Annual and Sustainability Report 2018 Annual and Sustainability Report 2018 Annual and Sustainability Report • 2018 • JBS TO READ page. 6 THIS REPORT MESSAGE FROM MANAGEMENT page. 8 THIS YEAR’S HIGHLIGHTS page. 16 THIS IS JBS Profile Values Governance Ethics and Compliance Risk management Associations and partnerships OUR page. 36 BUSINESS Global business strategy Food quality and safety Innovation Business lines · Beef · Poultry · Pork · Leather · Related Business Suppliers Clients page. 80 OUR PEOPLE Team Members Community OUR page. 94 SUSTAINABILITY Sustainability Governance Materiality and stakeholder engagement Priority issues: · Team Member health and safety · Animal welfare · Product integrity · Water Management · Climate change OUR page. 160 PERFORMANCE Financial results Non-financial achievements: • Awards • Certifications Outlook ADDITIONAL INFORMATION page. 170 AND GRI CONTENT INDEX 4 SUMMARY 5 Annual and Sustainability Report • 2018 • JBS TO READ THIS REPORT GRI 102-45, GRI 102-46 GRI 102-48 GRI 102-50, GRI 102-51, GRI 102-52, GRI 102-53, GRI 102-54 BS, because of its business is structured. This report The JBS materiality matrix is the businesses, geographies has been prepared in accordance basis of the Our Sustainability Jand the people who help with Global Reporting Initiative chapter. This details how the build the business every single (GRI) Standards: Core option. Company manages its business’s day, is a highly diversified food Our financial statements comply five priority sustainability issues Company. The Company’s with the International Financial and the results it has achieved identity is built around its Reporting Standards (IFRS) throughout 2018. Culture, which represents the issued by the International mission, beliefs and values which Accounting Standards Board Finally, Our Performance are shared by its Team Members (IASB) and are produced presents JBS’s financial results in all 15 countries where the by Grant Thornton and the recognition JBS has Company does business. Auditores Independentes. received, both of which help understand the scope of the As part of its mission to The report has also been Company’s activities and provide the best products and structured to focus primarily the level of excellence it has services to its clients, building on sustainability and the achieved, particularly in terms of solid relationships with its Company’s stakeholders. There value creation, reducing impacts suppliers, creating value for are four chapters: Our Business, and maximizing the positive its shareholders and offering Our People, Our Sustainability outcomes from the business. each of its Team Members and Our Performance, as well as an opportunity for a better a Company profile in the “This is The results and information future, the Company believes JBS” chapter. in this report cover operations nurturing respect for the entire from all JBS S.A. business production chain is essential In Our Business, JBS presents its platforms, divided into JBS for its continued success. As governance and management South America (Seara, Friboi1, part of this commitment, model, its commitment to JBS Couros and JBS Novos every year JBS publishes its ethics and compliance as well Negócios) and JBS USA (JBS Annual and Sustainability as its risk management and USA Beef - which includes the Report. This, the 10th edition value creation strategies. operations in the US, Canada, of the Report, describes Australia and New Zealand, - JBS the Company’s economic, Our People presents JBS’s USA Pork and Pilgrim’s Pride social and environmental relationship with its two main Corporation - with Pilgrim’s performance throughout 2018, its stakeholders: Team Members operations in the US, Puerto management and governance and the communities closest to Rico, Mexico and Europe). practices and the way the its operations. IF YOU HAVE ANY COMMENTS, SUGGESTIONS, QUESTIONS OR CRITICISM ABOUT THIS DOCUMENT, PLEASE EMAIL THEM TO [email protected], SEND THEM TO THE INVESTOR RELATIONS AREA AT +55 (11) 3144-4224 OR [email protected] OR EMAIL THE SUSTAINABILITY AREA AT 1 Prior to December 2018, this business [email protected]. unit was called JBS Carnes. 6 To read this report 7 Annual and Sustainability Report • 2018 • JBS MESSAGE FROM MANAGEMENT GRI 102-14 A MESSAGE TO OUR STAKEHOLDERS am excited to be able to share JBS has an extensive footprint – global sustainability strategy, JBS’s 2018 results with you with businesses in North, Central for which we have received a I and discuss the progress and South America, Europe number of awards from various we have made. Executing our and Oceania – allowing it to organizations worldwide. mission – which is to be the maximize global opportunities. best at whatever we put our This global strategy, alongside a We have also set a number of minds to and fully focus on our unique and diversified portfolio new records with net revenues businesses - we have produced of proteins, solutions, value- of R$ 181.7 billion, EBITDA of R$ outstanding results which will added products and recognized 14.8 billion and free cash flow allow the Company to continue brands, is one that increases of R$ 5.7 billion, equivalent to creating opportunities for our the Company’s competitive around US$ 1.5 billion. The free Team Members and generating advantages worldwide and cash we generated was used value for all our stakeholders. helps reduce possible impacts to reduce the Company’s net from market volatility. debt and reduce our financial For the past 65 years, JBS leverage to a factor of 3.01 times has been a synonym for hard As such, our strategy is based in the dollar-denominated net work, innovation, growth and around operational excellence. debt/EBITDA ratio. operational excellence. The In 2018, we strengthened our passion and commitment of global team and invested in in- Alongside these very positive more than 230 thousand house talent as we continued results, we have created new Team Members worldwide have to leverage opportunities and opportunities for our livestock transformed a Brazilian beef realize the Company’s potential breeders and integrated Company into one of the in many of our markets. We suppliers, customers, consumers global food industry leaders have refined our processes and our team and their families. with interests in practically and taken great strides in our every consumer market Compliance and Ethics program Based on the quality of our in the world. while also accelerating our products and our determination 8 Message from management to innovate while continuing In essence, we are a food to focus on customers’ and Company that is passionate consumers’ requirements, we about its role in families’ meals, have a track record of building supplying sustainable food valuable and highly recognizable solutions that our customers brands. This is all supported by and consumers are proud to our global innovation framework share and serve. that focuses on understanding and anticipating consumers Through teamwork, demands in many different commitment and humility, markets, which in turn helps the we believe the best is yet Company develop and improve to come for JBS and all our sales channels and solutions stakeholders. Backed by our that build consumer preference, teams’ extraordinary efforts, generating value for all our the Company is poised to make related parties. further progress, take on any challenges the future brings I am proud to be leading JBS and help build a better world through this new growth cycle for us all. and helping improve the quality of life for millions of people On behalf of our global team, I around the world every single would like to thank you all for day. It is our responsibility to your continued support and I produce safe, high quality believe there is much we can and sustainable food and still achieve together. it is a mission that we have passionately embraced. GILBERTO TOMAZONI Global CEO JBS IS A SYNONYM FOR HARD WORK, INNOVATION, GROWTH AND OPERATIONAL EXCELLENCE. THE PASSION “AND COMMITMENT OF MORE THAN 230,000 TEAM MEMBERS HAVE TRANSFORMED A BRAZILIAN COMPANY INTO ONE OF THE GLOBAL FOOD INDUSTRY LEADERS. “ 9 Annual and Sustainability Report • 2018 • JBS MESSAGE FROM MANAGEMENT 018 was one of JBS’s The Board is supported by a In its approach to sustainability, most important years number of advisory committees JBS has progressed in several 2ever. The Company addressing strategic business areas that have helped improve celebrated its 65th anniversary issues such as Sustainability, the economic, environmental and consolidated its position Audits, Finance and Risk and social aspects of food as one of the world’s largest Management, Governance and production. As a result, our food industry companies with Related Parties. product quality and safety are operations in 15 countries and generating additional value more than 275,000 customers in JBS has achieved planned and for customers and consumers. 190 countries. consistent growth in every The Company is also being business area and has been recognized for its ongoing Gilberto Tomazoni was elected expanding its markets and efforts to reduce environmental our global, clearly signalling winning over customers with impacts and increase resource how the Company’s governance its wide-ranging product usage efficiency. framework has evolved. One of portfolio, all of which is part his first steps was to announce of the Company’s coherent We would like to be profitable, Guilherme Cavalcanti as the strategy to create value and but also, and more importantly, Company’s global CFO. increase margins. we would like to create value for society. In the Compliance The Board also continues to The Company has fulfilled area, the JBS Compliance focus on the best interests its commitments to the department reports directly to of the Company and its market through consistent the Board and the Company has shareholders, setting out strategic planning and been recognized for its efforts guidelines and policies to disciplined financial and inbuilding a Compliance culture.