JBS N.V. Class A Common Shares

Good morning and welcome to JBS fourth quarter in the year of 2025 results conference call. At this time, all participants are in listen-only mode. Later, we will conduct a questions and answers session and instructions will be given at that time. As a reminder, this conference is being recorded. Any statements eventually made during this conference call in connection with the company business outlook, projections, operating and financial targets, and potential growth should be understood as merely forecasts based on the company's management expectations in relation to the future of JBS. Such expectations are highly dependent on the industry and market conditions and therefore are subject to change. Are present with us today, Gilberto Tamazoni, Global CEO of JBS, Guilherme Cavalcanti, Global CFO of JBS, Wesley Batista Filho, CEO of JBS USA, and Christian Aziz, Investor Relations Director. Now, I'll turn the conference over to Gilberto Tamazoni, Global CEO of JBS. Mr. Tamazoni, you may begin your presentation.

Good morning, everyone. Thank you for joining us today. We close 2025 with a consistent performance and a continued progress in building a stronger, more efficient company. In the fourth quarter, we recorded a revenue of $23 billion with an EBITDA margin of 17.4%. For the full year, revenue reached $86 billion, a company record. with a consolidated EBITDA margin of 7.9%. This scale and the diversity of our multi-protein and multi-geography platform remain our greatest strength, allowing JBS to navigate industry cycles or any disruption while capturing a structural growth in protein demand. In both the fourth quarter and the full year, JBS delivered record sales with positive consolidated results, reflecting the resiliency of our global platform. Net income total, $515 million in the quarter and $2 billion for the year, represented Year-over-year growth of 15%. Earnings per share of $1.89 per year. Free cash flow was $990 million in the quarter and $400 million for the year. Return on equity reached 25%. And the return on investment capital was 17%. Of our level ratio, at the end of the fourth quarter was 2.39 times in line with our long-term target. We also maintain a very strong debit profile with an average debt maturity of approximately 15 years and average cost of the debt of around 5.7%. No significant maturity in the short term. These strong results reflect our consistent performance in a year, marked by a challenging environment in some global protein markets. In the United States, the cattle cycle remains under pressure, with a limited supply and high costs. This is expected to continue in the coming quarters. Despite this environment in US beef sector, our global results remain positive, reflecting the resilience of our diversifying platforms. Australia was one of the highlight of the year, with a strong EBITDA growth and margin expansion, as well as a top line growth of 30% year over year in the fourth quarter. Our Australian business benefit from the current imbalance between global supply and demand of beef. Combined with the strong execution and support, solid profitability and reinforce the role of region in balancing our global results. In Brazil, the beef business operate within historical margin range, supported by strong export and steady domestic demand. The fourth quarter was particularly strong with the top line sales growing 26% year over year. At the same time, livestock productivity continued to improve. Country recorded highest beef processing volume in its history at around 42 million heads. This reflects its total gain in production and reinforces Brazil's growing role in the global supply. In this context, Friboi delivers solid results with growth in both export and domestic sales, volume increase in key international markets, including Mexico, Europe, and United States. while the business also strengthen its presence in Brazil. Program success at Friboi Plus continues to deepen clients' relationship and support growth in the domestic market. At Seara, we continue to advance our strategy in strengthening brands and expanding high-value-added products. In recent years, Seara has expanded its portfolio, entering new categories, and is threatened in connection with the customers. The business is now one of its strong moment in brand perception, supported by innovation, execution, and more differentiated product mix. In the United States, our chicken business continue to benefit from the strong demand in both retails and food service. Pilgrims delivered a volume growth above the industry average in segments such as case-ready and small birds. The big birds segment also improved performance through better yields, mix, and cost efficiency. Brand diversification continues to progress. And Just Buyer surpassed $1 billion in retail sales. reflecting the strength of our brand strategy and the significant opportunity we see to capture further growth across our modern high-value prepared food portfolio. In U.S. pork business, performance remains stable, and the business closed the year with solid margins, supported by disciplined operation and balanced supply and demand. Also in 2025, we completed the dual listing process, a milestone that the company history and became a nice listed company. It's threatened our capital market position. Since then, we have seen a clear improvement in how the market value the company. Our trading multiply and expanded, reflecting greater visibility and investor confidence although we still trade at a discount to our global peers. Liquidity also has increased significantly with average trading volume up approximately three times compared to the pre-listing levels. At the same times, our shareholder base has become more global and diversified. US-based investors now represent nearly 70% of the company's free flow. Overall, this change reinforced our position in the global capital market and supported the next phase of growth. Global protein consumption continues to grow, supported by demographic health awareness and demand for balanced diets. JBS is well positioned to meet this demand across markets and channels. Our strategy remains clear. We will continue to strengthen our brand, expand our value-added product portfolio, and develop solutions that make protein more accessible and more convenient in everyday life. Thank you again for joining us today. And now I will turn the call over to Guilherme. We'll walk through our financial results in more detail.

Thank you so much. to the operational and financial highlights of the fourth quarter and fiscal year of 2025. Net sales reached a record of $23 billion in the quarter and $86 billion in 2025. Adjustability in IFRS, totally $1.7 billion, which represents a margin of 7.4% in the quarter and $6.8 billion in 2025 with a margin of 7.9%. Adjustability in U.S. cap totaled $1.5 billion, which represents a margin of 6.5% in the quarter and $5.8 billion in 2025, with a margin of 6.7%. Adjusted operating income was $1.1 billion with a margin of 4.7% in IFRS and 4.8% in U.S. GAAP in the fourth quarter. In 2025, adjusted operating income was $4.5 billion in IFRS with a margin of 5.2% and $4.4 billion in U.S. GAAP with a margin of 5.1%. Net income was $415 million in the quarter and an earnings per share of 39 cents. For the year, net income was $2 billion and earnings per share of $1.89. Excluding the non-recurring items, adjusted net income would be $500 million and earnings per share of 47 cents in the quarter. And for 2025, $2.2 billion with an earnings per share of $2.1. Finally, return on equity was 25%, and return on invested capital was 17%. Pre-cash flow in fourth quarter 2025 reached $990 million, compared to $906 million in the fourth quarter 2024. The main positive drivers were related to the deferred livestock, particularly in the US, and inventories reflecting strong revenue growth during the period. Despite an $850 million in working capital consumption in 2025, the cash conversion cycle remained resilient and in line with prior year's levels. For the full year, free cash flow totaled $400 million. When we visited free cash flow breakeven IFRS EBITDA exercise for 2025, the initial estimate EBITDA to a breakeven level was around $6 billion. However, considering the actual results, the EBITDA breakeven would be approximately $300 million lower. The main difference came from working capital, as mentioned earlier, mainly reflecting the deferred livestock effect and the decrease in inventories. On the other hand, CAPEX came in about $100 million above estimates, as we executed $1.1 billion in expansion CAPEX during the period. We also saw a higher number of biological assets, largely driven by the increasing livestock volumes and prices, while the remaining items came in broadly in line with our estimates. Finally, the higher cash tax paid in 2025 were mainly related to the tax payments associated with the results of 2024. For 2026, and for the purpose of the EBITDA cash flow break-even exercise, we can assume a capital expenditures of $2.4 billion of which $1.3 billion is for expansion and $1.1 billion is for maintenance. Interest expenses of $1.15 billion and leasing expenses of $500 million and a consolidated effective tax rate of 25%. Just to highlight, it is still too early to estimate the variation in working capital and biological assets, as there are many factors beyond our control, such as grain and livestock prices. However, if you consider the same amount of working capital consumption in biological assets of 2025, a bid-back cash flow breakeven would be $5.7 billion, in line with 2025 numbers mentioned above. On page 24, we present a historical free cash flow breakdown to help analyst forecasts. Our leverage ended the year at 2.39 times in line with our long-term target of keeping that debt to be that between two and three times. In 2025, we also strengthen our balance sheet by extending our debt maturity profile, reaching an average debt term of approximately 15 years and an average cost of 5.7%. We have no significant debt maturities until 2031. The coupons of our debt are below treasury until and including 2032 maturities. with 32% of our gross debt maturing beyond 2052, and approximately 90% of the total debt is at fixed rates. It's worth mentioning that despite the 8% increase in net debt in the last three years, net financial expenses remained at the $1.1 billion per year. Our $3.5 billion in revolving credit lines and $4.8 billion in available cash provides us the flexibility to continue executing our expansion capex, value creation projects, and shareholder returns while maintaining a health and robust balance sheet. For this reason, and given our strong cash position and leverage, we announced last night the payment of $1 per share in dividends to be paid on June 17th. With that in mind, I would like to turn the operation for the question and answer session.

Thank you, ladies and gentlemen. If there are any questions, please use the raise hand button. Thank you. We have our first question from Lucas Ferreira with JP Morgan. Mr. Ferreira, you may go ahead.

Hi guys, hope you listen to me well. So thanks for your time to ask the questions. I have two. The first one, if you can give us an update on the business environment for PPC, especially in the US. But there were some renovation works at the Russellville plants, wondering if those are completed, if operations are running fine, if this could be an issue at all for the quarter. as well as any update you see in the market regarding prices. It seems that we are in an environment of a bit more supply than the first quarter of last year. So if you see how robust is the market and how balanced the market today. And the second question is on the U.S. beef operations. We saw a pretty steep recovery in beef spreads over the last few weeks. So to what you attribute this, obviously demand remains strong. but I've been in some capacity rationalizations in the industry. Any updates on the Greeley situation will also be welcome with regards of how that impacts your business and how you see the market for USB for now. Thank you very much.

Hi, Lucas. Thank you for your question. And I will start here to talk about the update in terms of pilgrims. And after that, Wesley will give us the perspective of beef in US. And as you mentioned before, we completed the transformation of three plants of pilgrims, already completed it. One, we transformed from a big bird to case ready because we have a strong demand in the retails and this strategy will support the retail growth of the demand of chicken. And the other two plants, in reality, is not a transformation. It's adequate to produce the raw material for our prepared business. Before, we sell the breast to the market because we are not able to deliver the appropriate cuts that our prepared food needs. Now we invest in machines and we are not need to sell and buy and rebuy the raw material. Now we deliver direct to our prepared business. Of course, we catch the margin of the third party. And we are keep best quality and able to react quickly in case of the increasing demand. And I understood there is a second point that you mentioned about supply demand. I can say to you, the demand for chicken meat in the US It's not just in US, it's a global demand. It's very high across all the chains. And if you take in consideration in US, the chicken placement in the beginning of the year grew around 3%. And the price of chicken breast increased in the market. But this show that a balanced supply and demand, because we increased 3%, the placement of chicken and the price of the breast increase it. And if you, and the USDA forecast for this year is that will be 2% growth in chicken supply. If we grow 3% and the price market increase, we can anticipate if the forecast 2% will be a very good year for pilgrims in the US. I think this is two components, the verticalization of our raw material production. We get more margins in prepare. In the grow of our prepared business in Pilgrims, just bearing is a strong demand. And you are investing new factors. We see that this year will be a good year for Pilgrims.

Lucas, good morning. So fourth quarter was, for us, was a pretty good quarter, given the market conditions on the beef side. It's common knowledge that given the market data, the beginning here of the first quarter has been really tough, really difficult, very challenging. Probably the most challenging we've seen in this industry in a very long time. I don't know if there is any other time that we had such a negative spread for January and February ever. You know, and it seems now that current data shows that March is showing that it's going to be a little bit, you know, it's going to become better, sharply better than where we were from January, February. But let's see what comes out of that. You know, when we are in one of the things that has happened in this scenario that we have very low cattle availability and very low processing volumes, is that the market has become more volatile than we're used to in this market. You see big fluctuations in cut-out, big fluctuations in cattle, more so than what we're used to. So that's just a fact of having such a small volume. If the volume is a little bit higher, it has big impact. And it's become a little bit more volatile. When it comes to the striking, really, you know, it's very difficult to forecast how that, you know, a strike would go on. We have a very good deal in front of us. of that local, we actually just did a national deal with 14 other unions in red meat, 14 other locals from the same union in red meat. And it's a historic union company deal. We have a variable pension plan. That's the first time in forever that the industry has brought back attention something like that for people when they retire for our team members so you know we have a very good deal actually even I think I would say it's probably one of the most innovative deals that we've had in a long time in this industry so let's see we think that we hope this gets resolved as soon as possible thank you guys thank you very much

Ladies and gentlemen, we have Mr. Gustavo Troiano from Itao who would like to ask a question. Please go ahead, Mr. Troiano.

Hello, everyone. Thanks for taking my question. My first question is on Seara and related to chicken supply here in Brazil. We acknowledge that discussions on the supply side should always be on a relative basis to demand, which seems quite strong at this point. But just wanted to get your updated thoughts on the balance between chicken supply here in Brazil, what to expect going forward as we move into the second quarter of 2026. If you guys are expecting the chicken supply increase to outpace demand in a way that we could see some profitability compression going forward. So that would be the first question. And the second one, still on US beef and a follow-up, and the first question actually is... Would you say that the current balance between slurring capacity in the U.S. and demand and cattle availability will imply some capacity adjustments going forward from other players or even from you guys? So what could you say on further capacity adjustments going forward? Because cattle availability is restricted right now. So just wanted to get your updated thoughts on that as well. Thank you very much.

Thank you, Gustavo. Talking about chicken in Brazil and after that, it will be compliment the answer about beef in the US. When you go to chicken in Brazil, the balance between supply and demand for chicken is still not very clear to us. On the one hand, we have a strong and growing international demand and new cases of poultry farming influence in several countries. We've encountered that produce that's a competitor of Brazil. And this could boost demand even further. The other end, we have to 3% increase the chick placement up to February. This is a reasonable limit for growth in Brazil. There is some news that chicken breeder stock has increased. In this scenario, it's difficult to predict the unfolding events if production of exceed market capacity. But in this case, the industry, the sector, the industry has many of tools to manage this. For example, we can export more fertile eggs. We can reduce the average age of the breeding stock. We can reduce the weight of the birds, among others. Means that so far, the market is very balanced in the market. And we see a strong demand in the international market. If, because if you look for the breeders, can increase more the volume domestic market, each industry needs to take its own decisions. But they have a lot of ways to manage of this supply. Because chicken is not still in the farm. It's in place. It is in the genetic. I can say, I can talk to you about what in our side, how we are, what we are doing. We are focused on the stretch of our export leadership. It's what we have, and enrich it, our value add mix in domestic market. I think is the most strategy we have. We have, well, well positioned in international market and well positioned in domestic market. And we are at value and be more innovative in terms of the way that you present the product to the consumers.

Good morning, Gustavo, on the US beef. You know, this question about capacity and capacity adjustments is very difficult for me to answer about, especially when it's something that's not related to our business directly, right? So it's very difficult for me to respond on that. It's clear that there is... more capacity in the US than there is available. In the US, not too many years ago, four years ago, had a process 33 million head, and now we're going to be below 27. So we're around 27, sorry. So that in itself shows that, yeah, there is excess capacity. Having said that, it's very difficult for me to respond about something that's regarding other companies.

Thank you, guys. Very clear.

Thank you. Our next question comes from Lucas Mussi with Morgan Stanley. Mr. Mussi, you may go ahead.

Hi, everyone. Thanks for thanking my question. My first one is related to Brazil beef in Australia. If you could talk to us a bit about how you're thinking about the export environment in the context of Brazil beef. and also Australia eventually reaching the limit of the export quota to China. Hard thinking about how volumes are going to behave, perhaps in the second half of this year. What are you thinking about your options here and potential impact to the business divisions? And the second one, one for Guilherme, if you could share more details on derivative lines on your P&L that went a bit lower this quarter, that would be helpful. And also, I know that we're still a bit early to talk about concrete working capital expectations for this year. But if you had to evaluate looking at where commodity future is today for grains, for livestock, what would be your assessment on working capital potential as things stand today for the year? Maybe a little bit below 2025, in line of 2025, if you have any on working capital. Thank you very much, guys.

Thank you, Lucas, for your question. Let me to separate. I think in Australia and Brazil, there is a different scenario. Australia, we are not seeing any challenge in terms of after the quote in Australia to China because Australia has a strong market demand. It's a very strong presence in Japan, in Korea, in all of the Asian markets, in the US as well, in Europe. Then Australia is easy to manage the volume for each one of these markets, that we are not really worried about this situation. In Brazil, maybe it will be more complicated. But I will talk related to that. But our Preboy team is very confident that they will be able to deliver in this year, 2026, in resulting with the line that the last year. And why we are confident on that? Global demand for protein is high, especially for beef. China's quote, if you talk about, we are expecting to end by the mid year. And in reality, we don't know how China will manage this volume restriction. I believe that some countries will likely not be able to complete their quotas, but this is, we cannot speculate, but this is a fact. Regarding this situation, Freeboy has developed a new international market, a new serial chain, investing heavily in value added and combined with customer service. An example of this strategy is the program of Freeboy My, Freeboy Plus. Now, I think it's the last week at the supermarket convention in Rio de Janeiro, Nielsen, you know Nielsen, gave a presentation comparing a store with a regular butcher shop to one with Friburgo Plus. And the results showed that the store with the problem has a higher revenue And 40% higher overall sales, not just the budget area, overall sales. It's a strong problem to support the growth of our customers. And at the same times, the retailers now face a challenge because they need to improve the quality of the sales in the stores. because this shift for more protein, this program, what GLP-1 and so on, that is booming, the consumption of protein, they need to enhance the portfolio in the retail. And our program is, I think, is fit perfect with this trend in the necessity of the supermarkets. The other point, I believe at the second half of the year, when the supply of feedlot cattle increase, this coinciding with the end of quota of China, which is largely, and we know that China is the largest for sale channel, the price of cattle will likely be affected. I think this will be correlation because of that we are so confident that we are able to deliver this year and results in line with last year.

On the derivatives line, what you saw there is any sort of derivatives that's not related to the operations. And the recent volatility in currencies and other commodity prices make this number higher, despite we have a very limited VAR for those types of derivatives. Now, on the working capital side, so far, what can I say? It's only about what we've seen in the first quarter. So first quarter 2025, we have a slightly lower working capital consumption than the first quarter of 2024. despite the 200 million higher impact of the deferred livestock. So again, it's too early to save for the whole year, but if we're considering just the first quarter, we had a little lower consumption of working capital. Doesn't mean a lower cash consumption, given that the operational side is likely worse.

Very clear, gentlemen. Thank you very much.

Thank you. Our next question comes from Tiago Duarte at BTG. Mr. Duarte, you may go ahead.

Hi, hello, everybody. Good morning. Yeah, two follow-up questions going back into US Beef and then Seata. Wesley mentioned, you know, the strong quarter, considering the circumstances that you had. But I'm still wondering what you believe justifies that performance. I mean, a Q over Q margin rebound, it's not something... typically happens considering the seasonality in q4 and even looking at the industry cut out spread so my question you mentioned the volatility has been something that that's even higher than usual and maybe that that has something to do with a particularly good quarter uh in q4 but if you could elaborate a little bit more on on what you think justifies that in this quarter in particular And the follow-up question on Seara, I think Tomazoni talked a lot about chicken demand and protein demand in general. So my sense is that what really drove This very good margin at the Seara division in the quarter was really related to chicken, fresh chicken, inatura chicken exports, as opposed to the domestic prepared food portfolio. So my question is really if that understanding is accurate in terms of, again, inatura margin versus prepared food margins for Seara in the quarter. Thank you.

Good morning. So, you know, especially when the market has such a volatility in cattle prices and and cut out values, you know, it's very possible, especially when you look at just the quarter, right, that you have a quarter that you position yourself really well, another one that you position yourself a little bit worse. And, you know, between quarters, you could have those, you know, just from a positioning perspective, you could be either have a very, you know, very good, look really good or, look a lot worse than you expect. And, you know, just given this such, you know, intense volatility that more than we're expecting. I saw some reports, you know, maybe question a little bit about if there was any hedging or derivatives there. There was nothing significant from that perspective. I think it's just when markets are more volatile and you make positions selling product up front and all of that, sometimes you get good positions, sometimes you could get worse. I think the best way to look at performance is look at overall longer term than just one quarter could kind of be misleading, positive or negative, either way, in this sort of business, especially with the sort of volatility that we've been having on cut-out and cattle prices.

Yeah, that's the only thing. Tiago. let me to make some assessment position about what you said. If the margin, if you understood well, you ask for the margin of... prepare foods in domestic market versus export commodity chicken to international market. If you take just in consideration the margin, yes, the margin of international chicken was higher than the margin of prepared in domestic market. But say that, we improve the margin of the prepared food in domestic market. If you remind some quarters ago, I mentioned that we are advancing as a process to improve our price management in order to get the real value of the brand in domestic market. And this is a continuous process. We are now focused on take the advantage of we have the perception of the brand. We haven't in the market. The penetration of the brand and the rebuy of the brand from the consumers. And we are strengthen our process in order to get this value. And because of that, we are continuously improving the margin in domestic market. But yes, you are right. If you compare this quarter, the margin of international market for chicken was higher than the margin of preparing domestic market.

Thiago, just to compliment something on beef that I meant to say and I forgot. For sure, this comparison quarter by quarter could create a little bit of that when it comes to position, positioning of how you sell forward and how you buy and all of that. But having said that, we're very satisfied with the way we are operating. There are still opportunities, for sure, and there are things that we're working on. But when we compare our operations, just the things that, how we are running our plants and how we are running our sales strategy, our procurement strategy, compared to a few years ago. We think we've made a lot of progress and I think we're doing a lot better than we've been doing in the past.

That's all very clear. Thank you.

Next, Mrs. Isabella Simonato from Bank of America would like to ask you a question. Please go ahead, Mrs. Simonato. Simonato.

Hi, good morning, everyone. Thank you for taking the questions. First, on the working capital for the quarter, right, you mentioned the deferred payment of livestock as well as inventories. Can you just give a little bit more details on the inventory performance and versus where you were expecting, right, when you mentioned in Q3 for the remainder of the year, what changed and how can that, if there is any impact to be postponed or translated into 2026 performance and second on seara um you were mentioning right amazonia about the the margins in brazil can you can you comment how you're seeing uh brazilian consumers behaving the beginning of the year if there is room to increase a little bit prices and if volumes have picked up. We noticed that retailers were running with lower inventories in the end of 2025 and there was any significant change in behavior in the beginning of the year. And finally, if you could give us a brief overview, how are your grain inventories and how you're seeing feed costs for the remaining of the year. Thank you.

So on the working capital cycle, Isabella, so every fourth quarter is a quarter that we decrease inventories and we rebuild them in the first quarter. And the same happens to the livestock, which we postpone payments from one year to the other. Between 2024 and 2025 and 2026, we postponed this year $600 million in livestock. Last year, we had postponed $400 million. So we had a $200 million budget. better impact on the fourth quarter, that will be a 200 million worse impact in the first quarter that I mentioned in the previous question. And in the inventory side, the same thing. We are seeing the same level of inventory rebuild that we saw in the last years.

Isabella, thank you for your question. When you look for, you have two separate questions. One is, if I understood well, one is related to the behavior of the consumer in domestic market with Seara. We see that the market starts a little bit weak in the beginning of the year, in January. But they back. Now, when we look for our sales, we are grow the sales compared to the last year. but with different mix. With the value-add mix growing much faster than the traditional and low value-added. It's difficult to say what is value-added or not value-added, it's prepared. But say, look, I call the traditional, they are selling less than the innovation. We have a huge growth in the innovation line with high protein products, air-fried product, designed for air-frying product, clean label product, this kind of innovation, they grow much faster than the other ones. But average, when you compare this year with the last year, we are growing. Even some challenge in some different chains, but it's growing. Uh, but they start as just to be clear, you start, uh, very tough, very not best stuff in the beginning and recover. Now we are, we are, we are, uh, say our sale is higher than the last year for prepare. And when you talk about the cost, I think you talk about grains, because there is a lot of consideration. We have different view in terms of corn and soybean meal with these two key elements for our feed. In the corn market, we see an upward trend. We should expect higher cost in 2026. And due to, if you look for reducing the global stock and solid demand, increasing the crude oil price that boost in ethanol margin, as well the cost and availability of fertilizers. US acreage at risk given the soybean ratio. And the second crop in Brazil, in face of some climate risk. That we are, I think is, we expect higher cost for corn. In the soybean meal, we see price stability. And do the, if you look for the crush margin, they are positive. and has the crush matter positive, we result in as abundant supply. And in the other part, weak Chinese demand do the tight pork margin in the market. But I think it's for soya bean milk, we need to monitor U.S. acreage, issue in the biofuel policy. But anyway, our outlook remain bearish.

So clear. Thank you very much.

Thank you. Our next question comes from Enrique Bustolin with Bradesco. You may go ahead, Mr. Bustolin.

Hello, everyone. Thanks for taking my questions. I have two. The first on US beef. Wesley, if you could comment about the Mexico cattle imports, right? They have been shut for a while now. Maybe this could be a discussion, the reopening could be a discussion amid the higher prices in the US. So it would be great to hear your thoughts in how relevant that could be in shaping the outlook for 2026. if we saw reopening of the animal imports from Mexico to the US. That will be the first one. And the second is a quick follow-up on Seara. But Seara has been through a very big investment cycle over the past few years. Would be great just to hear how those investments have already ramped up and what would you expect for volume growth into 2026 as probably we complete the ramp of some of those plants. Thank you very much.

Henrique, good morning. So on Mexico, it's difficult to tell when that's going to reopen. I mean, it's very meaningful. It's 1.2 to 1.5 million head per year. So it's more than the size of a double shift plant, right? So it's a big bottom and it's very important, especially to the south of the US. I mean, the USDA is doing a good job in in doing all we can to keep the disease outside of the US. They're, you know, working on the sterile flies and all of that. And Mexico obviously is also trying to get this resolved as soon as possible. But for me to be able to tell you that, like, I hope that this would get resolved within the year, but I have no, I have no No way to forecast and to even have an indicator of if that's going to really happen anytime soon. But it's really important. It's probably the most important short-term change that could happen to this whole beef supply and demand equation. The most relevant in the short term, for sure, is this whole Mexico thing. It's very important, especially for the south of the US. But again, it's very difficult for me to tell you you know, forecast. I hope it opens this year or as soon as possible, but very difficult forecast.

Ricky, and about the investment of Seara, all of them will be completed this year. And with it completed, the additional capacity will be around 10%, 13%. I will say 10%, 13% because it depends on the mix. Some mix that is less volume, high value, but it depends on that. But you can consider 10%, 13% in terms of volume capacity growth.

Very clear. Thank you very much.

Our next question comes from Benjamin Thurer with Barclays. You may go ahead, Mr. Thurer.

Yeah, good morning, and thanks for taking my question. Just following up real quick on the CapEx side, I think you said about $1.4 billion for expansion. I mean, I know there is a lot that Pilgrim's Pride has part of that and share of it with their outlook in terms of CapEx. But could you remind us a little bit about some of the other projects you're currently talking and working around as it relates to capacity expansion, aside from what... Someone's only just mentioned on Sarah. That would be my first question. I have a quick follow-up as well.

Hi, Ben. So basically, is the Pilgrim's Pride expansion on the prepared food parts on the rendering facilities, the pork sausage plant in Iowa, the ones that we announced it? So there's... Also the Oman project, we also announced a plant in Paraguay. Cactus Texas, also on the beef side. So everything that we've been announcing, and of course, all these capital expenditures are phased out throughout the years, and that's the portion for 2026.

Okay, perfect. And then as you kind of like look from just general capital allocation, I mean, obviously you announced the $1 dividend per share in the very large CapEx program. We're seeing a bit more activity right now as it relates to M&A activity within food companies in generally, but particularly between European and North American companies. So just wanted to get your latest as to your willingness or the opportunities you might be seeing on growth through M&A, which obviously has always been part of JBS's DNA to grow. Thank you.

We're always looking at opportunities throughout, everywhere in the world. But there's nothing that we are looking very keen at the moment. And that's one of the reasons that we increased our organic growth, because we're not seeing many opportunities on the acquisition front. So I think that there's nothing that we could say that we expect to announce or anything in terms of M&A. So that's why we were, we increased the expansion CapEx and that's why we are returning capital to the shareholders and giving that, Our net interest expenses continues to be at the $1.1 billion level. We are very comfortable with this capital allocation.

Perfect. Thank you.

Thank you. Our next question comes from Tiago Bordalucci with Goldman and Sachs. Please go ahead, Mr. Bordalucci.

Hey guys, good morning everyone. Thank you very much for the questions and congrats on the results. I have two follow-ups. The first one, this is on volumes, right? Amazonia, you have been very vocal on the solid momentum for global protein markets. And to be honest, when I look over the last few quarters, obviously a lot of debate on the margin cycles, but volumes and top line has been consistently surprising everyone to the upside. And I think it might be a continuous source of upside going forward. It's difficult to break out for us your sales component between volume and pricing. But internally, from a volume perspective, would you please share with us what business units, segments and destinations are the ones that are contributing the most with your growth? and which regions make you more excited with the opportunities for 2026, particularly if you could also comment on the opportunities in Africa. I know you announced a few things last year, just on a plate here, and then I can follow up with my second question. Thank you.

Tiago, thank you for your question. If I understood well, you talk about Seara or talk about overall? Overall. Overall, we see that the demand, when you say all of the market, it's not just because we try to simplify, but it's the reality. We have a strong demand in Europe. Friboi increased a lot of the sales of red meat in Europe as CR increased volumes in Europe. And the demand in chicken in Europe mainly is driven by some avian influence in some countries. And the demand for beef is because the beef production in Europe decreased. And I think it's not just Brazil sell more in Europe. And in Australia, in the UK, now they have a new agreement. And the demand is we are expecting growth in demand from beef in Europe. The other part, we see demand in all of Asia. Take China out of this component of Asia. But all of Asia, the demand is growth. For chicken and for beef as well, we see the demand in the markets. It is not a new market. We open a lot of new markets, but in traditional markets like Japan, like Korea, we increase the volume from the market. And I believe this is the trend. It's not the trend because price. It's the trend because the demand increase in the local production decrease. Decrease because of the cycles there or because of some disease in the market. We see... Middle East, now we are facing a war there. But the flow of the product to the market didn't change so far. They changed the logistic of vessels there, the logistic of internal logistic. We need to change port. And when you change port, we need to use trucks to deliver the product to the customer. But the flow is still there. The demand is there. Because of this, we are investing in the Middle East. New factory opened some months ago in Jeddah, and the investment we are announcing in Oman, because the demand is strong. Then, US, there is a strong demand for beef as well. Australia, Brazil sell a lot, the streamers from US. wouldn't say a lot more than before. I will not say compared to the production in domestic. Cell compare what previous forget. It's a look. We are not see that one market is this restriction. We see the demand for all of the market. Even in Brazil, the demand in Brazil for protein is high. Look for what is the, how Brazil have grown in terms of the number of fat processed in Brazil. It's amazing. And what is this? This is because the global demand for protein, because there is a reason. We have been talking before about that. There is a... trend is not a trend. It's a structural change in the demand of the market because of regulatory guidelines in the U.S. They change guidelines and they need to add more protein to need to go to 1.1 grams per kilo per 1.6, two grams per kilo. You can imagine how much we need to produce to fulfill this market. That there is a lot of the health habits that for young generation, for old generation, there is a new, medicine, technology, this GLP-1. And combined all of these, the demand is very high, very high. I don't know if I answered your question, Thiago.

Perfectly, Tomazoni. This is very helpful. Thank you very much for this. On the second one, still talking about the conflict in the Middle East. Obviously, this is an ongoing situation, but could you help us framing the impact so far in our freight expenses? And by freight, I'm mentioning seaborne freight, but also truck freights in Brazil. and maybe a sensitivity of how this could impact your profitability if sustained going forward, or how you plan to pass this along?

Thiago, I think I just mentioned before the flow, the product, We go to the market, didn't change. Didn't change from Brazil, didn't change from Australia, any of the other markets. It didn't change. We keep supplying the market. What we saw, the growth, the cost. We have a contract with the marine agents. And they put extra cost because of the risk to navigate in these regions. And this is one, the cost. The second cost is the cost that we need to change the port. The destination of the product, some destination was changed from one port to the other port. And when we change the destination from the different port, we need to have the truck transportation because there is no closer to the customers than we need to have this cost of transportation. But so far, all of this cost was bear by the market. We not see impact in our results.

This is also true in Brazil, Tomazzoni, with diesel prices?

No, in Brazil, we see the increase of price of diesel. And we see that increase in terms of the cost of freight. I talk about the Middle East, but when you look for Brazil, yes, you are right. Increase the cost of the freight. It will be, I think, if the crude oil keep this price and depends on what is the... the development of this war, I believe that other costs will be increased. The cost of packaging and what is depend of the oil will be increased as a raw material. I think this will be the impact. I think it's fertilizer will be impacted and could be, then I mentioned before when they talk about the cost of the corn, because the fertilizer will be higher, the availability of fertilizer may be, Maybe the use of fertilizer will be reduced and then the productivity of the crop will be low. But I believe it's too early to predict. Too early because you don't know. how will be the end of this war. I think this is, I saw this impact in the short term, but could be back. If they end the war, I think we'll be all back. It is, we, I think this is a situation that we are, how we are looking and act in this situation.

Makes sense, Tommaso. Thank you very much and congrats on the year.

Thank you. Mr. Benjamin Mayhew from Bank of Montreal would like to ask a question. Please go ahead, Mr. Mayhew.

Hi, can you hear me okay?

Yeah, good morning.

Hi, good morning, guys. So a lot has been covered already, but You know, I'd like to ask a high level question to begin. So in looking at 2026 versus 2025, just across your global segments, where do you see pockets of improved market fundamentals and where do you see pockets of maybe, you know, not so strong fundamentals throughout the year? So we'll start there.

Oh, Ben, thank you for your question. Ben, I think it's a rule of improvement we've seen in all of our business units because we have a methodology that mapping the gaps. It's one of the model that we work. All business units need to understand, need to know very well where is the opportunity to improve. then we call mapping the gaps that and when you look when you have the budget we go there and see the gaps and we forecast in our budget some gap up in the in the in the each one of the operations and not it's not just uh uh from the business but We got the business because we deployed each one of the process and subdivisions of the business. Then this, when you look for, if you look for, it's a huge opportunity we have yet because that new technology, new way to do the things, we are close the gap, we open a bigger gap, and this is the way that we are see or get the operational excellence. I think this is the mentality and the mindset for all of the business. But if you go to structural, we see that Brazil is one of that as a huge opportunity for growth in terms of meat. Beef in Brazil, I think is, if you compare Brazil, Brazil in US, Brazil has more than double of the Earth than US, more than double. And we produce, just this year or last year, Brazil produced a little bit more meat than US. means that if we are able to get the same productivity in the US, we can double the production in Brazil of meat. Then we see Brazil, in terms of red meat, huge opportunity in the future for growth. Oh, but it's not for all of the protein. The produce in Brazil is very competitive because we are grain competitive in terms of the cost of the grain. We are very competitive. We have good quality management. And I think it's Brazil is one. We see U.S. good opportunity. Chicken U.S. performs so well and we see that demand U.S. for chickens grow. Before U.S. export a lot of red meat, leg quarters. Now I think it's but huge junk of the volume for red meat is staying in the market because they start to appreciate the product made by red meats, by red meat from chicken, say, leg meats. This is, I think, in the US, it's an opportunity for growth, for chicken, for pork demand. In US we have, if you look for the result of our pork business, they are very consistent results for long period of time, well managed business. And we see that we can grow in pork business because US is very competitive to produce chicken and pork. So look, it's difficult for me because I'm booming in all of the market that we are present. Australia, we see, we are very excited with the pork business there. We are delivering a great result there. Australia now import pork meat, but Australia export grain. When you export grain, the price of grain is international price. That does not make sense that we export grain and import meat. You can produce meat there. And we are invested in our pork business, build farms, and improving the operation, the productivity of the operation. Then we are so, so excited with the opportunity for Australia. And our salmoth business, we have announced an investment to improve more than 50% our capacity of salmon in Tasmania. So we see Europe. Europe, I think, is an opportunity for growing chicken, mainly chicken and value added. So look, we are excited because we We are in a segment, in a sector that is growing. It's a protein. And we have a global platform that we can we can easily meet this demand. I think we are in a good situation and advantage to take this opportunity and transform this opportunity result to the company. And I think it is, I don't know if I answered your question.

Yeah, you did. And I really appreciate all the detail that that's very helpful context. So my second and last question would just be around the the beef cycles and. You know, just wondering if. you're seeing a little bit more progress on US heifer retention. So wondering about that. Also curious about your thoughts on the durability of the Brazil cycle, and then of course the Australian cycle. So if you could just kind of summarize that quickly, that would be amazing. Thank you.

Thank you, Ben. Yeah, we are seeing the herd rebuild more actively in Canada. We're seeing that in the dairy business as well in the U.S., which also obviously impacts the overall supply. When we look at the USDA data, it shows that I think we are retaining heifers, but it's relatively slower than we expected. But I think all the economics are there. Everything should be there for us to be doing that. Actually, I have an information that's pretty interesting. It's the beef cow slaughter. In 2025, the full year, we processed 2.3 million head. In 2022, it was 3.9 million head. So we're almost half of what the beef cow slaughter was. in 2022. I think that information is important and it shows that if it wasn't for to keep more females for breeding, we wouldn't see such a sharp decrease. It's almost half of what it was in 2022, not too long ago. So I think that there is some information that kind of makes us more optimistic, but obviously it's lower than we would wish.

Ben, related to Australia, we see we are in the middle of the cycle in Australia. And back to Brazil, Brazil, we see that the reduction of production in terms of the number of cows. But the other side, you have a different force. The Brazilian, if you look Brazilian and compared to US, and or compared to Brazilian, you cannot need to compare to, yes, you can compare for the high level productivity in Brazil producers and the average of Brazil. The average of Brazil, they bring to harvest the beef at the four years age. But the good producer or the modern farmers, they live two years to get the product finished, to get the kerosene finished. It means that at the same time, we have a reduction in the age of the kerosene. And this combined with... increased a lot of feedlot in Brazil before feedlot in Brazil was not well developed. Now you can see a lot of feedlots in Brazil and in The other part, we have an improvement in genetics, improvement in nutrition. The Brazilian ethanol, corn ethanol industry, now they deliver a good byproduct from the ethanol that is DDG. It is support a lot. They grow the... the growth of improvements and then feed. We see that we are, I think is Brazil will be able to manage this situation and postpone the cycle, the cattle cycle that is normal cattle cycle.

Got it. Thanks so much, guys.

Our next question comes from Heather Jones with Heather Jones. You may now go ahead, Mrs. Jones. If you're trying to speak, you might be on mute there, Mrs. Jones. For the moment, we'll move on to the next question on the list, which is Leonardo Alencar from XP Investimentos. You may go ahead, Mr. Alencar.

Thank you for taking my question. I wanted to go back to the U.S. beef discussion. I understand we mentioned many points on the supply side. I wanted to focus probably more on the demand side. So if we can get first a view on the resilience of beef prices. We've been seeing some amazing beef prices in the beginning or even before the spring season. So just to understand if you think this is This is feasible or even if it's possible for us to expect higher price throughout the next few months. There was an interesting change in choice and select spread. I don't know if there's any signal on that point, if you could provide us with more information. And this discussion on the product of USA label, I understand it's really new, but if we have any early views on that would be interesting as well. And then on the second point, maybe more like an exercise here. I understand that we've been discussing value-added products and processed goods and that US is the main focus for that. But you already have a lot of revenue on that channel. If we split that from the commodity business in the US, would you say the performance for 2026 may be better than the commodity business? Is it possible to do that exercise? That's it.

Sorry, I wasn't good. Good morning, Leonardo. Demand remains pretty strong for beef. Obviously, supply is pretty short, but it seems like beef continues to be very resilient. It seems like ground beef, especially ground beef, we've always measured ground beef versus chicken breast versus pork loins, and it seems like you know, the demand for, for, for beef in general, just, just, you know, there is obviously there is a little bit of a substitution with other proteins, but the demand for beef stays, still remains and, and remains pretty strong. So we see that going forward. And this, all this, this labor requirements and all of that, it, you know, it's, It's something that we're always, you know, whenever something changes, we're, we discuss with our retailers and see what, you know, that our customers and see what, what are the, the, the impacts and costs on that. And, but, but that's not something that I'm, I'm, I'm super concerned right now.

Okay. And the value added products.

Sorry, that value-added question was about which business unit. Sorry, I missed that.

Exactly not related to a business unit. If you could explain or remove or suggest a value-added product and remove from the commodity business, would you say 2026 is expected to be better or not for that part of the business? I don't know.

Look, our focus is to increase value added in brand. It's the focus that investment, if you look for an investment, we have known in the past, we prioritize the value added products. And because we take the advantage of verticalization, of the product, and the second one is a higher margin and more stable market. That value-add is one of our priorities.

Okay, and just one more follow-up here. On this split-up bill that was being discussed in the US government, I understand it's more noise than anything, but any comments here?

Seems like it doesn't have a lot of support in the, so right now it's not something that we're concerned about, Leonardo.

Okay. Okay. Thank you all.

Thank you. And we have, this is Heather Jones back online. If you would like to go ahead with your question, Mrs. Jones.

Are you able to hear me now?

Now, yes. Good morning.

Hello?

Yes, we are hearing you. We can hear you.

Seems we have some connection issues on Mr. Jones' side. So we'll continue for now with our next question from Guilherme Polares with Santander. You may go ahead, Mr. Polares.

Good morning, everyone. Thank you for taking my questions. Over the last couple of years, one of the main points here of the investment issues of JBS has been a bit of the geographic diversification, right? And you do report each of the businesses individually in terms of Australia, Brazil. I just wonder if you could share a bit what is, I think U.S. is a good indication there. In terms of the supply to the market, how much of beef meat in the U.S.? ? is being sold through JBS. Do you know a bit how much do you're selling today that it's coming from Brazil and Australia? The point here is a bit of food security, right? So having this geographic diversification, how much you can maintain supply even when the cycle conditions are not there. So if you could give us some color there, I think it would be appreciated. And the second question here, Tomazoni, Over the last two years, you guys entered in a new protein, which is stable eggs. Of course, you still have a minority stake on the investment there. But I just want to hear a bit of your thoughts going forward with this year behind you. What is your impression there and how big is the opportunity there? Thank you.

Sure, it's very relevant to have access to import meat from Australia, from Brazil, especially in periods of time when there is a shortage of beef in the U.S., So that does help, and obviously the volumes that Brazil and Australia produce are significant. So there isn't a supply problem when it comes to that. Having said that, the U.S. is a very, very, very, very competitive place in the world, probably one of the most competitive places in the world. The American rancher is among the most capable in the world to produce beef and high-quality beef. Obviously, the shortage is a situational thing right now, but the U.S. is a country that doesn't need to import. In the long run, it doesn't need to depend on import. It doesn't need to have imports to be able to supply its own demand. It should be able to, in the long run, to be able to have its domestic production to supply its domestic market and actually be an important exporter of beef like it's always been. Obviously, in the short term, we have the situation that we're importing a little bit more beef than usual, but And it's useful to have that when there is a shortage because the demand is still there. But the U.S. is a very, very productive place for beef and in the long run shouldn't depend on imports.

And related to table eggs, we enter in this segment because it's important. we see that the affordability of the protein is one of the more affordable protein in the market. And before to enter, we studied this category, and we are excited. The first impression, the first movement we have done is to buy a company in the US. and we are building farms in Brazil, we are excited with the business. This is one of the businesses we want to grow.

Okay, Tamazoni, and just one follow up there. You guys are also entering in the US, right? So what is also out there that you want to do on Table X that you think it is a relevant market that you can play and make a difference?

Look, we just buy these farms in US, and we are without, how to say that, the population of the chick, Now we are populating our farms, and we are excited with this. The thing is, we are going to go with Mantequera because Mantequera has the know-how, and this accelerates all of our lands in the market.

Thank you.

Our next question comes from beforehand Sharma, you may go ahead of with Stevens, you may go ahead and show.

Thanks, can you can you hear me okay.

yeah good morning.

Good morning. Appreciate the question here. And a lot of good content covered. So maybe I could just focus on the first question, maybe just on your US pork business. We've been hearing from US hog producers that they expect disease impacts to be the same, if not worse than last year. I was just wondering if you can kind of share what you've been hearing regarding disease pressure in the U.S., and if you would expect that to weigh in on margins in FY26.

Yeah, it could be. And the margin impact, it's not necessarily that it's – it depends on how and when it does impact. It doesn't necessarily mean that it's actually a negative impact. It could actually – We could have a short term. Obviously, we're not expecting disease and we don't want disease and we do everything we can not to have them. But in the short term, you actually could have a higher, you know, given a shorter supply, you could actually have a better margin if that happens.

OK, appreciate the color there. And my follow up, maybe just wanted to. Further on, some of the comments you made about the listing on the NYSE, you mentioned stock has seen some liquidity and valuation benefits, but that you're still expecting to get more. And in the past, you all have talked about, I think, index inclusions and the potential for to get into some of those and the timing to get into some of those. So I think as we're looking in FY26, was just wondering if you could maybe give us an update on what's out there in terms of inclusion on some of these passive indices.

Okay, so on a multiple side, if you look at our enterprise value, forward looking, we are trading higher than we used to trade before the listing. So there was a multiple expansion already, but we still traded at a discount to our peers. One of the reasons is also the index inclusion. There was a research that was sent yesterday from Stephens saying that according to what we released on our financial statements in terms of information of revenues and assets breakdown, we should be included in the Russell, which is... next June, and it could bring around 14 million shares demand from passive funds. But it's out of our control. We cannot guarantee that. But that's what is in the short term. On the longer term, at some point, most likely beginning next year, we will start to make files of 10Ks and 10Qs instead of 6Ks in order to be eligible to the S&P family. So then I think 2027, so I think this year, Russell is the plan. Next year, the plan is beyond the S&P family, first on the S&P 400. And once we reach it to $22.7 billion market cap, that's the threshold for the S&P 500. Although, again, it's not on our control. It's their committee decision for shares inclusion. Also, one thing mentioned that our average daily trading volume is three times higher what it used to be before the listing. And the Brazilian investors fell to 10% of our free float. In the U.S. investment today, it's already 70% of our free float.

Great. Thank you for the color.

And our next question comes from Ricardo Boyachi from Safra. You may go ahead, Mr. Boyachi.

hi uh good morning everyone uh thanks for the opportunity here um my first question goes to wesley uh i wanted to circle back to the us business uh you uh in fact already uh answered part of my uh of my um question here which related to the competitiveness of the us ranchers right We are seeing very favorable conditions for a faster herd rebuilding in the US with the beef prices, the cattle prices. My question here would be exactly when you look from the ranchers' perspectives, We see some concerns that labor, even succession plans could be an issue for the ranchers longer term. You expressed a very strong, positive outlook for the U.S. beef industry, which is very good. So I would ask you to elaborate a little further on the drivers for the industry, especially from the ranchers perspective, right? Is there anything that could prevent a more robust business expansion for the ranchers? Anything that could be a risk in the horizon? So that would be the first question. And the second one, just more broadly looking at the current market environment, the risk environment globally, does this situation here of increased volatility could imply an even more conservative approach when it comes to the balance sheet of the company? It's quite clear that the balance sheet is very strong. I mean, in terms of leverage, in terms of adaptive maturity, you already showed this in details. But the very short term, the current environment, does it imply an even greater conservativeness from your side or nothing relevant so far? Thank you, guys.

Cardo? So, yeah, there is, obviously, there is issues that are all very relevant. Succession is always very relevant and labor and all that. But at the end of the day, I have a pretty simple view of this. It's the U.S. and obviously, like, interest rates are relevant as well when it comes to herd rebuild, right? Because you have to carry more more working capital and livestock and all of that. But at the end of the day, I think it's pretty simple. The U.S. has the nature, has the culture. I mean, nature, I mean, like just the environment, right? Just the natural resources to do it, to have a thriving beef production. It has the culture to do it. It has the infrastructure like no other country. So at the end of the day, we remain very optimistic about it in the medium-long run.

In terms of balance sheet, I think it's worth mentioning that sometimes you should not look at the net debt absolute value itself, but not even on the net debt to be done. I think it's where I mentioned that in the last three years, we increased our net debt in 8%. However, financial expenses stayed the same. So through big management exercises, we've been able to, despite increases in net debt, to keep same level of interest expenses. So our capacity of debt repayment didn't change. So as long as we have this affordable debt capacity repayment, we have no, we're not being needed any restrictions in terms of our return to shareholders or our growth. given that we have discovered. And also, as I mentioned before, we don't have significant maturities in the next five years, which gives a lot of comfort that we don't need to go to the market at any interest rates. Our cash position is also, we ended the quarter with $4.8 billion, which is around $1 billion, $1.5 billion. higher than what is our minimum cash, given our cash conversion cycle. So again, we have a lot of questions that currently we don't need to be restricted in any of our initiatives.

Okay, super, super clear. Guilherme and Wesley, thank you very much.

Our next question comes from Igor Gedges with Genial. You may go ahead, Mr. Gedges.

Can you hear me?

Yeah, good morning.

Okay, thank you. Good morning, everyone. Thank you for the opportunity. I would like to talk a little about Seara. Regarding the first part of the question, this quarter we saw a resumption of shipments to China after several months of suspension. due to avian flu last year. I'd like to understand how the resumption went for you guys. The resumption happened around November, so it didn't cover the entire quarter. For Q1-26, should we expect an even stronger quarter in terms of volume? Is this recovery gradual, or do you believe the flu effect has already been captured for Q1? And the second part of the question, I'd like to understand from the perspective of breaking down the positive impacts. We have volume growth as well as price improvements realized through premiums based on certain chicken cuts. for China, such as chicken feet. Given the increase in volume, there is also an effect of improved fixed cost dilution. So my question is, if you could break it down a bit, what we saw in terms of margin improvements, what influenced it the most? Was it the increase in volume, the price improvement, or the fixed cost dilution? Thank you very much.

Igor, it's not a simple answer for you. If you talk about the volume to China, When open, this helps a lot in terms of profitability because we have the best market for chicken wings and for chicken feet is China. Then we increase in terms of feet we don't produce. We don't market to deliver all of the production. But then when they opened the market, they improved volume and improved price. And about the wins, they improved the price because the value of the wins in China is higher than the other markets. It means that we got part of the benefit because it was in November. I think it was October, November. And now we have got the benefit in this first quarter, all of the benefits. When you talk about why is important the cost of dilutions of price, of course, the impact of the feed, it's a huge impact in terms of profitability, because these represent 60% of our cost of chicken goes to feed, around 50%. And this is huge. That is more than to get increased the volume to compensate this. It's of course volume compensate, but not able to compensate all of this cost.

Okay. Thank you very much.

Our next question comes from Priya Ori Gupta with Barclays. You may go ahead, Mrs. Ori Gupta.

Great, thank you for taking the question. I hope you can hear me. A lot of questions have been asked at this point. I would just like to ask two. First, around just the capital allocation. You've already announced the $1 dividend per share that's going to be paid in June. That works out roughly to what you've been indicating for some time now around the ability to consistently pay about a billion dollars to shareholders. Is that sort of how we should think about the dividend for the entirety of the year? Or is there room to potentially increase that with a second payment later in the year? And then relatedly, how should we think about share repurchases, just given that you guys did do about $600 million in 25? And then I'll ask my follow-up.

Hi, Freya. So at this moment, we are sticking to what we will try to do as long as our leverage ratio allows to have the $1 billion per year in dividends. So I think this $1 billion is what we plan to pay this year. Depends on how much excess cash or cash flow generations, then we can reevaluate a share repurchase again or not. But that will depend on the cash generation in the next quarters.

Okay, great. Thank you. And then you were pretty clear just now about not having any maturities in the next five years or so. And so you don't have any real need to come to market. But some of your bonds do become callable later this year and into early next year. Is there scope for you to think about addressing those or consider other liability management? Or is this the rate backdrop that, or would this rate backdrop not necessarily lend?

Yeah, now the callable bonds, they have a very low interest rate, so it's not worth it. The coupons are below treasury. But there's opportunities to decrease interest rates and extend maturities on the 34 and 33 maturities. So maybe I think liability management could be targeted on those two bonds, 33s and 34s. which has high coupons and higher than what we could be issued today at 30-year, for example.

Thank you.

And next we have Mr. John Baumgartner with Mizuho, who would like to ask a question. Go ahead, Mr. Baumgartner. Good morning.

Thanks for the question. Two for me on North America. First on the value add side. I mean, traditionally there's been a focus on value add through M&A. More recently, you've gotten involved in CapEx to build the Italian meats business. But I am curious, alternatively, I know you have a relationship with Wendy's. You had done some test marketing of Wendy's burgers last summer. I'm curious what you sort of learned from that test market and how do you think about maybe licensing third-party brands to get those value-added brands in-house in lieu of making expensive acquisitions or even investing to build brands from scratch?

Good morning. So, look, we're looking at we always look at every option for, for us. Um, Greenfield has made more sense recently just because of valuations and the price of, of building some of these things. And actually some of these businesses that we, we, we did Greenfields. It's, um, it's, uh, it's better to do, you know, to, to, to have a new plant instead of buying, you know, old assets. And so that, that was very specific to those, to those Greenfield acquisitions or Greenfield projects. Sorry. Um, The project we went with was very interesting. It worked out well and it's great partners. It's an option as well, but we'll look at that too. We've seen that it's not necessarily as you mentioned expensive as in prohibitive to build brands. Look at what we've done with JustPay. We never had a an earnings call or pilgrims hasn't had an earnings call that they said that they were, you know, had invested, that the results weren't good or for one reason had a negative impact because we were building brands, right? We built brands as we built the business and it was sustainable in itself. And nowadays it's a $1 billion brand, so it's in revenue. So I think it's possible to do those two things at the same time.

Okay. Thanks for that. And a follow-up also in North America, Jeremy, I think you mentioned there's really no imminent M&A on the horizon here, but I am curious on the egg industry, you've seen where prices are for eggs. I'd imagine there's a fair amount of distressed profitability in the industry. I'm curious, looking at producer capitalization, that business specifically relative to beef, pork, other species where you've made acquisitions at the downtrend, the down point in the cycle. How do you think about this profitability issue in eggs right now, maybe accelerating your ability to build out and maybe be opportunistic and acquire some assets in eggs? Thank you.

Hi, John. So basically it all depends on having the opportunity at the asset price. So sometimes it's not related to the current egg price and you're always looking at opportunities. So it's difficult to say, and then that's our approach. It has to be an accretive acquisition. So.

Thanks for your time.

Okay. Ladies and gentlemen, with there being no further questions, I would like to pass the floor to Mr. Gilberto Tamazoni.

I would like to thank everyone for joining us today and all JBS team members for their dedication and commitment to deliver the results. Let me close with three key points. First, go JBS. We deliver record revenue of $86 billion and 13% growth for the three private years, reflecting the stress of the inconsistent of our global platform. Second, return. We continue to operate with a strong capital discipline, with return on equity at 25% and return on investment capital at 17%. Third, earnings per share. EPS reached $1.89, up 15% year over year, growing faster than net income and reinforced our focus on shareholder value. As we look ahead, we haven't changed our focus, execution, efficiency, and discipline in capital allocation. That is what allowed us to deliver consistent results and build long-term value. Thank you.

This is the end of the conference call held by JBS. Thank you very much for your participation and have a nice day.