BRF SA (BRFS) 2014 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to BRF SA conference call to discuss the second quarter 2014 earnings. This conference call is being transmitted via webcast in our website www.brf-br.com/ir. The presentation is available to download in our website. At this time all participants are in a listen-only mode and after the presentation we will conduct a question-and-answer session. Instructions will be given at that time. We would appreciate if each participant made only one question. (Operator Instructions)

Forward-looking statements related to the Company's businesses, prospectives, projections, results, and the Company's growth potential and provisions based on expectations of the management as to the future of the Company. These expectations are highly dependent on market change, economic conditions of the country and the sector, and international markets. Those are subjective to changes.

As a reminder, this conference is being recorded. At this conference are Mr. Claudio Galeazzi, Chief Executive Officer, Global; Mr. Augusto Ribeiro Jr., Chief Financial and Investor Relations Officer; and Ms. Christiane Assis, Investor Relations Director.

I would now like to turn the call over to Ms. Christiane Assis, who will open the conference call of the second quarter 2014.

Good morning and welcome to BRF's second quarter results conference call. We are glad to discuss with the market another good set of results, showing management's focus on profitability and value maximization.

Today our hosts are Mr. Claudio Galeazzi, Global CEO, and Mr. Augusto Ribeiro, CFO. I now turn over to Mr. Claudio for his opening remarks, and afterwards we will continue with the results presentation. Thank you.

Thank you very much for your interest and hearing us out in this call, and also for the opportunity to answer some questions which you may have. I would like to start. I'm here present with our CFO, Augusto, that will actually go into the details, the numbers of the Company. I'll just mention some highlights and some of ongoing activities.

BRF's performance in this second quarter indicates that management strategy are on the right track, while focusing results and increasing value. We had a very strong cash generation in the tune of BRL954 million vis-a-vis last year same period BRL365 million, an increase of 25% over the second quarter 2013.

The first semester of 2014 we had actually a BRL2.1 billion increase in our cash generation against same period last year for BRL434 million, the increase is in this period a 381% of free cash flow generation. This was achieved with a much more solid operational result, focusing in result, investment optimization, and a consistent reduction of working capital that went from 57.4 days, 14% of the net --

Net --

No, net --

Net revenue.

Sorry, net revenue, blank. Representing 14% -- 14.6% of the net revenue in June 2013, to 36.4 days or 9.8% of the net revenue in June 2014.

We will continue to address with active efforts in balancing accounts receivable and payable and of course adjusting our inventories. We expect to maintain these efforts in spite of the fact that we are initiating at the present moment a gradual buildup in our seasonal inventory looking forward to the end of the year.

We also expect to take rational advantage of the decrease in grain prices as we have storage capacity that is of three to four months consumption. As the prices are decreasing we will not take speculative move, but we will take certain position to maximize, of course, or to reduce as far as possible our main cost, which is grains.

Our net debt fell within the last three months 14%, 15%, to BRL5.1 billion of net debt. This represents 1.5 times EBITDA.

We would like to repeat what we mentioned at the last quarter that one quarter does not give an indication of trend and definitely does not establish a trend. A second quarter of good results starts indicating that you will have an establishment of trend. So we are very positive that in the next semester we will continue this indications and will be establishing then definitely a trend.

Our net revenues added up to BRL7.7 billion, a 2.2% over the second quarter driven by higher revenues from processed food products, fresh poultry from domestic market and higher revenues in the international market in spite of the sales levels of 1.3 being lower in the 12% during the same period last year.

This decline in volume was due to several factors, our reduction in volumes for the export market, reduction in lower beef volume inline with our strategy of core business, concentrating on core business, as well as a slower internal market demand.

EBITDA reached BRL1.0 billion, 25% above the second quarter of 2013, bringing EBITDA up to 13% vis-a-vis 10.6% of the second quarter 2013. The total for the first semester of 2014 was BRL1.9 billion. The net profit was BRL267 million, against BRL208 equivalent period last year, 28% above the second quarter 2013. If we consider expenses of BRL197 million due to our repurchasing of bonds in May our profit would be close to BRL500 million.

The internal market had a challenging quarter due to the slowdown in economic growth. During this period we focused our strategy in rationalizing our portfolio, we repositioned our brands and launched 18 new products aligned with the demands of our clients and customers. We concluded the GTM, the go-to-market rollout, an important phase in our acceleration plan with very encouraging results. We are convinced that we will capture significant volumes and gains during the second semester of this year through the rollout of the GTM actions which we took.

We are also convinced that our GTM project mitigated the decline in the band. We are staring a second phase of our go-to-market with the objective of training and better-qualifying ourselves sales force. Many of you will remember that we integrated all our sales force and we didn't make our sales force redundant as we did implement significant reductions in others areas of the Company. Qualifying our sales force, increasing our sales and cross-selling as well as better servicing our clients.

During, at the end of 2013 we announced a reduction of approximately 40% of SKUs to simplify process, reduce complexity, focusing in better product turnover and higher margins. We have already reduced 95% of these SKUs production in our plants, we have reduced the availability of these SKUs to 50% in the points of sales and approximately additional three months we should conclude a 100% in not having these SKUs available.

In the external market we increased gains by prioritizing the markets, choosing our markets to regions, reducing volumes to less profitable markets and a simplifying process and reducing also for the external market the SKUs. We implemented other actions such as adequate inventory planning oriented towards the demand and higher prices. This helped a much better performance of our export and Augusto will address the different issues with this export market.

From our strategy in the external market, specifically in the Middle East, we have concluded the acquisition, or re-formalized the acquisition of distributor, food distributor, which is Federal Foods in the Emirates with a final value of BRL65 million. The objective being to strengthen our brands and expand our portfolio, product portfolio in the regions.

In the same line of thought, we also made an acquisition of 40% of the working social capital or working capital of AKF, a distributor of our own brands in Oman.

Continue our strategy in expanding our distribution. We also -- sorry for that. We also concluded our Zero Base budget program during this second quarter and already during this quarter we generated small gains expecting however larger benefits of the Zero Base budget for second semester of 2014.

Our acceleration plan is absolutely inline with our expectation, and we do expect a very steeper capturing ramp of the benefits of our acceleration plan as of the second semester of 2014 to up to 2016. We are pleased with both initiatives and it is important to emphasize that these actions resulted in lower expense, cost of goods sold, and in spite of inflation labor salary negotiation, costs were during this semester lower than last years. Augusto will give also more details. We are presently undergoing divestment of our dairy division. We do have several international strategic players very much interested and we should come to definition in the very near future of the future of our dairy division.

In the production area we are concluding our studies of the industrial footprint, another very, very relevant project within the acceleration plan, the footprint towards the production rationalization, product line concentration and actions increasing modernization and (inaudible) to increase productivity, and definitely not increase capacity as we do have some idle capacity.

We would like to reinstate our CapEx policy, prioritizing it in logistics, environmental projects, IT and plant optimization and modernization. We do not plan or envision large acquisitions unless a very interesting opportunity arises. We are open to smaller acquisition in regions we consider a physical presence or a higher presence that will increase our local production, brand and distribution. Not concentrating only in this regions as the exporter of commodities. We are presently meeting contacts, viewing potential joint ventures, partnerships and association with several regions of the world.

Our present strong financials and cash position, our very low level of indebtedness and exceptional funding availability at relatively low costs as we are investment grade allows us to consider aggressive CapEx and M&A investments. However, we will proceed carefully and conservatively in analyzing opportunities that arise. We continue prioritizing and maximizing our evident existing human production, human production and commercial resources.

In our estimates we believe that the second semester should be more difficulty for retail, which will affect industry, food industry. We observe that the construction industry, which is a large employer, is suffering decline in demand of new construction, as well as the automotive industry which is suffering a decline in its sales this may -- and which will definitely increase or decrease, sorry, the available income, or disposable income of consumers, aggravated by the rate of -- by the increase in unemployment and of course a scenario of inflation and indebtedness of the consumer.

We would like to mention also that we have implemented in past six months, intensively in the last quarter, a profound cultural change, this change is a rethinking of the Company model. We are investing significantly in developing our internal talents, bringing new talents into the Company, and we are definitely targeting our Company, as a meritocracy-based company looking focused in results.

I would like to thank very much all of our collaborators which has dedicated the time, the efforts in going after our growth. Thank you very much and I would like to pass to Augusto, he would details of it.

Good morning to everyone, good afternoon for some of you. I will start with some operational figures and then move into financial ones. So let's start it with the overall Company. Net revenues come to BRL7.7 billion in this quarter, 2.2% higher than the second quarter of last year due to the increased sales of processed products and in natural poultry in the domestic market inline with our strategy. An annual comparison shows that the revenues in the quarter were driven by domestic markets where we were able to pass through price adjustments given the higher input costs, mainly grains, cattle and milk collection, as it allows a better mix than offset a ongoing weak market economic scenario.

Revenues from domestic market increased 7% over the second quarter of last year, and grew about 3% compared with the first quarter of 2014. The recovery in international market was 7.3% higher than in the first quarter of 2014 on a quarterly comparison. While an annual comparison show that net revenues fell slightly by 2.2%. This is in line with our strategy of reducing the volumes from regions with lower margins, a move that continues to be effective.

By the way even with the -- despite of the current devaluation of real, it was this adjustment in the offer demand curve that allowed us to increase prices in dollar terms for the last two quarters consecutively.

Despite the cost pressure felt in the second quarter 2014, mainly for grain, soybean, we were able -- our gross profit amounted to BRL2 billion in the second quarter 2014, 8.9% above second quarter of 2013.

The gross margin rose by 1.7 percentage points from 24.9% in the second quarter last year to 26.6% in the second quarter 2014. A quarterly comparison shows that the gross margin increased by 0.8 percentage points against first quarter 2014.

There was a reduction of 1% in operating expenses in the second quarter of this year compared with the same period of last year. With a higher gross profit and lower expenses achieved in this quarter we have continued with our strategy of applying back into our operations part of the savings generated at marketing (inaudible) marketing investments. Only in the second quarter 2014 we invested more than BRL50 million compared with same period of last year.

As I mentioned in the two -- in the last quarter call, we always gave a disclosure regarding the non-recurrent events if there is any. In this case, in the second quarter 2014 we had approximately BRL58 million, all related to redundancies, the majority of that happened in international -- in our international operations.

So EBITDA came to BRL1 billion, 25.1% higher than the second quarter 2013. This translated in a -- in margin EBITDA of 13% compared with 10.6% last year. A quarterly comparison show that increase 16.5% our EBITDA compared with the results in the first quarter of this year with an increase of 1.3 percentage points in the margin.

If we exclude the non-recurrent event that I mentioned to you, those BRL58 million, the net recurrent event, our EBITDA into the second quarter of 2014 would be around 13.5%.

Net income in the period was BRL267 million, with a net margin of 3.5%, an increase of 0.7 percentage points against the second quarter of last year. This occurred despite the payment made in relation to the bond buyback operation.

Again, if we exclude this non-recurrent event we would have approximately BRL0.5 billion as net income in the second quarter of 2014.

Now, let's start to go briefly through the market. So let's start with domestic market. With all the initiatives, revenues from the domestic market came to BRL3.3 billion in the second quarter 2014, 7% higher than the second quarter of last year. Average prices increased by 13% due to better portfolio and passing through of costs.

Here is important -- would like to mention you a specific point. As was the case in previous quarter, during the second quarter 2014 we felt the impact from the other sales lines which had significant variations in price and volumes. This difference was due to the improved sold to the Doux plant sold in May 2013, a non-recurring event.

If you exclude the other sales lines from the analysis the figures from the quarter give us a better idea of the real scenario of the domestic market with net operating revenues of BRL3 billion, this was 6.4% higher than the same period of the previous year, and an increase of price, an average price of 10% -- 9.9%.

The operating result EBIT came to BRL384 million, 70.4% higher than in the second quarter last year, registering an EBIT margin of 11.6% compared with -- compared to the 7.3% of the same quarter last year and an increase of 4.3 percentage point. If you compare -- so that is again 4.3 percentage point against last year.

Now, talking regarding international market, it achieved an important result in the manual comparison in the second quarter 2014. Although still faces some challenges during the period such as pressure from grain costs and lower supply of beef and hog at a good level.

The net revenue from this division declined slightly by 2.2% on an annual comparison and were 7.3% higher than the first quarter 2014. The operating margin EBIT came to 7.8% in this quarter compared with 6.4% in the second quarter of 2013 and 6% in the first quarter of 2014.

This shows that we are in the right track regarding our strategy to decrease the volatility in the (inaudible) international business.

Now I'm going through market by market in the external market, just give you some main figures. Middle East Africa, the sales volume in the period amounted to 269,000 tons in line -- 269,000 tons inline with the previous quarter. And revenues came to BRL1.4 billion, 4.1% higher than the first quarter of 2014.

The Far East, we have sold 123,000 tons in the Asian market in the second quarter of this quarter this year with revenues of BRL727 million, an increase of 4% over the previous quarter.

Japan was the main market in the region, following the trend of the first quarter of this year with continued reducing the local inventories and the possibility of raising prices.

In the Asian market it's also worth noting that BRF ended its joint venture with a Chinese company, Dah Chong Hong both -- in April. Both companies still maintain a non-exclusive commercial partnership, focused on the markets in Hong Kong and Macau.

Europe and Eurasia, the shortage of pork meat for Eurasia gave the Company good opportunities with volumes sold in higher prices. Europe registered an increase in sales of turkey meat. Sales in the region came to 87,000 tons, and net operating revenues amount to BRL800 million, a rise of 14.2% over the previous quarter.

Americas, there was a big increase in sales in the Americas region in the second quarter of this year. Volumes grew to 77,000 tons and net operating revenues to BRL456 million, both were higher than the previous quarter.

Now I will go through some financial specs, most of them already mentioned by Claudio but just I would like to pinpoint some specific topics, so allow me.

First of all, in terms of financial effect, net financial expense came to BRL393 million in the quarter. It was something like 52% higher than the second quarter 2013. The main issue here, this happened mainly due to the re-purchase of bonds with a face value of $450 million in May, with the subsequent issue of a 10-year bond of $750 million with a coupon of 4.75%.

By the way, that operation was one of the benchmarks for the region, not only for Brazil but also Latin -- for Latin America companies. These transactions extended duration of -- and just another point, if we exclude these non-recurrent event, this premium paid given the liability management that we did in the second quarter, our net financial expense would 0.5% -- 30% smaller, lower than those of the second quarter 2013. These transactions extended the duration of our debt denominated in foreign currency from 6.4 to 7.2 years while our average cost in dollars was reduced from 5.5% to 5% per annum.

With this (inaudible) management, the annual savings will be approximately $11 million, less financial expense.

The Company net debt continued to decrease and reached BRL5.1 billion. This is 14.6% lower than that registered only three months ago, by the end of March 2014 which give us a leverage of 1.5 times, which again demonstrate this administration's constant search for value and capital synergies.

I will not go through the investment detail; Claudio gave you some -- a good reason. Anyway we are -- we'd like to say that we are in the half of the year, we are starting -- as we start the second semester we are right on target regarding our guidance of that BRL1.5 billion that we expect to use as CapEx in 2014. And those (inaudible) are related to the process plant in Middle East as the last automation and improvement process and support in over the improvements in our levels of service.

Regarding financial cycle, the Company has been consistently working to optimize its working capital which led to an improvement in the financial cycle which fell from 57.4 days in June 2013, by that time representing 14.6% of net operating revenues, to 36.4 days in June 2014, which is 9.8% of net operating revenues.

The largest gains in this quarter occurred in accounts payable accounts receivable -- in the accounts payable and accounts receivable respectively. I just would like to make a specific point here. Although the active management of accounts payable and receivable inventories is expected to continue throughout 2014 into the year to come it's something that we are paying a lot of attention. It is important to highlight here that we might have not a decrease but a slight impact in our financial cycle improvement base.

Why is that? Because in the second semester as usual just would like to remind you about that that we tend to increase our stock level for the seasonal products that we sell in November and in December. So we started to build up these stocks in July, and moving forward month by month until the end of the year. As well as we might increase our position of grains, physical position, because the -- because if -- that would happen only if the price, the market prices regarding grains are inline, if they happen inline with our strategy. So those are two increase in stocks that would go against our optimization of working capital, but align everything okay with our strategy, and the way that we conduct our kind of business, I mean the seasonal products.

With our operational results improvement, better working capital management and CapEx optimization, the free cash flow generation amounted to BRL954 million in the second quarter of this year, compared with a BRL365 million that we generated in the second quarter of last year. If you take the, what we generated in this semester alone it's more than we generated in the -- throughout the entire year of 2013.

And finally I would like to share with you, actually to remind you, you were aware of that already, we received a positive outlook from S&P in this quarter, showing that we are in the right track in our strategy and the way that we are applying it.

So I will open now for Q&A, thank you very much.

(Operator Instructions) Diego de Campos Maia, HSBC.

Hi guys, thank you. Just curios, trying to gauge your sentiment regarding the second half of the year? I assume in one hand you have a more favorable cost scenario with falling grain commodities which could help especially your export business which is more commodities. But on the other hand you have more difficult scenario in the domestic market with decelerating consumer, higher inflation and maybe lower growth. So I'm just trying to see what your views are as far as the outlook for the second half and if you are maybe more optimist or more bearish versus what you were before (inaudible) this quarter? Thank you.

Thank you, Diego. Definitely the grains will play an important part. As you know, it is an important part of our comp, if everything is showing currently that we get some -- we might get some price benefit from the grains in the second quarter so that would be good for all the players that use that as a raw material for their animals.

Regarding the scenario, one thing that is important that we like to stress here, that we are, you know the expression walk the talk, as we've been talking regarding our strategy of a lower top line growth for the Company in 2014 and of this strategy (technical difficulty) we are having good results in the external market given the strategy (technical difficulty) and the volumes per certain regions.

In these kind of markets we merge the sales force, we started to increase our operation within the moms and pop stores. So when you look -- when you take all that we did in the second -- in the first half of the -- first semester of this year and you look at the second semester of 2014, we expect to be able to keep the good momentum of the Company.

So, but again the economy is not booming, and that would be great if you had a tailing; the economy would have (technical difficulty) is not going to be a growth year in terms of top line. What we -- the change in volume, in volume, top line growth in volume, specifically in volume of course. What we are seeing that second quarter, given the prospect of Brazil, there still will be heavily paying a lot of attention within our internal projects, our capability to deliver them. We after the merge (inaudible) now the name of the game in our case, productivity, we are going to pay a lot of attention on the sales force productivity. So we believe we will be able to get value outside of that in the short term, I mean still in 2014.

But again, the economy is not booming. And that would be great if you had a tailwind, the economy would be growing, that would be great. But we believe we have all the tools to deliver a growth aligned with our expectation. 2015 is something different, by then we should be able to have -- we will -- we went -- we will have went through the major projects of, that we are right now implementing, and then we might get back with the growth more aligned with our historic past.

Okay, awesome, thank you so much.

Tim Tiberio, Miller Tabak.

Good morning, thanks for taking my question. I was just wondering if you may be able to quantify the magnitude of feed cost reductions that you are expecting maybe second half over first half, and then for the full year over 2013 just so we can get a sense of the magnitude of what you're projecting.

Well, thanks for the question but unfortunately we might -- we cannot give you a number on that because it will depend a lot on what will happen in the market. Everything that we are seeing is based on common information. And given the production in Brazil, given the crop, the harvest of crops in Brazil, given what is forecasted and is happening in US, even Argentina, we expected that decrease in cost, in price, grain prices, but I cannot give you a precise percentage of decrease of that based on our assumption.

Okay, well, I guess I can build up my own private forecast, and it doesn't sound like you're aggressively hedging, so --

No.

Okay.

No, not -- we do have -- our hedge, let me make it clear. We -- we buy stock -- we have the -- by the way, we are the only one in the industry in Brazil that has the capability to hold stock, and inventory for more than three months. So what might happen in the second semester, given the price that we might find there we might decide to increase our physical stocks, that's the hedge that we do. Buy more grains.

Okay, that's very helpful. And then back to the export markets. You are seeing one of your competitors within Brazil expanding their capacity in the poultry segment via acquisitions. I am just trying to get a sense, outside of the proactive steps that you are taking to rationalize unprofitable or less profitable opportunities in export channel are you also just seeing more competition in these channels than a couple of years ago.

And does that concern you at all that you may see more competition going forward in the export channel and maybe that could potentially trim some of the growth expectation that we have seen in the past?

We find that the repurchases or the acquisitions of production is not an increase in production but the purchase of existing capacity. As we mentioned, we have idle capacity, we are concentrating our efforts of increasing productivity, rationalizing our productions, unifying production lines, in other words we are looking at the costs of increasing and supplying the finished products. I think we will try to rationalize our production, our facilities, maximizing, as I mentioned, productivity.

Okay. I guess I was addressing directly obviously JBS purchasing Tyson's business in Brazil and some of their prior acquisitions it seems like they are expanding their presence in the poultry segment. And I was just trying to get a sense of whether you think that may disrupt the dynamics that you have seen in the export channel versus the past or do you think since they are just buying existing capacity that in fact it could actually create more discipline because Tyson never really had much I guess operational skill, as I would put it, there to begin with. So having that, these assets within a larger operator maybe that actually, is it positive?

Actually I will not comment on their strategy, that is better if you ask them, I think that would make more sense. But going into your direction of the market balance if there -- since there is no building up of new production capability, since there is no more chicken out there, actually just a consolidation of the volume that (inaudible) would go with the direction of more discipline in the market. That would be my call.

But anyway, that is a different strategy, different company. As Claudio mentioned, we want to increase what we have in our house, we are very big, we have a lot of -- lot (inaudible) head to a very good growth to develop in terms of asset utilization. So we have space to grow in terms of volume based on that.

Great. Thanks for your time guys.

(Operator Instructions) Alexandre Amson, Credit Suisse.

I think I had a problem with the connection to first call, the Portuguese call, so I am not sure if you were able to listen to my question or even answer to that, but my question was regarding the potential impact in terms of taxes, income taxes for subsidiaries abroad because of the provisional measure that was approved a couple of months ago, and correct me if I am wrong. And I haven't heard anything new about these over the -- since then, so I just would like to check whether you had any updates concerning this matter. Thank you very much.

The updates, that's still -- we are still, not only us but the entire industry are still discussing with the government some changes in the current law. We strongly believe that is not pro-competitive for Brazilian exporters or Brazilian that wants to become multinational. This is something that, it's based on an ambition to raise more money from the government side, but there is an exchange when (inaudible) to when you think of longer term we need to actually to foster the Brazilian companies. So we are still on that front yet trying to -- came up with different possibilities. But in the short term there is no impact for BRF, we like to make it clear.

Our current business, the way that it's structured will not be impacted for that law. However, in the future, as the plant for example in Abu Dhabi and other regions start to grow, or even if we made some investments in regions with lower tax rate than in Brazil that would start to, might impact our results. So in the short term for 2014, even for 2015 I would say that impact will be not that big for BRF, but again we are still working with the government trying in other companies not only BRF but all the Brazilian exporters for that matter. So come up with a different solution that could merge all the industries involved.

Okay, Augusto, that's very helpful. Thank you very much.

Thank you.

Jose Yordan, Deutsche Bank.

I just have a quick follow-up to the hedging question, you mentioned that right now you just do it with physical inventories. But I mean is it just a matter of Company policy or why not use futures to hedge grain cost when, if and when there is extraordinary circumstances like what you have today?

Our policy regarding grains are related to physical lines, so we buy physical stock. We had some deals regarding the, but not actually hedges, regarding the -- some -- define some price, future prices within a certain level that is within our -- our treasury policy which is approved by our internal (inaudible) in the Company. And so there is a lot of rules within the Company that gives us step by step what we are supposed to do.

The majority of the hedge that we have is not 100% related to physical inventory holding, physical inventory and taking position physically speaking of grains.

Are you saying it is possible to do if you take it to the committee, et cetera, to extend the four months, and is that something you might --

Sorry. Sorry could you repeat, please?

I guess what I was getting at is, you seem to be saying that if you bring it to a committee, et cetera, that it is within the policy of the company to allow hedging with derivatives and therefore you could extend the period of hedge beyond the four months that you can do physically, it that the right way to look at it?

No, we do physically hedging of grains only.

Okay. All right, thanks.

Excuse me. This concludes today's question-and-answer session. I would like to pass the floor to Mr. Claudio Galeazzi for his final statement.

Sorry guys, I really would like to apologize but I am running late, I have to get some airplane -- after a week of meetings in Hong Kong, jetlag, it's been a tough and busy week, a lot of things going on, and I just like to apologize and thank you for your time. I am going to the airport now. So, Claudio. Thank you very much.

I would like to state that unfortunately Augusto will not be able to extend the present call but I would like to place all our investor relation plus Augusto and myself, the whole team will be always available for further explanations, answering the questions and the doubts you have. I think we have established a, practically an open house practice where we do appreciate where we do appreciate investors coming to talk with us either by phone directly or in person in Brazil or when our team and myself are traveling outside of Brazil. So please free -- feel free to contact us through (inaudible) we will always be meeting and giving necessary attention and comfort to your questions and doubt.

I would like to thank everybody for their presence in this call, for the questions asked and once again placing our team available for any further information you would like.

I would like to thank Augusto [Chris] (inaudible) Ribeiro that participated in the Portuguese version of our call. And thank you very much for your presence in this call. Thank you.

That does conclude our BRF SA conference call. Thank you very much for your participation. Have a good day.