vargas, a Masters
Anne has graduated from the European Business Program
production engineering by PUC-RJ and holds a MBA degree and Insead and has 18 years of experience in the
Degree in Retail from USP/FEA and is specialized in Business by The University of Chicago Booth School of Business. He
Management PGA from Fundação Dom Cabral/INSEAD, in consumer sector. Involved in marketing strategy,
has over 13 years of experience in Investment Banking and innovation projects, communication planning and
France. He has large multidisciplinary experience and has Corporate Finance, having worked for the past seven years
worked in the areas of Finance, Controlling, Trade regional coordination, Anne has worked for seven years
at Rothschild and Bear Sterns in the advisory of important at Unilever and six at Danone, becoming Marketing
Marketing, Marketing, Commercial (Brazil and other M&A transactions. He became the CFO of Vigor in April
countries) and Business Unit Management at Natura, Sadia Director of Vigor in December 2011.
2012.
S.A. and Coopers & Lybrand. In July 2011 he became CEO of
Vigor.
Luiz Gennari Gustavo Theodozio Paulo Botelho
Sales Director Administrative Director Industrial Director
Gustavo holds a Bachelor degree in Business
Luiz Henrique holds a Statistics degree from UFSCar, and a Administration by PUC-PE and a MBA in Business
Management by FGV-PE and Accountancy and Controlling Paulo has been working at Vigor for over 29 years. He
masters degree in Marketing from ESPM, and has over 19
by UF/PE. Gustavo has worked in companies such as started as an intern and has acted as maintenance superior,
years of experience in the consumer sector, involved in
Bompreço S/A Supermercado do NE, Grupo JCPM and maintenance manager and industrial manager, becoming
market research, trade marketing and sales. Luiz has worked
Sistema do Jornal do Comércio de Comunicação. In 2010 industrial director in June 2011.
for 15 years at Sadia, and for 4 years at Cia J.Macedo.
and 2011 he worked as the CFO for JBS’ leather division
Last year, Luiz was appointed, at BRF’s Dairy products and he is currently the Comptroller and Administrative
division “Batavo”, Sales Director (Brazil), becoming Sales Director of Vigor.
Director of Vigor in June 2012.
Darlan Carvalho
Diretor de Supply chain
Darlan holds a bachelor degree in Accountancy and a
graduate degree in Administration. He also holds a MBA
degree in Business Management and has worked for 29
years at Sadia, in the supply chain and logistics areas,
being responsible for the whole logistics structuring of BR
Foods. He became Supply Chain Director of Vigor in
September 2011.
27
28. Board of Directors composed by members with notorious reputation
Wesley Batista Joesley Batista Vicente Falconi Campo
Chairman Member elected by FB Independent member
Mr. Wesley Batista became CEO of JBS’ global operations in Mr. Joesley Batista is the current Chairman of JBS, elected on Mr. Vicente Falconi Campos is a Board member of Ambev and
Feb/2011. Prior to that, he was the president and CEO of JBS USA January 2nd, 2007. He was also the CEO of JBS SA between 2006 member of tbe Institutional Board of Managerial Development at
after Swift & Company’s acquisition in 2007. Under his and 2011, a period in which revenues have grown by 1,200%, and INDG, as well as an Emeritus professor at the Federal University
management, JBS USA more than doubled its revenues in 4 years, the Company has made different transformational acquisitions in of Minas Gerais. Mr. Campos has been a Board member of Sadia
and Unibanco and has received awards from different public
acquiring Smithfield Beef, JBS Five Rivers Feedlot, a majority stake North America and Australia, in addition to going public in 2007. Mr. organizations, both from the Executive and Legislative branches,
in Pilgrim’s Pride, as well as expanding its Australian operations Joesley Batista has been working at the JBS Group since 1988. and business associations, as well as having published six books
acquired along with Swift. During the previous fifteen years, Mr. on Business Administration. Bachelor in Mining and Metallurgy
Batista acted as Chief Operating Officer (COO) of JBS’ beef Engineering from the Federal University of Minas Gerais, as well
operations in Brazil and Argentina. as a M.Sc. and Ph.D. from the Colorado School of Mines (EUA).
Betânia Tanure de Barro Evandro Guimarães Cristiana Arcangeli
Independent member Independent member Independent member
Professor at PUC MG, PhD from the Brunel University (England), Mr. Evandro holds a Bachelor degree in Business Administration Mrs. Cristiana Arcangeli has graduated in Dentistry with
Post-graduate in Management Consulting by Henley from Fundação Getúlio Vargas in Rio de Janeiro in 1970. He specialization in Endodontics and has been working in the
Management College (England), specialized in management by started his career at Ciba Geigy as Product Manager, then cosmetics segment for over 25 years, in which she has created
INSEAD, psychologist by PUC – MG. Works as a BTA-certified moved to Bicicletas Caloi S.A. as a Marketing Manager. He then brands such as Phytoervas, Éh Cosméticos and Beauty’in. Mrs.
technical consultant, and professor at national and international moved to São Paulo in 1980 in the Sales Division of TV Globo
companies such as: ArcelorMittal, Banco Santander, Banco and in 1984 was promoted to National Sales Director. From 1989 Arcangeli has received different awards for her influence in the
Central do Brasil, Banco Itaú, Brasilprev, Embraer, Gerdau, till 1997, he headed Globo’s Center of Affiliates and Expansion cosmetics and fragrances segment and for her entrepreneurial
Kimberly-Clark, IBM, Natura, RBS, Sadia, Samarco, TAP, Usiminas, and was nominated as Institutional Relations Vice-President at actions, as well as being the first female member of the
Vale, Via Retail and Weg. Board Member at RBS and GOL Linhas Organizações Globo, directly interacting with the Executive, Brazilian Marketing Academy, a volunteer at Endeavor,
Aéreas Legislative and Judicial branches until the end of 2011.
Luiz Antonio Rodrigues Elias Marício Tiomno Tolmasquim
Independent member Independent member
Mr. Luiz Antonio Rodrigues Elias is an Economist and Head Mr. Mauricio Tiomno Tolmasquim was Executive-Secretary of
Researcher at INPI (National Institute for Intellectual Property). the Ministry of Mining and Energy, Board Member at Itaipu
Since 2007 is Executive Secretary of the Ministry of Science, Binacional and Furnas Centrais Elétricas (Hydro Powerhouses),
Technology and Innovation. Before that, was Secretary of coordinator of the technical group responsible for formulation
and implementation of a wide reform of the electric energy
Technological Development and Innovation from the same sector regulation. Mr. Tolmasquim was honored from Itamaraty
Minitry (2006), Director of Federal Railroad and Co-Secretary of with the Great Officer from Rio Branco Order. He is also author,
the Social Development Division of Rio de Janeiro Municipality. co-author, and organizer of over 20 books and more than 100
technical articles.
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