BRF S.A.

and operational and financial goals are just beliefs and premises of BRF Board of Directors, as well as information available to the company. Future considerations are not guaranteed of a performance. They involve risks, uncertainties, and premises. since they are referring to future events and depend on circumstances that may or not occur. Investors should understand that general economic conditions and industry conditions and other factors, operational factors, may affect results in the future. for the company and might lead to results that differ those expressed in for future consultations. Now, I would like to pass the floor to our global CEO, BRF, Rudival Rugeda-Bus. He will conduct the presentation of the company. Mr. Rudival Rugeda-Bus has the floor. Good morning to all, and thank you very much for being here during our earnest release for third quarter 2021 of BRF. Now, I'm going to give you some highlights through some slides for 15 minutes. And after that, all executive board members And we will be here to answer your questions and clarify any points with regards to third quarter 2021. Our third quarter, as you might see here on the screen, has been a very challenging moment. However, we were able to obtain results as expected. The result of the implementation of a series of initiatives, we provide you a very solid result. A very solid result that shows our growth and also our net revenues and our gross profit and average return adjusted to 1.4 million approximately. During the same quarter, we also had an adjustment with regards to that we have here in Bamberg in Turkey, and that caused a financial impact that was relevant, that brought our company to this $271 million loss. Now, I nevertheless would like to highlight the strength of our operational result. Likewise, it is important to highlight our capital structure, and I will be talking about that further down this presentation, in which we reached our limit of the financial leveraging of actually three times more, so with the impact of the exchange rate and also the position in our debt business. But the scenario is a long-lasting profile that allows us inadequate management for this and the coming year. I would like now to talk a little about the following. I would like to mention these results. And I would like to ask you, please, that along with me, understand and analyze what has been for us our last three semesters with regards to the management of this company. In the last 12 months, our market, all in all, had an inflation and an increase in cost that was unprecedented. In the long cycle, long lasting cycle of this sector, we moved from standards, or fat marks, in 2017, 18, and one corn stack of the morning was 30, 35, and now we are much beyond 100 reals. Likewise, costs such as freight, sea freight, packing, flexible, rigid packaging, there was an increase in more than 30 or 40% cost in many cases. And what do I mean by that and what would like to share with you today? If we analyze this context, comparing to other events in the past and if we analyze the results of this campaign for 2016, 2017, 2018 with EBITDA in which we had diversities and cost increase during those times and also our results were less than 3 billion and in 2021 with all those challenges that add complexity in our chain management the way it is integrated and we after 9 months achieved almost 4 billion as a result and I would like to add that last year, from last year to this year, we had an increase of 12% in our earnings, and up to the 4% increase. We also kept our gross margins up. above 20% and above 12%. And that shows that everything that we have mentioned with regards to a long-lasting view management by implementing structural processes in our agribusiness, in our industry, in our logistics, in our commercial and trade relationship, in our services to our consumers in a very effective way, bringing them quality, faithfulness, has produced results. And those are perceived and seen here with no initiatives such as those results provided. might have been very similar to previous scenarios which were not in such a challenging environment as today's. Same way, we are absolutely firm and we believe that once we have stability in our cost plateaus There will not be such a hike in price as we lived in the last 12 months and we do believe in stabilization for the next cycle. Our company shows to be absolutely ready, solid with processes that are implemented to be able to kept, yes, those earnings that are embedded in those current results. They were somehow impacted by the management, of course, due to this absolutely strong... and hike in price that we had in our result cost. So I reiterate that the acknowledgement of our operation and the trust in the processes that have been implemented and also the certainty of getting those earnings considering the seminar in the future allow us to see that. And I would like to share that with you what happened since 2019 with regards to our BRF costs and likewise the indicators of our production costs from Embalapa with regards to poultry and swine and pork and what happened to the margins from the producer's point of view. If we consider that the cost of production moved from 100, 183, 179, our cost went to 144 with our management. so that shows the efficiency and this implicit gain that is shown in our results so that we would keep those results in such levels as I mentioned and that provides us certainty that this will be positive from now on that we won't have such a hike across such a very steep curve and there will be stabilization of those Levels, of course, as I mentioned that in the past we were talking about 30, 50. Now we are now talking about 80, 100 level values. So this is the new pattern or standard that we are talking about in terms of cost. Now, moving away from that and talking about reinforcing our brand presence, we still work in an absolutely precise manner with quality and also with a lot of passion with what we do. And we have 50 years of my track. We are celebrating 50 years. And, of course, our event, that is beloved by all of us, force our brands and acknowledging that our consumers know us and love us and this is why we work for because our consumer is there and they want our products that is why we want to deliver quality and sympathy and the form of contacting them and also communicating with them, yes, in a very efficient way. and very full of details in what we believe to be the right thing to capture all this wonderful results. And we keep the preference from our consumers to our product with regard to Sagi, Perdigon, and Quali.

We have already increased to 83% the product base with value added, improving the mix of our products.

And all of this is a result of a strategy that has been very strong, that has been also focused on innovation and launches of new products that bring in very positive experience to our consumers, products that can also be practical and that consumers can receive, use those products on their own This growth of innovation also happens abroad. Here we have a scenario. I'm going to try to give you a summary of what we have been experiencing for the next cycle that is happening abroad. Turkey has been making good headway. in the market share in Turkey and the preference of our consumers. We have recovered margin even in an environment in which the effects variation is weak. Now the recovery of tourism for leisure and for business tourism. They have all increased the demand and reinforced our position in that region. both in the retail market as well as in the food service channel. It's a market where we have seen the revolution and we have seen a positive scenario related to this. Japan has resumed its consumption and also the volume in prices in a very positive manner. Direct exports have made good. Have they with new qualifications? new units that have been approved to operate in different countries and this focus continues for the year to come. We hope that for next year we are also going to have new opportunities by opening new markets that can be relevant to the company. China is a point of attention and we have to look at it very cautiously and with a lot of dedication in order to lift them, the movements that are going on, and they can come to have effects in the next year. We have the scenario of swine related to the slaughter of breeders that low aptitude that have made the prices drop, decreasing also the exports. and they bring in a fact that, in addition to the price, that would make sense for us to export to China, but rather allocate the products to different markets and different products. Another factor that we also have to monitor is in relation to what happened recently in relation to bovine meat. where the country has restrictions in relation to Brazil and its exports to China. We have to monitor the impact and the consequences that can be felt considering the scenario. So this is a point that deserves our management, but what I would like to say is that the company has capacity, has brands and production, so that we can rebalance the allocation of this raw material to products to other countries and also to process the products with added value also inside Brazil and in other regions as well. When we look at our business of ingredients and pet business, ingredients, this year, of course, Hive value added had a very good performance. Margins above 20%, as you saw, with EBITDA accounting for more than 100 million rails. And we have been working in a very efficient manner. So it's a business that is doing really well. We are working with specific markets for animal nutrition, human nutrition, pharmaceuticals, and other areas, bringing in customers. great advantage in our competition. In terms of past business, we have been reporting the first month. The first month of the consolidation of Recosur and Mojiana, we have been working intensively with the teams. I have visited the facilities of Mojiana in Campinas, Recosur in Ivo Tinga in Paraguay, and I can say that I am totally confident that this integration, this work is going to bring about important gains, important opportunities in order to provide better services to OFACs. So the capture of this result will bring and will happen in the next year and in the years to come. Speaking quickly about capital structure, it's important to say that our management of leverage is at this level of three times. This quarter, we have surpassed our limit, potential limit, obviously. We have the effect of the foreign exchange rate, and we are reevaluating our debt. that today it has more than 70% in the strong currency for the half of the year. And also, this is also related to the reimbursement that was allocated to the new assets. And as we said to the Vision 2030, we are going to maintain our discipline. We are going to do the management in an absolutely cautious way. M&As, acquisitions, all of them that can be on the radar are going to be put in the back burner so that we can look at them and make the necessary adjustments to the leverage so that we can resume the growth. And this is something that has been playing as of the beginning, and that's why we have this 10-year planning. We know where we want to get that, and we have the management in order to speed up all this process and be very cautious in this equation. It's important to say that the company does not have any risk related to liquidity, refinancing needs, at least in the next five or six years. If you look at the management that has been done, you will see the expansion of our debt, maturity period over nine years and the capital structure which is very strong even considering the increase in interest rates. I would like to invite you to look at the company at the period where we used to have a leverage which was much higher than the one that we have today and the debt had a period lower than three years. This scenario is absolutely positive and brings about a lot of confidence so that we can move ahead in capturing gains. Now, talking about our growth first, I would like to point out something which is absolutely important. In addition to the growth in all initiatives that we have been adopting, growing swine with value adders, ready meals, meat substitutes. We have worked a lot in the transformation journey, and we have announced recently a partnership, which is absolutely positive. And I'm very confident using the platform of this. There is a platform that is currently used by MBAF, And today this platform has 800,000 clients who are actually using this platform. And I mentioned we are in the basis of 290,000 active clients. In other words, we have an opportunity to access more clients. And this platform will bring about an opportunity of higher frequency of the active client and more intensity in the relationship and activation of this relationship. And without mentioning the increase in the number of items per order. So, it's something really positive that would, without a doubt, change the way we operate. And we'll that will start, obviously, in a gradual manner as of the first quarter of 2022. Now, talking about ESG, there are many initiatives going on, but I would like to enforce that our commitment with our governance, we have the commitment to integrity, with sustainability, and with all social aspects. I would like to talk specifically about FACT. data that we are generating. We have announced and we are beginning the process of building two sources of generation of energy in a partnership with AEAS Brazil for wind energy and a partnership for solar energy. And those two investments with Peloton for solar will bring BRF the capacity to make 88% of all energy consumed by DRF, generating our own energy in absolutely clean energy and also generating a financial impact which is positive to our company in the next 15 years. So these are facts and data produced by the company so that we can reach our net zero target. So with that, I thank you all for listening to the points that I wanted to share with you. And now we are going to open the Q&A session. Thank you, everyone. Thank you, Mr. Ludivar Luz, for the presentation. We are now going to start the Q&A session. Before that, we are going to see the tutorial video to provide guidance for you to operate at this time.