BRF SA (BRFS) 2024 Q3 法說會逐字稿

Good morning, everyone.

I'd like to thank everyone for attending our third quarter 2024 results conference call.

BRF today reports one of the best quarters in the company's history with continuous operational progress in all aspects.

The company showed consistent performance in all the markets in which it operates.

We recorded significant growth in the company's profitability and yet another consecutive quarter with a margin of 19.1%, an all-time record for the period and an EBITDA of around BRL3 billion.

We also saw growth in revenue up to 12% compared to the same period in 2023.

In Brazil, I would like to highlight the increase in volume reflect improvements in commercial execution and investments in our brands.

The scenario contributed to market gains in the main categories.

In processed products, we achieved a 40% share, a gain of 1 percentage point compared to the second quarter.

In the International segment, we also recorded a positive performance, driven by continuation of our market diversification strategy in addition to increase in sales of value-added products as well as the recovery of prices in pork cuts.

The figures presented reflect the actions implemented over the last few years and confirm the granularity of our gains and competitiveness.

BRF+ 2.0 incorporated into the Company's culture continues to deliver positive results in operational indicators, strengthening our business profile.

I'd like to invite our CFO, Fabio Mariano, to present the detailed results, and then I'll come back to you with more final comments on the announcement.

Good morning to everyone connected.

I highlight the main financial indicators for the third quarter of 2024, starting with the net revenue, which reached 15.5, 12% higher than in the same period in 2023.

We reported BRL3 billion for EBITDA, which gives a margin of 19% in the period, the best result of a quarter in our history.

Free cash flow performance was BRL1.8 billion.

In working capital, the financial cycle converted to 1 day, the lowest level on record.

And in this slide, with leverage, we reached 0.7 times EBITDA in the last 12 months was the BRF's lowest leverage.

Page 4, we show on the left show the historical evolution of gross profit with a profitability of 27.7%.

We reported a gross profit of BRL4.3 billion.

On the right, we can also see the EBITDA margin showing a continuous improvement in operational results.

In the next slide, we are going to show the performance by market and segmentation.

Starting with Brazil, we continue progressing.

We achieved 16.6% EBITDA margin in annual growth, especially for the processed categories that showed great market share.

The next Page number 6, we emphasize our journey and continuous progress in commercial execution, reflecting a greater number of points of sale served, boosting volumes and contributing substantially to the performance of the domestic market.

We also remain focused on leading innovations that meet the needs of our consumers.

We celebrated 90 years of Perdigao, promoting new campaigns and sponsorships that increasingly strengthen the preference for our award-winnings and admired brands.

The next slide, I will show about the international market.

We observed the segmental evolution, sustaining healthy margins as a result of good export price levels, recovery of pork cutlet margins and new markets were enabled as well as good performance in Turkey and the GCC.

EBITDA reached 22.2%.

The accuracy of our pricing system has allowed us greater agility and responsiveness to boost our results in this segment.

On the next slide, the process, we launched a new product, expanding the value-added portfolio in the region.

In Turkey, we also had good contributions with a good growth from sales of processed products, which now account for 25% of turnover.

On the right, I present the highlights of the direct export segmentation.

We expanded our business with 13 new permits for various markets, helping to maximize prices.

There are already 70 new export permits for 2024.

I'll end the presentation of the business segments on the next slide with the performance of Ingredients as well as Pets.

This segment reported EBITDA margin of 13.3%.

We've also registered a greater share of value-added items and ingredients as well as an increase in volumes in pet and other sales.

Also in pet, we would highlight an increased participation of the Super Premium Natural category, new commercial export agreements, and progress in logistics and distribution indicators.

In Ingredients, we started operating in the heparin segment, expanding the line of drugs and maintaining our focus on expanding and diversifying markets.

Next, I will share the progress of our efficiency program, which Miguel will be quantifying figures shortly.

I will present the comparisons with the same period last year.

Bars colored in dark gray, the comparison with 2022 can also be seen in the material.

In the agricultural sector, the feed conversion of poultry and pigs fell by 2.2% and 0.5%, respectively.

Chicken mortality fell by 0.2 percentage points and pig mortality by 0.6%.

The hatching rate remained stable.

In industry, we increased poultry and pork production yields by 2.2 and 2.9 percentage points, respectively.

In logistics, we have reduced returns and raised service levels in Brazil significantly.

On Page 12, we consolidate the following sustainability highlights.

Certification of BRF slaughter plants in Turkey.

In Brazil, our units have been certified winning the Gold Seal of the Brazilian GHG protocol program the 15th year.

We also see the recognition of transparency in publication of greenhouse emissions inventory, the launching through the Institute BRS through the Spanish language initiation program for Lucas do Rio Verde.

Finally, the completion of the first education of our part of education program, benefiting more than 4,000 students and teachers and six municipalities.

We can now present on Page 14, the information related to the Company's capital structure.

The chart on the left shows the decline in the net debt and leverage, which was highlighted at the beginning of the conference.

On the right, we can see the debt profile, which remains diversified and long, in a fairly comfortable liquidity position.

On the next slide, we show the free cash flow.

The graph shows us an operating cash flow of almost BRL3.4 billion, the best operating cash flow in history, an investment flow of BRL769 million and a financial flow of BRL609 million, resulting in a free cash flow of BRL1.8 billion.

You can also notice on the smaller graph, the evolution of cash generation over the last few quarters, eliminating exchange rate effects so that the significant evolution of cash inflows over the last period is even more evident.

On the final slide, we can analyze the decline in the net debt between the quarters.

We reported net debt of BRL6.9 billion, the lowest one since 2015.

The reduction in loans will continue to contribute to lower interest rates in the coming quarters.

I would like to thank the audience and then I'll give the floor to our CEO, Miguel Gularte, for his closing remarks.

Thank you so much, Fabio.

To end our presentation, I would like to highlight that we presented a net profit of BRL1 billion, the best leverage in our history with cash flow generation of BRL1.9 billion, results that were enhanced by operational advancements that also allowed us to reduce the net debt of 34% in comparison to the same quarter of 2023.

The BRF+ 2.0, consolidating the culture of the company is still registering positive results with an additional grant of BRL330 million with operational indicators utilizing BRL1.1 billion per year.

The liquidity of this quarter shows that BRF is much more prepared for the challenges that the market shows us.

In Brazil, besides the growth of added value products, I'd also like to highlight the anticipation of the beginning of the campaign outcome celebrated.

This is determining to establish our leadership and ensure time and again the presence of the Christmas supper of the Brazilian consumers.

In the international market, we registered another quarter with expressive numbers, advancing our diversification strategy in the markets.

We have already accomplished in 2024, 17 new registrations for exportations.

I would like to highlight a very important step for the consolidation of our presence and leadership in the Middle East with an announcement of an investment in one of the main chicken producers in Saudi Arabia.

We would also like to communicate the definition of Sadia as a global brand for the expansion of our beef segment.

We would also like to highlight remarks on the safety of our personnel that BRF is a reference.

We are consolidating our high-performance culture.

Our discipline is reflected in all work fronts of the company.

We would like to thank the almost 100,000 employees that have been contributing for our results.

I would like to end by thanking the strategical direction and our continuous support of our Chairman, Marcos Molina as well as the Administrative Board as well as our shareholders, as well as the permanent partnerships of our producers, customers, suppliers, and communities where we are present.

Together we will continue building a BRF much stronger and sustainable.

Thank you.

(Operator Instructions) Lucas Ferreira.

My first question regarding the domestic market of processed in Natura.

I mean, how do you see the customers' demand as well as price for the next quarters once we are seeing that the food inflation is going up?

When it comes to beef, this is also a reality.

Do you think this could also be a reality for processed foods?

Have you been seeing something in that sense?

The second question is about this announcement that you made, if I'm not mistaken, was at CIAL, in terms of the Sadia brand using this for beef Marfrig.

What are your expectations in terms of customers' acceptance?

How do you see synergy in that sense?

I wonder if this is something that could be expanded to other geographies as well.

Lucas, answering your question; Fabio, please, if you could complement.

We are seeing rather stable demand.

And evidently, if you have a stable demand, we will have the possibility of keep improving our price because chicken is an extremely competitive protein.

Chicken's price is present in all geographies, and it's a very resilient price, and this is not different in Brazil.

Another important aspect, if we take a look at the demand, if we shift this into the imports goods market, we will see an exchange rate that is favorable that facilitates our operations.

When it comes to all the operations that we had here in our quarter, we can try to predict a rather favorable scenario in that sense.

In the Brazilian market, this is also happening.

And in terms of BRF, in the last semester, we have been investing in added value products, and this is even more evident because we have been seeing a growth in processed goods as Fabio can complement right now.

Indeed, when we think of the demand, Miguel has already highlighted it, this is very solid and stable.

It's also a result of a greater consumption.

We see our business, our processed goods very much related not only to the income of our consumers, but also the reliability index of our consumers as well.

And even though these are not ideal parameters, we have been seeing improvements.

This helps us understand this increase in volumes that we've been seeing in these last two quarters, the expansion of volumes in processed as well that allowed us to see benefits in terms of market participation.

We reached 40% in terms of the average market participation.

And it's also important to highlight that this gain in terms of participation is related to all the subcategories.

So we gained participation in butters and frozen goods.

Another aspect that you mentioned about the Sadia brand, we are very excited.

This is another initiative connected to Marfrig, among many others that are happening concerning the two companies and a brand such as Sadia with the capillarity that it has, the commercial strength as well as the reputation that it has.

When it comes to a multi-protein portfolio with commercial synergy, strategic alignment allows us to have very good perspectives for next year.

Bruno Tomazetto, Itau BBA.

So when it comes to the international market, you mentioned about this gain of relevance of processed goods.

You mentioned 25% of participation in Turkey.

My question is more like, can you try to help us in terms of the perspective, how does that mix has been improving in different geographies and in terms of what you expected in the beginning?

What you're seeing now?

What can we still approach in terms of that mix?

And how much of opportunity would that represent in terms of incremental gain of international margin?

Second question is more about the cash generation.

I know that you've been delivering great results.

I believe that you mentioned this very well in a few.

And we have been debating a little bit more about capital allocation and consequently could provide us with an opportunity to accelerate the expansion agenda of the company concerning the news that we've been having about Saudi Arabia.

And we have been seeing a sequence, this leverage movement of the last year that could bring about some change in terms of this breakeven cash generation for next year.

My question is much more for us to have a perspective about all that.

So we have less financial expenses.

How can you put all of that into perspective for next year in terms of this breakeven cash generation?

How does that change from now on?

Bruno, I'll answer your question, and Fabio is going to complement.

Of course, we see a very favorable scenario.

Once we have the competitiveness of the chicken protein present compared to the other proteins and enhancement of the market scope, this protein can be exceeded in different features, mainly price assets, you have different possibilities like a mix.

This was connected to all the investments that were made as well as the strategical directions of the company, working with added value products, supporting brands that are extremely strong and contain the consumers' preference.

So the perspectives are very good.

When you take a look at the BRF+ program, it's a program that is present on the culture of the company.

So this performance is not a performance that happens only in the different sectors of the company in Brazil.

You also see this process happening in the different geographies.

Now we were actually traveling with our operations team.

We saw the operations in Turkey as well as the Middle East.

And it's a great satisfaction for us to see this.

Our Chairman, Marc, was with us, and as well as other directors.

And we see this seek of continuous improvement, this seek for the ideal performance.

This is present in all geographies of BRF.

And if you have a company that is performing well in a market, that is showing signs of resilience in a balanced scenario in all aspects when it comes to offer and demand, the perspectives are very good for a year for guidance, just analyzing the scenario as a whole.

I believe that you are correct.

When it comes to mentioning the progress in processed in the international market, you mentioned the participation of processed in the Turkey's portfolio.

But when it comes to the Gulf region and all the distributions, this portfolio has been progressing as well in terms of magnitude, in terms of the whole revenue or total revenue.

It's part of our strategical orientation of BRF to increase this portfolio internationally speaking.

Now making a connection to the second question.

I believe that the opportunities of keep growing in processed are going to be connected to investments without a shadow of a doubt.

Part of the dedication of this capital allocation is going to be connected to the growth of our capacity.

We will prioritize projects that we will have the opportunity to grow this added value product and some categories that we have some more conviction in terms of sustainable demand.

In some cases, we see some repressed demands to be met.

So I believe that you could expect for next year an growth investment that is much higher compared to the pace of the investments that were made in the last two years.

Today, we have a project pipeline of BRL1 billion for evaluation.

I'm not saying that all projects are going to be approved as well as executed, but we have conviction that most part of these projects are going to meet the requirements of economic viability.

So besides the announcements that we made last night, in terms of compensation to the shareholders on capital, new rebuying program, a good part of this capital reallocation is going to be connected to the sustainable growth of the company in the next years.

Leonardo Alankar, XP Inc.

First of all, congratulations on the quarter.

I would like maybe to get into two main points, maybe a little bit about what is still behind in Newcastle.

But thinking maybe giving a little bit more color, if you could talk a little bit about more the international market, Asia, all these other countries, maybe was something a piece of information that you said in the presentation about the price of the pork meat.

So if you could just get into more depth about the regions of the exportation that we can wait and if there's any kind of cash, some kind of restrictions in Newcastle if they drop.

And another aspect, I think you have the graphs, we see the margins recovery that has been doing pretty well.

And now you have a more share of processed.

The margin is much healthier.

So probably we shouldn't expect 2025 to have the number of revisions that we had to do in 2024.

So I would like to see maybe your point of view, maybe talking about the seasonality, what is the 2025 forecast?

How it will be designed because maybe the processed market might need to have less volatility?

So I'd like you to highlight this point.

Leonardo, I will start by answering referring to Newcastle.

Even though the OMS, the animal OMS had reclassified Brazil as a free country, still Rio Grande do Sul still has a closed market, both in Mexico and also in China.

And even in the case of Middle East, KSA, only on the October 31, it was the exportation from the state was made available.

So there is a lot of hard work from the Agricultural Ministry and the International Affairs Ministry so this market can be open in case of BRF.

We have almost our 20% of our poultry production is in Rio Grande do Sul.

We hope that if we go into accordance of our direct implementation, we hope that this flow goes back to normal.

When you see the market as a whole, think about exports, but not taking the internal market for granted, we see all these openings of new leases.

They might be about plants or geography.

They had a pretty relevant impact on BRF.

If you get the previous two years, if you take the last two years, we have more than BRL2.2 billion that were invested in these new geographies.

This is really relevant.

And if we analyze all the market growth that we experienced in Brazil, we've been working very hard with our teams, with our brands, and our different areas in the company.

Of course, in order to be able to offer this product offer and get the market opportunities, we need to have a team, an active team, resilient, that is committed so that they can make these opportunities -- they can make these opportunities come true.

So we are well satisfied with our performance, with team's performance, and I would say even more with all the geographies.

We are very pleased.

About the exports, the second part of your question, Fabio will answer you.

Just another complementation about the export part, and then I will redirect again to the Brazil question.

So when we go to each one of the geographies, we don't see any profitability highlight.

So it's the same to say that the margins, they are very similar.

What we have been capturing of profitability in Halal or profitability in Asia and what we have been capturing towards profitability in Africa and Americas.

All the regions, they are obeying the mix, but with margins, pretty similar margins if we assess them all.

It's important to highlight that an important data, which is when we add the enablers from 2024, in 2024 we could profit more than $1 billion with these new leases.

This is a relevant data because it highlights this quality of picture that Miguel said, we get more options, and this maximizes the Company's result through prices.

Marginally speaking, you talked about pork, but in comparing the quarters, it was superior to other markets.

Talking a little bit about Brazil, it's important to remember that more than 70% of what we sell in Brazil, they are processed products that have this guideline towards consumption.

And when we get to the clients where the consumers, they choose to buy our products.

So there's a lot of associations with income, standards.

We are pretty optimistic to see this macroeconomic data that we will have improvements ahead.

We are going through our theories that think about this stronger quarter because of the celebrations at the end of the year because, for example, for Christmas, we are going to commercialize some Christmas Kits.

And now, more than half of our campaigns, they have been sold, and we have already received many requests and it's one of the best results of the company and also retail from up to this date, it's better than our expectations were.

So we've commercialized some part of the campaign.

Of course, November, December, they are the stronger months, but everything leads us to think that we are going to have a pretty strong campaign.

And this shows that the strongness of the domestic market.

These products, they give a good price per kilo.

And seeing from in natura products, in natura it's around 30% of what we sell in Brazil.

We should remember that we don't see any piece of information that would show some sort of imbalance in supply and demand that would affect the prices.

So we understand that for in natura in Brazil and in natura internationally speaking, we might have stable prices in high standards.

This goes to poultry and pork.

Guilherme Palhares, Santander.

I actually would like to explore 2 points.

The first one would be towards the grains, the seeds.

We see an increase, right, of that in Brazil.

And I'd like to know your thoughts towards that.

And my second question would be about a follow-up question regarding what Bruno said.

Besides announcing about the GCP payment, you also opened another program of buyback.

And I would like to understand better if you could rank among the capital allocations, which ones would be the priorities?

And inside growth, which ones would be the main targets that if you could share that with us.

I will get started talking about the grains.

So we see it in a scenario that is taking into account the harvest that was expected for next year.

We see pretty good harvest.

And this has to do with Brazil, especially with the soy, probably soy harvest next year will be around 170,000 of tonnes.

For the American one, both for soy and corn we are expecting great amounts.

The harvest in Argentina too, they seem stable, at least towards the one that we could observe in 2024.

So when we take all that into account and we assess all these elements, we strongly believe that there might be some ups and downs towards the corn price that will be compensated by soy.

And regarding other inputs in our case, we are going to expect the stability, especially regarding to this abundance of grains and part of the projections that we are analyzing many market sources.

I will answer the second question now about this capital allocation.

So you asked about the prioritization.

So I believe that the company comes in first place.

We will prioritize the growth of the company, as I said before.

Obviously, that we have to compensate our own capital.

It's been eight years since the company did not compensate their own shareholders.

So besides having room in the capital structure, I believe it's a very good signpost for our shareholders in terms of this payment.

This rebuying program, this is something that was observed in the last call.

Even though the stock has been valued, we see that there's lots of room for the value to go up even more.

We are very optimistic in terms of our investments here in BRF.

So the prioritization is going to be the growth.

I mentioned some of the pipeline projects, some with more conviction than others.

And 2025 is going to be more intense in terms of CapEx compared to 2024 and 2023.

And if I could just make a follow-up on this issue of capital allocation.

So if I understood correctly, when it comes to dividends, we wouldn't be able to expect an extraordinary payment.

We should focus on growth and then the distribution and the return to the shareholder.

Is that it?

The prioritization strategy is connected to this strategy that you mentioned.

We are working on a daily basis for the company to have the possibility to make their own choices with room to grow and to give back to the shareholder.

Thiago Duarte, BTG.

Here, there are 2 follow-ups.

First of all, about the comments that Fabio made with regards to the projects, speaking of growth and speaking of these mapped projects that were not approved necessarily, but they were already mapped out.

Just for me to understand, Fabio, what is the main characteristic of these projects?

What should we expect as the main feature, the main characteristic in terms of what the company sees as revenue growth?

Are we talking about brownfield expansions in terms of precise capacity?

Are we talking about trying to get in new avenues like pet back then?

Are we talking about new geographies that are similar to this investment that was recently announced in terms of Saudi Arabia?

Just for us to try to qualify how these projects -- I mean, what are the characteristics of these projects?

Speaking of growth, it's very clear that the company is focusing on that, but I would like to understand how exactly they position.

The second question, actually, the second follow-up in the context of the grain price, talking specifically about corn and meals.

I know that this is something that you've already mentioned, but I would like to focus on a different element here.

We saw this increase in terms of the corn price, especially in the domestic market.

So more than asking you a question about the hedge and storage of the company, I would like you to tell us a little bit about a potential threat that you see or not in terms of the competition concerning the corn purchase.

And again, I'm talking about this big amount of ethanol production, corn ethanol production here in Brazil.

We know that every sector is competing when it comes to corn purchase for different usages such as ethanol.

So I would like to understand if you see this as a threat.

If so, what kind of measures or how exactly you can mitigate that?

Those would be my two questions.

Thiago, I am going to answer the second question.

And Fabio, if you could add up to that, then will answer the first one.

What we're seeing in terms of grain scenario, it's fairly stable.

It's evident that a company such as BRF has already a predicting model, and this model is rather assertive at least in the last two years.

All our projections were true, and we can take advantage of our predictions, right, as a company.

When it comes to production, or when it comes to climate because I know that it also has an influence on the production, we cannot see any scenario that would be known as threatening.

In terms of the grain dispute, it's important to say that we cannot use DGs.

And the composition of our meal, if it's crumble or other elements, it will allow us, without a doubt, to navigate the next semesters without any surprise, any pushbacks.

Okay.

Just the last complement to the second question about the grains.

This morning, there's an article on Valor Economico talking about the projects that you've just mentioned.

And over there, there is a data that says that additional demand for corn should reach 40 million tonnes.

If you imagine Brazil's harvest, it's up 120 million in the last year.

This is equivalent to interpreting the yes, corn is going to be a bit more competitive in some states, knowing that these projects are more concentrated in the region of Mato Grosso or Matopiba.

But as Miguel said, we have been trying to seek alternatives to our meals.

Miguel mentioned DDG.

We've also tried to implement sorghum and other types of grains.

So there are different ways on how we can change the formula without losing the energetic potential of the meal.

Talking about the CapEx, which was the first question, the profile of this pipeline that I've mentioned and I quantified as well, it's very much oriented for processed goods.

These are the categories that we have more conviction and we do have strategic alignment because indeed, the company needs to improve our business profile in terms of added value.

Maybe this is not the most profitable one, but is very resilient, knowing that we are part of this industry that faces different cycles.

Let me mention some examples.

We have our plant located in Abu Dhabi that is close to its own capacity in some lines.

A recent plant that we acquired in Saudi Arabia, we duplicated the capacity.

Some plants connected to frozen goods, they are almost fully occupied as well.

And then we see a demand in, as I've mentioned before as well, demands that are repressed.

So the ability of meeting these needs immediately.

So when it comes to the CapEx, we want to give priority to these processed categories.

Frozen categories, this is another one that inevitably will receive some investments.

And this is actually where we have to grow in terms of the origination of raw materials.

So we've been studying projects to understand the different possibilities of slaughtering and try to analyze competitive costs for the processing stage of the process.

Renata Cabral, Citi.

I have 2 questions actually.

The first one would be connected to BRF+.

We saw that during the quarter, you delivered BRL 330 million.

I believe that in the year, it should be a little bit above the expectations that we had in the beginning of the year.

And my question is more connected to next year.

We know that BRF+ is mainly focused on reaching a performance level of 2019.

And after that, you started seeing which units were performing better.

And from that point on, focus on that to show a delivery on BRF 2.0. On 3.0, if you provide us with some insights in terms of what is the company focusing on, if you're still focusing on internal benchmarks or if you're focusing on external benchmarks and if this would represent a smaller benefit connected to the last years because naturally, lots of synergy has been acquired or there is still a relevant value that you can deliver for 2025.

The second question is a follow-up about the capital allocation connected to CapEx, right?

You have investments in technology projects.

And I'm wondering if you could detail some projects as well as opportunities from these projects as well as the size of the capital allocation.

Okay.

When it comes to BRF+, this is a program, as you mentioned, in the beginning, the base was 2019.

From that year on, 2024, the base was the best performance of our internal benchmark of our different units.

What we have seen now actually, what we see now in November, we are already meeting our annual goal.

We are going to go over what we planned for 2024.

We already have the BRF+ for 2025 that is completely designed with action plans, all the areas are acting and having the synergy.

In the future, we'll have opportunities and possibilities for an improvement.

The project is a continuous improvement project, and it can impact the company in different ways.

We can improve the culture element.

So this process, it improves on its own.

Obviously, we're very much focused on that.

We are also seeing the opportunities with more details, trying to predict these possibilities in each of the areas.

But it does not miss out on what was the main principle that BRF bore in mind for these last years.

So there's always room for improvement.

We're always focused on the opportunities.

Here, we also have a critical mass that's very important.

There are units that adopt best practices in different geographies, and this seek is a continuous seek.

All areas, they interact in a collective way.

And if you analyze BRF+ 2.0, we added BRF+ 2.0 plus collected because evidently, the areas they learn how to work together, they strengthen one another in one area.

So once an area starts understanding their own performance, they will need another area, industrial, commercial, so on and so forth.

We have been focusing on that.

Now we are expanding this project to another geography as well as for other businesses like the pet business.

It's a very clear example when this operational efficiency strategy is present in different areas and segments of this kind of business.

I am going to answer the second question.

The investments in technology, I believe that when we think of the price of the investment marginally, I don't think it's going to grow significantly because we have already been investing in technology for a while now.

We talk about some occasions about innovation, R&D and launching of new products, but there are different projects in terms of adopting new technologies.

And that we have been executing in the last years.

For instance, robotics, machine learning, artificial intelligence and more recently, the adoption of generative artificial intelligence.

Let me mention some examples: we have this, the chickens that we analyze with computers.

We have the requests by the consumer that is generated by some algorithms and supplies.

We have the smart buyer that also makes use of generative artificial intelligence.

So it understands the recent negotiations that defines the target prices of the negotiations based on the track record.

We also have human resources, smart recruitment when it comes to the selection of CVs, making triage of the different candidates and all of that without, of course, mentioning the chat box that company owns for our HR, Sofia, and customer service.

So technology, we see it as something that can be quite useful, and this has been happening, as I've mentioned for some years already.

Isabella Simonato, Bank of America.

I'd like to go back a little bit about the domestic dynamic, the market.

I think it was pretty clear the improvement on the amounts, the drivers as well.

I'd like to go to the price discussion because even though we had all this gain, when we see the average price, it was kind of on the side.

So if you could clarify a little bit about the price performance by category throughout this quarter.

And maybe you could separate what was if we had a price increase or mix contribution, how we can see this revenue equation, mainly thinking about processed products.

I imagine you were talking about the processed products in general, right?

Because in nature of the products.

Yes, there is a huge influence on from the mix of products, especially from the ones that have huge volumes from like sausages.

This is a pretty important topic to highlight.

But when we don't take this issue into account from the portfolio, talking about price by price, I will talk about the margarine that we mentioned.

It is a category that could expand its margins due to the main input because of the soy oil that went down.

And this is a tendency that goes back because we have a price recovery towards the oil, and we see that there is an opportunity ahead that we can influence as market leaders, how we can change the prices.

So stable prices in Brazil in processed influenced by the mix and also some categories, especially measuring that we had bigger competitions due to the profitability, and this is a natural behavior.

Thiago, Goldman Sachs.

I would like to continue with this discussion about processed.

You said, I think your competitor, mentioned an increase in difficult for both.

And you, like Fabio said, you kept in general the average ticket.

So when you first saw this gap, and my question is, how of this gap, how much is it now awareness decision to kind of hold the price and get more shares in volumes or maybe that eventually, if there is space for more accelerated pricing from now on?

That's my first question.

The second one was international.

We understand the dynamic of the global demand, the benefits of the new enablers, but your margin has been kept and even improved its record -- we have record results, right?

If we isolate all these improvements that are structured thinking about the BRF structure, how would a bigger offer from the United States would apply some sort of pressure in this margin?

And in this context, what is the forecast, especially from about the offer, the supply and offer that other markets might offer in 2025?

It's important to say that in BRF, we work with pricing system and a pretty accurate market analysis, and we don't create a destruction of value to get share.

This doesn't happen in our company.

Our strategy is to gain added value, market share with commercial excellence, better efficiency and better costs.

So in our standpoint, there is no value destruction reducing or exchanging shares.

In the international market, assessing all the variables, whether they are climate or from supply and demand, we don't see any issue that might create some sort of imbalance.

We see that we have the chicken protein of the poultry, it's pretty competitive.

We see it in different geography that the demand is pretty resilient.

It's no different in Brazil, where we have the market with a full job environment and people are looking for this kind of poultry and pork protein.

So we don't see any price change.

Of course, we are always looking after better performances and seeing this landscape when we take a look at the cattle, the meat, it's more expensive and taking this opportunity, we're going to be performing on it.

And we always take into account that our brands are very strong.

And because of their strength, we can make decisions.

This year, we could go to more than 70 different destinations, and we can work with the next quarter that it's a pretty important quarter for BRF and because Perdigao and Sadia brands, they are Christmas synonyms.

They are totally related to it.

And we are very happy to develop these products and our communication projects this time of the year.

Like it had been said previously, our celebration campaigns had started before, and we are performing quite well.

The numbers that we have are ahead of us, shows a campaign that is fully developed with great results.

[Ricardo], Morgan Stanley.

First, Fabio, I have a question for you.

Yesterday, we talked about a good dynamic of working capital.

I think we could have BRL300 million and we discussed why we had such good results.

And my question is, when we are going to the fourth quarter, what is your perspective towards this accounts that came better than we had thought?

I think we talked about the receivables.

So maybe just thinking about this fourth quarter, how is going to be your approach on working capital?

We talked a little bit about stock, but stock is what is expected in the third quarter.

We do this buildup in grains due to the harvest.

So I don't think that there's no much to talk about it.

I think we could actually, I just wanted to see what I want you to tell us what happened in the third quarter and what might be happening in the fourth quarter.

And I also like to see how you expect the next quarters towards the price of pork because we see that in China.

And I would like to see your insights in your negotiations, a more qualitative assessment towards the pork price.

If you want to talk about the national and international market.

My question is more focused on the international, if we take into the exchange rate and if there is any kind of change in negotiations with your clients, but these are the two questions.

I will answer the first part about the working capital.

Like you mentioned, we had a cash flow that was pretty convenient, especially from DSO, the receivables and payments and consumption in stock, which is natural because once we create stocks for the celebration period, especially in the Q2 and Q3, and now especially in this fourth quarter, we see this with the celebrations moment.

We needed to take into account that for the sales related to celebrations, we have some deadlines that are taken into January.

And we need to see if it makes sense to anticipate something to December.

It's always a good idea, so we can prevent the use of credit.

We also see some opportunities to originate grains in the fourth quarter, and we see some prices where we are mainly the brand that is, its price has been going down in the last weeks.

So if we have opportunities, we are going to build stocks associated to the cost of our animal food towards next year.

And I know, unfortunately, the answer is not precise because it really depends on the market environment and the approach that we might have when we see the returns on the sales.

When we are talking about working capital, we are working with stocks, the stocks that were historically pretty optimized.

So when we talk about the perspective, we want to defend all this efficiency that we could capture in the last 18 months.

I'll give the floor to Miguel, and he will answer the questions about pork food.

We see the pork market going in a pretty interesting dynamic.

Of course, China is facing not only of demand, but also precification.

And China as a huge protein demander kind of influences the other proteins in the other geographies.

You see that at the same time that China creates returns its demand to cattle.

And when you see that in the other beef, poultry you are actually going to see that in the case of pork, we had a pricing correction, a market that precified more on exportation than the poultry meat, which is good because it gives us perspective and expectations to do the same corrections and margin gains in poultry, the same thing that we are doing with pork.

The questions and answers session is over.

We would like to thank all of your participation and hope you have an excellent day.

Statements in English on this transcript were spoken by an interpreter present on the live call.

The interpreter was provided by the company sponsoring this event.