BRF S.A.

Good morning, ladies and gentlemen. Welcome to BRF's Q4 and Full Year 2023 Earnings Conference. This conference is being recorded and will be available for replay at the company's website ir.brf-global.com, where the presentation slide deck can also be downloaded. All attendees are now connected in listen and view only mode. Later, the call will be open for questions and further instructions will be provided. Before moving on, we'd like to emphasize that forward-looking statements are based on BRF's management's beliefs and assumptions, as well as currently available information. These statements may involve risks and uncertainties, seeing as they relate to future events and therefore rely on circumstances that may or may not materialize. Investors, analysts and journalists must acknowledge that events relating to the macroeconomic environment, the industry and other factors may lead to materially different results than those expressed in set forward-looking statements. Joining our conference today are CEO Miguel Gularte and CFO Fabio Mariano. I will now turn over to Mr. Gularte, who will begin the presentation. Please, Mr. Gularte, you may proceed. Good morning. I'd like to start by thanking everyone for attending our earnings conference. BRF has reported net income of 823 million reais in the fourth quarter of 2023. Throughout the year, we focused on efficiency and excellence while executing our business plan. we made progress quarter by quarter and ended the year with positive results, largely driven by the company's improved operational performance and financial discipline. We've closed this period with significantly lower leverage, the lowest in seven years. Our ever-evolving commercial execution, improved product portfolio performance and consistent work with the Saadia, Pertigao and Quali brands have supported our profitability boost in 2023. In the international market, we've returned to double-digit margins, advancing in value-added products and securing a record number of plant licenses in new destinations. Now I'd like to invite our CFO, Fabio Mariano, to present our financial results in further detail, after which I'll come back for our final remarks on the announcement. Good morning to everyone on the call. On the starting page, I'd like to focus on the main financial indicators for Q4 2023, starting with net revenue, which came to R$ 14.4 billion. Our EBITDA was R$ 1.9 billion. This gives us a 13% margin for the period, our best quarterly result in many years. Our free cash flow performance was 613 million reais, that's our largest quarterly cash generation in three years. In working capital, we significantly reduced our inventories, which helped us to secure a financial cycle of 5.8 days, three days shorter than in the same period last year. inventory turnover reached 75 days, 18 days less than in 2022. Ending the slide with leverage, we reached 2 times our EBITDA in the last 12 months, lowest leverage in 7 years. In the next slide, page 4, we show on the left-hand side our gross profit over time with 24% profitability in the period. we've reported a gross profit of approximately 3.5 billion reais. On the right-hand side, we also notice the EBITDA progress as mentioned earlier. In the next slides, we will present our performance by market or business. Starting with Brazil, we continue to progressively improve our operating results. Our EBITDA margin came to 15.6% with the help of our holiday campaign. The best profitability of the year was that even excluding seasonal sales. Note the performance of processed products was consistent with historical levels despite the still suboptimal consumer environment in the country. On page number 6, we highlight the recovery in prices of fresh guts in Brazil, just as we had predicted in the previous quarter. At the bottom of the slide, we emphasize the increased accuracy of new product launches and continued progress of our commercial execution, which can be seen in the greater availability of products. products in store, greater penetration into new points of sales, and a marked improvement in customer service levels, which significantly contributed to the performance of the domestic market. On page 7, we highlight the outstanding performance of our celebratory portfolio. We showed our leadership in the market and the strength of our brands during this special festive period. Our market share was 72% in turkeys and 60% in special poultry, such as Chester. The next slide shows our performance in the international market. We see this business's recovery coming to double-digit margins as new price levels for poultry and griller cuts and the downturn of costs with decreased grains and efficiency gains from the BRF Plus program. Our EBITDA margin increased by 7 percentage points compared with the previous year. We also noticed increased market share in chicken and poultry exports to many destinations. On the next slide, we highlight the growing profitability in the halal market in the Gulf countries. We continue to grow our market share in processed foods, which is in keeping with our plans to expand the range of value-added items in the region. We also reported positive performance in Turkey, mirroring the larger share of processed foods in sales volumes and sound profitability levels in the unprocessed portfolio. We sustained our market share leadership with the Saadia and Banvet brands with 37% and 21% shares respectively in each of their markets. On the right-hand side, I point out the direct exports business. We can see how our prices performed for the main cuts. We grew our business alternatives with 16 new licenses for markets such as the United Kingdom, Africa and the Americas. Our export licenses had 66 new ones in 2023. We also reduced our finished product inventories by almost 80,000 tons internationally versus 22, and direct factory exports remain at high levels. Unsold inventories continue to fall, improving our commercial execution and relieving the capital we've employed. I'll end the presentation talking about ingredients and PET. The business reported an EBITDA margin of 11.7%, 98 million reais during this quarter. It's important to note that the development of our manufacturing output continued to contribute to the maximization of our results in the company's core portfolio. In the pet business, we increased our share in sales of the super premium natural category with higher profitability and higher exports throughout the year, ending 2023 with our first shipments to the United Arab Emirates. We'd like to underscore the extension of our BRF Plus program to the pet operation in search of growing our efficiency. In ingredients, we continue to focus on expanding our markets and increasing sales of value-added items, such as hydrolysis. We continue to add value to our co-products in order to maximize our business integration. Next, I'll share the progress of our efficiency program, which Miguel will be quantifying in figures shortly. I will show you comparisons with the same period last year. The bars were colored in light gray. The full year comparison can also be seen in the material you've received. In agriculture and livestock, feed conversion of poultry and pigs fell by 2.5% and 1% respectively. Chicken mortality fell by 2 percentage points and hatch rates increased by 5.6 percentage points. In manufacturing, we grew our factory yields by more than 5 percentage points. In logistics, we reduced our returns and increased our service levels in Brazil in a very materialistic way. And the following slide will show you the trend of our costs, a major driver for competitiveness growth. On the left-hand side, we can see that the average cost per kilogram in Brazil fell by 7.5% in the year versus 2022. And more importantly, the cost in the last quarter of the year was 5% lower than the average for the year, showing an excellent transition point for 2024. Internationally, the cost per kilogram in the last quarter was 8% lower than the average for the year. As we've already underscored, the improvement in cost is anchored in the reduction in grain consumption within the BRF Plus program. On page 14, We show you the highlights in sustainability ESG, showing achievements such as a 26% reduction in absolute scope 1 and 2 emissions. Two, we are very close to achieving our clean energy self-production targets. Three, we've achieved 100% traceability in direct grain suppliers and 77% traceability for indirect suppliers in the Amazon and Cerrado biomes. 4. We want recognition for good animal welfare practices. 5. We maintain our presence in the ISE and B3 carbon efficiency index portfolios. And lastly, we continue to generate positive social impact by engaging actions in 100% of the municipalities where we have a footprint. On page 16, we now show you information about the company's capital structure. In the chart on the left-hand side, we see the performance of our net debt and leverage. These indicators were already mentioned at the beginning of the conference. We have the lowest leverage in seven years. On the right, we can see our debt profile, which is still diversified and long, with no concentration of repayments in the near term and comfortable liquidity position. The next slide shows you our free cash flow. The chart shows an operating cash flow of 1.7 billion Reais, an investment flow of 741 million Reais, and a 352 million Reais financial flow. All of that adds up to a free cash flow of 613 million Reais, which is the best cash generation we've reported in any quarter in the last three years. On the final slide, we talk about the performance of our net debt between the quarters. We reported a net debt of R$ 9.4 billion with contributions from the capitalization of our share offering in July. The allocation of funds from that follow-on offering will continue to help us reduce interest charges over the next coming quarters. I'd like now to thank the audience and turn the floor over to our CEO, Miguel Gularte, for his closing remarks. Thank you, Fabio. To conclude our presentation, I'd like to point out that our focus on operational efficiency and the financial discipline we've maintained quarter after quarter is what enabled the net profit and cash generation we've reported for the fourth quarter of 2023. Our efforts and initiatives throughout the year were decisive for our sound performance in the period. The company's predicted intelligence model, combined with the efficiency gains from the BRF Plus program, proved to be assertive throughout the year and allowed us to capitalize on grain origination in due time as prices fell, which led to a material cost reduction in the second half of the year. Additional returns from BRF Plus totaled 525 million Reais in the fourth quarter, bringing the total for the year to 2.2 billion Reais. I should also highlight the progress we've made in major indicators throughout the year, such as feed conversion, unprocessed food yields, animal mortality, commercial execution, and logistics service levels, among others. Moreover, we've recorded the lowest FIFO discount levels in recent years, showing greater integration between our production and sales planning. Not only that, but we've also significantly reduced inventories across the board, bringing in savings in financial and storage costs. The highlights of the year also include our higher profitability in Brazil, supported by our ever-evolving commercial execution and improved performance of our portfolio as a whole. In the fourth quarter, we reported an EBITDA margin almost twice that of the fourth quarter of 2022. Special mention should also be made of the consistency and progress in the profitability of our processed foods portfolio in Brazil throughout 2023. In our international operation, our EBITDA margin returned to double digits in Q4 with a significant recovery in prices in all locations. Our market diversification strategy remained consistent as we resumed our exports to the United Kingdom. In 2023, we secured 66 plant licenses for new locations in Latin America, Asia, Europe and South Africa. I should also underscore Saadia's leadership in the GCC region's halal market, where we gain market share in processed foods, in keeping with our strategy of increasing the volume of value-added items. Our results also mirror the consistent work of our leading brands in their respective markets, Saadia in quality in South America and Banvit in Turkey. We also saw an improvement in our people management indicators, such as engagement, absenteeism, and turnover, and continued to invest in our team's development. I'd like to point out our performance in occupational safety, where we reported the best rates in history, cementing BRF's benchmark position in the market. Our performance in the last quarter of 2023 confirms our team's ability to manage with focus and discipline. We step into 2024 motivated by the results we've achieved and with version 2.0 of BRF Plus already well underway. As I often say, here the future begins every Monday and we will continue to devote ourselves to pressing on with BRF Plus 2.0 in 2024, always striving for our company's continued evolution. We've opened a new chapter in our history with Morphrix consolidation as controlling shareholder with more than a 50% stake, and we are confident we will continue our journey with commitment, agility, simplicity, and efficiency. I'd like to thank our dedicated associates for our progress and achievements. I'd like to thank our chairman, Marcos Molina, and the board of directors for their unwavering trust, constant presence, and continued support. And I'd also like to thank our shareholders, our integrated outgrowers, our customers, our suppliers, and all the communities where we operate. Thank you. We will now begin the Q&A session for investors and analysts. If you have a question, please press the reaction button and select raise hand. If at any point your question is answered, you can leave the queue by clicking lower hand. Please wait as we pull for questions. Our first question comes from Guilherme Pallares from Santander. Please, Mr. Pallares, your mic is open. Good morning, everyone.

Thank you for taking my questions.

Well, I'd say that the first question is more on the cost side. We're noticing this significant decrease the company has achieved from the unit cost standpoint. And we wanted to understand how much of that comes from operational leverage and how much comes from the slightly lowered fee costs. And what could we... look forward to in 2024 when it comes to the benefits of that factor. And my second question is, I'd like to understand a little bit more about the exports movements. We understand the better prices and the licenses. So if you could update the company's perspective, thinking about the beginning of 2024, that would be great. Thank you. Good morning, Guilherme. As to your question with regard to prices, and considering that we are operating under BRF+, that ultimately touches on all the links of the chain. We start with improvements on the agricultural side, and then you have food conversion, food aspects which is benefited by aspects in the industry and then you look at manufacturing where you have costs and better performance and you complement that with the commercial sense and will need better or more rational service and you can seize all of that on the cost side. Evidently this is a continued process It started at the end of Q4 2022 and operated throughout 2023, which led to, as we reported, over 2.2 million excluding the FIFO effect, which would lead that to over 3 million. We've talked about the design of BRF Plus 2.0 for 2024. And that continued to bring in effects throughout the year. And we expect this improved efficiency also enabled by a better situation in terms of international costs and prices. we should be able to report a satisfying performance at the end of the year. I will now turn over to Fabio who will add to the first part of your first question and also add to the second question because obviously I only gave you the answer in broad strokes. Good morning. As was already said, I will try to add a little bit to the answer with regard to costs, and then we can talk a little bit about our prospects for the markets, especially the international market. I think that Q4... was when we saw the lowest level of costs. And it does have to do with the decrease in feed prices, but also has to do with the efficiency plan that we've adopted BRF+. SAAT plan also involves what you mentioned, which is the operational leverage, seeing as we've increased our volumes and really made the most of our operational structure. As we transition now to 2024, comparing this level with our cost in 2023, on the international side, you see a difference of 8%. And in Brazil, you see that difference is 5%. All of that should help us in terms of gross profit to have a very positive start of the year. And when we combine that with the cost benefits and the favorable prices, all of that makes us optimistic about the beginning of the year. So we're seeing healthy prices and a very competitive cost ratio that lead us to believe that the company has reason to believe we will have great results also in the first quarter of 2024. That was perfect, guys. If you could also talk a little bit about your prospects for the export market. Well, Guilherme, we're seeing the export market end the year with prices on the rise. And it's important to highlight the 66 new licenses that BRF's team was able to secure. is very important these new licenses take us to that um quote that we've repeated over and over across the throughout the year which is the best uh option is to have a range of options and when it comes to experts that opens a range of choices for us in terms of new markets and from a situational standpoint we're seeing the entire market respond in time so when the entire market is responding in terms of price a company that has new licenses for new destinations and can leverage all of its brands, which are leaders in several different places, that allows you to predict and seize on those opportunities throughout the year. So in 2024, we go into a process where the company is performing well, in terms of operations in a market that's also performing well. So there's a better balance between demand and supply. Excellent, Miguel and Fabio. Thank you so much for your answers. Our next question comes from Gustavo Troiano with Itaú BBA. Please, Mr. Troiano, your line is already open. Good morning, Miguel and Fabio. Thank you for the opportunity. Well, there are two things I'd like to go over with you. The first has to do with the cash flow. In our last conversations, we talked a little bit about the break even and EBITDA, especially focusing on CapEx and financial flow. And it's interesting the financial result in Q4. So I just wanted to know if we can assume that this is the new break-even point, if it's reasonable to consider this the new normal. And when it comes to cash flow, I know it's difficult to advance the results because of the average grain prices. But when it comes to finished goods inventory, is there any room for... reductions or has all of that been tackled with brf plus in 2023 now on uh housing we had some preliminary data pointing to uh higher inventories in january and february and i'd like to hear from you if there's any uh movement from the company in terms of increasing or expanding housing which could lead to lower prices moving forward or if there's any other other side to that that we're not seeing. Thank you. Hi, Gustavo. Good morning. I will start with your first question talking about the break-even point and free cash generation. Well, what I can tell you is from a structural perspective, Our focus would be to invest around the same level as we did in 2023, so around $3 billion, maybe with a capacity for the biological assets, maybe even a little less than that, between $2.8 and $3 million. And then we need to consider the financial expenses. So we're working with a range between $1.8 and $2 billion, considering interest charges and other factors as well. That would take us to a structural break even that would fluctuate between 4.6 and 6 billion. Also, depending on the interest rate charges that also affect that and the debt that's incurred in strong currency. So that's essentially the equation for the company to generate cash flow. It needs an EBITDA around that size. On finished goods inventories, we've significantly reduced levels over the course of 2022. And just to remind you, in finished products inventories in Brazil, reported in advance that we had already identified opportunities to reduce the finished goods inventories internationally throughout the year. And we decided to wait for the right moment because for most of the year, we navigated the market with outstanding prices. So it's not the right environment to solve inventory problems. Now Q4, because there was a recovery in prices, we saw the opportunity to tackle that. So that's why we're seeing inventories with a turnaround time of 75 days. So pretty optimized. So any gains after that should be marginal. They should not be as representative as those we were able to secure throughout 2022 and 23. And lastly, when it comes to housing, Well, we have data for chicken housing of over 600 animals, but there are prospects for February and March that point to a decline. It's important to note that Brazil's supply is not what explains the production volume when it comes to poultry protein. Of course, Brazil is very representative, but we need to consider data from housing in the United States, Europe and Africa as well. In the United States, we already have figures showing that 2023 was a year when housing decreased when compared to 2022 and even 21. We must also consider In that equation, the supply and the demand side. In Brazil, we see a consumer environment, although not as attractive, a lot better than the environment we had in 2023. Per capita income is going up. Employment is resilient. Consumer confidence is at a sound level. And on the international side, we see strong demand in areas where we are dominant in the market, such as in the Middle East. We plan to have a very successful campaign during the Hamadan period. We have the spread with beef and poultry returning to levels which are just slightly above the historical average. So we also need to assess demand. and not only the supply side. And our understanding is the environment today is a lot more balanced than the one we had to navigate last year and even the year before that. So I'll now turn over to Miguel to add to my answer. Well, I think you were very comprehensive. We should navigate a more normalized environment and it's to be expected that The less efficient the environment is, the less efficient we will be in that market. And it's also important to remember that BRF is currently in a commercial position from the international standpoint that's very special. In Q3 and Q4 of 2023, for example, we saw a and exceeding Brazilian exports to Asia, even more than to the Middle East. And BRF has been a dominant, dominance in that case, sometimes exceeding 50% market share. So we're ready for that. And evidently a company with lower inventories unsold inventories with no uh stopped inventory and that's capitalizing a lot more agile in a much more agile way that type of situation that's that's a huge plus so we expect to see gains not only in the international market but also in the domestic market as well thank you miguel and fabio that was great

Our next question comes from Ricardo Boyatti with Safra. Your line is open. Hello, everyone. Good morning. Thank you for the possibility of asking question. My first question is in relation to the inventory levels. Of course, it is a surprisingly low level. It is clear that efforts have been made for the reduction of inventory levels, especially for finished products. My question is related to the efficiency of this inventory level. Can the company maintain those historical levels and can the stock out to the efficiency level be maintained without losing anything in the domestic market or in the international market? Have we reached a level where we need CAPEX for expanding the capacity to meet the demand even better, as you have mentioned? And you have mentioned that the demand has been very healthy, both in Brazil as in the exports market. And the competitors are increasing capacity in some lines. And can the competitor cause any impact on the price, especially in the domestic market? So this is my first question. I understand that you do not disclose the information on the profitability per product, but could you provide a ranking of the categories of products that performed better in this fourth quarter in terms of profitability, processed food, in natura, fresh and processed poultry? Could you provide a ranking? roughly what were the main drivers that led to a better profitability. It would be very nice for us to understand what's happening to the company. I'm going to answer the first question and then Fabio will answer the second question. I believe we have to understand that BR Plus program touches upon all the aspects, not only inventory levels. There is a pricing system that provides an indication of related to which is the location and what's the price you have to employ. And then you can increase your level and the commercial assertiveness. At BRF, we can see that we made a lot of headway in the And our disruption rate is the lowest ever in the company. And being very objective when answering your question, by means of operational efficiency, we maximize the gains with low inventory levels. And this is from the logistics viewpoint. And at the same time, we had a very high level of logistics performance, reaching high levels. From the viewpoint of commercial execution, we have the honor to say that both in Brazil and the international market, and when I mention international market, I include Halal geography. I can say that we've reached the right timing and we can go beyond. We can even talk about grains. Let's mention the previous quarters when we talked about the timing to purchase the grains. BRF followed its indicators and we saw some different situations in the market and for that reason we let our grain inventory levels low at really low levels and when they reached the lowest level we started purchasing grains and we had a very comfortable position And that was reflected in the costs. And this also shows that the efficiency in the execution of inventory levels, both as to grains or for exports, products for the domestic market, everything is integrated and interconnected. So the answer is yes. The company can and will continue providing those levels of efficiencies, operating at a reasonable level of inventories with no risks of disruption because we have extremely quality products. Now, providing a complement on the investments on production capacity. I have already mentioned in the previous question, when I talked about the break-even of cash generation, I said that we must invest at levels of 3 billion, between 2.8 billion and 3 billion rials. And it's important to consider that the company in the pandemic years expanded its capacity quite a bit in terms of production, especially in the line of processed products. This capacity has not been fully used. That means that we still have some idleness in the lines. So we have an important growth plan for the years to come that will start in 2024. So the company has the capacity to grow and expand its volumes with a very marginal capacity. In relation to capacity as a whole, as we see in the market, historically we understand we have all the conditions to compete. We have strong brands, quality products, and we hope to find a market logic which is disciplined. Now I'm going to address the last part of your question. You asked some more information about the categories. I would rather provide you with a breakdown, saying that the most important contribution in relation to profitability, in addition to the seasonal portfolio of commemorative products, comes from the recovery of unprocessed food, as we had previously mentioned. We had already mentioned in the third quarter, We were making the transition to the fourth quarter by using the best prices of cuts. And the processed products continue to be resilient. But the biggest contribution came from the commemorative products, seasonal products. And this is what I can disclose to you in terms of the domestic market. It's really clear. Thank you, Miguel, Fábio. Our next question comes from Lucas Ferreira with JP Morgan. Your line is open, sir. Good morning. My first question is about capital allocation. Considering that the company is reaching two times net debt over EBITDA, cash position very comfortable, BRF Plus program, which was very successful. My question is, when are you going to start considering accelerating growth or not, or maybe even focus on the payment of dividends. Maybe you have conditions to increase the payout. Is it going to be a year where you're going to be more conservative in order to reduce even further the leverage? So this is my first question. And the second is specifically if you could provide more details on the relevant market for you. I understand all the things about the licenses and everything, but I would like to understand more about Japan, where we are in the process of price recovery. Last year we had the avian flu issue and you see that the inventory levels are more normalized and also China. Do you see any opportunities for the year or do you see difficulties in recovery in China? Thank you. Thank you, Lucas. I'm going to answer the question about capital allocation. Then I'll pass the floor over to Miguel so that we can discuss Asia, Japan and China, as you asked. What I can say about capital allocation is that our focus is on growing the company. And this is what we have done in the previous quarters. As I have said, we still have some capacity to be occupied. So we have a very important focus on organic growth so that we can dilute our infrastructure of fixed costs even more. So this is the plan. Grow volumes. use the idle production lines, and this is what we intend to do in 2024. Of course, when we consider the finance needs, this is a very important year for us to be active, Because we do not have a lot of needs for amortization in 2024. So we are going to bring further assertiveness as to the financial expenses and burden. So this has to do with the liability management. So what do you expect from our... Execution is this. So I turn the floor over to you for you to answer the second question. Good morning, Lucas. Yes, we observed that Asia has been extremely relevant, even though I had mentioned that in the last two quarters we had a volume exceeding Asia. So we had CCE information about 130,000 tons. And for the further quarter, 136,000 tons in Asia against 138,400 in the US. We see this movement in terms of price at the end of the year and also in the beginning of January. The price of swine has some reaction and also poultry prices have had an impact, especially in China. So there were trends that we expected. They even happened before our expectations or expectations. expected by the market, and we could make some movements in relation to those price increases. And in the case of Japan, Japan received a higher offer in the fourth quarter, and this goes back to normal levels. There was an excess in the offer. And we see that internal inventories going back to normal levels and prices adopting a new dynamics related to recovery. And I insist to say that it's very representative. relevant for our business. It's very important for us to have different options. If you have options, you can trade among destinations and also which cuts you're going to be shipping to which market and you choose the product to be directed to different markets. So this is called value integration. The more destinations you have, the more you can integrate value and increase the profitability of your product. Okay, thank you. Our next question comes from Tiago Duarte with BTG Pactual. Mr. Duarte, you may proceed, sir. Hello, good morning, everyone. Miguel, Fabio, thank you for the opportunity. I would like to go back to the address volume. In other questions, you mentioned some aspects of volumes, but when we look at the result of the quarter, we have a feeling that at a certain time you prioritize the profitability in relation to volumes. You lose some share in the exports of poultry against the third quarter. The volumes in the Brazilian market, in spite of this is an ability, it does not have any evolution year on year. Fabio mentioned oftentimes that the capex level is low. maybe even a little lower than the capex from 23 to 2024. What is a consistent assumption for volumes to evolve considering there is no relevant investment in capacity increase? So it seems that the company is focused on profitability. Could you address this topic? I know that Fabio mentioned about long-term growth plan. You have idle capacity in the processed products, but it's difficult for us to see where the volume will come from considering you're prioritizing profitability. And the second question is almost a follow-up of the questions that was given in terms of unit cost. I think it was the first question asked. I would like to understand how you see when you move from 2023 to the first half of 2024, do you see any possibility of an additional drop of your unit cost? Because based on your answer, It seems that you would maintain the costs at those levels. I would like to know if we can reduce even further the unit price, even considering the raw material inventories that you have today. Good morning, Tiago. Answering in a very direct way your question, we do not see any equation of profitability to compete with the relations of volumes. I believe that when you have more commercial destinations, as we can see what BRF has done with 66 new licenses, we can increase volume. and we can maintain profitability. It's important to mention this because 2023 was a typical year. The first half of the year was extremely challenging, with a depressed price of unprocessed food, and the international market had the perfect storm, with the retraction in demand in different locations, but also you saw a situation where the offer would exceed the demand. This is left behind. after the second half of the year, and we entered a new situation of normalcy. And then there's a very important aspect to consider. Adding value process, that has been our effort. does not affect only the Brazilian geography, but also international geographies. We have growth of value-added products in Turkey, in Middle East, and we are very focused on this. And this will allow us to increase volume and add value. Because I have an industrial complex that can still grow organically, it's not of a concern to us because we do not understand that our investment capacity is limited. We understand that our investment capacity is proper, adequate to the needs of the company. So we started 2024 well-suited. as we usually say in Brazil, with low levels of stock levels, low levels of stock, with the market with high demand and the domestic market and the external market operating according to our availability and with the pricing information system that allows us to capitalize this opportunity. So we understand the equation of profitability will not affect the volumes and our industrial complex and our capex is at the proper level for that purpose. Good morning, Tiago, about the question related to costs in an objective way. We see Considering the price of the feed cost, when we compare 24 and 23, we see more stability. So the stability associated with raw material and the cost can be better, of course, considering we are implementing, we are running the efficiency program. It's a continuous journey, continuous improvement. And in our budget, We have the 2.0 version of BRF+, so we are very focused on materializing the productivity gains. Now, considering the raw material dimension, we see an environment that can offer opportunities. expect for the next production cycle of soybeans and maize, because market projections see an expansion of 5% for soybeans and 7% for maize at the global level. So we have windows of opportunities and better crops. And this will have effect in our costs. And we're going to see this in the transition from the first to the second half of 2024, provided that this is going to be materialized. I'm going to add to Fabio's question, Tiago. And we would like to say that we did not lose any share in exports. On the opposite, there are some variations, of course. On a quarterly basis, we see some variations from the third to the fourth quarter. And if you see the data provided by the CSX, you see that the share increased. And considering the new licenses, we see that this is going to be even better. And considering the FX rate is stable, And by reaching different locations, we are going to grow, share, and we are also going to diversify this movement. It's also important to draw your attention to the fact that the UK established a system of pre-list, and BRF is the establishment that had more plants to be licensed. Oh, that's very clear. Thank you very much for the questions. Mikkel was making reference to the share that you announced in the results, specifically of the fourth quarter in relation to the third quarter. Yes, this is an option because when we have the commemorative products, which is a very important moment for BRF, we capitalize this market leadership and But it's clear that our focus is in the domestic market and also in exports. Our next question comes from Isabella Simonato with Bank of America. Your microphone is open, ma'am. Thank you. Good morning. Can you hear me? Yes, we can hear you. You may continue. Perfect. Thank you. Okay, perfect. Thank you. Could we continue talking about volume? I believe that the external market strategy to gain profitability and go into new markets, I think it's very clear. It becomes evident every quarter. But when we look at the domestic market in the outlook of short and medium terms, Can we consider this volume growth and contextualize the macro environment? When we think of 2024 and also considering the basis that you have in terms of volume posted last year, what can we expect for 2024? How do you see the beginning of this year that would help us in our analysis? And also, yes, SG&A. SG&A, you had a pickup in the period. There is a sustainability levels and also transport. What can we think in terms of dilution looking into 2024? Thank you. Good morning, Isabella. Now, answering about volumes, I understand that the question was directed to the domestic market, but I will provide context before I answer your question objectively. I believe that the volume point, in addition to the licenses that we mentioned. And with that, we had some alternatives. We can increase volumes and prices, and we can choose among destinations. Sometimes the decision would involve removing the product from Brazil and direct to international market, and also to remove products from the international market and direct them to Brazil. Market volume grew year after year at the international level by 11%. And this is not perceived in the revenues because the prices were very depreciated in relation to the previous year. And this is also applicable to unprocessed food in Brazil. We grew 3% year on year. We do not notice this in the revenues because in 2023, the prices were lower for three quarters in relation to the previous year. And now reaching the domestic market in processed food, yes, we expect to expand in the main categories where we lead in Brazil. We have the capacity to produce in order to meet these expanded volumes, and we are going to work in order to grow beyond the growth of the categories. And this is related to our intention to gain market share. In relation to SG&A, yes, you're right. In the fourth quarter, we concentrate in marketing and trade marketing lines because of the campaigns of the seasonal products. And also the concentration of communication funds that involve all the brands in our portfolio. So when we understand the structure of SG&A, I would say we have from 6.5 and 7 related to variable expenses where the freight prices have a very important role. and 1.5 a little bit less of administrative expenses. And this difference is associated to expenses related to sales. Salesforce of nearly 3,000 people, promoters, more than 4,000 promoters. And this explains the funds for marketing and trade marketing. What we can expect for 2024 are gains. With freight, considering the negotiations that we have already started with some players, we expect opportunities with the reduction in fuel prices, and that will impact the numbers of 6.5 and 7 points. As to fixed expenses, we are likely to maintain the same sales structures. And we are going to keep the investment levels at the same point. This is what I can say. Yeah, it's clear. Thank you. Our next question comes from Renata Cabral with Citi. Your line is open, ma'am. Hello, everyone. Good morning. Thank you for the opportunity. I would like to have a follow-up on the PRF Plus program, maybe the version 2.0. We saw the results of the program for 2023, the relevant results. positively impacting the COGS costs. And we would like to understand what to expect for 2024. I'm not sure if... We could have information in terms of amount and values, but I would like to know whether it's going to be relevant when compared to 2024 in terms of total magnitude, which was over two. Okay, and what are the main focus the company is looking at? I understand that 2.0 is a continuity of the previous program. In the release, we see a lot about service level improvement and also logistics improvement and also poetry conversion. But could you provide some more information about what can be done and what will be done in 2024, both in terms of actions? And if you could give us an idea of magnitude, that would be very helpful. Thank you. Now, answering your question, DRF. has a principle which is continuous improvement. Of course, when there's a program that is mature because it has been in operation for more than a year, every quarter there is a feedback with the opportunities and we keep our KPIs active in all locations, in all geographies. And you see the new opportunities and you transform those opportunities into results. What is important to stress is that the BRF plus 2.0 is a little bit different from the previous version. So the previous version used the 2019 as a baseline year. Today we are looking into details and when we use as a basis our operations in different geographies, different locations. For example, there is a location where the mortality rate is lower. We go there, we see the indicators and we replicate those rates in other locations. It's an internal benchmarking that is implemented that can be used for the agro business, for the industry, for the exports, for logistics. It can be applied in all areas. So it's a domestic benchmark that will lead what we are going to do in the 2.0 version. As to the magnitude, I can say that in 2024, it's going to continue to be relevant. It's no longer a high-performance platform. program and it becomes cultural characters for the company, a high level company where all the teams would perform based on the KPIs that are observed on our daily basis. We say that the future starts every Monday here and in all locations of BRF to our joint. So we are very enthusiastic. We learned a lot in 2023. We perfected the process in 2023 and we are implementing all the process in 2024. So taking advantage of your question, still using your question, I would like to thank our team for their dedication and resilience because BRF Plus is a program that permeates the company as a whole. It's very clear. Thank you. Our next question comes from Lucas Muzi with Morgan Stanley. Your line is open, sir. Good morning. Thank you for taking my question. I have a question related to prices. We saw that prices, as Tiago mentioned, has posted a very slight improvement. And part of it has to do with the pressure of some processed items, such as breads and margarine and maybe pork and maybe a competition from other players. How do you see that looking at 2024, considering that you expect better grain costs? So how you think about the prices of 2024, considering that you are expecting lower prices for grains? And what if the price of spreads increases and also sausages and prices? I would like to understand how you see this, considering that you see favorable prices for 2024. Thank you. Thank you, Lucas. Good morning. If you allow me. I will make a comment. When we analyze year on year and the prices in Brazil, the price drop has to do with the unprocessed food, as we previously mentioned. If we separate this from the equation, the processed food price year on year in Brazil has improved. by 3%. I would like to make this consideration before I answer your question. Thinking about perspective, I think that the market dynamics will depend on the consumer. As I reported, the consumption environment is more attractive in Brazil. Even though it is not at the ideal levels, we understand that the income in Brazil is still impacted negatively. And the deflation process has started. It started last year. And with a more favorable consumption environment, demand will increase. And we will have opportunities to have better price rounds in the main categories. There are some other categories that show that the price of the raw materials have changed. So we do not have a lot of incentive in the market to purchase cheap raw material and industrialized products. So from this viewpoint, the competition may decrease for those specific categories. So this is what we see for 2024. Yeah, it's very clear, Fabio. Thank you. Our next question comes from Pedro Fonseca with XP. Mr. Fonseca, your line is open. Good morning, Miguel, Fabio. Thank you for taking my question. I would like to ask two questions and then two follow-up questions. The first one is in relation to the capital allocation. Fabio said that one of the focus would be the reduction in gross debt. Along those lines, which would be the main priorities? And what is the potential of the reduction in debt cost that you expect for 2024? Fabio mentioned 1.8 and 2.0 billion in financial expenses in 2024. I would like to know. How would affect the reduction in costs considering this liability management? I know this depends on break costs, but it would be nice to understand how you see this reduction in gross debt. And I would like to make a... Quick follow-up in terms of working capital. I think the inventory levels points are very well explained, but in the fourth quarter, we saw a slight deterioration of suppliers. I understand that there is the purchase of grains impacting a little, but can we see the supply levels going back to the average lines in 2024? Thank you, Pedro. Good morning. I'm going to start from the second question about working capital. I can say that in the line of suppliers, yes, we have an effect on the inventory levels. When we acquired in the May off-season and considering the payment conditions, we had a concentration in the fourth quarter. So I would like to say that No structural changes have been made in terms of the payment terms with the suppliers. And from the structural viewpoint, we'll go back to reach the same turnover levels that we observed in 2023. In relation to the net The gross debt, we are going to consider the less competitive debts, and we might settle this in advance or repurchase when we consider the market bonds. We did not consider in the break-even analysis, we did not consider any spread reduction, but we considered the new interest levels, especially in Brazil. So our focus is to promote this liability exchange or replacement so that we can reduce the financial burden. So we have been very active in monitoring the market conditions, both in Brazil and internationally. But this is what I can disclose now to you. Okay, Fabio, it's very clear. Thank you. A sessão de perguntas e respostas e a teleconferência da BRF... BRF conference call has come to an end. We would like to thank you for attending this call and have a great day.