PPC Investor Day September 20, 2017
Pilgrim’s Pride Corporation
(NASDAQ: PPC)
2
CAUTIONARY NOTES AND FORWARD-LOOKING STATEMENTS
Statements contained in this presentation that share our intentions, beliefs, expectations or predictions for the future, denoted by the words “anticipate,” “believe,” “estimate,”
“should,” “expect,” “project,” “plan,” “imply,” “intend,” “foresee” and similar expressions, are forward-looking statements that reflect our current views about future events and are
subject to risks, uncertainties and assumptions. Such risks, uncertainties and assumptions include the following matters affecting the chicken industry generally, including fluctuations in
the commodity prices of feed ingredients and chicken; actions and decisions of our creditors; our ability to obtain and maintain commercially reasonable terms with vendors and
service providers; our ability to maintain contracts that are critical to our operations; our ability to retain management and other key individuals; certain of our reorganization and exit
or disposal activities, including selling assets, idling facilities, reducing production and reducing workforce, resulted in reduced capacities and sales volumes and may have a
disproportionate impact on our income relative to the cost savings; risk that the amounts of cash from operations together with amounts available under our exit credit facility will not
be sufficient to fund our operations; management of our cash resources, particularly in light of our substantial leverage; restrictions imposed by, and as a result of, our substantial
leverage; additional outbreaks of avian influenza or other diseases, either in our own flocks or elsewhere, affecting our ability to conduct our operations and/or demand for our poultry
products; contamination of our products, which has previously and can in the future lead to product liability claims and product recalls; exposure to risks related to product liability,
product recalls, property damage and injuries to persons, for which insurance coverage is expensive, limited and potentially inadequate; changes in laws or regulations affecting our
operations or the application thereof; new immigration legislation or increased enforcement efforts in connection with existing immigration legislation that cause our costs of business
to increase, cause us to change the way in which we do business or otherwise disrupt our operations; competitive factors and pricing pressures or the loss of one or more of our largest
customers; currency exchange rate fluctuations, trade barriers, exchange controls, expropriation and other risks associated with foreign operations; disruptions in international markets
and distribution channels; and the impact of uncertainties of litigation as well as other risks described herein and under “Risk Factors” in the Company’s Annual Report on Form 10-K
filed with the Securities and Exchange Commission (the “SEC”).
Actual results could differ materially from those projected in these forward-looking statements as a result of these factors, among others, many of which are beyond our control. In
making these statements, we are not undertaking, and specifically decline to undertake, any obligation to address or update each or any factor in future filings or communications
regarding our business or results, and we are not undertaking to address how any of these factors may have caused changes to information contained in previous filings or
communications. Although we have attempted to list comprehensively these important cautionary risk factors, we must caution investors and others that other factors may in the
future prove to be important and affecting our business or results of operations.
This presentation may include information that may be considered non-GAAP financial information as contemplated by SEC Regulation G, Rule 100, including EBITDA, Adjusted
EBITDA, LTM EBITDA, Net Debt, Free Cash Flow, Adjusted EBITDA Margin and others. Accordingly, we have provided tables in the accompanying appendix and in our previous filings
with the SEC that reconcile these measures to their corresponding GAAP-based measures and explain why these measures are useful to investors, which can be obtained from the
Consolidated Statements of Income provided with our previous filings with the SEC. Our method of computation may or may not be comparable to other similarly titled measures
used in filings with the SEC by other companies. See the consolidated statements of income and consolidated statements of cash flows included in our financial statements.
Shared on 9/20/17
3
AGENDA: MANAGEMENT PRESENTATIONS
• 10:30-10:45 Welcome and Opening Remarks – Bill Lovette
• 10:45-11:15 U.S. – Jayson Penn
• 11:15-11:45 Mexico – Charles VonDerHeyde
• 11:45-12:15 Moy Park – Janet McCollum
• 12:15-12:20 Grains & Feed – Joe Waldbusser
• 12:20-1:00 LUNCH BREAK
• 1:00-1:30 On-line Strategy & Marketing – Laston Charriez
• 1:30-2:00 Financials – Fabio Sandri
• 2:00-2:10 Safety, People & Environment – Eduardo Noronha
• 2:10-3:00 Q&A/Wrap-up – Bill Lovette & Management
Shared on 9/20/17
BILL LOVETTE
5 Shared on 9/20/17
PILGRIM’S PROGRESS ON DELIVERING OUR VISION TO BE THE BEST
THROUGH OPERATIONAL EXCELLENCE & ACQUISITIONS
Closing GAPS Expanding TARGET
U.S.
Focus
JAYSON PENN
7
HIGHLIGHTS OF OUR BUSINESS
Shared on 9/20/17
Leading U.S. chicken producer with differentiated portfolio and diverse geography
Balanced portfolio of fresh, prepared and value-added chicken products
Broad, differentiated products to meet retail and foodservice customer demand growth
Competitive operational advantage in mix and efficiencies
Continuous operational improvement – both mix and cost
SG&A benchmark in the industry
Zero-Based Budgeting resulting in accountability and disciplined management
Poultry industry in balance with demand
Chicken is the fastest growing protein both in U.S. and abroad
Affordable and convenient product to consumers
Supply growing in-line with Demand
Favorable supply of key input (feed)
8
OUR VISION AND STRATEGY
Shared on 9/20/17
9
OUR VISION AND STRATEGY
Shared on 9/20/17
10
STRENGTHENING OUR TEAM
Shared on 9/20/17
1,000
Applicants
146 Hires
70%
Return Rate
8 MBAs
with at least
10 years
of leadership
experience
82
hourly team
members
graduated and
promoted to front
line supervisors
65
Hires
11
DEVELOPING OUR PEOPLE
Shared on 9/20/17
People FIRST
MBA Programs
Way of Leading
Elective Learning Program
LEADERSHIP
100K
HRS
People Safety
Food Safety/HACCP/
Animal Welfare
Technical Training
Summit
BUSINESS
KNOWLEDGE
157K
HRS
Zero-Based Budgeting
Daily Work Routine
Root Cause Analysis
Checklist to Achieve Goal
PDCA/SDCA
METHOD
102K
HRS
In 2016, we
invested more
than 350K hours
in team training.
12
OUR VISION AND STRATEGY
Shared on 9/20/17
13
Source: Watt Poultry USA March 2017, PPC
A U.S. MARKET SHARE LEADER IN READY-TO-COOK POUNDS
Shared on 9/20/17
NEARLY
CHICKENS IN THE
U.S. COMES FROM
14
LARGE
8 + L B S
RETAIL
6 - 7 L B S
SMALL
4 - 5 L B S
BUSINESS UNITS
OUR U.S. FOOTPRINT & BUSINESS UNITS
Shared on 9/20/17
C A S E R E A D Y
S M A L L B R I D
B I G B I R D / C O M M E R C I A L
P R E P A R E D F O O D S
F R E S H F O O D S E R V I C E
P R O T E I N C O N V E R S I O N
G N P
HATCHERIES 33 TEAM MEMBERS ~32K
BIRDS PER
WEEK ~33M FEED MILLS 26
PROCESSING
PLANTS 31
4 PROTEIN CONVERSION
4 PET FOOD LBS PER
YEAR 9+B
LOCATIONS
15
HOW
Fresh
Group P&L
Case Ready
BU P&L
Big Bird
BU P&L
Small Bird
BU P&L
Fresh
Foodservice
BU P&L
Plant Sales Manager
Plant Operations Manager
Plant Sales Manager
Plant Operations Manager
Plant Sales Manager
Plant Operations Manager
Plant Sales Manager
Plant Operations Manager
Combined Plant P&L
• Understanding of
Customer/ Segment
• Ownership of bottom
line at plant level
• Management of Mix at
Plant Level
• Shared KPIs on Sales and
Operations
• Success for Sales &
Operations: PROFITABILITY
CULTURE AND CONFIGURATION:
DRIVE OWNERSHIP & ACCOUNTABILITY DEEPER INTO THE BUSINESS
Shared on 9/20/17
16
CULTURE, CONFIGURATION, CAPABILITIES AT WORK
Shared on 9/20/17
UNDERSTANDING
of the market (customers/consumers)
• Emerging opportunities
• Competitors’ moves
• Fact-based decisions
ABILITY
to attract/satisfy/delight valuable customers
• Builds (creates) leading value
• Develops & cultivates loyalty
• Leverages competitive
advantages
CULTURE CONFIGURATION CAPABILITIES
Ownership
Accountability
External Focused
Coherent Structure,
Processes & Systems
Adaptability
Market Insight/Intelligence
Market Relationships
Strategy Tracking
Superior Drives
Customer retention and loyalty
Team member engagement and
satisfaction
Premium market prices
Market share growth
Increased demand for our company and brands
RESULTS DELIVERS
17
OUR BROAD PORTFOLIO DELIVERS COMMODITY UPSIDE
AND MARKET DOWNSIDE PROTECTION
Shared on 9/20/17
8+ Lbs. Live Weight
Commodity Price Correlation
Foodservice/Industrial
6 Lbs. Live Weight
Program Pricing
Retail/Consumer Brands
4 Lbs. Live Weight
Contract Pricing
Foodservice/Deli
Partially Fried/Fully Cooked
List Pricing
Foodservice/Retail/Deli
18
B R A N D S
OUR BRANDS & PRODUCTION MIX: EXPANDING MARKETS
Shared on 9/20/17
M I X *
* YE2016, U.S. only
• Recent acquisitions
expand our ability to
deliver against
underserved consumers,
surprise and delight
• Brands can gain share via
differentiation, especially
against Millennials
19
DIVERSE CHANNEL MIX DRIVES VALUE TO KEY CUSTOMERS;
ADDRESSES MULTIPLE CONSUMER NEEDS
Shared on 9/20/17
FOODSERVICE
Cut-up Parts
Boneless Skinless
Wings
Whole Chickens
Par-fried, Breaded
• Breasts/Other Boneless
• Wings/Other Bone-In
Fully Cooked
• Breaded
• Glazed
• Roasted
Fully Cooked
• Pulled & Diced Strips
• Fajita Strips
• Chicken Salads
Whole Chicken
Cut-up Parts
Boneless Skinless
Raw Value-Added
Fully Cooked Frozen
• Breaded, Glazed &
Roasted
• Par-fried Breaded
• Sausages & Meatballs
Individually Frozen & Fresh
• Boneless Skinless Breasts,
Tenders, Thighs
• Bone-in Parts
• Burgers
Rotisserie Chickens
8-piece Cut-up
Breaded, Roasted & Glazed
Patties
RETAIL & DELI
MORE LESS PREP TIME, WORK, LABOR
20
OUR VISION AND STRATEGY
Shared on 9/20/17
21
OUR KEY CUSTOMER STRATEGY DRIVES
GROWTH AND LOYALTY – TOTAL BUSINESS
Shared on 9/20/17
2011 2012 2013 2014 2015 2016 2017
22
DELIVERING HIGHER ORDER ATTRIBUTES TO MEET
GROWING CONSUMER NEEDS
Shared on 9/20/17
Grew 11% and 14% in dollars and
volume vs. conventional
at -4% and 1.9%, respectively.
2nd highest sales growth claim
(28.7%), after organic (44%)
76% of retailers report success with
converting shoppers
61% of consumers
willing to pay 5 cents/lb. more,
37% $1/lb. more
Organic Claims #1 CAGR
over Past 5 Years
(Compounded Annual Growth Rate)
>30%
CAGR $ Growth
23%
CAGR Volume Growth
92.6% of consumers find it
very important to purchase
humanely raised meats.
American Humane Certified
has highest brand awareness
of certifiers; almost 50%
perceive it to be the best
On average, consumers willing
to pay 5.7% more for meats
products that are humane
certified; Millennials 6.5% more
SOURCES: 2016 & 2017 Power of Meat, 2012 & 2016,Consumer Reports Surveys, 2016 National Chicken
Council U.S. Chicken Consumption Report, MeatingPlace; 2014 Humane Heartland Farm Animal Welfare
Survey, American Humane Association, November 2014; 2016 Animal Welfare Research/Qualtrics
23
LEADING U.S. CERTIFIED
ORGANIC CHICKEN SUPPLIER
• Controlled Atmosphere Gas Stunning
• Automated White Meat Deboning
• Automated Dark Meat Deboning
• Higher Order Attributes
Shared on 9/20/17
24
INTEGRATING THE GOLD’N PLUMP BUSINESS UNIT
Shared on 9/20/17
Cold Spring Plant Arcadia Plant
Luverne Plant Arcadia Hatchery
Arcadia Feed Mill
and Elevator
Gold’n Plump Barn owned
by a Family Farm Partner
ARCADIA PROCESSING PLANT
Cold Spring Plant Arcadia Plant
Luverne Plant Arcadia Hatchery
Arcadia Feed Mill
and Elevator
Gold’n Plump Barn owned
by a Family Farm Partner
LUVERNE VALUE-ADDED PROCESSING PLANT
LUVERNE VALUE-ADDED PLANT
COLD SPRING
PROCESSING PLANT
ARCADIA
PROCESSING PLANT
Expanded Geography
Differentiated Brands
Fresh and Frozen
Multiple Channels
Medium-size Bird for Retail Tray Pack
Small-Bird Strategy for Deli &
Foodservice
Vertically Integrated, State-of-the-Art
Operationally Flexible
Plants:
• 2 Primary Processing
• 1 Further Processing
2 Hatcheries, 2 Feed Mills
Expected
Synergies of
$30M
25
OUR VISION AND STRATEGY
Shared on 9/20/17
26
OUR METHODS TO ACHIEVE OPERATIONAL EXCELLENCE
Shared on 9/20/17
• The “ZBB” for Labor (~ 55%-60% of Plant Cost)
• 16 Full-time Industrial Engineers
• Workload Analysis/Each Position
• Create Perfect Staffing /Crewing
• Daily Labor Performance Calculations
• Tracking / Accountability Reports
• Called “ZBB”
• ALL expenses justified for each new period
• Starts from a ZERO base
• Built around what’s NEEDED
• Analyzes EVERY function
• Optimizes COSTS not just revenue
COST/EFFICIENCY
IMPROVEMENT
FEWER POSITIONS DUE TO
PERFECT STAFFING
27
INDUSTRY FACTORS
Shared on 9/20/17
28
DEMAND: DEMOGRAPHICS & ECONOMY
Shared on 9/20/17
+4.1%
Projected
pop. growth
52%
Millennials &
Younger
United States: 2015 vs. 2020
43%
Non-
caucasian
+16.5
Growth
+10%
Growth
Sources: BLS, Census Bureau, FRED
59.62%
13.21%
1.25%
5.46%
0.23%
2.57% 17.66%
Race Percentages (2015)
White Black
39.89%
14.32%
1.35%
9.35% 0.29%
6.24%
28.56%
Race Percentages (2060)
Race Percentages (2015)
White
Black
Race Percentages (2060)
• Total population growth expected at 0.8% per year.
• US population is changing as Millennials and younger, Hispanics and Asians become a larger share of the total.
• All three also spend more on poultry as a portion of their protein expenditure.
41% 39% 41% 46% 41% 42% 44% 40%
26% 26% 28%
26% 30% 32% 31% 33%
33% 34% 32% 28% 29% 26% 25% 28%
0%
50%
100%
Under 25 25-34 35-44 45-54 55-64 65 and
older
65-74 75 and
older
Protein Expenditures by Age
Beef Pork Chicken
33.7% 27.8%
$244
$175 $177 $170
$100
$150
$200
$250
$300
Hispanic Asian African American Caucasion/Others
Annual Retail Dollars Spent on Chicken (per HH)
60% 57% 55% 53% 51%
18% 19% 20% 22% 23%
13% 13% 13% 14% 14%
5% 6% 6% 7% 7%
3% 3% 3% 4% 4%
1%
1% 1%
1% 1%
0%
50%
100%
2015 2020 2025 2030 2035
US Population by %
Caucasion Hispanic African American Asian Two or More Races AIAN NHPI
29
U.S. PER CAPITA CHICKEN CONSUMPTION CONTINUES TO RISE
Annual Pounds-Per-Person Chicken Consumption:
1960 to 2017 Projected
Shared on 9/20/17
Source: USDA Last updated August 2017
Due to growth in retail and
foodservice
Millennials, Gen Z AND
people (40-69) are
consuming more chicken
than consumers of the
same age range 30 years
ago
Chicken preferred for
health/sustainable
attributes
-
10
20
30
40
50
60
70
80
90
100 91.3
57.9
17.0
15.5
50.9
30
DEMAND: DOMESTIC
45
65
85
105
Broiler Consumption Per Capita
vs. Wholesale Price
Consumption/Capita (Lbs.) Wholesale Composite Price (Cts/Lb.)
Sources: USDA, IRI, NPD
• Despite the upward trend of wholesale
composite price broiler consumption per
capita continues to grow.
• Fresh chicken sales at retail shows a five year
average dollar growth of 6.4% as demand
remains strong.
• Chicken in foodservice has grown over the last
12 months even as traffic has stagnated.
60,000
60,500
61,000
61,500
62,000
62,500
10,000
10,500
11,000
11,500
YE Aug'14 YE Aug'15 YE Aug'16 YE Aug'17
Tra
ff
ic (000
)
Se
rv
in
gs
(000
)
Servings vs. Traffic
Chicken Servings Traffic
6.4%
8.4% 8.3%
4.7% 4.2%
2.7%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
2012 2013 2014 2015 2016 2017 YTD
Retail Fresh Chicken: YOY Dollar Sales Growth
Shared on 9/20/17
31
DEMAND: EXPORTS
• US exports are becoming increasingly less reliant on the top export partners.
• Despite an 8.6% YTD decrease in Mexico, US exports are up 3.7% for 2017 YTD.
• USDA expects export volumes to increase in 2018 by 3.2%.
Source: USDA, EMI Analytics
3.7%
-8.6%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
2017 YTD
Changes
US Total Mexico
[CATEGOR
Y NAME]
[PERCENT
AGE]
China
14%
Mexico
9%
Canada
4%
Lithuania
4%
Cuba
4%
Ukraine
3%
Angola
3%
Iraq
3%
Turkey
2%
Others
22%
2007
Mexico
20%
China
9%
Cuba
7%
Angola
6%
Canada
5%
Guatemala
4%
Philippines
3%
South Africa
3%
Kazakhstan
3%
Chile
3%
Others
37%
2017 YTD
Shared on 9/20/17
32
CONTINUED SUPPLY GROWTH IN LINE WITH DEMAND
Source: USDA
• Industry has consistently grown since 2012.
• 2012-2016 growth largely driven by a consistent increase in live weights.
Shared on 9/20/17
Annual U.S. Chicken Produced (RTC Pounds) YOY Live Weight Change
33
1,250,000
1,300,000
1,200,000
1,250,000
2,000,000
1,250,000
160,545,444
168,795,444
160,000,000
161,000,000
162,000,000
163,000,000
164,000,000
165,000,000
166,000,000
167,000,000
168,000,000
169,000,000
170,000,000
He
a
d
p
e
r W
e
e
k
Production Expectations
SUPPLY: CURRENT PRODUCTION
• Through 2019 we see a 5.1%
increase in capacity through
new plants; 6.3% increase in
live pounds.
• Average yearly population
growth is estimated at 0.8%.
• Three year average growth
of consumption per capita is
at 2.7%.
• Export demand is up 3.7%
YTD in 2017; expected to
increase 3.2% in 2018.
Source: MeatingPlace, USDA
Shared on 9/20/17
34
GLOBAL PROTEIN TRENDS
Meat Consumption Forecast
14.3 15.1
16.4 17.3 18.1
19.9 20.0 20.7
22.8 22.1 23.4
25.2 25.0 26.0
27.0 27.0 28.3
29.4
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E
(MT in millions)
Global Protein Exports
Source: FAO – OECD, USDA: data comprised of beef, pork, poultry and turkey available August 2017
81%
229
312
354
+13%
68
113 132
91
117
128
11
14
18
59
68
76
2001 Avg. 14-16 2026
Poultry Pork Lamb Beef
(Million tons) Developed
21%
Emerging
79%
Shared on 9/20/17
Expected Increase in Meat Demand by
Country Groups Between 2017 - 2026
35
U.S. INDUSTRY TRENDS REMAIN POSITIVE – KEY TAKEAWAYS
Source: PPC
Chicken industry
growing in
balance with
demand
Export market
portfolio has
greatly improved,
creating more
stable export
platform
SUPPLY
Record global
corn and soybean
crops have
created a global
surplus, reducing
input costs
2017 chicken
demand and
consumption
increasing across
foodservice and
retail
91
LBS
Shared on 9/20/17
CHARLES VONDERHEYDE
PILGRIM’S MEXICO
NY - SEP 20th, 2017
Charles VonDer Heyde
+ Chicken Market
- Food Market Value
- Chicken Industry
- Protein consumption
+ Pilgrim’s in Mexico
- Main Data
- Where we are
- Chain Value
- Products Portfolio
- Market coverage
- Main Customers
+ Business Objectives
- Main business obj.
- Our Philosophy
- Our platform
- Pilgrim’s University
- Quality System
+ Fresh BU
- Fresh Products
+ Value Added BU
- VA Products
+ IDEA Center
+ New Project
- Veracruz
Agenda
38
Alimentos procesados Market
27.2%
22.0%
10.5%
10.2%
9.2%
7.8%
5.9%
3.7%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Chilled processed
Frozen processed
Canned Food
Animal Feed
Confectionery
Others
Seeds, Oils & Fat
Dairy
Meats
Bakery Tortillas
$ 130 BUSD
MXP18.5/USD
Estimated $ 28.6 BUSD
37%
36%
16%
4%
4%
3%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Supermarket
Special
Value Added
Cuts
Live
Wog
$ 6.3 BUSD
24.0%
48.0%
50.0%
22.0%
24.0% 29.5%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Volume Value
Others
Pork
Chicken
Beef
Total Market Value
TOTAL FOOD INDUSTRY MEAT INDUSTRY CHICKEN INDUSTRY
Value
39
SAGARPA : USDA
SAGARPA : USDA
• Chicken protein is recognized as the most healthy
meat.
• Most affordable.
• Variety to prepare finished food.
Market Protein Consumption in Mexico
Mexico
Per capita
Consumption
Chicken 4.0 49% 32.1 41.4 15.1
Pork 2.2 27% 18.0 23.1 15.9
Beef 1.7 21% 14.1 26.3 9.9
Others 0.2 3% 1.0 7.7 1.1
8.2 100% 65.2 98.5 42.0
Consumption
Million Tons
Share
GLOBAL
Per capita
Consumpti
USA
Per capita
Consumption
Kilograms
40
+ Chicken Market
- Food Market Value
- Chicken Industry
- Protein consumption
+ Pilgrim’s in Mexico
- Main Data
- Where we are
- Chain Value
- Products Portfolio
- Market coverage
- Main Customers
+ Business Objectives
- Main business obj.
- Our Philosophy
- Our platform
- Pilgrim’s University
- Quality System
+ Fresh BU
- Fresh Products
+ Value Added BU
- VA Products
+ IDEA Center
+ New Project
- Veracruz
Agenda
41
Pilgrim’s in México
+8
Million Weekly
6 Processing Plant
2 Value Added Plant
34 Distribution Centers
Employees
+10,500
26%
Market Share
Alimentos procesados Pilgrim’s Mexico
Leading Poultry
Producer
SALES
Fresh 95%
VA 5%
42
Pilgrim’s México facilities
Processing
Plants
Distribution
Centers
Alimentos procesados Pilgrim’s Mexico
Future DC
North Complex
Center Complex
South
Complex
43
Cadena de Valor
Processed Chicken
Processed Chicken
Live Chicken
Feed Mill
Distribution
Center
Egg Breeders
Chicken
Hatcheries Chick Farms
Live
Chicken
Processing
Plants
Fresh/VA
Processed
Chicken
Customers
Customers
Customers
Egg Grand Parents
Value Chain Alimentos procesados Pilgrim’s Mexico
From Farm to the table!
44
Portfolio
IQF: Individually Quick Frozen
Live Wog Tray Pack IQF
Ready to
cook
Fully
Cooked
Alimentos procesados Pilgrim’s Mexico
45
Customers & Channels
LIVE CHICKEN
WHOLESALERS
RETAIL
Channels
Alimentos procesados Pilgrim’s Mexico
QSR
46
+ Chicken Market
- Food Market Value
- Chicken Industry
- Protein consumption
+ Pilgrim’s in Mexico
- Main Data
- Where we are
- Chain Value
- Products Portfolio
- Market coverage
- Main Customers
+ Business Objectives
- Main business obj.
- Our Philosophy
- Our platform
- Pilgrim’s University
- Quality System
+ Fresh BU
- Fresh Products
+ Value Added BU
- VA Products
+ IDEA Center
+ New Project
- Veracruz
Agenda
47
Alimentos procesados Pilgrim’s Mexico
1)- Greater profitability of the industry in a sustainable way
3)- Enhance brand's portfolio value (brand equity)
2)- Increase market share
Business Objectives 2016/2020
48
+ Strong Culture based on our People
Our Philosophy (Mission, Vision, Values)
+ Culture Deployment
Internal communication system
+ Continue Training and Talent Development
Pilgrim’s University
+ Innovation
New product development/R&D center
+ Governance compliance
Strong internal and external audit
Our Platform To DO BUSINESS Alimentos procesados Pilgrim’s México
49
Alimentos procesados Pilgrim’s University
Training for your future
50
Alimentos procesados
Objective
A development strategy for all that
holds the efficient execution of our
management system and goals
accomplishment.
UP is an integral development system directed
to all levels to strengthen people development
and accomplish results, based on Company
Leadership skills and Values.
“We strongly believe that success is
achieved through transcendence of
the individuals.”
Pilgrim’s University Objectives Alimentos procesados Pilgrim’s University
51
Alimentos procesados
3 DEGREES 1 POSTGRADUATE 9 STANDARD COURSES 8 OPTIONAL SUBJECTS
Alimentos procesados
Educational Offer
Companies greatness stands in the size of their Leaders
52
7738
USERS
EDUCATION
WITH HUMAN VALUE
+ 45,000
TRAINING
HOURS
53
Alimentos procesados PP Mex Strategy
1) People
– Best people at the right position
– Constant training
– Empowerment
2) Process
– Government and customers approvals/certifications.
– Internal cross audit
QA & FS Strategy
3) Objectives
– Guarantee best and optimal quality.
– Assure perfect quality with zero risk
– Anticipate market changes/trends.
54
+ Chicken Market
- Food Market Value
- Chicken Industry
- Protein consumption
+ Pilgrim’s in Mexico
- Main Data
- Where we are
- Chain Value
- Products Portfolio
- Market coverage
- Main Customers
+ Business Objectives
- Main business obj.
- Our Philosophy
- Our platform
- Pilgrim’s University
- Quality System
+ Fresh BU
- Fresh Products
+ Value Added BU
- VA Products
+ IDEA Center
+ New Project
- Veracruz
Agenda
55
Alimentos procesados Fresh BU Fresh Business Unit – Strategy
Biosecurity
Decentralized
Structure
Empowerment
Development
and talent
retention
Diversified
Distribution
Portfolio of
Products
Innovation and
Renovation
1- Greater profitability
of the industry in a
sustainable way
2- Increase market
share
3- Increase the value of
portfolio brands
Fresh BU
strategy has
been supported
by 6 KEY Pillars
56
Alimentos procesados Fresh BU
Historically, efforts were focused only on Business to Business
Currently, efforts are evolving to focus on Business to Consumer & Shopper Strategy
Strategy Evolution
57
Alimentos procesados PP Mex Strategy Where we want to compete?
Branded
Products
We want to Increase our participation in Modern Channel with branded products that
allow us to have more stable profitability and at the same time to develop our brands.
Commodity
Products
Spot
Market
Modern
Channel
+ Retail & clubs
+ Foodservice
+ QSR’s
+ Rotisserie Chain
- Live Sales
- Wholesaler
58
Portfolio Evolution
Live Wog Wog Tray Pack IQF
Alimentos procesados Pilgrim’s Mexico
Fresh BU mainly focused
on commodities
Innovation focused on Customer
& Consumer knowledge
59
Alimentos procesados Product Innovation Fresh BU
New Pack Image New thermoformed pack
NATURAL LOW FAT
MARINATED
NEW
MARINATED
8 Flavors
60
Alimentos procesados Products Innovation Fresh BU
New IQF line No Antibiotic Ever Line
1.5k BAG 700g BAG
5k BOX
Feed with
vegetable grains
61
Customer Evolution Alimentos procesados Pilgrim’s Mexico
Basic Products - Commodities
Public Markets
Public Markets + Retail + QSR’s + Direct Sales
62
Brand Presence at POS Alimentos procesados Pilgrim’s Mexico
63
+ Chicken Market
- Food Market Value
- Chicken Industry
- Protein consumption
+ Pilgrim’s in Mexico
- Main Data
- Where we are
- Chain Value
- Products Portfolio
- Market coverage
- Main Customers
+ Business Objectives
- Main business obj.
- Our Philosophy
- Our platform
- Pilgrim’s University
- Quality System
+ Fresh BU
- Fresh Products
+ Value Added BU
- VA Products
+ IDEA Center
+ New Project
- Veracruz
Agenda
64
One Pager Strategy
To be the number one choice for poultry value added products at each
distribution channel and market segment.
Winning aspiration
Poultry ready to cook and ready to
eat products.
Providing the best value equation and
differentiation to every market segment. Cost
efficiency and innovation will allow us to
outperform competition.
Understanding Consumers
Building strong brands
Innovating : Research & Development
Leveraging Company Scale
Strategic alliances with customers and suppliers
Ownership for each Market
Segment, Brands and Channels.
Monthly Business Reviews
VOLUME GROWTH AND EBITDA TARGETS
Management Systems Required
How to Win Where to play
Core Capabilities
Value Added
Business
Unit
65
Alimentos procesados Pilgrim’s Mexico Value Added BU Value Added
20,000 Tons/Year
90% growth over 2016 ($mxp)
Premium
We inspire you to give the best
choice for your loved ones
To provide the best food (flavor +
Nutrition) to connect people.
Value
60% VOLUME / 40% VALUE
Best equation taste/price
40% VOLUME / 60% VALUE
Best sensory experience of the category
Expected 2017
Purpose
Essence
Expected to grow 35% in 2018 ($mxp)
66
Alimentos procesados A short but successful story VA BU
• VA Business Unit was born on June 15th 2016.
• During 2016, we launched more than 30 new products in
different channels; wholesale, retail and club stores.
• Our portfolio grew from 30 to 60 SKU’s and Net sales
increased 23%.
• Pilgrim’s VA Brand was launched with a multichannel
advertising campaign starting November 2016 and
ending May 2017.
67
68
69
The BLUE WAVE keeps expanding
70
And the orange one too.
71
Alimentos procesados Market Segments : Frozen Chicken Where to Play
Ready to Cook Ready to Eat
*$ : Value to client or distributor
At least 30,000 Tons
90 USD Million
At least 25,000 Tons
160 USD Million
MDM
Breast / Soy
Filled Breast
Pieces /
Formed
Ready Meals
PRE
M
IU
M
V
A
LU
E
72
Alimentos procesados The Playing Field of every brand Where to Play
Ready to Cook Ready to Eat
MDM
Breast / Soy
Filled Breast
Pieces /
Formed
Ready Meals
RANCHO DORADO
READY MEALS
BRAND
73
+ Chicken Market
- Food Market Value
- Chicken Industry
- Protein consumption
+ Pilgrim’s in Mexico
- Main Data
- Where we are
- Chain Value
- Products Portfolio
- Market coverage
- Main Customers
+ Business Objectives
- Main business obj.
- Our Philosophy
- Our platform
- Pilgrim’s University
- Quality System
+ Fresh BU
- Fresh Products
+ Value Added BU
- VA Products
+ IDEA Center
+ New Project
- Veracruz
Agenda
74
Research & Development
IDEA CENTER INTRODUCTION
75
Alimentos procesados Operations How We Do It
External
Suppliers
QA Production
Sales Marketing
Customer
Accounting
Supply Chain
R & D
76
Alimentos procesados Operations Our Process
Decision filters definition
A STAGE-GATE methodology”
methodology helps us to evaluate
business opportunities.
“
1
IDEATION
2
UNDERSTANDING
THE
OPPORTUNITY
3
CONCEPT
DEFINITION
4
PRODUCT
DEVELOPMENT
5
LAUNCHING
DEVELOPMENT
6
LAUNCHING
AND KPI´s
CHECK
Successful
and
innovative
products
on the
market
77
Alimentos procesados Operations Our Process
Red Box & AGA
mkt
R&D
Suppliers
Packaging Product
Universities
- Retailers
- Wholesaler
- QSR
M K T
RESEARCH
WORKSHOPS
CONTESTS
COBRANDINGS
1. Brief 2. Ideation
Session
3. Pool Ideas 4. First Filter 5. Economic
validation
and
feasibility
CONCEPTS
6. ENTER TO
NEW PRODUCT
DEVELOPMENT
PROCESS
IDEATION
78
+ Chicken Market
- Food Market Value
- Chicken Industry
- Protein consumption
+ Pilgrim’s in Mexico
- Main Data
- Where we are
- Chain Value
- Products Portfolio
- Market coverage
- Main Customers
+ Business Objectives
- Main business obj.
- Our Philosophy
- Our platform
- Pilgrim’s University
- Quality System
+ Fresh BU
- Fresh Products
+ Value Added BU
- VA Products
+ IDEA Center
+ New Project
- Veracruz
Agenda
79
Alimentos procesados Operations VERACRUZ PROJECT
Current Capacity:
- Feed Mill (3,500 MT/Week)
- Hatchery (650,000 Chicks/W)
- 10- Broiler Farms (390,000 Chickens/W)
2018 Capacity Increase:
- Feed Mill (+3,500 MT/Week)
- Hatchery (+650,000 Chicks/W)
- 11- Broiler Farms (+410,000 Chickens/W)
- Future opportunity to build Processing Plant
80
Thank You
JANET MCCOLLUM
Introduction to Moy Park
September 20th 2017
Shared on 9/20/17
Retail
59%
QSR /
Foodservice
32%
Other
9%
Total 2016A
revenue:
c£1.4bn
Moy Park at a glance
Product mix (% 2016A Revenues)
Channel mix (% 2016A Revenues)
Overview
1. Poultry volume produced based on DEFRA calculations using egg placings and average
mortality rates. Moy Park production in May 2017 of 5.7m birds per week. Total Average UK
production from January to March 2017 of 19.1m birds per week
Top 10 UK food company
–2016A full year revenue of c£1.4bn and Adjusted EBITDA of c£133m
Fully vertically integrated poultry producer
–800+ farmers and 5.7m birds processed per week (30%1 of UK
production)
–13 processing plants across UK and Europe
Highly regarded and innovative manufacturer of
convenience food products
–Supplies all major UK supermarkets and major European Quick
Service Restaurant operators
European headquarters in Craigavon, Northern Ireland and
more than 12,000 employees
Fresh & Added
Value Poultry
52%
Prepared
Foods
48%
Total 2016A
revenue:
c£1.4bn
Shared on 9/20/17
84
Primary fresh and
fresh added-value
Multi-protein & meat
free
Ready-to-eat
Coated
Comprehensive product offering centred on poultry, convenience and meat free products
Our products
85
Fresh primary
Frozen Coated
Ready to eat
Fresh added value (fresh added
value, RTC, BBQ, rotisserie)
Fresh Coated
Agr
i-
fr
es
h
Fresh primary
£1.55bn
Frozen coated
£365m
Ready to eat
£385m
Fresh added value
(primary added value,
RTC, BBQ, rotisserie)
£497m
Fresh coated
£283m
Co
n
ve
n
ie
n
ce
Product category Product images
Moy Park retail market
shares (2017F )
26%
34%
51%
11%
40%
Core Consumption Occasions
Seasonal, mid week treat,
weekend entertaining
Family easy weekday teatime
Healthy mid week meals
Mid week convenient meal
Lunchtime, snacking
Present across all key UK retail poultry categories
Market sizes from Kantar Worldpanel 52 weeks to 13th August 2017. Data relates to size of retail market, and calculated on retail price sales
Note: share of Fresh primary is 26% v share of UK production @ 30%. Balance is sold through higher shares in added value and prepared foods channels, and in food service; note that 26%
share includes recent business gains during July/August. Full year share in Fresh primary = 24%
86
Primary fresh Ready-to-eat Convenience & meat free
UK & Ireland
(75% of 2016A revenues)
Continental Europe
(25% of 2016A revenues)
Retail Foodservice Other¹
8% 92%
Retail Foodservice
Coated
76% 13% 11%
1. Other channel includes sales to agricultural customers and sales of poultry on the international traded market
Note: Percentage of 2016A revenues
CUSTOMERS
PRODUCTS
CHANNEL
MIX
Our businesses today
Shared on 9/20/17
87
VISION
REVENUE &
MARKET SHARE
NEW BUSINESS &
INTERNATIONAL
FOODS
EFFECTIVE
EFFICIENT & SAFE
ORGANISATION
HIGH PERFORMING
PEOPLE & TEAMS
PROFITABILITY &
CASHFLOW
Become the best and most respected company in our industry,
creating the opportunity of a better future for our team members
Be a leading and
highly regarded European
food company
Provide fresh
high quality
locally farmed
poultry
Provide complementary
convenience food products and
brands to customers
and consumers
Be the most safe,
effective and
efficient
organisation of our kind
in the industry
Our strategy: Focus Together
Shared on 9/20/17
88
2
Trusted, long-term partner to leading European food retailers and foodservice customers 3
Attractive structural growth dynamics in a market of critical importance to customers and
consumers
4
Fully integrated, well invested poultry production platform delivering industry leading
technical excellence and food safety standards
5 Track record of strong and sustained earnings growth
Leading presence in fresh poultry and convenience segments, underpinned by strong
innovation capabilities
1
Top quartile profit growth opportunity through ongoing commercial and operational
improvements
6
Moy Park key highlights
89
UK Produced 72% Imported 28%
Critical category for retailers
Strong health and wellness credentials
Focus on provenance and British origin
Rapid convenience segment growth
72% of poultry produced in the UK
Source: Protein purchase volumes Kantar WorldPanel, 52 weeks to 18th June 2017. Import data per DEFRA, IHS Maritime & Trade – Global Trade Atlas, HMRC, AHDB – all via AHDB Poultry
Pocketbook 2017
…with consistent long-term growth
Favourable demographics
Core, sizeable, growing food category
Frequently consumed affordable staple protein
(Historical fresh protein retail sales volume, ‘000 t) Last 3 years CAGR
M ost popular prot ein i n t he UK…
51%
Fresh Pork: (2.9%)
Fresh Poultry: 4.5%
Poultry accounts for over half of all meat
sold in the UK by volume – more than
beef, pork and lamb combined
464 475
500
529
268 268 270 276
173 169 165 159
150
200
250
300
350
400
450
500
550
52 w/e 22 Jun 14 52 w/e 21 Jun 15 52 w/e 19 Jun 16 52 w/e 18 Jun 17
Fresh Beef: 1.0%
Attractive structural market dynamics 1
90
77% 75%
31%
25% 25%
Chicken Fish Beef Lamb Pork
Long term interest in health is soaring with chicken perceived as the healthiest fresh protein, and
consumers caring more about provenance than any other food and drink category
“In general, what types of protein do you consider to be healthy?”
Source: YouGov SixthSense Meat and Poultry Survey (17th- 24th February 2017)
Note: Based on 1,256 nationally representative UK adults
Neither
Unimportant /
very unimportant
Source: YouGov SixthSense Food Provenance Survey (11-19 June 2012)
Note: Based 1,256 Nationally Representative UK Adults
58%
56%
56%
53%
52%
48%
49%
47%
47%
41%
40%
37%
27%
26%
25%
24%
29%
33%
34%
30%
34%
35%
38%
39%
41%
31%
48%
39%
12%
11%
12%
13%
13%
13%
14%
14%
14%
15%
16%
14%
20%
21%
6%
8%
3%
2%
2%
8%
3%
3%
2%
4%
3%
18%
5%
14%
Poultry
Eggs
Vegetables
Milk
Potatoes
Bakery
Jams
Very important
/ important
Don’t know
Significance of food provenance by category
Consumers demand healthier products with clear provenance 1
91
One of the leading poultry producers in the UK and more than twice the size of the next largest
competitor… consistently growing market share
UK poultry by volume produced¹ (2017) Growth in Moy Park market share
Note: A,B,C,D refer to competitors
Source: Management estimates in conjunction with DEFRA calculations using egg placings and average mortality rates
1. Poultry volume produced based on DEFRA calculations using egg placings and average mortality rates. Moy Park production in May 2017 = 5.7m birds per week. Total Average UK production across January – March
2017 = 19.1m birds per week
30%
26%
30%
2014A 2017F
A
B
C
D
Others
4.5m
5.7m
Moy Park production capacity
(m birds per week)
Leading presence in UK fresh poultry… 2
92
51%
Other
49%
Chilled ready-to-eat
Chilled fresh coated
Market growth
(2013-17 CAGR)
+6.9%
+2.2%
Market value (€bn)
1. Specific Global Data category used is “fast food”, which is synonymous with QSR.
Source: Global Data, July 2017
UK QSR market¹
Market growth
(2013-17 CAGR)
Market value (€bn) Market growth
(2013-17 CAGR)
11.9
2017
Moy Park has leading market positions in higher growth convenience food categories. Increasing
penetration of the fast-growing foodservice channel in France and the UK provides further growth upside
French QSR Market¹
+4.2%
+6.0%
40%
Other
60%
Market growth
(2013-17 CAGR)
Source: Management Estimates in conjunction with Kantar WorldPanel (13A & 17A). 2013 refers
to 52 weeks to 23rd June 2013. 2017 refers to 52 weeks to 18th June 2017.
For context, UK grocery CAGR for the same period was 1.1% (Kantar WorldPanel)
17.9
2017
UK retail Foodservice
… with clear leadership in convenience segments 2
93
26
75
2011A 2017A
Consumer insights capabilities support innovation and food development, helping deliver a large variety of new
products for all different meal occasions over the last 10 years and further supported by our embedded chefs
Food Development
Innovation & Insight Headcount
c50 new
employees
Roast in bag Embedded Chefs Gluten free
Omega 3 Rotisserie Chicken
Insight and innovation capability drives further customer engagement
2
94
Innovation drivers
• Market and consumer needs are evolving
• Retailers are looking for differentiation
• Need to differentiate ourselves from competitors
• Consumer are looking for products that meet their
changing needs
• Process innovation to enhance efficiency
Overall market trends
Rise of convenience food
New shopping habits
Increased connectivity
Disruptive business models
Changing population
Evolving health perception
Innovation is key to Moy Park 2
95
Trusted, long-term partner to leading European
food retailers and foodservice customers
Retail
59%
QSR /
Foodservice
32%
Other
9%
Total 2016A
revenue:
c£1.4bn
Key customers
R
e
ta
il
F
o
o
d
s
e
rv
ic
e
Moy Park has long standing relationships with its retail and foodservice partners who trust us to
protect their own brands through quality, food safety, innovation and service
2016A customer split
2016A channel Split
Top 5 retail
customers
46%
Top 3
foodservice
customers
24%
Other customers
30%
Total 2016A
revenue:
c£1.4bn
3
96
Risk management
Feed
Ingredients
Packaging
Meat
Commodity Pricing Models
Residual Risk
to be
Fixed Price 7%
Customer
Rolling Cost
Models
46% of raw material spend is covered by pricing models that
enable cost movements to be passed through
46%
cost
passed
throug
h
Customer models are utilised extensively to
minimise volatility to profitability as a result of input
price fluctuations
– Moy Park commodity expertise is shared extensively with
customer base to help decision making as appropriate
– All procurement teams regularly provide commercial
support with customer meetings and commodity updates
Residual risk is managed via forward cover on
physical contracts or frame agreements
– Futures and derivatives are not used, although knowledge
exists
– Market view and internal risk appetite are used to define
cover policy
– Changes to cover policy on feed are signed off by Supply
Chain Director and CEO
Approach
3
97
Note: All numerical values including # weeks and # eggs represent average expectations.
Fully integrated poultry supply chain – that delivers
traceability, quality, efficiency
50 year partnership with Aviagen
F
e
e
d
M
il
ls
Excellence in bio-security and food safety
Farming, nutritional and veterinary partnerships
Data driven insights and decision making
Supply chain and operational excellence delivering sustained
improvements in health and safety, quality and efficiency
Consumer and customer insight delivering optimised range
Innovation and Food Development
4 Fresh Poultry
Processing Sites
9 Added-Value
Processing Sites
Investment in processes and technology to ensure strong
service levels
3 Weeks 5 Weeks 12-24 Hrs 12-24 Hrs 12-24 Hrs
Breeding Hatchery Farm Factory Stores Distribution centre
29 months
Grandparent
Rear
Parent Lay
Broiler Hatchery
Grandparent Lay
Broiler Farms
Poultry production platform Key benefits for customers
4 Fully integrated, well invested poultry production platform
Parent Hatchery
Parent Rear
Industry Leading animal welfare and sustainability
Modern and well invested farm estate
4
98
Fresh processing
UK added-value processing
EU added-value processing
Grandparent
breeding grounds
Ballymena
Dungannon
Craigavon
Dublin
Anwick
Ashbourne
Grantham
Huntingdon
Peterborough
Marquise
Hénin-
Beaumont
Orleans
Schagen
Long-term relationship with 800+ farmers
7 hatcheries and 3 feed mills
13 processing plants in the UK, Ireland,
France and the Netherlands
–4 fresh processing
–9 added-value processing
Employing more than 12,000 people
Geographical location of
grandparent breeding
grounds in West-Europe
we believe is the most
secure in Europe with
respect to biosafety and
protection from disease
Fully integrated, well invested poultry production platform 4
99
Strong commitment to food safety, welfare and quality standards
Best in Class
antibiotic
stewardship
Best in Class agri-
infrastructure and
welfare KPI
measures
Best in Class
campylobacter
performance
Best in Class food
security
Best in Class
research & horizon
scan
Determination Accountability Teamwork Integrity Relationships Mutual respect
Approved by key legislative and third party bodies
Trust
Integrity
Quality
Food
Safety
4
100
£1,394m
£1,422m
£1,442m £1,437m
2013 2014 2015 2016
£66m
5.2%
£81m
6.3%
£98m
7.0%
£115m
8.1%
2013 2014 2015 2016
Track record of strong and sustained earnings growth
Revenue (£m, FYE December) Adjusted EBITDA1 (£m, FYE December)
Adjusted for Corporate Charges, Exceptional Items & SOX Costs
Source: Company information, (MPHE Management accounts), stated based on IFRS accounting
5
101
Recent key strategic projects
Increase fresh slaughter capacity &
efficiencies
− c£36m investment increasing capacity by
c1m birds per week
Increase hatchery capacity
−New state-of-the-art hatchery in Newark
commissioned in September 2017 delivering
c2.4m chicks per week
− Ashbourne hatchery extension increasing
capacity to 1.2m chicks per week
Newark new hatchery
Significant capital investment in capacity and efficiency improvements
Operational excellence – strategic investment in modern facilities
Source: NFU Poultry Housing Age Survey (data based on 000’s m2 as of 2015, rebased on 2017); Moy Park internal information
17%
45%
Industry Moy Park
% of Poultry Sheds 9 Years Old
and Under
6
102
• Strong track record of cost reduction, with US $50m of net improvements
targeted over next two years
• Fundamental principles:
– Established Governance programme
– Identification of ‘best’ performance versus ‘average’ performance – the gap
– Target setting to close % of the gap – the goal
– Rigorous daily work routine management – PDCA
– Identify new ‘best’ performance and then repeat
• Workstreams established in Agriculture, Operations and Procurement have all
consistently outperformed stretching targets
• Significant future opportunities still exist and are being actively progressed
Approach
Operational Excellence – The ‘Being the Best’ programme 6
ACT PLAN
DO CHECK
103
Future Opportunities £38m [$50m]
ACT PLAN
DO CHECK
Operational Excellence – The ‘Being the Best’ programme
£19
m
£11
m
£8m
Factory
Operations
Agriculture Procurement
Target Area Value
Yield & Giveaway £10m
Productivity £9m
New Hatchery £5m
Agriculture £6m
Sourcing £5m
Specification £3m
Total £38m
Total $50m
6
104
VISION
REVENUE &
MARKET SHARE
NEW BUSINESS &
INTERNATIONAL
FOODS
EFFECTIVE
EFFICIENT & SAFE
ORGANISATION
HIGH PERFORMING
PEOPLE & TEAMS
PROFITABILITY &
CASHFLOW
Become the best and most respected company in our industry,
creating the opportunity of a better future for our team members
Be a leading and
highly regarded European
food company
Provide fresh
high quality
locally farmed
poultry
Provide complementary
convenience food products and
brands to customers
and consumers
Be the most safe,
effective and
efficient
organisation of our kind
in the industry
Our strategy: Focus Together
105
JOE WALDBUSSER
107
CASH CORN OMAHA, NE
Shared on 9/20/17
Source: USDA-WASDE
3.580
3.130
3.220
4.090
2.900
4.110
3.370
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
1/
8
1/
22 2/
5
2/
19 3/
5
3/
19 4/
2
4/
16
4/
30
5/
14
5/
28
6/
11
6/
25 7/
9
7/
23 8/
6
8/
20 9/
3
9/
17
10
/1
10
/1
5
10
/2
9
11
/1
2
11
/2
6
12
/1
0
12
/2
4
US
D
/ B
U
2017 2016 2015 '12-'16 Avg CME '17/18
108
CASH SOYBEAN MEAL DECATUR, IL
Source: USDA-WASDE
346.700
285.600
297.900
263.200
413.300
396.500
200
250
300
350
400
450
500
1/
8
1/
22 2/
5
2/
19 3/
5
3/
19 4/
2
4/
16
4/
30
5/
14
5/
28
6/
11
6/
25 7/
9
7/
23 8/
6
8/
20 9/
3
9/
17
10
/1
10
/1
5
10
/2
9
11
/1
2
11
/2
6
12
/1
0
12
/2
4
US
D
/ T
on
2017 2016 2015 '12-'16 Avg CBOT '17 CBOT '18
Shared on 9/20/17
109
AUGUST TEMPS ONE OF THE COOLEST ON RECORD
Average Temperature (F):
Departure from Mean:
Aug 1-Aug 30, 2017
SOURCE: Midwestern Regional Climate Center, cli-MATE: MRCC Application Tools Environment, Generated at 9/12/17 12:27:38 PM CDT
Shared on 9/20/17
110
DRIEST AREAS OF BELT RECEIVE THE BEST RAINS
% of Normal Precip:
Over 30 Days
Ending 12 UTC/Sept. 6, 2017
111
US CORN STOCKS REMAIN IN SURPLUS
• US corn yield projected at 169.9 bushels/acre
vs market estimates of 167.9
• US stocks projected at 59.3 million tons on par
with 2016/17
Shared on 9/20/17
112
SOYBEAN STOCKS INCREASING DESPITE DEMAND
• US soybean yield projected at 49.9 bushels/acre
vs market estimates of 48.7
• US and global stocks projected to increase in
17/18 despite growing Chinese import demand
Shared on 9/20/17
LASTON CHARRIEZ
114
OBSERVATIONS & OPPORTUNITIES
• Pilgrim’s is a fantastic opportunity
• The audacity to think bigger. Deliver
brands and provide retailers with
solutions for all their Poultry needs, from
Private Label to branded options
• Cross-pollination and expansion of
great ideas across organization
• Create FRUGAL INNOVATION:
Improving product quality at more
accessible price points
Shared on 9/20/17
115
Alimentos procesados Winning
By providing the BEST consumer/customer value equation—
better than our competitors…sustainably and profitably.
THE BEST VALUE EQUATION
Shared on 9/20/17
116
OUR CONSUMER SEGMENTATION DRIVES INNOVATION; DELIVERS VALUE
Cooking
Avoiders
Protein
Seekers
Convenience
Seekers
Family
Pleasers
Inspiration
Seekers
SOURCE: Protein Consumer Segmentation Study - TNS and The Futures Company – Fall 2015 - n =5,000
Shared on 9/20/17
117
BRANDS FILL DIFFERENT CONSUMER NEEDS
LESS HEALTH
SOURCE: Protein Consumer Segmentation Study –
TNS and The Futures Company – Fall 2015 - n =5,000
Shared on 9/20/17
118
…FOR USAGE AND ATTITUDES
SOURCE: Protein Consumer Segmentation Study –
TNS and The Futures Company – Fall 2015 - n =5,000
Shared on 9/20/17
119
Fortify Home
Gain Market Share
Better
Fresh, Straightforward,
Fun with a Bit of Attitude
Wholesome fresh chicken and
better-for-you value-added
products for trusted
convenience
Eating Occasions
National Expansion
Best
Simple, Empowering,
Inspirational
Premium quality fresh chicken
with leading health attributes
and simple, clean
convenience products
Lifestyle, Creating
BRAND STRATEGIES ALIGN WITH CONSUMERS
Market Strategy
Fortify Home
Gain Market Share
National Expansion
Portfolio Role Better Best
Tone
Fresh, Straightforward,
Fun with a Bit of Attitude
Simple, Empowering,
Inspirational
Product Position
Wholesome fresh chicken and
better-for-you value-added
products for trusted
convenience
Premium quality fresh chicken
with leading health attributes
and simple, clean
convenience products
Tagline
Marketing Focus Eating Occasions Lifestyle, Creating
PRIMARY
Consumer Segments
SECONDARY
Protein
Seekers
Inspiration
Seekers
Family
Pleasers
Convenience
Seekers
Cooking
Avoiders
Shared on 9/20/17
120
Alimentos procesados
Sustainable
competitive
advantage
Differentiation
Production
Efficiency
• Deep and holistic
understanding of customers
• Intensive brand building
• Jealous guarding of customers
• Commitment to Frugal
Innovation
• Systemic understanding of
costs / costs drivers
• Relentless reduction of costs
• Commitment to
standardization.
NET
MARGIN
Winning THE BEST VALUE EQUATION
Shared on 9/20/17
121
9.8%
3.9% 3.8%
3.6%
3.5%
3.5%
3.4% 3.3%
3.3%
3.3%
3.2%
3.1%
3.1%
3.0% 2.9% 2.8% 2.8% 2.7% 2.7% 2.6% 2.5% 2.5% 2.5% 2.5% 2.4% 2.4% 2.3% 2.3%
1.9% 1.8% 1.7% 1.7% 1.6% 1.6%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
FEATURE IMPORTANCE SCORES
Chart shows the RANGE of each
feature’s impact on purchase--
calculated by subtracting the highest
from the lowest scores.
Shared on 9/20/17
122
Alimentos procesados Capabilities
Deep
Unde
rs
ta
n
di
n
g
of
C
on
su
m
e
rs
C
reati
n
g a
n
d
Bu
ild
in
g
B
ra
n
d
s
Inno
v
at
in
g
R
&
D
Technolo
g
y
*
St
rate
g
ic alli
a
nce
s
w
it
h
C
u
stomer
s
a
n
d
Sup
p
lie
rs
G
loba
l
E
x
pe
rti
se
&
K
now
-
H
o
w
SUPPORT CORE CAPABILITIES TO WIN
Shared on 9/20/17
123
FRUGAL INNOVATION = IMPROVING PRODUCT QUALITY AT
MORE ACCESSIBLE PRICE POINTS
• Value is often misinterpreted as
“Managing Pricing” or “Cost of
Goods”
• Use of the word ‘value’ revolves
around the “price/benefit”
relationship offered to consumers,
shoppers and customers
• The relationship that needs to be
understood is between “perceived”
benefits vs. “perceived” price, as it is
perception that drives decision
making
Shared on 9/20/17
124
CREATING MARKET VALUE: 3W’S
• Different people value
different things
• Managing “fair value” for a
brand requires a clear
understanding of
─ WHO you are targeting
─ WHAT they value within the
category in which the brand is
operating
─ WHY they value it (what NEEDS
does it address)
WHO WHAT Where
When
How
WHY
Geography - Demographics
Socioeconomics
Psychographics
Needs
Behavior
Shared on 9/20/17
125
• The development of
product, price and
activation strategies are not
developed in isolation, but
also recognize how they
work together to influence
value
• The purpose of each lever
is to understand how the
product, price or activation
can work together to
create value for the
consumer
POINTS OF PARITY, DIFFERENCE & IRRELEVANCE
Shared on 9/20/17
126
Alimentos procesados People
Deep
Unde
rs
ta
n
di
n
g
o
f
Cons
u
m
e
rs
C
reati
n
g
a
n
d
Building
B
ra
nd
s
Inno
v
at
in
g
R
&
D
Technology
*
Str
a
tegic
all
ia
n
ces
w
ith
C
u
stomer
s
a
n
d
Sup
p
lie
rs
G
lo
b
a
l
Expe
rti
se
&
Know
-
Ho
w
CRITICAL TO WINNING/BECOMING THE BEST
“Become the best and most respected company in our industry,
creating the opportunity of a better future for our team members”
Shared on 9/20/17
127
DIGITAL STRATEGY
MAKE THEM AWARE
DRIVE
CONSIDERATION
MAKE
THEM ACT
Local Targeting – reach a specific
audience in a defined area (zip, geo, etc.)
Brand Affinity Targeting – reach a
specific audience based on behaviors and
locations associated w/ your brand
Proximity Targeting – engage your
audience when they are within a certain
distance from your store/product
In-Store Targeting – engage an
audience upon entry to your store
Geo-Conquesting – drive action as consumers
are preparing to make a choice w/ competitor
Mobile Retargeting – retarget your audience
to continue engagement
FACT: People spend 2X as much time online
as they did12 years ago. And offline marketing
isn’t as effective as it used to be.
Use online marketing techniques
to achieve your goal(s).
Shared on 9/20/17
128
LOCATION-BASED MEDIA: GEO-FENCING PILOTS
Shared on 9/20/17
129
Just BARE Digital Marketing Strategy
TARGETING
• Demo
• Market
Protein
Seekers
Inspiration
Seekers
Shared on 9/20/17
130
TARGETING
• Demo
• Market
Gold’n Plump Digital Marketing Strategy
Cooking
Avoiders
Family
Pleasers
Convenience
Seekers
Shared on 9/20/17
131
https://www.cnbc.com/2017/01/30/online-grocery-sales-set-surge-grabbing-20-percent-of-market-by-2025.html
https://www.cnbc.com/2017/06/21/dont-worry-wal-mart-amazon-buying-whole-foods-is-just-a-drop-in-the-bucket.html
ON-LINE/DIGITAL GROCERY
Shared on 9/20/17
FABIO SANDRI
133
OUR VISION AND STRATEGY
Shared on 9/20/17
134
OUR VISION – HOW DO WE TRACK IT?
Shared on 9/20/17
135
OUR VISION - MARKET VALUE
Shared on 9/20/17
136
OUR VISION - TOTAL SHAREHOLDER RETURN
$658
$274
*$100 invested on 12/25/11 in stock or 12/31/11 in index, including reinvestment of dividends. Indexes calculated on month-end basis.
Peer Group includes Hormel Foods Corp, Sanderson Farms Inc. and Tyson Foods Inc.
Copyright© 2017 Russell Investment Group. All rights reserved.
Shared on 9/20/17
137
OUR VISION – OPERATIONAL BENCHMARKS
2011:
PPC
below
AVG Co
2013:
PPC
better
than
AVG
Based on Agristats C/lb profit
Vision:
The Best
2015:
PPC Top
Third
Shared on 9/20/17
138
$5,656 $5,971
$6,336 $6,784
$7,027 $6,784 $6,358 $6,853
2010 2011 2012 2013 2014 2015 2016 2017
LTM
U.S. Domestic
PROGRESS REPORT – GROWTH
…BOTH in the U.S. and Abroad 6 Years of Significant Growth …
Note: 2012 sales adjusted to 52 weeks.
$1,226
$1,565 $1,632 $1,627 $1,556 $1,396 $1,574
$3,531
2010 2011 2012 2013 2014 2015 2016 2017
LTM
International
(Export + Mexico + Europe)
$6,882
$7,536
$7,968
$8,411
$8,583
$8,180 $7,931
$10,384
2010 2011 2012 2013 2014 2015 2016 2017
LTM PF
Total Sales
51%
21%
188%
($ in millions)
($ in millions)
Note: 2012 sales adjusted to 52 weeks, figures may be off due to rounding. 2017 LTM PF sales comprised of $8,436mm from Pilgrim’s Pride, which is pro forma for a
full year of GNP sales, and $1,948mm (£1,487mm) from Moy Park. Source: PPC
Shared on 9/20/17
139
RELENTLESS PURSUIT OF OPERATIONAL EXCELLENCE
>$1.0B cumulative operational improvements ’11–’16
2016 impacted by portfolio mix changes
$174M targeted for 2017
Commitment at every level; using ZBB
2011 2012 2013 2014 2015 2016
2011 2012 2013 2014 2015 2016
-1.2c/lb.
-0.4c/lb. -0.8c/lb.
-1.4c/lb. +0.4c/lb.
Yield
Plant Cost
$250
$125
$200
$180
[VALUE]
$174
2012 2013 2014 2015 2016 2017
Target
Operational Improvement
+1.5%
+0.9%
+1.5%
+0.8%
+0.3%
Source: PPC
($ in millions)
Shared on 9/20/17
140
MANAGEMENT OF SG&A
De-layering: Closer to customers
Shared Service Center with JBS
Zero-Based Budget
$0
$50
$100
$150
$200
$250
$300
$350
$400
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Reduced, Sustainable SG&A Levels
2.5%-3.0%
4.7%
Source: PPC
($ in millions)
Shared on 9/20/17
141
PROGRESS REPORT – RESULTS
…and Profitability Growing Volume…
2010 2011 2012 2013 2014 2015 2016 2017
LTM PF
Volume
$482
($147)
$398
$810
$1,352
$1,214
$899
$1,192
2010 2011 2012 2013 2014 2015 2016 2017
LTM PF
Adj. EBITDA
($ in millions)
(MM lbs.)
Note: 2012 Lbs. adjusted to 52 weeks as fiscal 2012 contained 53 weeks. Adjustment was to reduce lbs. by 1/53 rd. 2017 LTM PF data includes Moy Park. 2017
LTM EBITDA includes $50m expected synergies.
35%
147%
Source: PPC
EBITDA Margin
7.0% (2.0%) 5.0% 9.6% 15.8% 14.8% 11.3% 11.5%
Shared on 9/20/17
142
PROGRESS REPORT – FREE CASH FLOW
$250
$350
$750
$880
$826
$480
2011 2012 2013 2014 2015 2016
Close Management of working capital
Strong Cash Flow generation
Net debt / LTM EBITDA 1.1X as of
June 2017
Significant room for growing the
company
Cash Flow Generation
($ in millions)
Source: PPC
Shared on 9/20/17
143
GROWING THROUGH INVESTING IN OUR BUSINESS
Source PPC
Strong Free Cash Flow generation has enabled us to direct more capital spending towards identified projects with
rapid payback and structural projects. $1B invested in the last 6 years
New strategic projects will support key customers growth and de-emphasize our exposure to commodity markets by
bringing more differentiated portfolio.
Capex (US$M)
Shared on 9/20/17
144
GROWING IN U.S. THROUGH ACQUISITIONS – GNP
Cold Spring Plant Arcadia Plant
Luverne Plant Arcadia Hatchery
Arcadia Feed Mill
and Elevator
Gold’n Plump Barn owned
by a Family Farm Partner
ARCADIA PROCESSING PLANT
Cold Spring Plant Arcadia Plant
Luverne Plant Arcadia Hatchery
Arcadia Feed Mill
and Elevator
Gold’n Plump Barn owned
by a Family Farm Partner
LUVERNE VALUE-ADDED PROCESSING PLANT
LUVERNE VALUE-ADDED PLANT
COLD SPRING
PROCESSING PLANT
ARCADIA
PROCESSING PLANT
Expanded Geography
Differentiated Brands
Fresh & Frozen
Multiple Channels
Medium-size Bird for Retail Tray Pack
Small-Bird Strategy for Deli &
Foodservice
Vertically Integrated, State-of-the-Art
Operationally Flexible
Plants:
• 2 Primary Processing
• 1 Further Processing
2 Hatcheries, 2 Feed Mills
Expected
Synergies of
$30MM
Shared on 9/20/17
145
GROWING IN MEXICO
Diversified product mix from commodity to prepared branded
products, including premium Pilgrim’s brand
Geographic Diversity
Product Diversity
Growth Opportunity
New complex in Veracruz – starting with 100K live
chicken/week growing to 500K in 2 years
Strong player in central and north regions
Demand growth for chicken
Shared on 9/20/17
146
GROWING IN MEXICO, CONT.
Acquisition in Mexico at
end of Q2 2015:
– Initial estimate of $30MM in
synergies
– Actual synergies of $50MM
and the acquired asset is
performing at the same
level as the legacy
– Cross-learning and
benchmarking benefiting
both new and legacy asset
results
Shared on 9/20/17
147
GROWING INTO DIFFERENT GEOGRAPHIES
Value
Creation
Capital
Structure
Synergy opportunities of $50MM
Yields, productivity and sourcing
Immediately accretive to EPS
$10c/ share based on current results and full acquisition in debt
$25c/share expected for 2018 based on capturing 50% of the synergies and
actual increase in debt giving cash on hand
Pilgrim’s strong cash flow generation and the additional cash flow resulting from the
acquisition will allow the Company to maintain its strong balance sheet
Pro forma leverage of 2.2X and expectation of less than 2X LTM EBITDA after Q3
Continued financial flexibility
Constant search for shareholder value creation through improving capital
structure and growth
Shared on 9/20/17
148
CREATING A STRONGER PORTFOLIO
Europe 19%
US 65%
Export 3%
Mexico 13%
2017 LTM
PF Sales
$10,384mm(1)
Pro Forma Sales by Geography
Fresh 65%
Prepared/
Value-added
27%
Export and
Other 8%
Pro Forma Sales by Product
2017 LTM
PF Sales
$10,384mm(1)
Note: 1. 2017 LTM Pro forma sales comprised of $8,436mm from Pilgrim’s Pride, which is pro forma for a full year of GNP sales, and $1,948mm (£1,487mm) from Moy Park.
Shared on 9/20/17
149
• Better, more stable results: Variable
compensation
• Healthy company growing and creating new
opportunities
• Attract the best teams, suppliers, partners,
customers and investors
• Pride of being the BEST!
OUR VISION - BETTER FUTURE FOR TEAM MEMBERS!
Shared on 9/20/17
EDUARDO NORONHA
151
PILLARS TO SUPPORT OUR STRATEGY
PEOPLE
QUALITY MAINTENANCE ENVIRONMENT
METHOD
Shared on 9/20/17
152
SAFE People – A Condition/Results & Methods
The safety of our team members is a condition. We continually
outperform the industry AND expect continuous improvement.
Occupational Health and
Safety Programs
Safety Leadership Committee
Training and Education
Prevention
Audits
Corrective Actions
PILGRIM’S DART, TRIR & SEVERE INCIDENTS
VS. POULTRY PROCESSING INDUSTRY AVERAGE
RES
U
LT
S
METHOD
S
Shared on 9/20/17
153
At Pilgrim’s, we:
• Understand the
responsibility that comes with
being a major employer in
rural America
• Work hard to contribute to
the well-being
of these communities by
providing gainful
employment opportunities
and maintaining a
sustainable workforce.
Our TEAM, our COMMUNITIES
Shared on 9/20/17
154
From 2010-2015, we
outperformed 8 out of
9 of our 2010 goals,
reducing:
• energy use by 28%
• water use by 34%
• greenhouse gas
emissions by 33%
ENERGY, WATER & EMISSIONS
STRONG Team Strong Results: ENVIRONMENT
Our sustainable and solid financial results came from the outstanding engagement of our
41,000 Team Members in any aspect of our business.
Shared on 9/20/17
155
From 2010 to 2015, we:
• reduced our solid
waste by 44%
• increased our
recyclable packaging
by 40%
• reduced our
packaging per unit of
production by 25%
STRONG Team Strong Results: ENVIRONMENT, cont.
WASTE & PACKAGING
Shared on 9/20/17
BILL LOVETTE
157 Shared on 9/20/17
PILGRIM’S PROGRESS ON DELIVERING OUR VISION TO BE THE BEST
THROUGH OPERATIONAL EXCELLENCE & ACQUISITIONS
Closing GAPS Expanding TARGET
U.S.
Focus
158