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 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 have the basis, the beliefs and the administration of BRF and the current information for the company. These declarations can involve risks and uncertainties. Bear in mind that we talk about future events, therefore depend on circumstances that can or not occur. Investors, analysts and journalists should take into account that events connected to macroeconomic environment, to the segment and other factors can make the results be materially different compared to the ones that are expressed in the prospective 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 the 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 1.2 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 work streams. 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 at 15.5 billion reais, 16% higher than in the same period in 2024. EBITDA was 2.8 billion reais, the best result 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 a Doha poultry in Saudi Arabia in partnership with PiIF. Ending this 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 .3% of 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 process categories and the contribution of fresh cuts to domestic market margins. On the next page, number six, we emphasize our journey of continuous evolution in commercial execution, reflected in greater numerical distribution in new points of sales served. We also see greater adherence to suggested price 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 meal menu line from Pergigo and hot bowls from Saadia. We also promoted new campaigns and sponsorships, reinforcing the brand's visibility and supporting our consumers' reference, excuse me. Now on the next page, we present the international market. We saw healthy margins in the segment with contribution of geographical certification 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 planned 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 Saadia and Bombay brands in their respective markets. On the right, I present the highlights of the direct export segment. We expanded our business alternatives with 12 new permits in 2025, helping to maximize prices. There have already been 187 new export permits since 2022. Recently, we completed the acquisition of the processed food plan in China, reinforcing our strategy of added value at local presence. We also highlight the process made in process products in Chile and the extension of portfolio with the launch of the Saadia 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 in PET. The segment reported 76 million in EBITDA and PET would improve 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 your gradients, 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 I know evolution of the feed conversion and yield indicators for poultry and pigs for relevant catches. On the right, we have introduced gains and factory occupancy and volume. So we have significantly increased volume since 2022. On page 12, we consolidate the following sustainability highlights ESG. Consecutive participation in the ESC 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 30 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 in a fairly comfortable liquidity position. The next slide, it shows the free cashflow. The graph shows an operating cashflow for the quarter of 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 cashflow 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 BRFs 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 yield, feed conversion and service level and result. 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 historical growth in volume so far for a first quarter, with highlights in process 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 Sadea across GCC countries and Banvet in Turkey. Besides that, our operation in Southern Cone continues to grow steadily with a notable milestone in Chile, where Sadea 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 processed food plant in Henan, 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 figures 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% increase compared to 2024, keeping us above performance benchmark and reflecting BRF 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 to their support along this journey. Our sincere thanks to our customers, integrator, producers, suppliers and communities where we operate for their strong partnership. And finally, a heartfelt thank you to BRF, 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 Erika Bruxelin from Bradesco de Ip. Bruxelin, 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 closing 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, 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 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 Hickey, the Ministry of Agriculture with ordinance 785 created the communication with regionalization of a sanitary for the municipality of Montenegro. With this focus of avian flu. In the first moment, the ministry regionalizes through communication, makes a communication for the World Health 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 then in case of Newcastle disease, China did the same thing, closed Brazil and then they closed 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, Jile, Armenia, Bosnia, Kazakhstan, Cuba, Egypt, Philippines, Georgia, Hong Kong, India, Japan, Jordan, Macedonia, Mauritius, islands, several other countries, Thailand, Ukraine. All these countries have regionalization forecast in the first moment. So we're gonna see as time passes and information flows, we're gonna have two situations. Some countries that were regionalized and she's already forecast as applying the rule is limited to 10 kilometers radius and other countries working with aspects of state. So this is gonna be clearer in the next coming days. And there are some countries that are gonna close Brazil in the first moment. And then in the second moment is study the status of 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 are 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 gonna 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 pressified your product better and mitigate a little bit of the costs 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 gonna be difficult, but I am confident that we're gonna make it right and very fast as if the markets that are closed are gonna be resumed. I'll give to Florida Fabio to answer the second part. Good morning, Hikiu 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 volume. So this is important because it shows that is 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 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 at maturity reach an additional growth of three to 5%. 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 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 makes 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. Great, thank you. Our next question is from the Elnard Alinkar from your mic is open.

Good morning, thank you so much for the result. I know that there are many things that have been discussed. I would like to focus on this a little bit, thinking of the bird flu, right? And maybe we can take a look at the next steps. I believe that it tends to be smaller than what the market was predicting at first. And I think that the fusion was discussed on the last call. So considering that we are pretty much on the half of the second quarter and the first quarter was atypical, let's put it like that, considering the seasonality of consumption in Brazil, we know that they press lots of margin. I know that you have like a difference in terms of mix changing from one quarter to another, but the sequencing price is high, right? And when we think of mix, we could have like a drop in that. So if you could comment a little bit, first of all, the domestic demand, right? How are you seeing this, right? Considering that the production is still enhancing, right? And then all the other accounts that we have, like so I believe that we still have a very healthy read in terms of domestic demand. Maybe if you could talk a little bit about that and considering the continuity of the scenario. And when it comes to exports, maybe you could go back to a topic that was discussed before the aviary flu, which has to do with the tariff. So the market really reacted to the higher costs in the United States, eventually exporting ones to some countries with some prices that were higher. China, we've seen some prices increasing. So if you could provide us with, you know, like a general view of this market, what are some of the possibilities for the second quarter? If you could share some of these details, I would like a lot. Okay, so on the fourth quarter, it's something that we saw on the first quarter of 2025, we saw a supply and an offering demand that was extremely balanced on a market with possibilities of keep demanding and accepting the repositioning of prices. We had a price increase on the first week of January of 2025, and this went very well. With these adjusted prices adapted to our costs, we were able to experiment with the increase of volume. This is something that was part of our predictions. Another important aspect when we analyze BRF, we see BRF going about their homework, let's put it that way. They increase the productivity of the plants, they improve their commercial service, considering their logistic process. All that allows that considering a heated demand, the company can make use of this performance to grow and to meet our customers' needs. What we've seen, right, and we are in the second month of the quarter, we see this demand price dynamic and it's still absolutely balanced and very active. The pricing capacity is also there. So we see this price demand that goes from one quarter to now, it looks very similar to what we saw in the first quarter. We are still focusing on enhancing our penetration and popularity and client activation. So we see a quarter when it comes to the demand standpoint, when it comes to the domestic market, of course, right? It seems to be very similar to what we saw on the first quarter. When you talk about exports, we can see that rather depressed prices, some markets that we've experimented on the second month of the first quarter is now being reverted. There are some geographies that are pricing their imported goods. Speaking about the tariffs, if you analyze the price track record and volume track record of markets, you clearly see that so far we haven't seen a big impact in terms of tariffs. When it comes to pricing, if you think of China volume, it's still very stable. If you get China month to month, it's very stable. We don't have like a volume increase or decrease of volume. There's no price variation as well. So I believe that we're seeing a stability. I don't see this varying that much. When you take a look at the feedstock, right? Or the cataprotein, right? It's back to stability. Nowadays we have a very good stability. We see the scenario without iteration, at least when it comes to the short term. Okay, it's very clear, Miguel. Thank you so much.

Our next question comes from Guillermi Palares from Santander. Mr. Palares, your microphone is open. Good morning, Miguel, Fabio, everybody. Two brief questions. I'd like to take the prior question about exportation and take the opportunity that we had two questions about the deals of Saudi Arabia. I'd like to hear a little bit more of your perspective with this acquisition and now starting the operation there. It's a market that obviously in this consolidation stage and the vision of 2030, I'd like to hear from you your perspective in the sense. And another point, Miguel, you mentioned about efficiency and we've had it for the BRF plus two years, if you could share with us today, given this need of a little bit more investment, where we are in terms of capability usage and the processing and poultry farms. And if there is a bigger need, what is in transformation than an increase of volume? And thank you. Guillermi, answering the first part of your question, we see the investments that we have made, they are perfectly aligned with the demand and market opportunities. If you look at the CISSEX bulletin to the first quarter of 2025, you see MENA performing exportation above Asia, 151,000 tons average month and against 136,900 in Asia. So we have MENA working, operating well in terms of demand. We opened yesterday our hidden plant in China, extremely modern plant with the capacity production that is very high over 80,000 tons, allowing us to use the place and use the commercial opportunities that are gonna come up very much aligned. We already have a process in agreement to supply major networks of local fast food. This is gonna work anchoring production and profitability for the company in the mid and short term. On the other hand, we are gonna open next year, the JDOW plant, this plant extremely modern that is gonna work as a productive hub for the region, allowing BRF to capitalize and also capitalize the Sardiya brand, extremely reputed and distinct in the region. We follow and continue doing, I understand we have made excellent choice, we continue doing that and this allows us to take these opportunities in the first moment. We have had a major focus on the organic growth, K-Pax of enjoying this bottlenecks that we had in production. This is starting to be behind, company has the capacity to grow organically. In the pipeline, we already have strategic investments that are gonna allow us the trail, the growth trail is constant and consistent, the company continue performing and taking opportunities. As I said in the prior answers, when you have 187 new permits, all this productive effort and plant effort turns into business opportunities that you capture, but still we have opportunities that are anchored in a solid performance in the local market. Our leadership with the strong brands in Brazil, service has a very tangible base to project growth, good growth with the company. Hi, Guilherme, I'm gonna add to the second part of the question you mentioned, efficiency, and we reported in this quarter over 300 million in additional captures. And you are correct, we've been talking about this topic, about efficiency over quite a few years. And what I have to tell you is that in the company, we're not happy at with the results, we are happy with what we have obtained so far, but we still see opportunities. So we see in some of our locations, we have room, so we can evolve even better with the field indicators, with industry indicators, yielding, even the commercial relationship, we see room for improvement in execution. And this is also valid for logistic service levels. This is gonna continue being a journey to be trailed for continuous improvement. We have also mentioned in the call about volume expansion, this has allowed us to speed up the idle parts in our factories, and this is, we are investing in capacities. And part of the term report that we have capacity to growth without major investments, but we have to think in the mid and long run, and for that, we have a guaranteed plan for three, four years, and we've been in some lines, and then demand is gonna go over our capacity. So talk about some investments, some of them have been approved under execution, and from there on, in addition to the growth plans that we have in the company, this is gonna add additional capacity between three to 5% with this project, reach maturity. So the motto for growth doesn't mean that we are not gonna be guided, focused on and allocated resources that are unproportional in the growth journey, in the efficiency journey, sorry, this continues as one of the pillars for the strategy of the company. Perfect, Fabio, if you could clarify a little bit, three to 5%, you comment, we're talking about a Pantel, or necessarily this is only volume, because you could have an improvement in mortality and other questions involved. I'm talking about finished product, which is already a consequence of Pantel in the field of its capacity of slaughtering and post-industrialization. Thank you, perfect, thank you, Fabio Miguel. Thank you.

Thank you, the Q&A session, the teleconference of BRF is finished. We thank all of you for your participation and have a wonderful day.