Release Date: November 14, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• BRF SA (NYSE:BRFS) reported one of the best quarters in its history with a record EBITDA margin of 19.1% and an EBITDA of around 3 billion.
• The company achieved a 12% increase in revenue compared to the same period in 2023, driven by improvements in commercial execution and brand investments.
• BRF SA (NYSE:BRFS) expanded its market share in processed products to 40%, reflecting successful market gains.
• The company's international segment showed positive performance due to market diversification and increased sales of value-added products.
• BRF SA (NYSE:BRFS) reported a significant reduction in net debt, reaching the lowest level since 2015, and achieved the best operating cash flow in its history.

Negative Points

• Despite the positive results, there are concerns about food inflation impacting customer demand and pricing in the domestic market.
• The company faces challenges in the international market, particularly with restrictions in certain regions like Mexico and China due to Newcastle disease.
• There is a competitive pressure in the domestic market, especially in categories like margarine, which experienced increased competition due to profitability.
• The company needs to manage potential threats from increased corn ethanol production in Brazil, which could impact grain availability and pricing.
• BRF SA (NYSE:BRFS) must navigate the complexities of capital allocation, balancing growth investments with shareholder returns, which could impact future financial strategies.

Q & A Highlights

• Warning! GuruFocus has detected 7 Warning Signs with BRFS.

Q: How do you see customer demand and pricing for processed foods in the domestic market given rising food inflation? A: Miguel Gilar, CEO: We are seeing stable demand, which allows us to maintain and potentially improve pricing. Chicken remains a competitive protein, and the exchange rate is favorable for imports. We are also investing in added value products, which is reflected in the growth of processed goods. Fabio Mariano, CFO, added that demand is solid and stable, linked to consumer income and confidence, leading to increased volumes and market participation.

Q: Can you provide insights into the international market, particularly the processed goods segment and cash generation? A: Miguel Gilar, CEO: We see a favorable scenario with competitive chicken protein and market expansion. The BRF Plus program is embedded in our culture, driving performance improvements across geographies. Fabio Mariano, CFO, noted that processed goods are growing in Turkey and the Gulf region, and capital allocation will focus on expanding capacity for added value products.

Q: What are your expectations for the international market, particularly in Asia and the impact of pork prices? A: Miguel Gilar, CEO: Despite being classified as Newcastle-free, some markets remain closed. However, we are optimistic about reopening these markets. Fabio Mariano, CFO, added that profitability is consistent across regions, and new export permits have significantly contributed to our results. We expect stable prices for pork and poultry, with no significant supply-demand imbalances.

Q: How do you prioritize capital allocation, and what are your growth targets? A: Fabio Mariano, CFO: Our priority is company growth, with a focus on expanding capacity for processed goods. We have a project pipeline of 1 billion for evaluation, prioritizing those with economic viability. We aim to increase investments in 2025 compared to previous years, focusing on sustainable growth and shareholder returns.

Q: Can you elaborate on the BRF Plus program and its impact on future performance? A: Miguel Gilar, CEO: BRF Plus is a continuous improvement program, initially based on 2019 benchmarks. We have already met our 2024 goals and are planning for 2025. The program focuses on internal and external benchmarks, with opportunities for further improvement. It enhances our culture and operational efficiency across geographies and business segments.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.