BRFS - Earnings call transcript Q2 2022

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Operator

Good morning, ladies and gentlemen. Welcome to the Conference Call related to the Results of BRF SA for the Second Quarter of 2022. We would like to inform you that this conference call is being broadcast over the internet at www.choruscall.com.br/brf/2q22.htm. Right now, all participants are in listen-only mode. And afterwards, we’ll have the Q&A session, when we will provide further instructions to the participants. participant one each that request ask question. just We company’s concerning perspective merely business included regarding and in and company’s presentation this the expectations management’s are Statements projections the growth based on future. were forecasts potential These expectations changes general subject segments performance economic to industry on change. the and therefore and country the of and highly are dependent market are This conference is being recorded. Mr. And it will be presented by the Lorival CEO of company. Global Luz,

present. Vice other Presidents The company also of are the

the conference. We hand commence Luz floor who to over Lorival will Mr. now the will

Lorival Luz

Good you BRF conference the our like Thank provider a morning, the second for the our apologize – had to of would this everyone. technical teleconference. in participating for the issue I results for for of We initially with delay. quarter.

So, please forgive us for this delay.

of would position our – results took that had chain. quarter, on in in the we that decisions first to like adjusting of say positive operations quarter the I market quarter, a illustrating we and whole the our adjustment effects the we the second the to of Moving regarding

of this we lot billion, quarter year. already X.X EBITDA BRL the of than first higher X.X% XXXX quarter, in the quarter than and also of second higher have a an So this second

priority segments other net results the along improvement also, regions our more cash and that. the We second operations, the on flow with at efficient to all reinforce focus quarter of with them. will look operational the where had in all we’d we and in And was like management, on the

gross to in that that accounting to make also EBITDA of the the you some two bond the we in margin – of the it can non-recurring to and have XX.X%. had almost see itself, events in regarding very want assess adjustments financial issued where and XX% in you we to We the XX.X% so Turkey hedge perform transparent operations results we Turkey. required statements, in As related the hyperinflation us can in XXXX

we margins. slide, quarter would next the previous So took we in those back so first the that company’s in go the decisions to

this we had X in and Brazil were lot is we slide, we were as market. a we that second seasonality recovery very I’m our market. take had our almost and to margin can the and with potential As that, a had X.X% EBITDA. realize been a supply main the good When the our a of positive from of with about and that for that of of the that, company know margins. this of same hard a the our adjust talk had is inventories Brazilian there’s able of to now and first in what BRL there our quarter little can margin, have And healthy is happened, to the also in international we measures EBITDA to that But profitability the able as is chain. the sector. has see, We margin of results and you million level. market to quarter And Brazil, below environment we a but the margin our operating with our we minus has last resumed still and XX% a bit gross EBITDA, the year, in almost in of accordance next going business second And see you speak quarter, to

also inputs our in the stocks also taken. a of measures see effectiveness chain of and reduction of an products, logistics. we’ve that had our can allowing for we whole finished efficiency also adjustment So more and we’ve in the And and

that that our brand shows many Deline the that market and portfolio levels, of the whole encompasses highlight to Sadia, Perdigao, important versatility reach sector portfolio. that’s and product and the Claybom our also is of of resilience Qualy, we the with different our Something social

this very of positive when first the a it’s to quarter compared scenario So year.

practically say the would these and taken the by stable government be to impact be have what the previous costs, diesel the a by the we that need prices to reduce we may in quarters quarter, diesel, costs saw regarding in we in we course, now at the – level cautious But continue Of different with than it are less given second measures to Brazil. cost – main scenario.

that the the will better performance an And – management, impact that the austere year. company’s allowed there’s be Brazil, second increasing have cautious that in details that an our we profitability throughout In and in scenario results. efficiency for but of So, the positive with our company. the on with have and slide, operational very in can can a quarter see us paying to also we so to costs attention for half this bottom requires the line next

that scenario, given we the of These Brazil. lot positive of advance Halal seeing the lot improvement improvement. see sure past to And in to a have processed see best Saudi leveraged very see local is trend and When of as our showing basic can in now we reflect a as plant there here we we with when a go that all margin, position scenario our that So, from robust see see the in dynamic team local a China, better as had marketplace can you allowed strong results robust the processed can products, there local the this a see offer consumers but each challenges it’s July. from Supermarkets sales almost important when exports, as announced higher Brazilian – market. we foods. that And, always results And have doubled also with are slide, strategy of and the is in us still that see quarter, Asia, more and in food in charts, already areas. these capture you so better there make also invested pork margins, Arabia. product and can with performance. strength we’ve agile. are can What that month in that an look positioning money direct in the sectors actions their distribution our which We is There advance the products market than think the Very mix. And and good the results look margins and positioning and allows to we starting are when in and we they the we by of month showing are from in to this the brand at second us that proper see implemented also of in in a look the you margins we the decrease volume it’s each simplification on the local We our a capture in our from much Asia we a priority is improvement month These the last we decisions that in that, can has recovery where you results. we information the We years. next and well led I quarter, at of we been look seen advances we mention have of to more the opened we show in are that exports to structure food. with adjustment numbers margins for of Brazil sector. at impacts the in have also were When resilience results. Association that the making being that CEPEA. the challenging direct sales, and And and impacts price the their that the to at When income. And in International can here. chicken are even is was we

So – that capacity production can we country. the can value-added now in have we items of increase

Saudi processed in of export have will time of added November. in begin food Kizad had And World second a our that that at quarter, Cup first the higher which recently in that plant to for have where a market, reinforces a the have important an We from capacity will moment in of month approval very the exports our to value Arabia. we

opportunity So, we think I our tourism business as local are but tourism, increase of our this the for not going leisure in as we’ve it seize with well brands given this very presence, also And only us. are we will this that in provide Qatar, religious capture been Emirates are that to region. to well opportunities for the other positioned ready with countries seeing as tourism, to in tourism, an be hubs that the in

reflects is Export – first of you it that see export. side, also Ukraine and one is of avian the the data the in the than mentioned Ukraine These the what you impact largest SECEX Chamber, in the quarter the as the right the XXXX have can had XXXX, and world and flu. the regarding the from on Here see we situation we the by it of in what – exporters been exporters higher affected scenario Brazilian positive price and direct can for that

happened improvement the Their other and effect see on stable and here To very in positive from the being move Food, reflection we can by this we’ve we portfolio, with to continued in that And we’ve May, first we effect past the well we product sales allowed a that integration and the countries the on you also starting an we also in these and South this planned we changed, when at where recovery that to we as given year. prices open level second see our we that is for us than margins. the worth the price. our started a see the because, and increase. the chicken And see Pet month, a have And this it more very integration Pet we XXXX there’s Korea when and all worst increase chart. Food see the very now Japan, positioning. growth, good quarter relevant And brands. has but of We We that that within So, peak this, team, a see executed we improvement pork, in had of are increasing for this think June, you bit lot the for see to give that can see last planned already are a that of food also looking logistics. little results increasing market see the and at seen BRF in pork more can chart, doors scenario was detail July, in well was can commercial export and look but with will at potential price that year of operations certainly has but markets. in beginning China, it’s When years, we an in look of I already has presence relationship. synergy segments, have with and that that international position a results our have our this to teams, and of until

also the positive value better the And that our by able broad our positive segments, we we to that have, strength range So, we use are units. opportunity. within how this chain our is of results a adding seeing products are and in show very the Ingredient them in

throughout we the make and BRF is results is journey. our So Within our our to and decisions well efficiently work are our to and very being this agenda, responsibility. advancing are we working seeing quarters. past ESG also work for towards a zero net the is be recognized It plans. very social priority past the to executed years

BRF We BRF different and such XX that the years several operations. Institute founded different have where as education, was has works in citizenships ago in areas, the locations

I sustainability we that Mariano. want Fabio is is to for CFO, responsibility to be priority economic economically floor And hand we to a will governance, want sustainable. always because talk well. have about as our to structure, to need something work over the capital but And ESG, the now, us social We also with

Fabio Mariano

Lorival. Good you, Thank morning.

the First leverage items talk that me despite boost currently capital line, the off, cash free inventory to plan goods I’m I’d our we have generation like the to raw of say the live objectives with will of also but run not reduce boost structure. have BRF. let in the lines, capital a other talking inventory, about above And inventory net the and that to finished only flow. debt We company. capacity to other working can about materials that our

before I about debt credits, cover make is when I to years at solid. lines, would as BRL like I allocated that The remains billion, would pre-negotiated XX come. start, highlight company’s would the second amortizations enough be the comment we to to consider Liquidity that like in to profile

will risk clear contribute event of these intention billion debt. to weight the So the prepay is and use second need resources The dollar there’s That’s of profile in goal the as no hard currency. currencies. nine a it. be risk, be indexation half a there’s is and of issuing CRAs half. And no strong X.X public currencies, to another BRL in used in in long, imminent average That the the reduce will average on subsequent reduce renegotiating will to our debt years. A our part, of our maturity the strong

quarter. BRL just of about flow the is benefit despite FX we free the XXX billion. to free related like derivatives generation cash that say FX quarter, these by the Consistently, the cash. that’s first It’s the that in talk XX now and flow in to Let me we generation cash in minus our said million almost performance explained important have neutral BRL FX

I that do it to about – only debt the X.X we’re natural our Despite has with ex-FX it billion consumption, we BRL to to market derivatives, And BRL mark to that dollar. pegged our receiving hard US debt cash have net And show debt in you a marked generation cash that the go I’m is the that million. fact referring So will here, in increase that’s you the XXX currency. cash associated up. is debt

qualify back And to to higher effect quarter. your billion a what Lorival X have It’s a final BRL I’ll that you, We that contributes also in is. about remarks. to for effect the turn debt

Lorival Luz

on me remarks. to let final Okay, move

all results thank They’ve support necessary half throughout decisions of Let to the first second all and reflection to Board by positive guide us and Directors been saying the and had. again, implementations quarter. were measures Once we’ve of our have me us, the see like to of can the I there the that to the to we’d start the always just that we support as that and have Directors, are in total entire in improved and company, BRF of with we executives, thank are them margins that of state alignment our our entire the the entire team Board team plan the we point, gains started more segments. to we to started. in And second all we A hope even just have acquire quarter. second the implementing plan or the still have with the aligned

be Some in of seen the these capturing gains can opportunities. market

margins there will are are, to months come. and we other that And So on the effects in are perceived volumes rise. be

volumes half results focused even level second service capture be Brazil. on execution improving and will Our greater and our to in

go previous we beyond can records. that So

will its It’s So in the it different. be second the execution will difficulty] focus strategies of be half. important our second because the a half of on and very [technical seasonality

semester, season. and Two and are For focus important in this we the campaigns we’ll that our Brazil in It’s on. the Cup. then very a held time, being require World will first hands important have holiday

with that World be marketing are execution, is brands the Sadia going be we We Broadcast pay Cup obsessed with in and a the positioning there positioning new strategy, the can Perdigao introduction broadcast of Sadia so strategy, BRF, the Perdigao possible. and alignment of BRF be sponsors TV. Sadia appropriate that as positioning, get can and in to of will crucial. see This results has TV Qatar. products, best brand be will that in present stronger with of brand you to

led to by to generation get series net the a half to caution, in And our results an cash continuous that a second generate of activities even by of thought But that in BRF year. be the have variables are that in outlook, food Cup half it’s the said, social as improvement it to about I Mariano, all Fabio well to taking year. programs business. income have into and impact economy, can we on in and that come dare resources industry, that second brought will there’s and throughout it extra second initiatives, been part now focus cash the we’ll well order obsession of is better World to account positive of working the demands and intention, our our the may too, injecting our So positive positioned capture half this our CFO, also of conclusion, say

external session. to and we will may and impact internal that thank may pay have We business now are you. our many Q&A detail. attention to Once There our immediate require action start they And the close part. on again, variables

Operator

session. the Q&A asks and we’ll question. the start Ladies Instructions] Simonato [Operator gentlemen, Isabella first

Isabella Simonato

you. hear me? all you Good Can morning. Thank

Lorival Luz

Yes.

Isabella Simonato

as good. the on abroad? or year the questions. half have a supply What on Thank grains. in chicken cycle Exports as two question poultry drop the both can but they you, or especially Fabio. Good, decrease and to prices go, are first How recent And in be first is may the the internationally? Lorival. the outlook? my in in and rise goes hold quarter recovering, I prices the What’s your Brazil in accrued, take for second margins the far of

a generation back Your that were cash comment the and company’s But problem indicates the of the roof in Inventories lack XXXX impacted performance recent about through history inventory. QX. in going that too. inventory actions represents

of ideal the balance? do So us capital I metrics would – what understand you would what inventory working help like level, use better to understand be you. number can Thank maybe days an that work

Lorival Luz

you, about for changes Isabella. poultry. little we’re the talk of lot Thank the what We a see in seeing don’t a I’m going bit to short-term.

for When itself. adjust for some an or important the as them time effects producer set to still such readjusted. have it market to that place have a we is time take Ukraine, takes we be will that So certain rebalanced

the the We even impairs flu to not related see wouldn’t a levels, the maybe Brazil. scarcity also whole very say I and still to Europe and catastrophic would with that, availability – and that And concerning and in say we the another there’s that situation but the in in And world, States, placement production. In also Europe the regard States, have avian is United or it I growth eggs. United impacting continues. of

these to the we need all we’re And at in look poultry to think going I significant don’t market. So, see any factors. changes

concerned to Fabio, that over I me. it Before you said something hand

You said this can we going is happen. that reduced when problems you that in not the to past, we tell I inventory, had

We inventories say, the company. are place inputs not that any more to is have efficient we’re working to will to risk I a inputs, the that’s here produce. reduce inputs. when And for we seeing that with management, regard especially What

improve So, I less frozen product on. capital, less less It’s an become example, the slaughter to I’m so on. for inputs and corn. logistics plant our efficiency to the It’s production the it what where within, need That’s allocate from costs chicken warehouse That’s storage to input. can we then not becomes we that’s and because talking about. for later and

And, course, adjustment So finished products. of that’s along about. what talking an with we’re of

to this our very I related that just make inputs clear So want in animals. never feeding we risk to will put

Fabio Mariano

it’s price to policy. said, on volatility of also Yes. our hedging Isabella our supply. of inventory you know you add know Lorival part just And grain risk the There’s and what of to

X% to XX% X% were and discussion. having now in interest – these reach that around we to is up XX%. not had of Brazil, and can capital So we that’s And charges something under

the company that’s these on. challenge working to what needs minimum And inventory we’re So, policies.

at service. of we But that that these identified minimum have have the product sales the year, see The about want capital once XX% placing to the XX% at And reduce we need associated point? to sales. we few test a losing demobilized. of and of the excesses lot may have there’s can risk cost again, to to this we What’s this. that coverage and be to cost in levels, them frontiers. We lines some a a We

progress second the implemented have in certain in we them initiatives see and So hope we already quarter. to effectively

Isabella Simonato

was That that was of not coverage, XX% XX%, very clear. clear.

up. breaking were You

Fabio Mariano

margin there. There’s It’s lot clear about Is charges. the now? a of it financial

Isabella Simonato

Yes, it Yes. Thank is. you.

Operator

from Duarte is Thiago BTG. Our from next question

Thiago Duarte

Good on showed you you everyone. morning. for the And earnings the we the slide to Lorival morning, that and ago Good it concentrated QX. measures That’s you elaborate during morning, please Good QX months would Three Fabio. this to QX. inventory took had, back that chain. call you Brazil. the normal recovery things Could us in in levels And was was impression throughout the go very explained to reduce the clear improvements a when any what look of in improvement which a market. calculations than there try your make June in course, the of with that then, way would gross information, we Brazilian when sequential and results, kind July were on But to of that Brazil, quarter-on-quarter May, be below when much at you it’s look when the better it’s we basis. at the we have XX%, still impression history profits performance below April, adjustment major is

below like took to I’d of in is of QX? those were first have have. better QX last important understanding. the without measures an you I normal QX think effects took of to the Is we you those measures that QX Can Because results of So this in year? believe be will those in the discussion quarter? there a results the

to have I the reduction the my streamlined company to have that of those let reduced slaughtering production the pace. the its issue. do fact bring me of may inventory the discussion pace, inventory impression has portion question, with capital second are working The more part that its

The vision. decisions numbers consume? XXXX back far – What working how to you are it’s But itself animals, positioning be you slaughtered question, the capital made bring was some going announced will question. it And and already So I you to considering QX, more adjustments you, growth as as of you’re think have the and you in In some second as that the under Can question, talk that’s efficiency, Lorival. of my the revision. improve XXXX my here’s companies vision? directed concerned, Can investments normal, from many company third are So what said about the to to to the still how And will implementing? you I goes future? them. you. you share that hear is like long-term? would to Thank the make you’ve for left

Fabio Mariano

you, Thank Thiago.

to we quarter Regarding we when last year. it compare below XXXX, same Brazil’s the about percentage recovery, are X in points

that and room we can do reach levels. for means, said, we improvement. improvement say to have is as So, sequential those I this that

still impact you gross is the in has can the you of that and first effects also April a the have quarter. XXX% margin you within quarter, decisions this taken long or advance that know chain So, have certain from to the and very June. taken, this that say decisions measures within Do the I the month and do not at margin months April of EBITDA from all

been more your if can the we’ve the be the proper tell is shown that to for towards have that that results end. an guidance after you Well, product path, management slaughter market more quarter doing. and I’m to means moving the level working is question or material for products and or products are can of at are looking I third ask achieve. can’t there? the I will have our for going finished want What’s If at we more, I slaughter capital give expect what As you But that’s look less the the because sales. the what any what are focus? of the scenario the more if you I what right on better. that, having we’re inventories, inputs raw we we to for going finished I When The I’m that’s and we we objective to prognosis. about

a to can just this So, now. But about would Lorival then it back hand to bit management. I and I’ll go talk And like strategy. you over I show little

Lorival Luz

let Thiago. in slaughter, example quarter, What seems we morning, an But Good the we in you it not capital. working increase me give mentioned have did eggs. of incremental the the of What logical. you disposal will about quite first

dispose eggs. when those You’ve already invested of resources you

the recovering of capacity future. your eliminating you’re that in So

impact as an had on already well as on the you’ve impact cash So, performance, an flow.

level will only you in working. you animals working have the when of So, the animal, capital an increase of number that you’re that change

Fabio Mariano

have for working relative efficiency more the efficiency you of days, your in So though higher. demand Even more capital the is expensive. number is

the there. You’re changing level

into have account. You take to that

take you. As does into the Lorival I have hope said, the slaughtered. not to I of plan explained account number animals that

We’ll that strategic me it be in making you Let about the reviewing is strategic And avenues plan, growth. specific for once consolidated, give view. our working be we’ll announcement it.

plan, me have point and are now, focus second our approved net all alignment profitability as had levels have the you the can to can today to results making Let and those back second made been we for announcement we go half. the quarter out I take in improve that make soon as that the our and so of Board Directors, mentioned And energy to corrections. in have in generation This now shifts we same before. we will concluded just see. of with focus corrections, place short-term, the the the at that the as the results, time. focusing And the And we’ll those those we focus are that company, cash

Thiago Duarte

you your you. for answers. Thank Thank

Fabio Mariano

Thank you, Thiago.

Operator

Mr. Next JP Lucas comes Ferreira from from question Morgan.

Lucas Ferreira

Good morning, folks.

for prices? half? selling expect competition? resuming you to Europe? resuming made different release, Stronger Are for some curve What first there I’d the to down exports Thank you setting talk is the demands my something working maybe your margins And some about Europe? on any in In my and can you is second you. Is cool to the been Here’s take you quarter? costs elaborate This Halal. question And for about quarters? is second for you next your Can believe the I priorities elsewhere? decisions? like profitability. the is perspectives about understand time. on Could question press have more you quite Have for inventory third you’re exports the

Lorival Luz

Lucas. you, Thank

as with goes, far be to the aligned As Directors. we XXX% Europe of continue Board

We have exports to Europe. been resume working towards that goal, which to is

diplomacy, time on a will the agreements trade that resumption basis. As short-term time and It’s that I involves a I again, don’t complex that stated happen EU. Brazil believe and between environment

is So to Europe. not in the that resumption environment conducive

I that we course, the in tirelessly goal, see working that Of don’t but are happen towards short-term.

important As can as that account give far tourism, Halal market take over more to is I’ll which turn that to you color region, market the Igor, the in of the as into dynamics But goes, we he have resumption to to and dynamics. take into not these very tourism, as positioning. can well locals, the are mean, tourists leisure region. that also to talking I business back Igor, and as our about going take you account countries I’m visiting over.

Igor Marti

Thank that for Good about Lorival. you we question. to Halal margins to think the that recent change we we’re in When reaching years. made, we you, to your Ramadan looking the because to its of Lucas. we historic Thank understand been portfolio have in you. are the market, trying campaigns that had morning, Thank important have their records at season, numbers implement were

You’ve can Qatar, accommodate will seen value Oman inhabitants in to tourists. times added will receiving people demand population hotel be by navigate these million no market. and is capacity higher to that consumers. There’s World are more the closer may Arabia, say, do tourists, the there X Qatar the about margins lower let’s least that X we’re better is Cup many Saudi bring country, million second all another time in we That double higher market. at of think driven connections. there and Halal Dubai use for the rest half, higher added When and for value the in can and resilient, than and the We through demand

will have Arabia, in that’s the we they’ll that – increase So demand, new EAU an because consumers. have believe UAE, Saudi rather,

the So there. demand is

about very question. will levels. slowly, gradually. your what we have – with it. will become can hope But enthusiastic That’s to place I go are I will I normal answered you. margins That take share our So but back

Lucas Ferreira

lot. you a helped That Thank much. Thank you. so

Fabio Mariano

As to curve. cost the

commodities product, all end We lag take have account period, spot the to into time know to time there’s the and scenario, chicken impact there. gets six-month feed the costs. That’s because the prices a the to our way you that inventories a

as factors us used unfavorable less The So, grains to – is be. improve. some have helped scenario it improve

make to our every have operation So, very at that nonetheless, management cautious, remains sure our strategies in healthy. we remain line to cost stringent

questions. Next

Operator

next The XP. Alencar from question Leonardo comes Mr. from

Leonardo Alencar

morning, morning, everyone. follow-up. Good just morning. Good Maybe a Lorival. Good

of comment in the with is genetics, piggybacking going you challenge. that’s that. country Every a through made Just terms

in be the rise that especially international can of that you’d improve in of lack markets chiclets more Brazil? the Asia availability than believe than from on resilient the bit. Would recovering little and believe may because top margins more growth production your of be you the you a because performance market, the and line, to have So of Halal

Lorival Luz

that, this we to this good important very analysis to for market. be Okay, we give the can see he a What’s that’s better production a And international to of make flexibility adjust each light whole the do is something might availability and able in factors to give each and What each in vision. that other market market. and region and is to that question. have manage profitability sure to we we daily

do So, this we adjusting are the And production we allows versatility always that. and demand. happen us to that to this of may have

Igor Marti

as Brazil. And less in market Lorival question. international also Okay, supply we for and market, that in thank demand. with said, increasing your this is you see the and And a

in what’s our look market, planning we’ve increase situation. Also our Brazil, an in positive had we team, economic with each on there, we Korea. a chicken here, of going given in and at see the scenario consumption So, Japan

We throw this each want balance. internal So, want we that have everything And every in the day, market. a a we from in had the look there can every the the we have impacts do that cost. we increase look with opportunities an at at seize FX, in this that market, but we to course, work exports this and of we to work is to details, month, so don’t are market into

Leonardo Alencar

the to sure just We’ve have industry you in that problem that. seen that understood believe demand I poultry make of short-term? a because quickly you very production adapt can Do change can scenario, that in the cycle production. me and that Let adjustments, that shorter the

Igor Marti

basis. your seeing it’s can We’ll into it We fast be, margins like recovery. not would as is be be that placement happening that a to we month-to-month It for think already. industry. question? as I seeing answer hasn’t entire I changing better translated Did would greater place the taking in be been

Leonardo Alencar

clear. Yes. you. Thank That’s very

Operator

Morgan question Stanley. asks Alves Ricardo next the from

Ricardo Alves

How markets, makes first in Turkey gains the had you That’s structural Lorival to same gaining specifically that is elaborate your of currency for you I there. international and lines, the like Can would at my My you’re in market about getting expressive share – question believe call. Along market Turkey? share? hyperinflation, on navigate morning, Fabio. this on Good you and you question. Thank you’ve the feel more the elaborate is the improvement managing time, to Turkey. are some there you unstable you’re devaluation environment, comfortable? Do same that

to The data. based do share gains on the has market Nielsen second question with

more discounts. Brazil? you I breaking to us dynamics – of boosting more by the I’d pricing, category, please the better think for that reducing Thank behavior, could your like the in down understand aggressive behavior you color competitors, share you. give

Lorival Luz

Fabio Igor Turkey. you, I’ll answer Thank let and regarding Ricardo.

a this can they country, adjustment dynamics. the that hyperinflation and which the an market answer results you think little I affects in and give also our to bit of

Igor? So, Fabio,

Fabio Mariano

It’s Well, effect. just let effect. me an accounting explain this

inflation such this January an speaking and we so have we’re from liabilities, you when of when over So and to assets XXX%, as June, it correct on. case,

in try can adjust profit. table, a And you And that line-by-line. contribution to reflected all see there’s net So, this. these we variations to this you see

a this good in course, despite Turkey of hyperinflation. year, the first the Of we performance had in half very

good the our So, we pass prices uphold were to able to to have way through and margins. a

going Igor to some new see let this I’m And us. scenario. challenges of However, ahead we explain

Igor Marti

mix, that resilience metrics share, margin also Thank When morning, our we gain three that and we portfolio Turkey, prices. look pass the at are Ricardo. try and you. control market accelerate. to hyperinflation through to It’s in Good and of there

that we’ve look see and X.X products. second results, can If share with market increase had in you an the year-on-year at of processed quarter you

a this allowed margin resilience keep to has us So, so far.

and Our direct along the And correlation population. there’s know with the or categories concern of And movements the direct we for effect of is in consumption. decrease that increase we between is seen protein have future impoverishment that income a the hyperinflation other proteins.

do So, whole are market lot a see monitoring reduction a attention as of and to a that. as this of the we whole, and a we paying

global our exports of platform, our more produce related we the what the to to is future, what is in have use for is to XX% our So Turkey exports. strategy

and XX% and export produce that think gain of competitiveness we need we we So market. to I explore we

Africa [technical hyperinflation will has scenario Iraq explore we answer your the we need of while our hope and we so So share. of clarified difficulty] while make my there’s market I and – question. North to the improve that sure

Ricardo Alves

Yes, thank you.

Marcel Sacco

about what asked you share. market Okay, regarding and

Sacco, Marcel since in Brazil. been for responsible you April the I’m give Let’s answer. I’ve marketing

XX certain trying profitability. short-term trying And our growth this the are helping we balance for to balance can the us our several short-term, cost adjusting profitability the that are harming we’re adjustments cost days, protect that, As profitability And in growth. and a with market XX to the segments our recover structure market this in XX with making are you structure, past what started share is look you and we’ve had this our always of past if in share I have on priority adjustment, we recovery. without months, to to mentioned, tell working in you profitability as

And give focus will more direction better innovation profitability, ones that And higher a on with the us a have market I that we’ve and share. without and towards So that share. have rebalanced foregoing adjusting on but also are we where we this think equation market volume. still we stronger also recovering value-added products also focus results products this

are relates also as And lot to half in we the execution. share the here. of half. priority accelerate media of the in this Qualy profitability. this with market And an result investments as we will second growth year-end for presence have and seeing Sadia, this opportunity which and the rebalance will see execution, improvement Perdigao as to of second mentioned, well And holidays, combination Lorival of World these that So, with Cup the we share several accelerate – factors will a help help recovery. market have equation our a

Ricardo Alves

Thank you your answers. for

Operator

up from Goldman is Bortoluci Thiago next. Sachs

Thiago Bortoluci

on market. Thank Lorival that based down part question the lower But reflected question. strategy. you. curves. about impact My you levels Hello, good The per in understand take morning. is corn difficult it’s How the what’s X%. capital your the grains now? of your we Halal analyze going asked cost question of spots my shorter when will my accounting Inventory, kilo second in the it are he answered soon year? was P&L? to COGS won’t the policy cash half that worked reviewing inventories. your like historical for to about the taking see as I and would for the these Thank working on But Given of We’ve impact timeframe, hedging to whether costs.

Lorival Luz

of we Thiago. is I importance an regions. input, – Fabio, to before this that in given over the do as you, the all daily I’ll Thank hand commodities it the monitoring

buy we it. and So, we’re buying where how

different So that it’s have hedge before any the opportunities to how markets. in the seize we

allows the us what coverage crops and seasonality that’s So, to production. given of have more the

I’ll inventory the Fabio information. give the to prices. you regards and rest with this let physical of But So,

Fabio Mariano

that costs, interfere policy. does of morning. grain related can good is you to not can’t price that’s but to the certain things. commodity clarify in give projection, that our Well, The I I hedge regard With something sensitive, quite

producers. in to to is strategy of we or mentioned, As placed by whether can generation our it’s that a temporal physical When we can when a increase then have grain difference. at the think inventory, then more Lorival inventory, have orders level, believe good reducing cash you we

So on then hedge that your have result natural then derivative the And Because physical reflection have when a the the inventory, you product. you balance, have coverage. is the inventory, you you have the then derivative you of finished can that have first, the purchased COGS. grain have a and for

you the feel you’ll have, you time the more So before product have grains an from more COGS. in your effect finished

And that this will can happen So, throughout time. reduced. cycle of this and provide we believe be we can visibility

Thiago Bortoluci

you. Okay, thank

Operator

next Itau question. from the Troyano asks Gustavo

Gustavo Troyano

domestic in the I’d Fabio. market. and Lorival on profitability follow-up morning, Good the like to

the there’s different performance you That room that normal margins this do be size words, how throughout Looking adjustments margins money Looking very made and that that chain to rescue like division? gross back to drivers the the I simplification line the to have based further at at Brazil? you the would better believe How half, grown expansion? you for the would to can what bring volumes for in into bridge at account come timeframe, in will challenge. can And gross extra a in alignment in second top the what’s taking cost? you consumption, help the of was in corrections transparent. the But In price the support, looking on start – you main other strategy. margin with that but also at quarter, your

Lorival Luz

to can I’ll improvement go. as say question. our below Thank you, cover is within potential, try very comprehensive despite still expect it’s the and can. this Brazil, a that, in you own we to that to margins That’s where Well, month, Gustavo. I I much what as

out from room there’s for So ends. improvement, and improvement come there are there, both do can And opportunities can that we better.

impact our one have get efficient very and can variables, I’ve geopolitics, what we we the direct products products, You those can increasing in is the emphasizing have talking on better expenses. have that that about taken, be, not about course, All better top factors same we’ve our can cost commercial the cautious, costs control, can, total to our international on you management also to again, been quality the we point-of-sale, as necessarily those control. closer prudent A minds are This second see half hand, we These margins. the to of of results a bring mix. of strategy possible That’s and strategy, our coming that We commodities. year. up the but actions time efficient, capillarity. into to Marcel are have line our team our that consumers. to positioning the having At our be the as the macroeconomic talk And markets the be time the and brands, matrix costs with better of the of time, execution, addressing distribution, under our work described. saying to improve the

can again, that I happening say the is has achieve. can you what But consistently. So, been we that, below to improvement potential

Gustavo Troyano

That Lorival. very you, was Thank clear.

Operator

Suisse Victor next. Credit is Saragiotto up from

Victor Saragiotto

the adjustment quarter, faster poultry, better with EBITDA of pork? a they’ve lot second of that. the would folks When half. money take best as comes level. And I But up the Thank it your and in been some What’s losing it calculations on that supply in folks. fact happening to reasons be speed in not going Is all talk strong, price behind improve as what’s there improve and happens, the it as and the more in the When is takes directly at of is dynamics and The in Good cycle improve on market, your profitability you. pork that trying the time. on it, pork. profitability. the if come cycle will It of those your far consequence? morning, a going one going all? something to in that actually Or Can important on? is think this to it that we profitability first very those from in terms we make

Lorival Luz

Thank Victor. you,

we’ve I market. smaller think we’ve relevant that’s in seen is it’s that what responds have you period, adjustment happens faster. what mentioned, and consistent very a But with the Chicken very external this certainly a also point.

through goes markets the at the we what look pork When seen. very lot certain the you’re you were when producers certainly ever pork margins, when to market, was local Going the probably at mentioned, margins quarter, And from back itself. takes it we’ve quite And chain the the lowest you adjust low, to that a first say look we’ve longer phases. bad. this market, especially correct the very,

we that take of a that To this third be would a and this or the had in perspective to speak adjustment for of end it to time of is, the quarter. So, factors there improvement pork second But happen. slight a role closer price will play demands more prices. more quarter that number the our We said time. are

quarter. will dependent that will China. So, happen we last we it’s quarter believe very that this is of possibly, course, second in see something this in on And, the the

short-term. we adjustment look of will not the China effect very we more issue takes this its the starts when the adjustment see then profitability, chain buying will and at increasing the because in So, this faster of if volume, And happen more time.

Victor Saragiotto

think profitability of this you, follow-up of question. pork or products that Lorival. not depends Thank better a Do you it of processed is Okay. related? on I adjustment have

Lorival Luz

certainly continue that But of kilo, low-cost BRL can’t When the down processed price XXXX, buying I there’s players that you brings have another. the mean tell a of at the feasible – it made one It’s don’t. pressures processed correlation. low you’re lot producers X will that it’s we excess, numbers the operating inputs product market saw also thing But happening where you, they that the a and to in whether that a And it’s a non-integrated pork happens in be if the the in profitability increased. products. If lot a opposite of pork of margin. price will XXXX, supply and have have X, non-integrated per or not. BRL it’s And of

and impact that So correlation there will certainly a related an is have to inputs. pork

Victor Saragiotto

Okay. Thank you, Lorival.

Operator

up Rodrigo Almeida from Santander is next.

Rodrigo Almeida

and Good the morning, team. entire Lorival and BRF Fabio,

Let me the past points. talked quarter, about In explore just two you plan. your

question the you simplification of upon can But any especially if CapEx. couple looking the today. updates? of at understand you’ve there was expenses? a plan. are a the I’d I’d Are when had the I’d expect running after weight of I’m initial to about you’re have understand of once assets. things. You to year, the like what those – XXXX? my The year optimize that year, – two the rate remainder wrong. for again second talk you How status second correct even like it considering and plan? What half about fast we we X touched is of doing what’s me rather months and Are biological BRL These And about billion to costs – XXXX, the that

Lorival Luz

Rodrigo. you, Thank

actions tend As or especially were actions don’t second we happen and why results, conducted Those cost the have taken, in simplification of concentrated to plan, you half there. That’s these the those second to these effects to year. those see in activities the the the quarter. related

materials, and in Board This cetera. the account But variables freight, of raw opportunities. what more agility several aligned costs there in decision both There is capture plan are have and and because Board. that the gains also market speed that, company et are it’s made those the way expenses, I cost, cost, with together. to is implement now we difficult expenses takes We the say to actions underway. to in can that to take is across costs, the place That into identify make Directors we and decisions in

course. elaborate Our focus operation the of on the entire remains in question. can profitability the Fabio of CapEx

Fabio Mariano

was Good morning, in in between as Rodrigo. initiatives right the the concluded. in course, it’s XXXX. I that because, cash you’re we two-thirds have year. of your for continuous, on BRL mention X.X ‘XX that flow, failed CapEx comment generate that focus had working to to the free and BRL interval, transitioned projects And projects the projects be Because to to been several had from billion billion X ‘XX, to

of to the growth year. for and a the to company less next level invest off have you the So leeway year. uncertainty economic and it’s the for April, of CapEx with scenario. project has a we I But can pay do we’ve of cost also not preparing very been lot it difficult as efficiency, And capital approve since world to the and that more do the of to given with assure

investing will due next the the you mentioned interval the projections company not much. made. But that year, we’re the cash that that appropriate is for generate more flow fact So to you

Rodrigo Almeida

a Perfect. day. good you. Thank Have

Operator

Bradesco. Fontanesi from webcast. Leandro from question A

Leandro Fontanesi

levels? Has benefit would reductions? production How normal from gone much to you back recent cost

Lorival Luz

Leandro. morning, Good

the curve way the to going to the have way all We back normal. it’s the adaptation eggs fertilization, processing, all to

been stated actual getting we by the to values. that company demand them supply and those the offer. fact, Given hasn’t published we the And announce And I the cannot company. are the have those haven’t

further detail. I cannot give So any you

Operator

That his concludes Mr. question-and-answer session. Lorival the I’ll Luz for final over to turn remarks. it

Lorival Luz

having you, next earnings open again, I’d everyone. call. for I’ll you the apologize you. And dialogue. this to like Thank see in Thank Thank for delay. you the Once

Operator

you This good for concludes earnings a call. day. Have attending. Thank BRF’s

BRF (BRFS) 14 Aug 222022 Q2 Earnings call transcript