© Reuters.
BRF S.A. (BRFS3.SA), one of many largest meals firms on the planet, reported a strong fourth quarter for 2023, with a internet revenue of BRL 823 million. The corporate’s concentrate on operational effectivity and monetary self-discipline has led to important enhancements in its efficiency, together with the bottom leverage in seven years and a return to double-digit margins internationally.
The earnings name highlighted BRF’s profitable value discount methods, such because the BRF Plus program, and its robust place within the Halal market. Wanting ahead, BRF is about to proceed its concentrate on operational effectivity with the implementation of BRF Plus 2.0 in 2024, whereas additionally aiming for natural development and market share growth in each home and worldwide markets.
Key Takeaways
- BRF achieved a internet revenue of BRL 823 million in This autumn 2023.
- The corporate reported the bottom leverage in seven years and double-digit worldwide margins.
- BRF Plus program contributed to value reductions and improved efficiency indicators.
- Progress was seen within the Halal market and in market share throughout numerous locations.
- BRF’s capital construction stays robust with low leverage and comfy liquidity.
- Free money move was the best in three years.
- The corporate plans to launch BRF Plus 2.0 in 2024 to additional improve operational effectivity.
Firm Outlook
- BRF is assured in future development, backed by operational effectivity and monetary self-discipline.
- The corporate will proceed to concentrate on natural development and profitability with out sacrificing quantity.
- Plans to develop manufacturing capability in 2024 and compete successfully out there are in place.
- BRF expects to develop within the home market and acquire market share.
- The BRF Plus program is about to proceed lowering COGS prices in 2024.
Bearish Highlights
- The consumption surroundings in Brazil is enhancing however just isn’t but at excellent ranges resulting from damaging revenue impacts and deflation processes.
Bullish Highlights
- BRF noticed improved working ends in Brazil, attaining the very best profitability of the yr.
- The corporate skilled robust demand in each home and worldwide markets, significantly within the Center East.
- Stability in feed prices and potential for additional value reductions in 2024 had been famous.
– Progress within the Halal market.
– BRF’s money move highest in three years.
Misses
- BRF famous a slight deterioration in provider ranges within the fourth quarter because of the acquisition of maize and cost circumstances.
Q&A Highlights
- Stock ranges have been considerably diminished to traditionally low ranges with out inflicting stockouts.
- Rivals rising capability usually are not anticipated to considerably affect costs resulting from wholesome demand.
- Profitability per product just isn’t disclosed, however processed meals and poultry contributed to raised profitability.
- Web costs in Brazil have seen a slight enchancment, particularly in processed meals.
- Market dynamics in 2024 will rely upon shopper demand, which is anticipated to extend.
- The corporate goals to scale back gross debt and is contemplating legal responsibility alternate or alternative to scale back monetary burden.
BRF’s earnings name showcased an organization that has efficiently navigated market challenges and is now poised for continued development. The corporate’s strategic concentrate on effectivity, value discount, and market growth underlines its dedication to sustaining a robust monetary place whereas delivering worth to shareholders, associates, clients, and communities. With the upcoming implementation of BRF Plus 2.0 and the anticipation of favorable market circumstances, BRF is about to solidify its presence within the meals business each in Brazil and internationally.
InvestingPro Insights
BRF S.A. (BRFS3.SA) has just lately made headlines with its spectacular fourth-quarter efficiency in 2023. To offer an excellent deeper understanding of the corporate’s monetary well being and market place, let’s delve into some key metrics and insights from InvestingPro.
InvestingPro Knowledge reveals that BRF has a market capitalization of 5150M USD, reflecting its important presence within the meals business. Regardless of a difficult surroundings, the corporate has managed to attain a 1-week value whole return of 9.96%, indicating a notable investor confidence enhance. That is additional supported by a 1-year value whole return of 161.86%, showcasing BRF’s robust efficiency over the previous yr.
Furthermore, BRF is buying and selling close to its 52-week excessive with a value share of 97.78% of the height worth, which means that the market is valuing the corporate’s current strategic strikes and its future potential.
InvestingPro Ideas spotlight that two analysts have revised their earnings upwards for the upcoming interval, signaling optimism about BRF’s monetary prospects. Moreover, regardless of analysts not anticipating the corporate to be worthwhile this yr, BRF has proven a major return during the last week and has been recognized as a outstanding participant within the Meals Merchandise business.
It is price noting that BRF doesn’t pay a dividend to shareholders, which may very well be a strategic choice to reinvest earnings again into the corporate for additional development and operational effectivity enhancements.
For these seeking to discover additional insights and tips about BRF, InvestingPro presents further evaluation and metrics. By utilizing the coupon code PRONEWS24, readers can get a further 10% off a yearly or biyearly Professional and Professional+ subscription, offering entry to a wealth of knowledge that may assist buyers make knowledgeable selections.
Bear in mind, there are 9 further InvestingPro Ideas accessible for BRF, which may very well be significantly helpful for buyers contemplating this firm for his or her portfolio. The following pointers may be accessed by means of the InvestingPro platform, providing a complete have a look at BRF’s financials and market standing.
Full transcript – BRF-Brasil Meals SA (BRFS) This autumn 2023:
Operator: Good morning, women and gents. Welcome to BRF’s This autumn and Full 12 months 2023 Earnings Convention. This convention is being recorded and will probably be accessible for replay on the firm’s web site, ir.brf-global.com, the place the presentation slide deck will also be downloaded. [Operator Instructions] Earlier than transferring on, we might like to emphasise that forward-looking statements are primarily based on BRF’s administration’s beliefs and assumptions in addition to at the moment accessible data. These statements might contain dangers and uncertainties seen as they relate to future occasions and, subsequently, depend on circumstances that will or might not materialize. Buyers, analysts and journalists should acknowledge that occasions referring to the macroeconomic surroundings, the business and different elements might result in materially completely different outcomes than these expressed in such forward-looking statements. Becoming a member of our convention right this moment are CEO, Miguel Gularte; and CFO, Fabio Mariano. I’ll now flip over to Mr. Gularte, who will start the presentation. Please, Mr. Gularte, it’s possible you’ll proceed.
Miguel Gularte: Good morning. I would like to start out by thanking everybody for attending our earnings convention. BRF has reported internet revenue of BRL823 million within the fourth quarter of 2023. All year long, we centered on effectivity and excellence whereas executing our marketing strategy. We made progress quarter-by-quarter and ended the yr with optimistic outcomes largely pushed by the corporate’s improved operational efficiency and monetary self-discipline. We have closed this era with considerably decrease leverage, the bottom in seven years. Our ever-evolving business execution, improved product portfolio efficiency and constant work with the Sadia, Perdigão and Qualy manufacturers have supported our profitability enhance in 2023. Within the worldwide market, we have returned to double-digit margins, advancing in value-added merchandise and securing a document variety of plant licenses and new locations. Now I would like to ask our CFO, Fabio Mariano, to current our monetary ends in additional element. After which, I will come again for our remaining remarks on the announcement.
Fabio Mariano: Good morning to everybody on the decision. On the beginning web page, I would prefer to concentrate on the principle monetary indicators for This autumn 2023, beginning with internet income, which got here to BRL14.4 billion. Our EBITDA was BRL1.9 billion. This provides us a 13% margin for the interval, our greatest quarterly lead to a few years. Our free money move efficiency was BRL613 million. That is our largest quarterly money era in three years. In working capital, we considerably diminished our inventories, which helped us to safe a monetary cycle of 5.8 days, three days shorter than in the identical interval final yr. The stock turnover reached 75 days, 18 days lower than in 2022. Ending this slide with leverage, we reached 2x our EBITDA within the final 12 months, lowest leverage in seven years. Within the subsequent slide, Web page 4. We present on the left-hand aspect our gross revenue over time with 24% profitability within the interval. We have reported a gross revenue of roughly BRL3.5 billion. On the right-hand aspect, we additionally seen the EBITDA progress as talked about earlier. Within the subsequent slides, we are going to current our efficiency by market or enterprise. Beginning with Brazil, we continued to progressively enhance our working outcomes. Our EBITDA margin got here to fifteen.6% with the assistance of our vacation marketing campaign. The perfect profitability of the yr was that, even excluding seasonal gross sales. Observe the efficiency of processed merchandise was in keeping with historic ranges regardless of the nonetheless sub optimum shopper surroundings within the nation. On Web page quantity 6, we spotlight the restoration in costs of contemporary cuts in Brazil, simply as we had predicted within the earlier quarter. On the backside of the slide, we emphasised the elevated accuracy of latest product launches and continued progress of our business execution, which may be seen within the larger availability of merchandise in retailer, larger penetration into new factors of gross sales and a marked enchancment in customer support ranges, which considerably contributed to the efficiency of the home market. On Web page 7, we spotlight the excellent efficiency of our celebratory portfolio. We confirmed our management out there and the energy of our manufacturers throughout this particular festive interval. Our market share was 72% in turkeys and 60% in particular poultry, akin to Chester. The subsequent slide reveals our efficiency within the worldwide market. We see this enterprise’s restoration coming to double-digit margins as new value ranges for poultry and griller cuts and the downturn of prices with decreased grains and effectivity beneficial properties from the BRF Plus program. Our EBITDA margin elevated by 7 share factors in contrast with the earlier yr. We additionally seen elevated market share in hen and poultry specialists to many locations. On the subsequent slide, we spotlight the rising profitability within the Halal market within the Gulf international locations. We continued to develop our market share in processed meals, which is consistent with our plans to develop the vary of value-added objects within the area. We additionally reported optimistic efficiency in Turkey, mirroring the bigger share of processed meals and gross sales volumes and sound profitability ranges within the unprocessed portfolio. We sustained our market share management with the Sadia and Banvit manufacturers with 37% and 21% shares, respectively, in every of their markets. On the right-hand aspect, I level out the Direct Exports enterprise. We will see our costs carried out for the principle cuts. We grew our enterprise alternate options with 16 new licenses for markets akin to the UK, Africa and the Americas. Our export licenses got here to 66 or have 66 new ones in 2023. We additionally diminished our completed product inventories by virtually 80,000 tons internationally versus ’22 and Direct Manufacturing unit Exports stay at excessive ranges. Unsold inventories proceed to fall, enhancing our business execution and relieving the capital we have employed. I will finish the presentation speaking about substances and pets. The enterprise reported an EBITDA margin of 11.7%, BRL98 million throughout this quarter. It is necessary to notice that the event of our manufacturing output continued to contribute to the maximization of our ends in the corporate’s portfolio. Within the Pet enterprise, we elevated our share in gross sales of the Tremendous Premium Pure class with increased profitability and better exports all year long, ending 2023 with our first shipments to the United Arab Emirates. We would prefer to underscore the extension of our BRF Plus program to the Pet operation in the hunt for rising our effectivity. In Elements, we continued to concentrate on rising or increasing our markets and rising gross sales of value-added objects akin to hydrolyzed seeds. We continued so as to add worth to our co-products with a view to maximize our enterprise integration. Subsequent, I will share the progress of our effectivity program, which Miguel will probably be quantifying in figures shortly. I will present you comparisons with the identical interval final yr. The bars had been coloured in gentle grey. The total yr comparability will also be seen within the materials you’ve got acquired. In agriculture and livestock, feed conversion of poultry and pigs fell by 2.5% and 1%, respectively. Hen mortality fell by two share factors and hatch charges elevated by 5.6 share factors. In manufacturing, we grew our manufacturing unit yields by greater than 5 share factors. In logistics, we have diminished our returns and elevated our service ranges in Brazil in a really materials means. Within the following slide, we present you the pattern of our COGS, a significant driver for competitiveness development. On the left-hand aspect, we are able to see that the typical COGS per kilogram in Brazil fell by 5 – or reasonably 7.5% within the yr versus 2022. And extra importantly, the fee within the final quarter of the yr was 5% decrease than the typical for the yr, exhibiting a wonderful transition level for 2024. Internationally, the COGS per kilogram within the final quarter was 8% decrease than the typical for the yr. As we have already underscored, the advance in COGS is anchored within the discount in grain consumption throughout the BRF program. On Web page 14, we present you the highlights in sustainability. ESG exhibiting achievements akin to a 26% discount in absolute Scope 1 and a pair of emissions. Two, we’re very near attaining our clear power self-production targets. Three, we have achieved 100% traceability in direct grain suppliers and 77% traceability for oblique suppliers within the Amazon (NASDAQ:) and Cerrado biomes. 4, we received recognition for good animal welfare practices. 5, we have maintained our presence within the ISE and B3 carbon effectivity index portfolios. And lastly, we continued to generate optimistic social affect by participating actions in 100% of the municipalities the place we now have a footprint. On Web page 16, we now present you details about the corporate’s capital construction. Within the chart on the left-hand aspect, we see the efficiency of our internet debt and leverage. These indicators had been already talked about firstly of the convention. We’ve the bottom leverage in seven years. On the best, we are able to see our debt profile, which continues to be diversified and lengthy, with no focus of repayments within the close to time period and comfy liquidity place. The subsequent slide reveals you our free money move. The chart reveals an working money move of BRL1.7 billion, an funding move of BRL741 million and BRL352 million monetary move. All of that provides as much as a free money move of BRL613 million, which is the very best money era we have reported in any quarter within the final three years. On the ultimate slide, we discuss in regards to the efficiency of our internet debt between the quarters. We reported a internet debt of BRL9.4 billion with contributions from the capitalization of our share providing in July. The allocation of funds from that follow-on providing will proceed to assist us scale back curiosity expenses over the subsequent coming quarters. I would like now to thank the viewers and switch the ground over to our CEO, Miguel Gularte, for his closing remarks.
Miguel Gularte: Thanks, Fabio. To conclude our presentation, I would prefer to level out that our concentrate on operational effectivity and the monetary self-discipline we have maintained quarter after quarter is what enabled the online revenue and money era we have reported for the fourth quarter of 2023. Our efforts and initiatives all year long had been decisive for our sound efficiency within the interval. The corporate’s predicted intelligence mannequin, mixed with the effectivity beneficial properties from the BRF Plus program proved to be assertive all year long and allowed us to capitalize on grain origination in due time as costs fell, which led to a cloth value discount within the second half of the yr. Extra returns from BRF Plus totaled BRL525 million within the fourth quarter, bringing the whole for the yr to BRL2.2 billion. I also needs to spotlight the progress we have made in main indicators all year long akin to feed conversion, unprocessed meals yields, animal mortality, business execution and logistics service ranges amongst others. Furthermore, we have recorded the bottom FIFO low cost ranges in recent times, exhibiting larger integration between our manufacturing and gross sales planning. Not solely that, however we have additionally considerably diminished inventories throughout the board, bringing in financial savings in monetary and storage prices. The highlights of the yr additionally embody our increased profitability in Brazil, supported by our ever-evolving business execution and improved efficiency of our portfolio as an entire. Within the fourth quarter, we reported an EBITDA margin virtually twice that of the fourth quarter of 2022. Particular point out also needs to be manufactured from the consistency and progress within the profitability of our processed meals portfolio in Brazil all through 2023. In our worldwide operation, our EBITDA margin returned to double digits in This autumn with a major restoration in costs in all places. Our market diversification technique remained constant as we resumed our exports to the UK. In 2023, we secured 66 plant licenses for brand new places in Latin America, Asia, Europe and South Africa. I also needs to underscore Sadia’s management within the GCC areas Halal market, the place we gained market share in course of meals consistent with our technique of accelerating the quantity of value-added objects. Our outcomes additionally mirror the constant work of our main manufacturers of their respective markets, Sadia and Qualy Vita in South America; and Banvit in Turkey. We additionally noticed an enchancment in our folks administration indicators akin to engagement, absenteeism and turnover and continued to put money into our staff’s growth. I would prefer to level out our efficiency in occupational security, the place we reported the very best charges in historical past, cementing BRF’s benchmark place out there. Our efficiency within the final quarter of 2023 confirms our staff’s capacity to handle with focus and self-discipline. We step into 2024 motivated by the outcomes we have achieved and with Model 2.0 of BRF Plus already nicely underway. As I typically say, right here, the longer term begins each Monday, and we are going to proceed to dedicate ourselves to urgent on with BRF Plus 2.0 in 2024, all the time striving for our firm’s continued evolution. We have opened a brand new chapter in our historical past with Marfrig’s consolidation as controlling shareholder with greater than a 50% stake, and we’re assured we are going to proceed our journey with dedication, agility, simplicity and effectivity. I would prefer to thank our devoted associates for our progress and achievements. I would prefer to thank our Chairman, Marcos Molina, and the Board of Administrators for his or her unlevering belief, fixed presence and continued assist. And likewise prefer to thank our shareholders, our built-in outgrowers, our clients, our suppliers and all of the communities the place we function. Thanks.
Operator: [Operator Instructions] First query comes from Guilherme Palhares from Santander (BME:). Please Mr. Palhares, your mic is open.
Guilherme Palhares: Good morning, everybody. Thanks for taking my questions. Effectively, I would say that the primary query is extra on the fee aspect. We’re noticing this important lower the corporate has achieved from the unit value standpoint. And we wished to grasp how a lot of that comes from operational leverage and the way a lot comes from the marginally lowered charge prices? And what may we sit up for in 2024 in terms of the advantages of that issue? And my second query is I would like to grasp a bit of bit extra in regards to the exports actions. We perceive the higher costs and the licenses. So should you may replace the corporate’s perspective, eager about the start of 2024, that might be nice. Thanks.
Miguel Gularte: Good morning, Guilherme. As to your query with regard to costs, and contemplating that we’re working beneath BRF Plus, that in the end touches on all of the hyperlinks of the chain. We begin with enhancements on the agricultural aspect, after which you’ve gotten meals conversion features, which is benefited by features within the business. And then you definitely have a look at manufacturing, the place you’ve gotten prices and higher efficiency, and also you complement that with the business sense and can want higher or extra rational service and you’ll seize all of that on the fee aspect. Evidently, it is a continued course of. It began on the finish of This autumn 2022 and operated all through 2023 which led to, as we reported over BRL2.2 million excluding the FIFO impact, which might lead that to over BRL3 million. We have talked in regards to the design of BRF Plus 2.0 for 2024, and that continued to usher in results all year long, and we anticipate this improved effectivity additionally enabled by a greater scenario when it comes to worldwide prices and costs. We should always be capable of report a satisfying efficiency on the finish of the yr. I’ll now flip it over to Fabio, who will add to the primary a part of your first query and likewise add to the second query as a result of, clearly, I solely gave you the reply in broad strokes.
Fabio Mariano: As already mentioned, I’ll attempt to add a bit of bit to the reply with regard to prices. After which we are able to discuss a bit of bit about our prospects for the markets, particularly the worldwide market. I feel that This autumn was after we noticed the bottom degree of prices. And it does must do with the lower in feed costs, but additionally has to do with the effectivity plan that we have adopted BRF Plus. In order that plan additionally entails what you talked about, which is the operational leverage, seeing as we have elevated our volumes and actually made essentially the most of our operational construction. As we transition now to 2024, evaluating this degree with our value in 2023, on the worldwide aspect, you see a distinction of 8%. And in Brazil, you see that distinction is 5%. All of that ought to assist us when it comes to gross revenue to have a really optimistic begin of the yr. And after we mix that with the fee advantages within the favorable costs, all of that makes us optimistic in regards to the starting of the yr. So we’re seeing wholesome costs and a really aggressive value ratio that lead us to imagine that the corporate has purpose to imagine we could have nice outcomes additionally within the first quarter of 2024.
Guilherme Palhares: That was good, guys. In case you may additionally discuss a bit of bit about your prospects for the export market.
Fabio Mariano: Effectively, Guilherme, we’re seeing the export market and the yr with costs on the rise. And it is necessary to focus on the 66 new license that BRF’s staff was capable of safe is essential. These new licenses take us to that quote that we have repeated again and again throughout the – all year long, which is the most suitable choice is to have a variety of choices. And in terms of specialists, that opens a variety of selections for us when it comes to new markets. And from a situational standpoint, we’re seeing your entire market reply in time. So when your entire market is responding when it comes to value, an organization that has new licenses for brand new locations and may leverage all of its manufacturers, that are leaders in a number of completely different locations, that lets you predict and seize on these alternatives all year long. So in 2024, we go right into a course of the place the corporate is performing nicely when it comes to operations in a market that is additionally performing nicely. So there’s a greater steadiness between demand and provide.
Guilherme Palhares: Wonderful. Miguel and Fabio, thanks a lot in your solutions.
Operator: Our subsequent query comes from Gustavo Troyano with Itaú BBA. Mr. Troyano, your line is already open.
Gustavo Troyano: Good morning, Miguel and Fabio. Thanks for the chance. Effectively, there are two issues I would prefer to go over with you. The primary has to do with the money move. In our final dialog, you talked a bit of bit in regards to the breakeven and EBITDA, particularly specializing in CapEx and monetary move. And it is fascinating the monetary lead to This autumn. So I simply wished to know if we are able to assume that that is the brand new breakeven level if it is cheap to think about this the brand new regular? And in terms of money move, I do know it is troublesome to advance the outcomes due to the typical grain costs. However in terms of completed items stock, is there any room for reductions? Or has all of that been tackled with BRF Plus in 2023? Now on housing, we had some preliminary knowledge pointing to increased inventories in January and February. I would like to listen to from you if there’s any motion from the corporate when it comes to rising or increasing housing, which may result in decrease costs transferring ahead? Or if there’s some other aspect to that, that we’re not seeing? Thanks.
Miguel Gularte: Hello Gustavo. Good morning. I’ll begin along with your first query, speaking in regards to the breakeven level and free money era. Effectively, what I can inform you is from a structural perspective, our focus can be to speculate across the similar degree as we did in 2023, so round BRL3 billion, perhaps with a capability for the organic property, perhaps even rather less than that, between BRL2.8 million and BRL3 million. After which we have to think about the monetary bills. So we’re working with a variety between BRL1.8 billion and BRL2 billion contemplating curiosity expenses and different elements as nicely. That might take us to a structural breakeven that might fluctuate between BRL4.6 billion and BRL6 billion, additionally relying on the rate of interest expenses that additionally have an effect on that and the debt that is incurred in robust forex. In order that’s primarily the equation for the corporate to generate money move, it wants an EBITDA round that dimension.
Fabio Mariano: On completed items inventories, we have considerably diminished ranges over the course of 2022. And simply to remind you, in completed merchandise inventories in Brazil, we reported upfront that we had already recognized alternatives to scale back the completed items inventories internationally all year long, and we determined to attend for the best second as a result of for many of the yr, we navigated the market with excellent costs. So it isn’t the best surroundings to resolve stock issues. Now This autumn as a result of there was a restoration in costs, we noticed the chance to deal with that. In order that’s why we’re seeing inventories with a turnaround time of 75 days, so fairly optimized. So any beneficial properties after that needs to be marginal. They shouldn’t be as consultant as these we had been capable of safe all through 2022 and ’23. And lastly, in terms of housing, nicely, we now have knowledge for hen housing of over 600 animals, however there are prospects for February and March, that time to a decline. It is necessary to notice that Brazil provide just isn’t what explains the manufacturing quantity in terms of poultry protein. In fact, Brazil may be very consultant, however we have to think about knowledge from housing in america, Europe and Africa as nicely. In america, we have already got figures exhibiting that 2023 was a yr when housing decreased when in comparison with 2022 and even ’21. We should additionally think about in that equation, the provision and the demand aspect. In Brazil, we see a shopper surroundings, though not as engaging, lots higher than the surroundings we had in 2023. Per capita revenue goes up, employment is resilient, shopper confidence is at a sound degree. And on the worldwide aspect, we see robust demand in areas the place we’re dominant out there akin to within the Center East. We plan to have a really profitable marketing campaign in the course of the Ramadan interval. We’ve the unfold with beef and poultry returning to ranges, that are simply barely above the historic common. So we additionally must assess demand and never solely the provision aspect. And our understanding is the surroundings right this moment is much more balanced than the one we needed to navigate final yr and even the yr earlier than that. So I’ll now flip it over to Miguel so as to add to my reply.
Miguel Gularte: Effectively, I feel you had been very complete. We should always navigate a extra normalized surroundings. And it is to be anticipated that the much less environment friendly the surroundings is, the much less environment friendly we will probably be in that market. And it is also necessary to keep in mind that BRF is at the moment in a business place from the worldwide standpoint that is very particular. In Q3 and This autumn of 2023, for instance, we noticed an exceeding Brazilian exports to Asia, much more than to the Center East. And BRF has been a dominant – dominance in that case, generally exceeding 50% market share. So we’re prepared for that. And evidently, an organization with decrease inventories or unsold inventories with no stopped stock, and that is capitalizing much more agile – in a way more agile means that kind of scenario. That is an enormous plus. So we anticipate to see beneficial properties not solely within the worldwide market but additionally within the home market as nicely.
Gustavo Troyano: Thanks, Miguel and Fabio.
Operator: Our subsequent query comes from Ricardo Boiati with Safra. Your line is open.
Ricardo Boiati: Hiya, everybody. Good morning. Thanks for the chance of asking query. My first query is in relation to the stock ranges. In fact, it’s a surprisingly low degree. It is clear that efforts have been made for the discount of stock ranges, particularly for completed merchandise. My query is said to the effectivity of this stock degree. Can the corporate preserve these historic ranges? And might the inventory out to the effectivity degree be maintained with out shedding something within the home market or within the worldwide market? Have we reached a degree the place we want CapEx for increasing the capability to satisfy the demand even higher as you’ve gotten talked about? And you’ve got talked about that the demand has been very wholesome, each in Brazil as within the exports market. And we’re – the rivals are rising capability in some strains. And might the competitor trigger any affect on the value, particularly within the home market? So that is my first query. I perceive that you don’t disclose the data on the profitability per product, however may you present a rating of the classes of merchandise that carried out higher on this fourth quarter when it comes to profitability, processed meals in pure, contemporary and processed, poultry. Might you present a rating roughly? What had been the principle drivers that led to a greater profitability? It will be very good for us to grasp what’s occurring to the corporate.
Miguel Gularte: I’ll reply the primary query, after which Fabio will reply the second query. I imagine we now have to grasp that the BRF Plus program touches upon the entire features, not solely stock ranges. There’s a pricing system that gives a sign of associated to which is the situation and what is the value it’s a must to make use of. After which you may improve your degree and the business assertiveness. At BRF, we are able to see that we have made lots of headway within the meals price. And our disruption price is the bottom ever within the firm. And being very goal when answering your query, by the use of operational effectivity, we maximize the beneficial properties with low stock ranges. And that is from the logistics viewpoint. And on the similar time, we had a really excessive degree of logistics efficiency, reaching excessive ranges. From the point of view of business execution, we now have the distinction to say that each in Brazil and the worldwide market and after I talked about worldwide markets, I embody Halal geography, I can say that we have reached the best timing. And we are able to transcend. We will even discuss grains. Let’s point out the earlier quarters after we talked in regards to the timing to buy the grains, BRF adopted its indicators and we noticed some completely different conditions out there. And for that purpose, we let our grain stock ranges low – at actually low ranges. And once they reached the bottom degree, we began buying grains, and we had a really snug place, and that was mirrored within the prices. And this additionally reveals that the effectivity and the execution of stock ranges, each as to grains or for exports, merchandise for the home market, every part is built-in and interconnected. So the reply is sure. The corporate can and can proceed offering these ranges of efficiencies, working at an inexpensive degree of inventories with no dangers of disruption as a result of we now have extraordinarily high quality data.
Fabio Mariano: Now offering a complement on the investments on manufacturing capability. I’ve already talked about within the earlier query after I talked in regards to the breakeven of money era. I mentioned that we should make investments at ranges of BRL3 billion – between BRL2.8 billion and BRL3 billion. And it is necessary to think about that the corporate within the pandemic years expanded its capability fairly a bit. By way of manufacturing, particularly within the line of processed merchandise, this capability has not been totally used. That signifies that we nonetheless have some idleness within the strains, so we now have an necessary development plan for the years to come back that can begin in 2024. So the corporate has the capability to develop and develop its volumes with a really marginal funding. In relation to capability as an entire, as we see out there, traditionally, we perceive we now have all of the circumstances to compete. We’ve robust manufacturers, high quality merchandise, and we hope to search out the market logic, which is disciplined. Now I’ll tackle the final a part of your query. You requested some extra details about the classes. I might reasonably give you a breakdown saying that an important contribution in relation to profitability, along with the seasonal portfolio of commemorative product comes from the restoration of unprocessed meals as we had beforehand talked about. We had already talked about within the third quarter, we had been making the transition to the fourth quarter by utilizing the very best costs of cuts and the processed merchandise proceed to be resilient, however the largest contribution got here from the commemorative merchandise, seasonal product. And that is what I can confide in you when it comes to the home market.
Ricardo Boiati: It is actually clear. Thanks, Miguel and Fabio.
Operator: Our subsequent query comes from Lucas Ferreira with JPMorgan. Your line is open, sir.
Lucas Ferreira: Good morning. My first query is about capital allocation, contemplating that the corporate is reaching to instances internet debt over EBITDA, money positions are snug, BRF Plus program which was very profitable. My query is, when are you going to start out contemplating accelerating development or not or perhaps even concentrate on the cost of dividends, perhaps you’ve gotten circumstances to extend the payout? Is it going to be a yr the place are you going to be extra conservative with a view to scale back even additional the leverage? So that is my first query. And the second is particularly, should you may present extra particulars on the related marketplace for you. I perceive all of the issues in regards to the licenses and every part, however I want to perceive extra about Japan, the place we’re within the technique of value restoration. Final yr, we had avian flu concern. And also you see that the stock ranges are extra normalized. And likewise China, do you see any alternatives for the yr? Or do you see difficulties in restoration in China? Thanks.
Fabio Mariano: Thanks, Lucas. I’ll reply the query about capital allocation, then I will cross the ground over to Miguel in order that we are able to talk about Asia, Japan and China, as you requested. What I can say about capital allocation is that our focus is on rising the corporate. And that is what we now have executed within the earlier quarters. As I’ve mentioned, we nonetheless have some capability to be occupied. So we now have an important concentrate on natural development in order that we are able to dilute our infrastructure of fastened prices much more. So that is the plan: develop volumes, use the idle manufacturing strains. And that is what we intend to do in 2024. In fact, after we think about the finance wants, it is a essential yr for us to be lively as a result of we do not need lots of wants for amortization in 2024. So we’re going to deliver additional assertiveness as to the monetary bills in burden. So this has to do with legal responsibility administration. So what you anticipate from our execution is that this. So I flip the ground over to you so that you can reply the second query.
Miguel Gularte: Good morning, Lucas, sure, we noticed that Asia has been extraordinarily related despite the fact that I’ve talked about that within the final two quarters, we had a quantity exceeding Asia. So we had the CCE details about 130,000 tons. And for the quarter, 136,000 tons in Asia towards 138,400 within the – we see this motion when it comes to value on the finish of the yr and likewise to start with of January. The value of swine has a response and likewise poultry costs have had an affect, particularly in China. So there have been tendencies that we anticipated they even occurred earlier than our expectations or anticipated by the market, and we may make some actions in relation to these value will increase. And within the case of Japan, Japan acquired increased supply within the fourth quarter. And this goes again to regular ranges. There was an extra within the supply beforehand, and we see that inside inventories going again to regular ranges, and costs adopting a brand new dynamics associated to restoration. And I insist to say that it is related for our enterprise. It is essential for us to have completely different choices. If in case you have choices, you may commerce amongst locations and likewise which cuts you are going to be transport to which market and also you select the product to be directed to completely different markets. So that is referred to as worth integration. The extra locations you’ve gotten, the extra you may combine worth and improve the profitability of your product.
Lucas Ferreira: Okay. Thanks.
Operator: Our subsequent query comes from Thiago Duarte with BTG Pactual. Mr. Duarte, it’s possible you’ll proceed sir.
Thiago Duarte: Hiya. Good morning, everybody. Miguel, Fabio thanks for the chance. I want to return to deal with quantity. In different questions, you talked about some features of volumes. However after we have a look at the results of the quarter, we now have a sense that at a sure time, you prioritized the profitability in relation to volumes. You lose some share within the exports of poultry towards the third quarter. The volumes within the Brazilian market, regardless of the seasonability, it doesn’t have any evolution year-on-year. Fabio talked about oftentimes that the CapEx degree is low, perhaps even a bit of decrease than the CapEx from ’23 to 2024. What’s a constant assumption for volumes to evolve, contemplating there isn’t a related investments in capability improve? So evidently the corporate is concentrated on profitability. Might you tackle this subject? I do know that Fabio talked about about long-term development plan, you’ve gotten idle capability within the processed merchandise. However it’s troublesome for us to see the place the quantity will come from contemplating your prioritizing profitability. And the second query is nearly a follow-up of the questions that was given when it comes to unit value, I feel it was the primary query requested. I want to perceive the way you see once you transfer from ’23 to the primary half of 2024. Do you see any chance of a further drop of your unit value? As a result of primarily based in your reply, it appears that you’d preserve the fee at these ranges. I want to know if we are able to scale back even additional the unit value, even contemplating the uncooked materials inventories that you’ve right this moment.
Miguel Gularte: Answering in a really direct means your query, we don’t see any equation of profitability to compete with the relation of volumes. I imagine that when you’ve gotten extra business locations as we are able to see what BRF has executed with 66 new licenses, we are able to improve quantity and we are able to preserve profitability. It is necessary to say this as a result of 2023 was a really atypical yr. The primary half of the yr was extraordinarily difficult with a depressed value of unprocessed meals and the worldwide market, we had the proper storm, with the retraction in demand in numerous places. But additionally you noticed a scenario the place the supply would exceed the demand. That is left behind after the second half of the yr, and we entered a brand new scenario of normalcy. After which there’s an important side to think about, including worth course of that has been our effort. This not have an effect on solely the Brazilian geography but additionally worldwide geographies. We’ve development of value-added merchandise in Turkey and Center East, and we’re very centered on this. And this can permit us to extend quantity and add worth. As a result of I’ve an industrial advanced that may nonetheless develop organically, it isn’t of a priority to us as a result of we don’t perceive that our funding capability is restricted. We perceive that our funding capability is correct, sufficient to the necessity of the corporate. So we began 2024 nicely suited as we normally see in Brazil, with low ranges of inventory ranges – low ranges of inventory with the market with excessive demand and the home market and the exterior market working in response to our availability and with the pricing data system that permits us to capitalize this chance. So we perceive the equation of profitability is not going to have an effect on the volumes. And our industrial advanced and our CapEx is correct on the correct degree for that goal.
Fabio Mariano: Good morning, Thiago. In regards to the query associated to prices in an goal means, we see contemplating the value of the feed value after we evaluate ’24 and ’23, we see extra stability. So the steadiness related to uncooked materials and the fee may be higher, after all, contemplating we’re implementing – we’re operating the effectivity program. It is a steady journey, steady enchancment. And in our finances, we now have the two.0 model of BRF Plus. So we’re very centered on materializing the productiveness beneficial properties. Now contemplating the uncooked materials dimension, we see an surroundings that may supply alternatives. We anticipate for the subsequent manufacturing cycle of soybeans and maize as a result of market projections see an growth of 5% for soybeans and seven% for maize, the worldwide degree. So we now have home windows of alternatives and higher crops. And this will – could have impact in our prices, and we will see this within the transition from the primary and the second half of 2024 supplied that that is going to be materialized.
Miguel Gularte: I’ll add to Fabio’s query, Thiago. And we want to say that we didn’t lose any share in exports. On the alternative, there are some variations, after all, on a quarterly foundation, we see some variations from the third to the fourth quarter. And should you see the information supplied by the CSX (NASDAQ:), you see that the share elevated and contemplating the brand new licenses, we see that that is going to be even higher. And contemplating the FX price is secure and by reaching completely different places, we’re going to develop share, and we’re additionally going to diversify this motion. It is also necessary to attract your consideration to the truth that the U.Okay. established system of prelist and BRF is the institutions that had extra vegetation to be licensed.
Thiago Duarte: That is very clear. Thanks very a lot for the questions. Miguel was making reference to the share that you simply introduced within the outcomes, particularly of the fourth quarter in relation to the third quarter.
Miguel Gularte: Sure, that is an choice as a result of when we now have the commemorative merchandise, which is an important second for BRF, we capitalize this market management and – we – nevertheless it’s clear that our focus within the home market and likewise in exports.
Operator: Our subsequent query comes from Isabella Simonato with Financial institution of America. Your microphone is open, ma’am.
Isabella Simonato: Good morning. Are you able to hear me?
Operator: Sure, we are able to hear you. It’s possible you’ll proceed.
Isabella Simonato: Okay. Excellent. Thanks. Might we proceed speaking about quantity? I imagine that the exterior market technique to achieve profitability and go into new markets. I feel it’s extremely clear. It turns into evident each quarter. However after we have a look at the home market, within the outlook of quick and medium phrases, can we think about this quantity development and contextualize the macro surroundings after we consider 2024? And likewise contemplating the idea that you’ve when it comes to quantity posted final yr, what can we anticipate for 2024? How do you see firstly of this yr that might assist us in our evaluation? And likewise, SG&A, you had a pickup within the interval. There may be seasonability ranges and likewise transport. What can we predict when it comes to dilution wanting into 2024? Thanks.
Miguel Gularte: Good morning, Isabella. Now answering about volumes, I perceive that the query was directed to the home market, however I’ll present context earlier than I reply your query objectively. I imagine that the quantity level, along with the licenses that we talked about, and with that, we had some alternate options. We will improve volumes and costs, and we are able to select amongst locations. Typically the choice would contain eradicating the merchandise from Brazil and direct to worldwide market and likewise to take away merchandise from the worldwide market and direct them to Brazil. Market quantity grew yr after yr on the worldwide degree by 11%. And this isn’t perceived within the revenues as a result of the costs had been very depreciated in relation to the earlier yr. And that is additionally relevant to unprocessed meals in Brazil. We grew 3% year-on-year. We didn’t discover this within the revenues as a result of in 2023, the costs had been decrease for 3 quarters in relation to the earlier yr. And now reaching the home market in processed meals, sure, we anticipate to develop in the principle classes the place we lead in Brazil. We’ve the capability to supply with a view to meet this expanded volumes. And we’re going to work with a view to develop past the expansion of the classes, and that is associated to our intention to achieve market share. In relation to SG&A, sure, you are proper. Within the fourth quarter, we focus in advertising and commerce advertising strains due to the campaigns of the seasonal merchandise and likewise the focus of communication funds that contain all of the manufacturers in our portfolio. So after we perceive the construction of SG&A, we now have – I might say, we now have from 6.5% and seven% associated to variable bills the place the freight costs have an important position and 1.5%, a bit of bit much less of administrative bills, and this distinction is related to bills associated to gross sales, gross sales drive of practically 2,000 folks, promoters, greater than 4,000 promoters. And this explains the funds for advertising and commerce advertising. What we are able to anticipate for 2024 or beneficial properties with freight contemplating the negotiations that we now have already began with some gamers? We anticipate alternatives with the discount in gas costs. And that can affect that numbers of 6.5% and 6, 7 factors. We’re going to – as to repair the bills, we’re prone to preserve the identical gross sales constructions, and we’re going to hold the funding ranges on the similar level. That is what I can say.
Isabella Simonato: It is clear. Thanks.
Operator: Our subsequent query comes from Renata Cabral with Citi. Your line is open, ma’am.
Renata Cabral: Hiya, everybody. Good morning. Thanks for the chance. I want to have a follow-up on the BRF Plus program, perhaps the model 2.0. We noticed the outcomes of this system for 2023, very related outcomes, positively impacting the COGS prices. And we want to perceive of what to anticipate for 2024. I am undecided if we may have data when it comes to quantities and values, however I want to know whether or not it will be related when in comparison with 2024 when it comes to whole magnitude, which was over to – okay. And what are the principle focus the corporate is taking a look at beneath this system? I perceive that 2.0 is a continuity of the earlier program. Within the launch, we see lots about service degree enchancment and likewise logistics enchancment and likewise poultry conversion. However may you present some extra details about what may be executed and what will probably be executed in 2024, each when it comes to actions? And should you may give us an concept of magnitude, that might be very useful. Thanks.
Miguel Gularte: Now answering your query, BRF has a precept, which is steady enchancment. In fact, when there’s a program that’s mature as a result of it has been in operation for greater than a yr. Each quarter, there’s a suggestions with the alternatives and we hold our KPIs lively in all places in all places, in all geographies. And also you see the brand new alternatives and also you rework these alternatives into outcomes. What’s necessary to emphasize is that BRF Plus 2.0 is a bit of bit completely different from the earlier model. So the earlier model used 2019 as a baseline yr. At present, we’re wanting into particulars and after we use as a foundation, our operations in numerous geographies, completely different places. For instance, there’s a location the place the mortality price is decrease. We go there. We see the symptoms and we replicated these charges in different places. It is an inside benchmarking that’s applied, that can be utilized for the agro enterprise, for the business, for the exports, for logistics. It may be utilized in all areas. So it is a home benchmark that can lead what we’re going to do within the 2.0 model. As to the magnitude, I can say that in 2024, it will proceed to be related. It is not a high-performance program, and it turns into cultural characters for the corporate. A high-level firm the place all of the groups would carry out primarily based on the KPIs which can be noticed each day. We are saying that the longer term begins each Monday right here and in all places of BRF to our pleasure. So we’re very enthusiastic. We realized lots in 2023. We perfected the method in 2023, and we’re implementing all the method in 2024. So making the most of your query, nonetheless utilizing your query, I want to thank our staff for his or her dedication and resilience as a result of BRF is a program that permeates the corporate as an entire.
Renata Cabral: It’s extremely clear. Thanks.
Operator: Our subsequent query comes from Lucas Mussi with Morgan Stanley. Your line is open, sir.
Lucas Mussi: Good morning. Thanks for taking my query. I’ve a query associated to costs. We noticed the online costs as Thiago talked about is – it has posted a really slight enchancment. And a part of it has to do with the stress of some processed objects akin to spreads and margarine and perhaps pork and perhaps competitors from different gamers. How do you see that taking a look at 2024, contemplating that you simply anticipate higher grain prices? So how you consider the costs of 2024, contemplating that you’re anticipating decrease costs for grains? And what if the value of the spreads will increase and likewise sausages and costs? I want to perceive the way you see this contemplating that you simply see favorable costs for 2024?
Fabio Mariano: Lucas, should you permit me, I’ll make a remark. Once we analyze year-on-year and the costs in Brazil the drop – value drop has to do with the unprocessed meals, as we beforehand talked about. If we separate this from the equation, the processed meals value year-on-year in Brazil has improved by 3%. I want to make this consideration earlier than I reply your query. Excited about perspective, I feel that the market dynamics will rely upon the buyer. As I reported the consumption surroundings is extra engaging in Brazil, despite the fact that it isn’t on the excellent ranges. We perceive that the revenue in Brazil continues to be impacted negatively and deflation course of has began. It began final yr. And with a extra favorable consumption surroundings and demand will improve. And we could have alternatives to have value rounds – higher value rounds in the principle classes. There are another classes that present that the value of the uncooked supplies have modified. So we do not need lots of incentives out there to buy low-cost uncooked materials and industrialized merchandise. So from this viewpoint, the competitors might lower for these particular classes. So that is what we see for 2024.
Lucas Mussi: It’s extremely clear, Fabio. Thanks.
Operator: Our subsequent query comes from Pedro Fonseca with XP (NASDAQ:). Mr. Fonseca, your line is open.
Pedro Fonseca: Good morning, Miguel, Fabio. Thanks for taking my query. I want to ask two questions after which two follow-up questions. The primary one is in relation to the capital allocation. Fabio mentioned that one of many focus can be the discount in gross debt. Alongside these strains, which might be the principle priorities? And what’s the potential of a discount in debt value that you simply anticipate for 2024? Fabio talked about BRL1.8 billion and BRL2.0 billion of monetary bills in 2024. I want to understand how would have an effect on the discount in prices contemplating this legal responsibility administration. I do know this is determined by break prices. And – however it could be good to grasp the way you see this discount in gross debt. And I want to make a fast follow-up when it comes to working capital. I feel the stock ranges factors are very nicely defined. However within the fourth quarter, we noticed a slight deterioration of suppliers. I perceive that there’s the acquisition of grains impacting a bit of, however can we see the provision ranges going again to the typical strains in 2024?
Fabio Mariano: Thanks, Pedro. Good morning. I’ll begin from the second query about working capital. I can say that within the line of suppliers, sure, we impact the stock ranges after we acquired within the maize of season and contemplating the cost circumstances, we had a focus within the fourth quarter. So I want to say that no structural modifications have been made when it comes to the cost phrases with the suppliers. And from the structural viewpoint, we’ll return to succeed in the identical turnover ranges that we noticed in 2023. In relation to the online debt – the gross debt, we’re going to think about the final additive money owed. And we’d settle this upfront or repurchase after we think about the market bonds. We didn’t think about – within the breakeven evaluation, we didn’t think about any unfold discount. However we thought of the brand new curiosity ranges, particularly in Brazil. So our focus is to advertise this legal responsibility alternate or alternative in order that we are able to scale back the monetary burden. So we now have been very lively in monitoring the market circumstances, each in Brazil and internationally. However that is what I can disclose now to you.
Pedro Fonseca: Okay Fabio. It’s extremely clear. Thanks.
Operator: BRF convention name has come to an finish. We want to thanks for attending this name, and have an excellent day.
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