BRF S.A.

English and Portuguese. In downloads, you can download the financial demos. We inform you that we will be open to questions after the end of the presentation, in two ways, by writing a message or via audio in the indicated number. At any time, you can go back to the initial screen and click on Support and talk to one of our attendants. We thank everyone for their participation and have a great meeting.

Consumers are looking for more and more dishes to enjoy special moments at home with practicality, without losing quality. Thinking about it, Linha Speciale da Sadia created three dishes with cuts of noble meats. Suíno mignon scallop with creamy sauce made with fresh mushrooms and white wine reduction. Suína costela prepared in barbecue sauce. and ossobuco with certified angus meat prepared in a black beer sauce and caramelized onion. They are delicious dishes prepared by a high gastronomy restaurant technique, the sous vide method. In it, the meats are cooked slowly, at low temperature and vacuum for hours, maintaining the nutrients and without artificial preservatives. Preparation at home, in minutes. Just heat it up. Then just impress yourself with the flavor and softness. Dishes made with a touch of chef in your home. To make the meals even more special.

The flavor of this rifle with Alfredo Perdigão's eye is a power to turn everyone into a chef. What a pleasure. Look how creamy the sauce is, with chicken breast and quince. Now you just have to serve it and that's it. Oh, what a good smell! Why do I speak French if Alfredo's sauce is Italian? Actually, it's me. I choose my accent. Right, sister?

BRF is the leader in the retail margarine category. It stands out for its high relevance in the Brazilian food service market. We present all the taste of Quali that you already know, now in an individual version. Quali Blister is convenient and suitable for the needs of your customers. Its individual use is hygienic, practical and easy to open. It is ideal for hotels, hotels, hospitals, bakeries, industrial kitchens and several other types of establishments. And you are sure that you are offering a superior quality product for your customers. Quali is the favorite brand of margarine of Brazilians. Quali Blister, the same margarine that you already know, now in the 10 gram version.

You asked, we'll answer. And the Claybon family has grown. Our Margarina Sabor Manteiga is now also in an economical package. The 250g and 500g of Margarina Claybon Sabor Manteiga are already a success with consumers. That's why we're launching an economical package with a 1kg gram serving this market that is in expansion. The new packaging is ideal to increase sales, offering an attractive design with the quality of Perdigão. Our Margarina Sabor Manteiga presents great versatility in applications, being able to be consumed directly or used in several recipes, with 60% lipids, bringing the incredible flavor of butter and the creaminess of margarine. Claybon, 70 years of tradition, bringing innovation and irresistible flavor.

More and more, dogs are part of families. And for that, they need a quality diet. Balanced meals are prepared with essential nutrients for the development and health of your dog. Each package contains 24% of raw protein, rice... vitamins, yucca plant extract and corn. The zip system opens and closes for greater preservation and practicality. It is very easy to identify in each package the flavor and the indicated phase, in addition to the guarantee of a product free of artificial dyes and aromatizers. All this to ensure the taste that your dog will love. Balanced Rations, healthy nutrition at your fingertips.

Welcome to the BRF results teleconference for the fourth quarter, thus closing the results of the year 2021. Cabe ressaltar que essa transmissão está sendo gravada. Informamos a todos que todos os participantes estarão vendo e ouvindo a transmissão durante a apresentação da companhia, e em seguida iniciaremos a sessão de perguntas e respostas, quando mais instruções serão fornecidas. Passaremos agora um vídeo que irá orientá-los sobre o funcionamento da plataforma e também auxiliar caso necessitem de assistência durante a transmissão.

English and Portuguese. Download you can download the financial demos. We inform that we will be open to questions after the end of the presentation, in two ways, by writing a message or via audio in the indicated number. At any time, you can go back to the initial screen and click on Support and talk to one of our attendants. We thank everyone for their participation and have a great meeting.

Antes de prosseguir, gostaríamos de esclarecer que eventuais declarações que possam ser feitas durante essa transmissão, relativas às perspectivas de negócios da companhia, projeções e metas operacionais e financeiras, constituem-se em crenças e premissas da diretoria da BRF, bem como informações atualmente disponíveis para a companhia. Considerações futuras não são garantias de desempenho. Thank you very much. e podem conduzir a resultados que diferem materialmente daqueles expressos em tais considerações futuras. Nesse momento, eu passo a palavra ao CEO global da PRF, Sr. Lorival Luz, que fará a apresentação da companhia. Por favor, Sr. Lorival, pode prosseguir.

Obrigado, bom dia a todos. Mais uma vez, agradeço a participação, a presença de vocês aqui e mais uma divulgação de resultados da DRF, desta vez do quarto trimestre e o fechamento do ano de 2021. Já no primeiro slide, eu quero pontuar para vocês aqui o resultado e a performance que nós tivemos, tanto nesse quarto trimestre como no ano de 2021. Um crescimento importante e relevante na nossa receita líquida, crescendo 19.6% in the quarter and, in the year, a growth of 22.5%, reaching R$ 48.3 billion. In the same way, we substantially grow both the EBITDA of this quarter compared to the quarter of the previous year, 2020, and we grow our EBITDA in the year in 7.2%, reaching R$ 5.6 billion. Always remembering, an extremely challenging year from the point of view of increased costs, expenses, production costs, even lack of some inputs, lack of some services that greatly affected the shape and the challenges we had to operate throughout the year. So, a very robust result, very resilient of the company in such a challenging year. We also ended this year with a profit of R$ 500 million and, in the fourth quarter, reaching almost R$ 1 billion in profit and an operating cash flow also growing in this last quarter, quite robust. And here, it is always worth referring to the leverage point of view, which we discussed in our last presentation of results, saying, yes, that we were there, in the case of three times the liquid debt per EBITDA, an increase throughout this year, given the adverse conditions that we faced, and that now, with the follow-on that we successfully concluded in this first quarter, we present here for you a proforma, which is basically bringing the R$ 5.4 billion that entered the company's box, the result of the follow-on, a proforma impact that would bring in this leverage of the end of last year, that is, a substantial improvement of our leverage coming to the 2.2, 2.17 here, which allows the company, as we said, in the follow-on structure, to advance and continue making investments necessary, internal, of the company and, at the same time, capturing and benefiting from a substantial reduction of the financial expenses in light of the scenario that presents itself for 2022. Showing the result over time. It is always important to show the resilience of this result. The year 2021, when we look here In the fourth quarter, an increase compared to the previous year of almost R$ 300 million in gross profit and about R$ 100 million in EBITDA compared to the previous quarter, which undoubtedly shows the discipline of management of the company, even in several different scenarios, that happened in the previous year, showing here an EBITDA of almost 1.7 billion in the previous year. And when we talk about scenario, I think it is always important to ponder in detail what we are talking about. And we have shown this sequentially in the last few semesters. We have, since the second, third quarter of 2020, an increase, the beginning of a very large increase in inputs and production costs, which you can see by this blue line, which is the cost of production index of Embrapa, both for chicken and for pig. You see a fairly accentuated increase, which reflects, when you look at the picture below, exactly at the producer's margin. So today we are still living, the industry as a whole, a very aggressive environment from the point of view of margin. We are still suffering the industry with margins, perhaps the margins of the producer, lower than in recent times, and already for a long period, already for about a year, even more than a year. And we at BRF have done an absolutely the austerity of our costs, a strategy of adequacy of our expenses and production costs in all ways, in such a way that we can and have managed to review the prices in the same order to preserve our margins, and you can see, you can see this in the yellow and orange lines, which is, without a doubt, the reflection of what we have just shown, the resilience dos nossos resultados trimestrais. Então, um resultado e uma gestão bastante eficiente no mês a mês. Continuamos, não abrimos mão de cuidar das nossas marcas. E quando falamos de cuidar das nossas marcas, mensuramos, monitoramos a preferência das nossas marcas, porque a preferência é um indicador, assim como o NPS, completo, porque ele mostra the quality of our product, the service, the adequacy of our product to what the customer wants. It's not just a relation or a price function that you can quickly convert into a market share with a price adjustment. We look, evaluate, take initiatives and decisions looking at this context as a whole And our brands have risen, have increased the preference, together with our consumers, keeping the leadership, both in the food sector, like Sadia, Quali, in the same way. And here, another factor aligned with our strategy. We continue innovating, launching the product, working hard here, again, the increase in the per capita consumption of pork, which has increased, and we launched and made many launches throughout 2021. And this is a very relevant scenario and we will continue to work on it. And when we look at this strategy over time, we clearly see the effect of this in Brazil. An increase in the base of aggregate value products from 74% to almost 85% and an increase in the revenue of innovation to almost 7% of all revenue. With a range, a range of products that bring quality, practicality, service, demand and understanding and the profile of our customers. With the Bio line, with the free and light line and several other products that we have launched not only in Brazil but also abroad. And speaking abroad, we are increasing the volume of industrialized products. In our operation in the Emirates, in our operation in Turkey, we have done this with many launches, with launches of new products, innovation and bringing more quality more service to the demand of our customers, which today we already have 20% of the aggregate value portfolio, which is in line with our strategy, with our vision of 2030, which is to be more and more a food company of high aggregate value, also providing aggregate value to our consumers and customers. We have here Even a macroeconomic scenario adverse in Turkey, with the devaluation of the Turkish lira, we are advancing and we had the capacity and agility to direct about 20% of the volume for export, which also benefited our results. We follow the same strategy as Brazil. advancing in the preference of our brands. And Banvit has already reached 50% of preference in Turkey. Extremely relevant, which gives us an opportunity to continue advancing and already preparing for the expansion and for the investments that we started last year. So, perfectly aligned so that we can capture these gains that we are making. And then, among several things that we are doing in the international market, I want to highlight here what we have done in the Gulf countries, that we continue and increase our participation with Sádia, reaching 38% of share in the region, extremely important, extremely relevant, and that gives us more certainty of the progress and the path we are now drawing with the EMU, with the memorandum of understanding, together with the PAF, so that we can make an investment in Saudi Arabia and continue, yes, meeting the demand of that population with our products and with production in Saudi soil. Another thing that is important to highlight, also aligned with our strategy. Our business, our ingredients business, continues to grow, advance and bring extremely positive returns. Already this year, 2021, it responded to about 8% of all company's EBITDA. And it comes as a result of innovation, value generation, taking advantage of our sub-products from our industry, bringing innovation both in the chain of aromas and in the chain of food production for fish, for other animals that we serve along the chain, both in Brazil as well as to the outside with our exports. So, here we are suppliers of many customers who recognize in BRF the quality, the capacity for innovation and the technology in the nutritional evolution of our products. So, an excellent year was that of our business, Gingredients, and then I congratulate all our team for the fantastic result that was achieved this year. We follow here in the strategy of Petfood in accelerated pace of integration, of integration of our lines, of our business that we already had in BRF with Amogiana and with EcoSul. We have already made the first meetings, the first sales conventions, aligning the entire portfolio strategy, channels,

We'll continue to do with these investments so that we can serve our pets with the same level of quality that we've always had when serving our human clients. to innovate and meet the demands of our customers as both human and animal. Also importantly, balance is always number three in dry food for pets, which goes to show that our strategy was very much appropriate in all of our distribution and sales channels for pet food. Now, a little bit more about our 2030 vision and the investments we've been making. We've made headway in value-added pork with new products and we've grown increasingly more. in both consumption and sales of our products. We've also made headway in ready-made dishes. We've expanded our platform with the Lever & Lev new line and a host of new products also in keeping with our Ready Meals strategy. And we've also continued to invest heavily in digital transformation, both within the company within the business, within our sales channels, Be Digital and Go Digital, all of which were critical in terms of investments. Now, I'd like to take some time to talk about our omnichannel strategy. We've opened over seven new stores last year so that our customers have access to all our products in a single point of sale. That can bring more convenience to our services combined with Mercado and Casa. Now, Mercado Sadia together with Mercado and Casa and other platforms showed new advances. We had partnerships with Magalu and Mempy. And as we talked about Biz, the platform we are now running tests on with the first orders and has been doing terrifically well. That's something we've worked on over the course of January. We already have customers being served by Biz. We have invoiced them. We have delivered products to them, which gives us very, very great prospects. prospects that are bright in terms of increasing our customer base. In Brazil we have about 290,000 active customers and what we expect is to make headway in our base of active customers with over 300,000 active customers and also increase the intensity and the frequency of these orders as well as the number of items per order. So that's something we are moving forward on. And this year, the platform will be rolled out to other areas to reach the entire Brazilian territory with Biz, which is doing very well.

And all of that has been done without leaving our ESG commitments aside. We have kept our net zero commitment. We have advanced in actions with the BRF Institute. We kept our positioning with EZ on B3 and we are the first margarine to offset 100% of the packaging in Brazil through recycling. These are actions that are present throughout the whole company. All of the initiatives or whenever we make a new investment or we implement a new action, ESG is part of our assessment. This is in the scorecard of all of the executives, and this is important and relevant in all the decisions we make at our company. Now, moving on to the last part of my presentation, I'd like to share with you a bit about our leverage in recent quarters and our cash position. So now we took the freedom of creating this pro forma with simulations that include the follow-on results that we completed in the first quarter. With this follow-on offering, our cash position would reach 16 billion Brazilian Reals . So with great liquidity, we will be able to face the year of 2021 with increased expenses and higher interest rates and continue advancing, moving on, and making investments to adjust our industry with the digital platforms, omnichannel, and all of the investments we've been making in our lines to meet the demands of our consumers and to adjust the consumption profile of those consumers. Now, if we look at the chart on the left-hand side, leverage, This is pro forma incorporating our follow-on offering. We would be at 17 times, which is quite appropriate for the market conditions in our industry. And this is a number. I mean, the company reported a similar number before 2016. So it's been some time, and the company... has been, was actually operating with higher leverage numbers. Now, our net debt is below 12 billion now. And why is that important? With a significant increase that we've been seeing of the interest rates in Brazil, the SELIC rate in Brazil, and prospects of real interests of around 6%, according to projections, this cash reinforcement will greatly benefit us by reducing our financial costs and expenses. And this is extremely important in a year like this. With such reduction, we're going to save in terms of interests and financial expenses, and those savings can be invested in our businesses, in the adjustments of our lines, in improving the performance of our lines, and in innovating in new products. That was an extremely correct decision in my point of view to have this follow-on offering at this point. This is going to bring us many benefits and a better capital structure in order to serve the demands and face the challenges of 2022. And when I talk about challenges, it is paramount to make clear what these challenges are and why we have made changes for 2022. If we look at the prospects, and this is the focus survey data, so previous prospects for Brazil showed an IPCA forecasted for 2022, which was double what was forecasted a year ago. A GDP growth that was much smaller for 2022. They were first forecasting 2.5, and now they are around 0, 0.33% GDP growth. So inflation increases, interest rates at around 10%. small growth and a much higher selic rate at around 11.5%. The forecasts in the beginning of 2021 was around 4.5. So this is a completely different scenario. And the challenge can be seen in many other indicators, the Turkish line, global freight, increase in grains, inflation of costs throughout different areas of our company. And of course, we need to monitor risks regarding protectionist measures and possible sanctions that may be put in place around the globe, not only because of the events in Ukraine and Russia, but other events happening around the world. So this is a challenging year. The month of January has already proven to be very challenging considering what we got last year. The month of January started with a sales volume that was already a bit below our projections. So we now have a challenge to adjust in order to go back on track. And the scenario we currently have is of low growth. high inflation and a reduction in the purchasing power of our consumers. Consumers will feel that impact in their pockets and in their purchasing power. That is happening in many different sectors, including ours. But we have the capacity, the agility and the flexibility to adjust. because we have the most affordable proteins like poultry and pork, and we have the versatility and flexibility to adjust our portfolio to meet the current demand. So in spite of the month of January that started with that challenge because of the current situation, we have the agility, the flexibility, and the capacity to go back on track throughout the rest of the year. And why is that? Because we have plenty of opportunities. And I want to close by telling you that, yes, we have challenges, but we also have many opportunities throughout 2022. With the reinforcement of our capital structure, there's no question that we're going to save in our financial expenses, which will enable us to advance in our strategy and in improving our growth performance. We are also moving on in our geographical footprint with new agreements, and our portfolio keeps on growing. We are launching value-added products that are increasingly having positive participation in our product mix. And now the digital world, movements are also going to be felt in 2022 this is a major investment we've made and also expanding our customer base with the best that's also going to be made in 2022 so i want to close now by telling you that we are very confident and certain that the decisions that have been made were correct so that our company can move on and continue with our strategy so that we can capture benefits throughout the year in spite of this more adverse economic scenario that we are currently facing. So thank you once again for joining us today. And as we usually do, we will make our QR code available so that you can test it. and make the most of our Mercato en Casa with a 30% discount available for you up until next Saturday. Enjoy it. So now I will close my part of the presentation, and we can move on to our conversation session. We are going to have our... Executives now available to answer all of your questions. Thank you once again. Thank you, Mr. Lorival Luz, for your presentation. We're now going to start our questions and answers session. But before that, we're going to share the tutorial video once again, giving you further information about how this is going to happen.

Sejam bem-vindos à teleconferência de resultados da BRF. Você está no hall virtual. Clique em plenária para que possa assistir nossa transmissão. Confira o seu sinal de internet para acompanhar todo o conteúdo sem oscilação. Mas se mesmo assim ainda tiver problemas, temos o canal de backup para auxiliar. Estão disponíveis para você também duas versões, em inglês e português. Em download, você pode baixar os demonstrativos financeiros. Informamos que estaremos abertos a perguntas após o término da apresentação, de duas formas, escrevendo uma mensagem ou via áudio no número indicado. A qualquer momento, você pode voltar à tela inicial e clicar em suporte e falar com um dos nossos atendentes. Agradecemos a participação de todos e uma ótima reunião.

So as you saw in the tutorial video, you can send us your questions in writing in the transmission screen at the lower bar. You can find the question box and you can write there and send your question to us. Or you can call 5511-4968-8974. and send us your questions, your audio question. Okay, let's now start our Q&A session for the fourth quarter 2021 BRF's earnings conference call. I would like to invite Mr. Lori Valdez, the global CEO of BRF, back on stage and our executive team on the screen. The questions will be first sent to Mr. Lourival for him to give us some background information and then forward the question to the executive of the area. The first question is by Isabella Simonato from Bank of America. Isabella, you have the floor. Thank you. Good morning, everyone. Good morning, Lourival. I have two questions. The first one about Brazil. I think it would be interesting if you could tell us a bit more about this year-end context, which seems to be a bit more challenging. Can you tell us about the categories or channels that are performing better or also give us some more flavor in terms of the consumer behavior right now and the changes you are seeing? So that's the first question. The second question about the external market. We see that Asia is feeling a lot of pressure, but we have direct exports and halal. So for 2022, can you give us further information about what you see in each one of the markets? China and the Middle East. Can you please give us some Further information about volume and prices in those regions. Thank you very much. Thank you, Isabella, for your question. That was a very relevant question. Both the domestic and the external market are facing different challenges and different scenarios. So let me give you some information, and then I'll give the floor to Sydney, Michele, and Igor so that they can add to my answer. In Brazil, you know the results of the retail market in recent quarters, and the scenario is definitely challenging. The year-end scenario already presented us with challenges, but we had a celebration campaign that was challenging, quite positive below what we would like it to be, but it was still positive and that brought impacts for the first quarter of 2022 and more specifically the month of January. When you see our customers selling less with higher stock, of course there will be an impact in the industry in the month of January because they need to adjust their stock levels their inventory levels, and then there will be a reduction in their purchasing from us. So that's one of the scenarios that we can see. This first quarter is very challenging and very complex. That's going to require us to adapt, to adjust, to be flexible and versatile in order to incorporate all of these effects and also this different demand that we might have considering that the corporation might have a smaller revenue. We cannot ignore what's happening in the market with higher inflation rates, higher interest rates, and lower growth. So these are scenarios and the company must adapt to it because that will impact all of our consumers in different regions and different social classes. So that's a fact. that will require us to adapt. Now, about the prospects regarding the external market, you said it well, Isabella. While we do have a very challenging scenario in China, I agree with you. There is a volume and a demand in China that we do not expect to grow, but actually to stabilize. But we have extremely positive expectations for the whole halal market with the increased demand that we can see in the food service market and increased in business, leisure, tourism, with events that is happening in the region, with the World Cup in Qatar this year, in addition to new markets. licenses that we are getting right now. So we have a very positive expectation regarding Mexico as well. You can see the current price of chicken breast in the U.S. that's going up. And as a result, the countries that exported to them might have a demand for that we can address and therefore sell to those markets. Likewise, I'm also optimistic about the UK. So I think it's all a matter of balancing out those demands and it's really important to diversify our products and our footprint in order to reach that balance? I don't know if maybe Sydney, Michele, or Igor would like to add to my answer. Yes, good morning, Isabella. Thank you for your question. Let me just add and give you a few other perspectives about categories and channel. We are working with what we call an hourglass effect. On the one hand, there's no question that the macroeconomics and the income will have an impact on our business, but it's also important to highlight that the food market has proven to be very resilient. Now, when we look at the proteins, we notice that indeed, poultry and pork have been growing And they have reached historical levels in the market share in Brazil. Both poultry and pork have increased their market share in Brazilian plates, Brazilian dishes. Now, the hourglass effect. Yes, on the one hand, you have this growing demand for more affordable products. But on the other hand, you also have a growing demand for more convenient products. And that makes the consumption at home to gain space. So I'm not necessarily comparing this to the other products in supermarkets, but comparing to the price of restaurant dishes or takeout dishes in which you can have a better comparison with good flavor, high quality at a more affordable price. So yes, there is a higher demand for more affordable products, but we also have a growing demand for more convenient, high-quality products. So that's an important effect. Now, a little bit about channels. What we can clearly see is that the food service is recovering significantly in our businesses, with the consumption outside the homes going back to previous levels. And we have seen this growth then of meals away from home compared to the last two years. And retail has been feeling this aspect of the sales fluctuations but the fact that that's happening there doesn't mean that there is a generalized drop in sales because we have different performances in different categories so overall in Brazil we have a concern with dropping levels of income but there is a great opportunity for companies that have brands like ours that reflect Consumer trust. When there is a lack of money, consumers don't want to take a bat. They will go and choose the brands that they prefer. So brand preference is really important here. Now, our ability to innovate is also very important. In the swine or pork segments, we launched 17 SKUs, ready meals, 16 SKUs. So brands and the ability to adapt to the new scenarios are very important factors. That's probably a great explanation of the resilience of our products in spite of the adverse scenario.

Hello, Isabella. I just wanted to talk a little bit about the halal market. I think there are a couple of very simple points we could go over. First of all, when you look at our performance in the halal market, you see that there's an increase in crisis, admittedly. And there's really this brand that's pushing our performance. And one second point I would mention is we have a very resilient business. And that is really making a huge difference for us. So that performance is likely to continue moving on in 2022. Okay, thank you. Isabel, I just wanted to add to what Laura Val talked. I think China is actually important, and it's important to acknowledge that in 2021, we saw a substantial upturn in our domestic output. which grew virtually 45%. Obviously, that's had its reverberations on our results. And that combined with an upturn in sales. And the fact that China has a zero tolerance policy with COVID, which affected their rebound in general. So in the first half of the year, we believe these Conditions will remain unchanged, but starting in May, when our focus will really be to boost growth and progress, we believe that in the second half of the year, the conditions we face will be slightly more favorable. If we look at imports of pork last year, we have seen a decrease in about 30%, So we believe that is a reasonable basis for comparison when we look at 2022. Also, adding to what Lorval said about other opportunities, always referring to pork products, we also believe we will have opportunities in other places around the world, such as Russia, over the course of 2022. that obviously will be very significant in order for us to balance out our accounts. Next question comes from Mr. Tiago Duarte from BTG Pactual. Mr. Duarte? Good morning. I hope you can hear me well. I'd like to go back to the discussion about the Brazilian market from two different perspectives. First of all, in the last two years, you were able to reach a very significant level of pass-throughs. And I wanted to hear from you whether you understand that the more pressured consumer and the lower demand at the beginning of the year, will that translate into a trend for the rest of the year and will it be more restrained or is there room to adjust your margins which remain pressured or at least remain below when you compared 2021 to 2020? And my second question would be when we look at warehousing levels which would point to your production of both pork and poultry, we also saw a downturn since last year. Even with cooperatives, I think the pressured margins were true for the industry at large. And I wanted to hear from you whether you see that trend that way as well. And is there some sort of recovery in the company, in the industry's margins over the course of the year on the horizon? And also, you've consistently shared about the consistency of your brand. And I wanted to hear how that 45% preference that we see between Saudi and Portugal, how does that compare with your market share levels? I know you're not sharing your market share levels again, but I wanted to understand whether your preference levels are performing better or outperforming your market share levels or not. Thank you. Well, thank you, Tiago. And I'd like to apologize and ask my colleagues to be shorter in our answers because we have a long list of analysts who have questions for us. So we are a bit short in time. So trying to answer your question in a very short way with regard to the room for recovery in Brazil it's very challenging because again consumers purchasing power has shrunk but we have to look at it in a comparative way and the point is what other options do consumers have so just as our price went up the prices of our competitors have also gone up but we have what we call the entry proteins and as Sydney mentioned sales of that type of protein has increased in terms of per capita consumption. So we have a very versatile portfolio, which allows us to adapt to the mix in terms of demand. And whatever pass-through, whatever level of price we have to pass along, we will do that. Because you've seen how the economy has been... sustained itself and how we have sustained itself because we will never subject ourselves to selling at a lower price than what we need to produce so we will do whatever we as much as we can to adjust but the truth is we will work with the production that we have and the products that we have to meet the demands of our customers With regard to warehousing, there has been a decrease, but not enough so to adjust to the current situation. So those levels should already be at a certain level and should continue to decrease so that we have the balance I mentioned in a presentation when it comes to producer margins. It's a very simple equation. If the store has more, it has to sell more, and producer margins go down. And when you narrow producer margins for a longer period of time, there's a reduced possibility for him to store products at his warehouse. So in my opinion, that is going to go down further and has to because you reduce producer's capacity for a long period of time with very narrow and depressed margins. margins for a long period of time. So I do believe we still have this prospect for production based on the assumption I just talked about. Now about preference and market share. Honestly, I think these are two different beasts. What we want ultimately is to have people's preference because honestly, with regard to market share, we could just say, Oh, just drop the price by 10% and we'll gain a lot of market share. But is that what we want really? What we want is to really have our customers really in love with our products and our service because our market share reflects mostly one factor, one main factor, which is if I change my margins and my price range, to a lower one than my competitors, we'll gain market share. But when it comes to preference, that's a completely different story because it involves many other factors. It includes quality, service, specifications, packaging. So we're working on all of that. That's our main focus precisely so that we can generate customers' desire and demand for our brand specifically. Our next question comes from Mr. Rodrigo Almeida from Bank Santander. Good morning, Lorival, Carlos, and the entire BRF team that's on the call. I'd like to address this sort of post-follow-on period. You've talked a little bit about your financials, but I wanted to understand a bit better what your plans are with regard to management and what strategy do you guys have in mind to reduce your gross debt and your financial debt as well? How do you plan to tackle that? You showed your pro forma performance and pro forma leverage. And in that sense, I wanted to understand a little bit better how you guys are working from a metrics perspective with your leverage for this year what look looking forward what do you guys see especially considering the more challenging situation as we've mentioned earlier even in terms of cash generation this year also i wanted to hear a little bit more about your capital allocation considering that you've had this influx of cash how can we think about that moving forward especially in terms of organic growth and also More on what you said about Saudi Arabia and Bivet. What were the next steps that we could think about and what should be the next steps in terms of both organic and inorganic growth moving forward? Thank you. That was perfect, Rodrigo. I'll start with your second question and then I'll turn the floor over to Carlos because we've talked a lot about that during our call on our follow-on offering. First of all, I think that the scenario this year And Carlos could talk a little bit more about our prospects in terms of that. And we should work with an investment of about $4 billion this year. That's what we're working with currently. But again, we will constantly be looking at the opportunities that are presenting themselves to us and the market that's presenting itself to us so that we can really advance or slow down according to the situation, considering the current balance that we're working with. The MOU that we signed is a document that states that together with PIF, we establish a society 70-30 in Saudi soil, 70% VRF and 30% PIF, so that we can be increasingly more embedded in the Saudi industry with local production and also the great distribution and warehousing that we have in the country. So these talks are moving forward over the course of this first quarter. And we plan to really make headway in that transition and that transaction. And with that, I'll turn over to Carlos, who will give you a little bit more of a detailed explanation. Good morning, Rodrigo. I hope you're all healthy and well at Bradesco. Well, as Lori said, our priority is to reduce our gross debt, and you've monitored how this has developed and how much this administration has been concerned about how inflation and the interest rate curve has affected our debt. So we went to the market and made the most of the increase in interest. We're trying to reduce our exposure to foreign exchange. We have our derivatives that are becoming increasingly more expensive because of the hike in interest rates. So we're working on really shrinking that system of derivatives. We're also working on bilateral systems in Brazil and according to how the market performs, we'll be able to analyze how the market does and analyze the tender offer considering the bonuses we will have. One maturing in the next few months and another maturing next year. So that's essentially the structure. A lot of people ran numbers during the course of our transaction and which came to $600 million being deducted from our financial debt. But I'd like to say that we have a significant not to have a cash effect on this financial gain because of taxes, which translated into having a few tax credits. Now, in terms of our leverage in 2022, obviously we'll not go into details here, but It will all come down to the currency effect and how we will dose this cash flow, as Lorival said, which comes down to having a coherent capex, a capex that's in line with our strategy, and also a sort of alleviate, a more alleviated cash flow. So that, in addition to the monetization of tax credits, which is something that we've done and has already generated over $1 million, last year, and we expect to navigate between two and two and a half times in terms of leverage. That's probably what we will have, obviously, depending on how our CapEx and our investments oversee progress. Our next question comes from Mr. Victor Sarajoto from Credit Suisse. Mr. Sarajoto, you have the floor. Good morning, guys. Louis Val said that the year has started on pretty much challenging terms as well and that new adjustments should still or are still expected to occur. And over time, we've seen that those adjustments take some time. And one thing caught our eye, which was the trend in pork prices in the fourth quarter of the year. We talked with a few players and outgrowers. Obviously, they're buying pork at prices slightly lower. And we even heard from some of them there's been negative pressure on processed goods. So, I wanted to understand how you guys are looking at this trend in processed food prices and is there a tendency of a downward trend in these prices moving forward good morning thank you for your question victor and you're absolutely right in the point you're making what happened last year especially in the last quarter of the year you have market prices that you can look at it's a little bit of that effect so the industry and producers were ready and prepared for a larger volume especially in for exports to China, mostly, and it's what we always say. If you don't export, the local market, especially smaller players, including cooperatives, will absorb that in the local market. And when it comes to the local market, that has an impact on prices. But this plays into what I tried to say with regard to warehousing you need adjustments you need to adjust your supply to the existing demand so you have a temporary imbalance which is what we saw and now you're trying to equalize that and balance that out considering the reality that you have with the demand so obviously a few of these products that require a lot of raw material have also been pressured because the market uses them as a place to dump this pork raw material. So obviously this is something that's a short period of time that we'll need for adjustment, but obviously that adjustment will take place. And again, this is part of what I mentioned early on when I talked about the challenges that we're facing because we will need to make that adjustment. Our next question comes from Mr. Lucas Ferreira from JP Morgan. Mr. Ferreira?

Mr. Lucas Ferreira, can you hear us? We have had a connection problem with Mr. Lucas. Our next question is from Mr. Ricardo Alves. with Morgan Stanley. Good morning, Loreval, Carlos, and the whole BRF team. I hope you can hear me. Thank you for this call and your availability to answer questions. Now, I have two quick questions related to previous questions that were asked. First, about processed goods. We are talking about this more challenging scenario. But when we look at the competition, maybe Q4 was a quarter that was a bit more aggressive in terms of prices or more discounts being offered. Or is this also something that is happening in January because of the inventory levels? So what is your performance in terms of processed goods? also considering the whole competitive environment. And now my second question about CapEx. Lorival mentioned $4 billion for 2022. So I just want to try and understand. After your follow-on offering, I believe you closed 2021 close to $4.7 billion. And I would imagine a more aggressive capex scenario now. So after the follow on offering, did you postpone any project or is there a chance that you will speed up the implementation of any project in 2022? Thank you. Thank you, Ricardo. I just heard a pet barking in the background. One of our consumers, please buy our products for your pet. Now, about your CapEx question, 4.7, yes, that's pretty much right. But in this 4.7, we are including the M&A, the M&A of pet foods that we performed. If we exclude that and focus on organic, that's very much in line with those 4 billion. So there's nothing that has been postponed or anything like that. It's all going according to plan. So we are making the adjustments that are aligned with our strategic plan. Now I think Sydney can give you a bit more color on the market. regarding processed goods. Hello, Ricardo. Thank you for your question. I just want to add a comment to Lorival's answer. We have swine products and this whole scenario that he talked about, which impacts processed goods, especially sausages. These are products where the market is more spread and there is a larger number of players taking part in that market. So yes, there is an impact because of the pork context for processed goods, especially so for sausages, which creates this price pressure because of the excess offer, the excess supply that is still being felt in January, but will probably go back to previous levels from now on. Now let's go back to Mr. Lucas Ferreira from JP Morgan. Good morning, everyone. I have two questions. Good morning, Lorival. First about the cost scenario, excluding grains. Can you tell us about freight, power? what are your expectations for the first and second quarter of 2021? Do you see some relief in the pressure on those two lines? And now, Carlos, the Turkish lira has devaluated 60%. So 60% depreciation. Have you taken that into account? I think it was like a 40% depreciation of the Turkish lira from one quarter to another. So are you having that? Do you take that into account on your results? Thank you, Lucas. I'll turn the floor over to Carlos and he can talk a bit more about those two subjects. Now, when it comes to costs, when you see this, when we say there has been a slowdown, it's not a drop in prices. You're running on a certain level, but there is no significant drop in prices. It's not like we're going back to prices like they were a few years ago. But let me turn the floor over to Carlos. He's going to talk about the Turkish lira and costs. Okay, good morning, everyone. Well, when it comes to costs, no, we don't see a downturn. We continue with this critical process with our supply chain and product offers in the domestic and international markets, which exert pressure on our margins. We thought the main impact would be on the costs that came from commodities, but that's not so. It's coming and continuing because of the X grain costs. So what have we been doing? The supply area, working together with the product area, industrial area, category area, they're doing process re-engineering, product value re-engineering in order to capture benefits and specifications. And that is associated, of course, to the scale of the company, which benefits from the volumes acquired. We have a preference in procurement and we can negotiate and we have a great storage capacity here. compared to other companies in the sector. So that has shown our resilience. But I want to emphasize that we're working on costs as well as expenses in our management matrix. So these expenses have had a nominal decrease and they've reached the lowest historical level in the share of revenue because we are very strict in managing our costs and expenses, and this is not married to one specific area. This is a culture we have at our company to have our costs under control. This makes all the difference for us to be competitive and flexible, you know, Sidney, Michele, and Igor, when conducting national businesses. Now, about the international businesses in the Turkish Lira area, Here, our company has receivables of exports in U.S. dollars, and we also have accounts payable of acquisition of inputs in U.S. dollars, namely grains. We have no debts in foreign currency in our businesses in Turkey. So our currency exposure is neutral, and the impact on results is very mild. So when we consolidate the business compared to actual numbers, there has been an evaluation of the Brazilian real against the Turkish lira, which has had a mild effect on our balance sheet, as you saw. And this effect will continue to be mild. There is no hiccups expected from this currency exposure we control. the currency exposure in Turkey, just as we do in other parts of the globe. Our next question is by Tiago Bortolucci from Goldman Sachs. Good morning, everyone, Lorival, Carlos, and the whole BRF team. Thank you for this call, and congratulations on your follow-on offering. So I'd like to go back to previous issues that have already been addressed. Can you tell us about the Brazilian demand? We've seen results with negative volumes and a downturn in some of the products. a two-digit decline in certain places.

And we don't know whether you are ready to make the most of it in 2022.

What are your expectations in terms of demands now for the coming year? And related to the CAPTO structure, you gave us some pro forma figures and leverage. And you said that this would be a pathway to accelerate the investments. So within this context, is there like an M&A target you're interested in? These are my questions. Thank you very much. Thank you, Tiago. So these are two questions that strategically we cannot answer. telling you if there is an M&A target, if we have anything in mind, is unfortunately something that I cannot answer right now. But I can tell you that we do have a strategy, and we are constantly evaluating and considering the market conditions. What we have already announced is our agreement with PIF that we're working on. And now about Brazil, before I turn the floor over to Sydney, he cannot give you precise information about our expectations and the strategic plan that we have regarding Natura, processed, and things like that. But he can give you a bit more details about the market. Hello, Tiago. Okay, let me go back to a point I addressed when answering Isabella's questions. This is the hourglass effect that we see in the market. There is demand on both sides, and we are increasingly prepared to capture and to make the most of that. So there is some public information. We have a plant in Seropedica that is expanding with capacity for sausages, and we are also advancing in value-added products with poultry, ready meals, and pork. So there is not one single behavior in the market. That's my take-home message here. You have different perspectives depending on the context. A consumer may compare poultry and pork and think that is a trade-down compared to beef, but compared to restaurants, that can be considered actually a trade-off. So it's really important that we have a deep knowledge of the chain and especially of consumers. The more we study and understand the behavior of consumers and consumption situations, the more prepared we are with deal with these situations. And here we have not only this deep knowledge, but we also have brands that talk to all consumers and all consumption situations differently. and that makes us more and more resilient to market oscillations or fluctuations. Okay, this is our last question now. The questions that have not been answered today will be answered by the BRF team later on. So the last question is by Gustavo Triano from Itaú BBA. Good morning, Loreval, Carlos. Good morning, everyone. My question is more related to the international scenario and the geopolitical tensions that we're seeing. Are there opportunities and challenges that may come from possible sanctions that may be put in place? And how can we look at this in the P&L of the company, especially considering the relevance of Ukraine in the global trade? Ukraine is an important chicken export country. exporter to the Middle East. So have you seen changes in the export flows to those regions and are there opportunities that may arise because of that, especially considering the supply of chicken in these operations where you also operate? Thank you, Gustavo. That's an excellent point and a very topical point, something that is unfolding right now as we speak. So the first thing I'd like to say is that we hope that this situation doesn't get more severe. We hope that the situation may be resolved with dialogue, peacefully, without any type of actual conflict. So although the scenario may bring us and present us with opportunities. I hope that the opportunities will come from a different situation and not from a possible war there. So this is just my personal wish. Now, you mentioned something important. Ukraine is a chicken exporter today. And the chicken feed comes from sunflower seed, not necessarily corn. So, yes, there is an impact. And there might be other limitations in the flow of transportation. There might be some economic, financial sanctions that are put in place. So we're keeping an eye on this. We have a team. There, Michele and Igor, they're monitoring this. We have operations in Turkey that are being monitored when it comes to supply and exports. So, yes, that's a topical issue. I don't want to say that our company can benefit from this because that's not what we would like to happen in a situation like this. But, of course, we are monitoring the whole situation. with an eye on all of those aspects. One of them is chicken production that may be affected indeed. And we also have a matter of Russia with sanctions and gas and oil supply. So there is a complex scenario involving these countries. We are monitoring that and we'll try as best much as we can to supply the regions affected for any reason. So we're working hard to be able to supply to all of those regions. But we'll see how things unfold, and then we'll be able to give you further details about that. Ladies and gentlemen, thank you very much for all of your questions. I would like to ask Mr. Lorival to give us his final remarks so that we can close this earnings conference call. Thank you so much for joining us in our earnings release conference call. I would like to thank our shareholders and our board for all the support and thank all of our employees for their efforts, their commitments, as well as our suppliers and the trust of our consumers and clients. Thank you very much. And we'll see you again when we release our earnings of the first quarter of 2022. Thank you very much.