BRF S.A.

Good morning, ladies and gentlemen. Welcome to the conference call related to the results of BRFSA for the second quarter of 2022. We would like to inform you that this conference call is being broadcast over the internet at www.choruscall.com. Right now all participants are in listen-only mode and afterwards we'll have the Q&A session when we will provide further instructions to the participants. We request that each participant ask just one question. Statements included in this presentation concerning the company's prospective business projections and growth potential are merely forecasts and were based on management's expectations regarding the company's future. These expectations are highly dependent on market changes and the general economic performance of the country and industry segments. and therefore are subject to change. This conference is being recorded and it will be presented by Mr. Lourival Luz, Global CEO of the company. The other vice presidents of the company are also present. We will now hand the floor over to Mr. Lourival Luz, who will commence the conference. Good morning, everyone. Thank you for participating in this conference for the results of BRF for the second quarter. I would like initially to apologize for our delay. We had a technical issue with our provider of the teleconference, so please forgive us for this delay. Moving on. to the results of the second quarter. I would like to say that we had a positive quarter illustrating the effects in our operations of the decisions that we took in the first quarter regarding adjusting our market position and adjustment of the whole chain. So in this second quarter, we already have an EBITDA of 1.4 billion, 7.7 higher than the second quarter of 2021, and also a lot higher than the first quarter of this year. We will look at all the other segments and regions where we had improvement in all of them. And also our focus in the second quarter was on the cash flow and the net results, along with the operational management with priority on more efficient operations. We'd like to reinforce that. As you can see in the financial statements, we had two non-recurring events related to the hedge of the bond issued in 2012 and also regarding the hyperinflation in Turkey that required us to perform some accounting adjustments in Turkey. We want to make it very transparent to you so that we can assess the operations result in itself, where we have a gross margin of almost 19% and 10.3% in EBITDA, 10.6%. In the next slide, we took those decisions in the first quarter so that we would go back to the company's previous margins. As you can see, this has happened. The results of the second quarter, we had almost 19% of a cross margin, almost the same as the margin for last year, and we know that there's a seasonality to our sector, and this is in accordance with that, and we had a very good recovery of our operating margins. And as you can see in the next slide, I'm going to talk a little bit about the business environment in Brazil and also in the international market. When we speak of Brazil, it is our main market. And what we were able to realize in the second quarter is that there has been a resume of our healthy profitability level. We had a hard first quarter and we had to take a lot of measures to adjust our inventories and our supply chain. And we were able to now have a positive EBITDA, but with a margin that is still below the potential of our company and the Brazilian market. But with that EBITDA, margin of 6.1%. That from a minus seven EBITDA. So we can see the effectiveness of the measures that we've taken. And we've also had an adjustment and a reduction of our stocks of inputs. and also finished products allowing for more efficiency in our whole chain and also in logistics.

Something that's important to highlight is the

versatility of our portfolio with the brand Sadia, Pertigao, Quali, Clebon and Deline that encompasses the whole market. We reach many different social levels and that shows the resilience of our sector and also of our product portfolio. So it's a very positive scenario when compared to the first quarter of this year. Of course, we need to continue to be cautious with the cost scenario, but at a different level than what we saw in the previous quarters. Regarding the main costs, we would say that these costs now are practically stable, And in the second quarter, we may have less impact by diesel given the measures taken by the government to reduce diesel prices in Brazil. So that will have an impact on our company's costs in the second half of the year. And that allowed for better performance in Brazil. but requires us to be cautious and a very austere management, paying attention to the details so that we can have operational efficiency and a bottom line with increasing profitability for the company. In the next slide, we can see that there's an also positive scenario throughout this quarter with the results. So you can see an improvement in the performance. These are actions that were implemented each month, and we see the results each month here in Brazil. There has also been a recovery in the price of chicken and pork, as you can see in these charts that reflect the market price from CEPA. And even given the challenging scenario that we have in Brazil with a decrease in income, what we have from information from The Brazilian Supermarkets Association is that there is a strong resilience in the food sector. We offer basic products that are always the priority of the consumers when they are making decisions to make sure that their money is being invested in food. When we look at the international scenario, We've seen improvement in margins and also advances in all sectors and areas. A very positive halal market with robust margins, robust positioning that has leveraged our local position showing the strength of our local brand and our local distribution as well as our local sales team that have allowed us to have proper positioning with the best product mix. We can see the advance of processed products where we can capture better margins in this market. When we look at direct exports, we also had a Very good improvement. We almost doubled the margins in the second quarter. also much higher than last year's. And when we look at Asia, there are still a lot of impacts by China, which led to a lot of challenges in sales, but already with better results. And when we look at direct exports and the impacts from Asia show the results of the adjustment, And the advance of the structure simplification that we announced in the past quarter, we can see that it's more dynamic and agile, and that allows us to capture more volume and margin. And we are starting to see the results, as you can see in the numbers that we are showing here. And this is a