BRF S.A.

Good morning, ladies and gentlemen.

Welcome to our BRF earnings conference call regarding the results of the first quarter of 2025. This conference has been recorded and the replay can be checked on the website of the company. The presentation is also available for download. Right now, all the participants are connected as listeners and then we will start our Q&A session when more instruction will be provided. Before continuing, I would like to say that the prospective information has the basis, the beliefs and the administration of VRF and the current information for the company. These declarations can involve risks and uncertainties. Bear in mind that we talk about future events Therefore, depending on circumstances that can or not occur, investors, analysts, and journalists should take into account that events connected to a macroeconomic environment, to the segment and other factors, can make the results be materially different compared to the ones that are expressed in the respective declarations. Here in this conference, we have Mr. Miguel Goulart, the CEO, and Fabio Mariano, the CFO. I would like now to pass the floor over to Mr. Miguel, who will start a presentation. Please, Mr. Miguel, you can proceed. Good morning. I'd like to thank everyone for joining our first quarter 2025 earnings conference call. We started the year delivering another consistent quarter with solid results and continued progress on our journey toward greater efficiency and growth. We reported a profit of 1.1%. 2 billion reais, twice as much as the same period last year, and our net revenue reached 15.5 billion reais, a 16% increase compared to the first quarter of 2024. The performance we'll be discussing today marks the best first quarter in BRF's trajectory. Our BRF Plus program delivered 305 million reais in efficiency gains during the period and remains a key driver of continuous improvement across all workstreams. Efficient management enabled growth through performance improvements, higher utilization of our current assets, allowing us to lay the groundwork for sustainable growth, always with financial discipline and focus on generating value for our shareholders. I now invite our CFO Fabio Mariano to present the quarterly results in detail and I'll return afterwards for closing remarks on today's presentation. Good morning to everyone connected. On the first page, I'll highlight the main financial indicators for the first quarter of 2025, starting with the net revenue, which reached 15.5 billion reais, 16% higher than in the same period in 2024. EBITDA was 2.8 billion reais. The best results in our history for a first quarter, 30% higher than the previous year's performance. contributing to a net profit of 1.2 billion in the period, double the first quarter of 2024. Free cash flow performance was approximately 1.3 reais or 1.8 billion if we eliminate the effect of the acquisition of Adoha Poultry in Saudi Arabia in partnership with PIIF. And in the slide with leverage, we reached 0.54 times EBITDA in the last 12 months with the lowest leverage in history. The next slide on page four on the left shows the historical evolution of gross profit with profitability of 26.3% in the period. We reported a gross profit of more than 4 billion reais. On the right, we can see the evolution of EBITDA and margins showing stability in operating results. We will now present the performance by market business segment. Starting with Brazil, we continue to evolve progressively. We achieved an EBITDA margin of 17.1%, volume growth, especially in processed categories, and the contribution of fresh cuts to domestic market margins. On the next page, number 6, we emphasize our journey of continuous evolution in commercial execution, reflected in greater numerical distribution and new points of sale served. We also see greater adherence to suggested prices and a lower historical level of FIFO discounts associated with the useful life of products. Service levels are still at optimum levels despite the significant improvements in volumes. We remain attentive to our consumers' needs, and in the frozen food category, especially in ready meals, we launched new items in the Meu Menu line from Perdigão and Hot Bowls from Sadia. We also promoted new campaigns and sponsorships, reinforcing the brand's visibility and supporting our consumers' preference. Now, on the next page, we present the international market. We saw healthy margins in the segment with contribution of geographical diversification and new exports permits. EBITDA margin exceeded 19% in the quarter. On the next slide, we highlight the announcement of the construction of the new process products plan in Saudi Arabia and the growth in volume driven by Hamadan, with an emphasis of gaining market share in process products. In Turkey, we continue to focus on increasing the contribution of sales and process products, which represent around 25% share. helping to mitigate the effects of the greater local supply of fresh chicken. We maintain our market share, leadership with Sadia and Bombet brands in their respective markets. On the right, I present the highlights of the direct export segment. We expanded our business alternatives with two new permits, 12 new permits in 2025, helping to maximize prices. There have already been eight, 100, and 87 new export permits since 2022. Recently, we completed the acquisition of the processed food plant in China, reinforcing our strategy of added value and local presence. We also highlight the processed meat and processed products in Chile and the extension of portfolio with the launch of the Sadia hamburger, which marks the first in the beef category. I'll end the presentation of the business segments on the next slide with the performance of ingredients and pet. The segment reported 76 million in EBITDA, and Padwit improved the process by implementing SAP, strengthening the controls and management teams, which allowed us to improve the mapping of the BRF plus pet levers. In ingredients, we continue to diversify our products and markets. Next, I'll share the progress of our efficiency program and also growth, presented in a base 100. On the left, you can see the annual evolution of the feed conversion and yield indicators for poultry and pigs for relevant catches. On the right, we have introduced gains in factory occupancy and volume sold. We have significantly increased volume since 2022. On page 12, we consolidate the following sustainability highlights. ESG. Consecutive participation in the ESG and Carbon Efficiency Index portfolios excellent position in the fair ranking among chicken and pork producers, and also in global animal welfare rankings. We published the 2024 report incorporating our progress in economic, social, and environmental terms. Lastly, we celebrated 13 years of the BRF Institute with the mobilization of more than 40,000 volunteers and social actions carried out in 70 cities. We now present on page 14 the information related to companies' capital structure. On the chart on the left, we show the decline in net debt and leverage. On the right, we can see the debt profile, which remains diversified and long, with no concentration of repayments in the short term, and a fairly comfortable liquidity position. The next slide shows the free cash flow. The graph shows an operating cash flow for the quarter 2021. a 3.6 billion Reais, an investment flow of 1.5 billion, including the acquisition of a Doha, and a financial flow of half a billion, resulting in a free cash flow of 1.3 billion Reais. On slide 16, we can analyze the involution of net debt in the last period. We report the net debt of 6 billion Reais after return on equity. versus 8.3 billion in the fourth quarter of 2024. The reduction in loans will continue to contribute the lower interest charges in 2025. I would like to thank the audience and then give the floor to our CEO, Miguel Goulart, for his closing remarks. Thank you, Fabio. To wrap up our earnings presentation, I'd like to highlight that, we delivered a record first quarter EBITDA of 2.8 billion reais. Our investments in sustainable growth and financial discipline allowed us to reach the lowest leverage in BRF's history at 0.64 times. Our BRF Plus program is still evolving, keeping the company's key indicators at healthy levels. This quarter, standout metrics included yields, speed conversion and service level in Brazil. I would like to highlight the progress of our commercial execution, which has been key to strengthening the presence of our products at more points of sale across Brazil. Additionally, we posted the highest historic growth in volume sold per quarter, with highlights in processed products and strong margin contributions for our fresh category. Our performance in international markets was supported by our ongoing market diversification and global expansion strategy. which drove both healthy and profitability and volume growth. This quarter, we secured 12 new export approvals, bringing the total to 187 since 2022. Our brands remain market leaders in Middle East, with Zadea across GCC countries and Banved in Turkey. Besides that, our operation in Southern Cone continues to grow steadily with a notable milestone in Chile, where Sadia entered the burger category. Our global growth and presence strategy is already gaining traction in the first few months of 2025. We concluded the acquisition of a processed food plant in China and acquired 26% stake in a Doha poultry company in Saudi Arabia. We also pronounced the beginning of the construction of a new processed food plant in Jeddah, also in Saudi Arabia, which will boost our regional presence with a focus on higher value-added products. It's important to emphasize that none of these big years would be possible without our people. I would like to acknowledge the progress in employee engagement reflected in the global survey we conducted in the first quarter. We reached an employee satisfaction score of 89%, a 4% point increase compared to 2024, keeping us above performance benchmark and reflecting BRAF commitment to best-in-class management practice. a source of pride for all of us. All these factors strengthen in confidence in VRF and its growth journey, led by our chairman and controlling shareholder, Marcus Polina, who has been guiding the company's transformation for over three years with a strategy focused on operation efficiency, innovation, and global presence. I also want to thank our shareholders and the board of directors for their support along this journey. Our sincere thanks to our customers, integrated producers, suppliers, and communities where we operate for their strong partnership. And finally, a heartfelt thank you to Beref, more than 100,000 employees for the outstanding quarter we delivered. Together, we remain focused on building a company that stands out in the market and we're proud to be part of. Thank you all very much. Thank you. We'll start now our Q&A session for investors and analysts. In case you want to make a question, please. Click on the button and raise a hand if your question was answered. You can leave the line clicking on the same button again. Wait while we collect the questions.

Our first question is from Enrico Bruselin. Bruselin, your microphone is open. Good morning, Miguel, Fabio. Thank you for taking my questions. Two points that I would like to explore together with you. The first we talked a little bit about in the call with Comer Freak from the incorporation the avian flu we saw the news coming out the communication news from China closed the market for 60 days what I would like to hear from you is that we saw over the last few years Brazil implementing several protocols of regionalization bilateral agreements very specific in some cases of avian flu in not in commercial poultry farms but things that were negotiated what i would like to hear a little bit the points that you see with more attention when we think maybe about the large markets what possibly do you have in terms of agreement regionalization to bring more comfort that should happen and what is a little bit more in doubt depending on the importing market so we can map out the scenario a little bit this is the first point the second i would like to hear from you a little bit about growth also in the context of the incorporation we mentioned clearly brf to seems to be a growth vehicle your movements over the past few months make it really clear I would like to hear what else you have seen in terms of opportunities and where you're heading and aiming at, and you want to continue advancing and moving forward in terms of growth, not only organically and also inorganically that's been happening. These two points. Thank you. and the Ministry of Agriculture with Ordinance 785 created the communication with regionalization of sanitary for the municipality of Montenegro. uh with this focus of avian flu in the first moment the ministry originalizes through communication makes a communication for the world health animal animal health organization and this first measure preventive closing of some markets, the case of China, as you mentioned, and as the documents move between the countries and the information flows, you see the regionalization. I would like to remind you that in the case of Newcastle disease, China did the same thing, closed Brazil, and then they closed the... around the Rio Grande do Sul, the municipality. The period that we just had, we had Newcastle last year, is that the regionalization from the disease was forecasted in several countries, Saudi Arabia, Algeria, Armenia, Bosnia, Kazakhstan, Cuba, Egypt, Philippines, Georgia, Hong Kong, India, Japan, Jordan, Macedonia, Mauritius, Ireland, several other countries, Thailand, Ukraine. All these countries have regionalization forecast in the first moment. So we're going to see as time passes and information flows, we're going to have two situations. Some countries where regionalization is already forecast as applying the rule is... limited to 10 kilometers radius and other countries working with aspects of states. So this is going to be clearer in the next coming days. And there are some countries that are going to close Brazil in the first moment. And then in the second moment, study the status as a focus of the county municipality. All this is going to move forward and we have in terms of experiences that last year, the process was really fast of limiting the radius and determining the focus, the outbreak in one region. And we at PRF, we've been working very much in the past few years in the sense of having contingency plans. So we have a contingency plan that forecasts alternative markets. We have 187 new permits in the past three years that we're going to transit with product. And we also have, we've been taking care of that. very closely in keeping strategic inventories in regions where we have distribution. This allows two types of situations. First, you keep the clients supplied, and in the second moment, you've pressified your product better and mitigate a little bit of the cost because of some temporary closings. We're working on that. it's too early to say anything but we are aware that the country has a biosafety that is really strong a credibility and concept that reputation that is really strong and we can transit this situation we hope to very fast and agile to move and it's going to be difficult but I am confident that we're going to make it right and very fast if the markets that are closed are going to be resumed. I'll give the floor to Fabio to answer the second part. Good morning. You asked about growth. And before looking ahead, I would just like to recover a little bit of the history. We are reporting a growth of revenue growth in the quarter equivalent to 16% in the annual comparison. And when we look at Brazil, the growth is even bigger, 20%. This time is very much directed to volumes. This is important because it shows that it's something that we had already been disclosing. Our intent to occupy better our industrial assets and we see many of the production lines, especially those aligned it to process product that there is a demand forecasted and we would have to invest. to be able to address that. So we already have investments projected. Most of them already approved and started the execution. And when they reach maturity, that means the facilities are finished and gradually volumes are flowing to the results of the company we can then a maturity reach an additional growth of three to five percent so this is the mode of the company what we've been calling in the new chapter we are directed to this growth and it should has to be oriented to volume growth not only in the persification equation of products but And from the inorganic perspective, we have been already disclosing all these transactions that make sense strategically with this potential of adding more value to our portfolio. And the business combination also is more anchoring this process to happen the way we imagine it should happen.