Q4 2023 JBS SA Earnings Call

Operator: Good morning and welcome to the JBSSA and JBSUSA fourth quarter and full year 2023 results conference call. At this time, all participants are in a listen-only mode.

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Speaker Change: <unk> good morning, and welcome to Jbs S E N J B S USA fourth quarter and full year 2023 results conference call niche and momentum at this time all participants are in a listen only mode.

Operator: Later, we will conduct a Q&A session, and instructions will be given at that time. As a reminder, this conference is being recorded. The link for downloading the presentation is available at the R.I. site and in the chat.

Speaker Change: Later, we will conduct a Q&A session and instructions will be given at that time as a reminder, this conference is being recorded at the.

Speaker Change: The link for download of the presentation is available at Lee our eye and you make your site and in the chat any statement. Eventually made your joining this conference call in connection with the company business outlook projections operating and financial targets and potential growth should be.

Operator: Any statements eventually made during this conference call in connection with the company's 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 market conditions, on Brazil's overall economic performance, and on industry and international market behavior, and therefore are subject to change. Here with us today are Gilberto Tomazoni, Global CEO of JBS, Guilherme Cavalcanti, Global CFO of the company, Wesley Batista Filho, CEO of JBS USA, and Cristiane Assis, Investor Relations Director. Now, I will turn over to Gilberto Tomazoni, who will start the presentation.

Speaker Change: Understood as nearly forecasts based on the company's management's expectations in relation to the future of J B S.

Speaker Change: Such expectations are highly dependent on market conditions on Brazil's overall economic performance in an industry and international market behavior, and therefore are subject to change here with US today, we have zubair to Tomas Johnny Global CEO of J B S.

Speaker Change: Uli amicable guarantee global CFO of the company Wesley Batista, SR CEO of Jbs, USA and Cristiani's since Investor Relations Director now I will turn it over to Gerard to tumor zoning, who will start the presentation Mr.

Gilberto Tomazoni: Mr. Tomazoni, you may begin your presentation. It's important to highlight that our focus on operational excellence was key to correcting the course of two of our businesses that underperformed in 2023, USB's and Sierra. We identified issues and took action to adopt management measures based on our culture with a focus on people and discipline execution.

Speaker Change: Thomas Zani, you may begin your presentation.

Speaker Change: Yeah.

Thomas Zani: Thank you resolve that Donato fault, it's important to highlight that our focus on operational excellence was key to correcting the course of two of our businesses that underperformed in 23 U S beef and Sierra.

Gerard: We identified issues and took action to adopt management measures based on our culture with a focus on people and disciplined execution.

Gilberto Tomazoni: The results of these measures are already being felt; at Sierra, the outlook for 2024 is very positive, with the possibility of margins exceeding double digits in the first quarter of the year, a traditionally challenging period for the sector. Within the positive scenario of demand and normalization of prices, Seattle is well positioned to reap the rewards of operational improvements implemented in recent months and the investments in expansion made in recent years. I would like to reiterate that our multi-protein and multi-geography strategy puts us in an unmatched position in the global industry.

Gerard: Their resolve some of these measures are already being felt by the AMC at Sierra the outlook for 'twenty 'twenty four is very positive with a possibility of margins exceeding double digits in the first quarter of the year.

H. Additionally, challenging period for the sector within the positive scenario of offering in mind and a normalization of prices Seattle is well positioned to reap the rewards of operational improvements implemented in recent months.

Gerard: And the investments in expansion made in recent years.

Gerard: I would like to reiterate that our multi protein and multi geographies strategy puts us in an unmatched position in the global industry. This is strength allows us to capitalize on the cattle cycle upswings in Brazil and Australia.

Gilberto Tomazoni: This strength allows us to capitalize on the cattle cycle upswings in Brazil and Australia, whereas our American operation faces margin decline due to current market conditions. In Australia, the improvement in our outlook is reflected in a significant increase in margin in the fourth quarter of 2023 compared to the same period last year. In Brazil, where the situation is similar, significant growth in cattle processing volume, increased value-added product sales, the authorization of new plants to supply the Chinese market, as well as improved profitability of reports, offer promising prospects for the beef business in the short and long term. Chicken and Pork businesses face persistent pressure on production costs throughout 2023 but are already benefiting from the normalization of grain prices. This is evident in Bill Grimm's NUS sports results.

Gerard: Whereas our American operation phases margin decline due to current market conditions.

Gerard: In Australia the improvement.

Gerard: In our outlook is reflected in a significant increase in margin in the fourth quarter of 23 compared to the same period last year in Brazil, where the situation is similar significant growth in cattle processing volume increased value added product sales the authorization.

Gerard: New plants supplying the Chinese market as well as improved the profitability of reports offer promising prospects for the leasing business in the short and long term.

Gerard: Sure.

Gerard: The breakthrough for us.

Gerard: So chicken and pork pork.

Pork business faced a persistent pressure on production costs throughout 'twenty three that are already benefiting from the normalization of grain prices.

Gerard: As is evident in bill Graham's N U S. Pork results the recovery of margins in these businesses also reflects a battery balancing of supply and demand Pilgrim's margins starting to have had a strong growth arising from one 5% in the fourth quarter of 'twenty two.

Gilberto Tomazoni: The recovery of margins in these businesses also reflects a better rebalancing of supply and demand. Pilgrim's margins have shown strong growth, rising from 1.5% in the fourth quarter of 22 to 6.8% in the fourth quarter of 23. Likewise, U.S. Pork Results. This number jumped from 4.8% to 9% in the same period. By means of our global platform, we operate successfully in all relevant protein types.

Gerard: Two to six 8% in the fourth quarter of 'twenty three of March Likewise U S pork results.

Gerard: Jumped from 4.8% to 9% in the same period, where many of the law.

Gerard: By means of our global platform, we operate successfully in all relevant protein types.

Gilberto Tomazoni: With results exceeding expectations, our growth in aquaculture reaffirms our belief that we will replicate what we have done previously with poultry, pork, and value-added products. Likewise, we continue to invest in research and development of alternative proteins such as plant-based and cultivated proteins. In 24, we will complete a cultivated protein facility in San Sebastian, Spain. We're also building the JBS Biotech Innovation Center in Brazil, which is a research, development, and innovation biotechnology center. We are a food company, and our focus is to meet consumer demand for all protein options. I would also like to highlight that in 2023, we once again demonstrated our financial strength. The maintenance of our healthy cash generation allowed us to distribute $448 million in U.S. dollars in dividends for the year, creating value for our shareholders.

Gerard: With results exceeding expectations, our growth in agriculture, reaffirms, our belief that we will rapidly K to what we have done previously with a voluntary bark and value added products.

Gerard: Likewise, we continue chain Vas in research and development of alternative proteins, such as plant based and cultivated protein in.

Gerard: In 'twenty four we will complete a cultivated protein facility in San Sebastian Spain. We're also building D. J B S. Biotech innovation center in Brazil, which is a research development and innovation Biotechnology Center, we are a food company and our focus is.

Gerard: Is to meet consumer demand for all protein options.

Gerard: I would also like to highlight that in 2022 we once again demonstrated our financial strength.

Gerard: The maintenance of our healthy cash generation allowed us to distribute for hunting and 48 million.

Gerard: U S dollars in dividends for the year, creating value for our shareholders reduction we reduced our gross debt by 1.6 billion U S dollars from the third quarter to the fourth quarter of 'twenty three.

Gilberto Tomazoni: We reduced our gross debt by 1.6 billion U.S. dollars from the third quarter to the fourth quarter of 23, which we plan to continue in 24. As a result of our financial discipline, we began the company's deleveraging process at the end of 23. The leverage ratio decreased from 4.87 times in the third quarter to 4.42 times in the fourth quarter.

Gerard: Which we plan to continue in 'twenty four.

Gerard: As a result of our financial discipline, we began the company's deleveraging process at the end of 'twenty three.

Gerard: The leverage ratio decreased from from four point 87 times in the third quarter to four point 42 times in the fourth quarter in.

Gilberto Tomazoni: In other words, we remain confident in our long-term strategy. We will continue reinforcing our diversified platform, both geographically and by protein type, investing in strong brands, value-added products, and strategic partnerships with our customers. The set of actions is crucial for creating better margins and reducing volatility. Investments made and delivered in 2023 are significant milestones that support this. In Brazil, we opened two new plants in the state of Paraná, which will allow Sierra to advance its expansion strategy in value-added projects. Likewise, we started operating at the new Principi Italian Meats Facility in Columbia, Missouri, and invested in our King's Lane Pork Unit in the UK to make it a center of excellence in cold cuts.

Gerard: In other words, we remain confident in our long term strategy, we will continue reinforcing our diversified platform, both geographically and by protein type investing in strong brands value added products any strategic partnerships with our.

Gerard: <unk>.

Gerard: This set of actions is crucial for creating better margins and reducing volatility investments made and delivered in 'twenty three are significant milestones that supports this.

In Brazil, we opened two new plants in the state of partner, which will allow Sierra to advance its expansion strategy value added projects.

Gerard: Likewise, we started operating at the new.

Gerard: Principally Italian meats facility in Columbia, Missouri, and invested in our Kings Leong bark unit in the U K to make it a center of excellence and cold cuts Jbs has demonstrated resilience and strength over its 17 years.

Gilberto Tomazoni: JBS has demonstrated resilience and strength over its 70 years. The company's diversified platform, commitment to excellence, innovation, and sustainability, focusing on people and culture, and the impending dual listing in Brazil and the United States put the company in a unique position to embark on a new cycle of accelerated growth and shareholder returns. We remain focused on the dual listing process in the U.S.

Gerard: Company's diversified platform commitment to excellence innovation and sustainability, focusing on people and culture, ending bending dual listing in Brazil, and the United States.

Gerard: Put the company in a unique position to embark on a new cycle of accelerated growth and shareholder returns.

Gerard: We remain focused on the dual listing process in the U S and today.

Guilherme Perboyre Cavalcanti: We have filed an update to the registration request with the SEC, which includes our figures up to December 31. 23. I thank you all for your participation in this earnings call, and I will now hand over to Guilherme, who will detail our financials. Guilherme, please take the floor.

Gerard: We have failed an update to the registration request with the S E C industrial.

Gerard: This includes our figures up to December 31.

Gerard: 23.

Gerard: Hi, Ravi.

Ravi: I. Thank you all for your participation in this earnings call and I will now handover to Gilead, Amy who will detail our financials you Liane. Please state the floor. Thanks.

Guilherme Perboyre Cavalcanti: Thank you, Tomazoni. We're now going to talk about the financial highlights of the year and for the fourth quarter of 23, starting on slide 16, please. I would like to start by highlighting some important events that took place over the past year and also update you on some of these processes. The first point to be highlighted is the registration of the 11 senior notes with the SEC in August.

Amy: Thank you Thomas Arnie.

Amy: We're now going to talk about are the financial highlights of the year and for the fourth quarter 23, starting on slide 16. Please I would like to start by highlighting some important events that took place over the past year and also update you on some of these processes.

Amy: The first point to be highlighted is the registration of the 11 senior notes with the FCC in August this was fundamental for both the company and investors as it brought a series of significant manifests among them. We have the expansion of investor base, the increasing liquidity of notes and the obligation.

Guilherme Perboyre Cavalcanti: This was fundamental for both the company and investors as it brought a series of significant benefits. Among them, we have the expansion of the investor base, the increasing liquidity of notes, and the obligation to adapt to rules and regulations such as SOX, FCPA, and PCAOB. In addition to the publication of new reports, such as the V20F, we have actually just filed it. We have also announced that we will register new senior notes issued on September 23 in the amount of US$2.5 billion. We will also use this opportunity to reopen the exchange period for the 11 senior notes which have already been registered.

Amy: To adapt to rules and regulations, such as Sox F. C. P. A M D. C E O B. In addition to the publication of New reports such as the 20-F, we have actually just file them.

Amy: We have also announced that we will register new senior notes issued in September 23 in the amount of 2.5 bid in U S. Dollars. We will also use this opportunity to reopen the exchange period for the 11 senior notes, which have already been registered however.

Guilherme Perboyre Cavalcanti: However, some investors did not exchange their notes at that time, and therefore, we are now offering a new opportunity at the request of these investors. Given the announcement of the registration of the senior notes, we have made public our intention to have our shares listed in the U.S. and Brazil, as mentioned by Tomazoni. Taking advantage of the end of the fiscal year, we also filed a new F-form, which is now available for public consultation. And in relation to the new agencies... On September 23, we issued US$2.5 billion in senior notes to JBS USA. In October, JBSSA issued CRAs in the amount of US$1.7 billion. Additionally, through our subsidiary, Pilgrim's Pride, we carried out two issuances totaling US$1.5 billion. With the resources obtained, we significantly reduced our short- and mid-term debt, practically eliminating the need for debt payments until 2027.

Amy: And investors did not exchanged their notes at that time and therefore, we are now offering a new opportunity upon the request of these investors given the announcement of the registration of the senior notes, we have made public our intention to have our shares listed in the U S and Brazil as mentioned by Thomas zones.

Amy: Taking advantage of the end of the fiscal year, we also.

Amy: Have filed a new App or forum, which is now available for public consultation and are in relation to the new issuances.

Amy: On September 23, we issued 2.5 billion U S dollars in senior notes to Jbs USA in October J B S. S. A you should see our ace in the amount of 1.7 billion U S. Dollars. Additionally, through our subsidiary Pill Graham Stride, we carried.

Amy: Doubt two issuances totaling 1.5 billion, where the resources are obtained we significantly reduced our short and mid term debt practically eliminating the need for debt payments until 2027 now moving onto slide 17 net revenue in the fourth quarter of 23 in the order of <unk>.

Amy: 19 going toward bidding U S dollars.

Amy: Add to that totaled.

Amy: 1 billion U S dollars, which represents a margin of 5.3% for the quarter net profit was 17.7 million U S dollars in the quarter and on Slide 18, we have the highlights of the year net revenue in 23 of our 73 billion U S dollar.

Guilherme Perboyre Cavalcanti: Now moving on to slide 17, net revenue in the fourth quarter of 2023 was in the order of US$19.4 billion, and to that totaled US$1 billion, which represents a margin of 5.3% for the quarter. Net profit was US$17.7 million in the quarter.

Amy: Yeah.

Amy: Adjusted <unk> totaled nine I'm, sorry, a 3.5 billion U S dollars, which represents a margin of 4.7% for the year net loss was.

Amy: 199 million U S dollars and a year.

Amy: Now moving on to slide 19, before commenting on free cash generation. It is important to highlight that as of the fourth quarter. We began to include a leasing expanses in their calculation of fresh cash flow, Amy as representing the company's cash generation more accurately and.

Amy: To be in greater lying with the variation in net debt.

Amy: Operating cash flow in the quarter was 1.7 billion U S dollars free cash flow for the quarter was a tentative 75 million U S dollars. The free cash flow generation was positively impacted by improved operating results at <unk>.

Guilherme Perboyre Cavalcanti: And on slide 18, we have the highlights of the year, net revenue in 2023 of US$73 billion, and adjusted ETIDA totaled US$3.5 billion, which represents a margin of 4.7% for the year. Now, moving on to slide 19, before commenting on pre-cash generation, it is important to highlight that, as of the fourth quarter, we began to include the leasing expenses in the calculation of fresh cash flow, aiming at representing the company's cash generation more accurately and to be in greater line with the variation in net debt. Operating cash flow in the quarter was US$1.7 billion.

Amy: Pilgrim's, Jbs, Brazil and Australia.

Amy: And he's a working capital of mailing banter is N suppliers, which combined totaled a positive variation of 570 million U S dollars and a reduction in capex.

Amy: By 282, 3 million U S dollars and the partner.

Amy: Yeah.

Amy: Of the last year during the results release call left Q1, we had commented on what we would do to compensate for.

Amy: The cash burn of 1.3 billion in Q1 of 2023 remembering that seasonally the first quarter consumes cash throughout the year, we provided update to the market on the previously discussed value totaling $1.4 billion, considering the necessary revisions and now as the end.

Amy: Of the year and even in the face of a difficult and volatile year, we not only have reverted in the first quarter result, but also generated 448 million in free cash in 2023 the main evolutions, we're working capital that was 1.4 billion reais of $318 million considering.

Guilherme Perboyre Cavalcanti: Pre-cash flow for the quarter was US$875 million. The pre-cash flow generation was positively impacted by improved operating results at Pilgrims, JBS Brazil, and Australia, the release of working capital, mailing inventories, and suppliers, which combined to a totally positive variation of US$570 million in a reduction in CAPEX by $253 million U.S. dollars in the quarter. Last year, during the results release call of Q1, we had commented on what we would do to compensate. We not only reversed the first quarter result but also generated $448 million in free cash in 2023. The main evolutions were working capital that was $1.4 billion, so $318 million, considering inventory accounts, accounts receivable, and suppliers, reduction in CAPEX by $3.7 billion, and tax refunds in the U.S., and monetization of tax credits in Brazil, which totaled $360 million.

Amy: Inventory accounts accounts receivable and suppliers reduction in Capex by a 3.7, Balian Ray eyes and tax refunds in the U S may not monetization of tax crowded temperatures, Brazil, which totaled $360 million, while 'twenty 'twenty four without providing guidance.

Amy: <unk>, we expect our cash generation to follow a seasonality similar to last year. This means that it is likely that we will have a cash burn in the first quarter, but we expect it to be around half the value recorded at the same period last year, taking into account the evolutions and sad results and the main.

Amy: Tenants have attractive margins in Australia U S pork and Pilgrim's.

Amy: Now for the updated year of the bed at unnecessary for free cash flow breakeven. We can consider net financial expenses of 24 similar to twenty-three at 1.1 billion leasing expenses, which we calculate add $500 million visa V 400.

Amy: And 29 million and 20 twenty-three reflected the increase in installed capacity in the same way as rental expenses. The increase of our production capacity also increases the consumption of biological assets. Therefore, disregarding possible variations of grain prices we're estimating.

Amy: Logical lapses consumption of $650 million Capex for 'twenty twenty-three was 1.5 billion, which is 500 million in expansion 'twenty 'twenty for a total cash capex of $1.3 billion was approved the death of which 550 million was for a carryover.

Guilherme Perboyre Cavalcanti: Well, in 2024, without providing guidance, we expect our cash generation to follow a seasonality similar to last year. This means that it is likely that we will have a cash burn in the first quarter, but we expect it to be around half the value recorded in the same period last year, taking into account Now, for the updated year of the EBITDA necessary for free cash flow breakeven, we can consider net financial expenses of $24 similar to $23 at $1.1 billion leasing expenses, which we calculate at $500 million vis-à-vis $429 million in 2023, reflecting the increase In the same way as rental expenses, the increase in our production capacity also increases the consumption of biological assets. Therefore, disregarding possible variations in grain prices, we are estimating biological asset consumption of $650 million; CAPEX for 2023 will be $1.5 billion, which is $500 million in expansion.

Amy: And 200 million for expansion and continuity with the plant inaugurated last Sierra Thus does regarding capital variations outside the company's control and again with our guidance the avatar that corresponds to the breakeven point of free cash is estimated around three.

Amy: Point $55 billion. It is worth underscoring that the difference above this amount will be subject to the application of the effective average global income tax rate, which is around 25% on slide 21, we can see our debt profile. During Q4, we used cash to reduce gross debt.

Amy: By $1.6 billion until February 'twenty, 'twenty, four we've U 566 million and our cash position to reduce grow our gross debt and we intend to continue this movement that net debt for 'twenty twenty-three ended at $15.3 billion stable visa the.

Amy: Last year as the company's free cash generation was sufficient to cover the dividend payments that totaled $448 million now our leverage was two four points.

Amy: Four point 40 to $8 and a four point 32 in Reais.

Amy: Confirming the deleveraging trajectory that we had indicated in previous calls using the market consensus the leverage will fall of the downward trajectory that began in Q4 of 'twenty twenty-three D. Four according to the market consensus for 'twenty 'twenty four we have.

Guilherme Perboyre Cavalcanti: In 2024, a total cash CAPEX of $1.3 billion was approved, of which $550 million was for carryover and $200 million for expansion in continuity with the plans inaugurated last year. Thus, disregarding capital variations outside the company's control and again without guidance, the EBITDA that corresponds to the breakeven point of free cash is estimated around $3.55 billion. It is worth underscoring that the difference above this amount will be subject to the application of the effective average global income tax rate, which is around 25%.

A 6.5% EBITA margin and in 'twenty 'twenty five a margin of 7% of EBITA 'twenty 'twenty six or 7.8 EBITA margin. This is a market consensus therefore, using these figures as reference we would reach the end of 'twenty 'twenty four with them.

Amy: Leverage ratio below three point twenty-five in 2025 below three times and below 2.5 by.

Amy: By the end of 2026.

Amy: So I will now briefly go through the business units, starting with Seattle on Slide 22, the net revenue for the quarter fell 5% and twin in Q4 and 4% in the year 'twenty twenty-three was challenged with margins below the ideal levels due to surface Sir.

Amy: <unk> external and external challenges such as the global excess of poultry and high production cost and challenges in the upstream part for the businesses as well as lower dilution of fixed costs due to the plant's inaugurated in 'twenty three are still in the ramp up process. However, we.

Guilherme Perboyre Cavalcanti: On slide 21, we can see our debt profile, 4.42 in dollars and 4.32 in reais, confirming the leveraging trajectory that we had indicated in previous calls. Using the market consensus, the leverage will follow the downward trajectory that began in Q4 of 2023-D4. According to the market consensus for 2024, we have a 6.5% EBITDA margin, and in 2025, a margin of 7% of EBITDA, and in 2026, a 7.8 EBITDA margin. This is the market consensus. Therefore, using these figures as a reference, we would reach the end of 2024 with a leverage ratio below 3.25 in 2025, below three times, and below 2.5 by the end of 2026.

Amy: Ended the year with positive results and we're highly optimistic for 'twenty 'twenty four 2023 well.

Amy: Slide 23, Jbs, Brazil recorded net revenue of 4% higher than Q4 of 2022 reflecting higher volumes sold but 6% lower than 20 twenty-two due to the drop in prices in the domestic and international market 20, twenty-three was marked by a high market volatility mainly due.

Amy: Due to the south embargo be export to China, the main destination for Brazilian industry, and the favorable livestock cycle, which increase the availability of animals for slaughter and reduced the prices of lives cattle in Brazil. In this scenario, we strengthened international relationships gained new plants are typically.

Amy: Asian further improve the level of service for our key partners and brought our brand closer to consumers for the fourth time that Freeborn brand was top on my mind and that the result, everything above both the quarter and for the year, we improve profitability now now in U S. GAAP the neb.

Amy: <unk> of of beef North America grew 15% during the semester and 6% year on year on 2023, despite the increase in revenue, resulting from higher prices in the period profitability was impacted by the growth in the price of life cap of live cattle at a faster pace.

Unknown Executive: So I will now briefly go through the business units starting with SEATA on slide 22, the net revenue for the quarter fell 5% in Q4 and 4% in the year 2023 was challenging with margins below the ideal levels due to several external and internal challenges Slide 28 However, during the year, the increase in volume sold did not fully compensate for the reduction in prices in both the domestic and international market. Despite this, in both periods, there was an improvement in profitability mainly due to a reduction in the price of cattle acquisition resulting from greater availability of animals due to a more favorable cycle in the country and efficiency gains in several areas. Well, USA Pork, net revenue for the quarter was 4% higher compared to Q4 of 22, but a reduction of 5% compared year on year.

Amy: The increase in sales price, reflecting the increase in costs, resulting from the cattle cycle in the U S. Additionally, the company uses future contracts as a short term production measure. However, the fourth quarter was affected because the price of live cattle fluctuated in in a typical way on September 12.

Amy: Two it was approximately 187 cents per DAU per pound on December said, it fell to 162 cents in Quaker plea went back to 188 at the beginning of the year now J B S. Our Australia in the quarter revenue growth was the result of higher volumes sold reflect.

The greater availability of cattle. However, during the year the increase in volumes sold did not fully compensate for the reduction in prices in both the domestic and international market. Despite this in both periods. There was an improvement in profitability, mainly due to the reduction in the price of cattle acquisition re.

Amy: Resulting from greater availability of animals due to more favorable cycle in the country and efficiency gains in several areas.

Amy: Well USA pork well net revenue for the quarter was 4% higher compared to Q4 F. 'twenty, two but the reduction of 5% comparing year on year. The beginning of 'twenty three we faced changes in prices profitability due to the excess of supply of hogs in the domestic market. However through.

Unknown Executive: At the beginning of 23, we faced changes in prices and profitability due to the excess of supply of hogs in the domestic market. However, throughout the year, we observed a normalization in production accompanied by a reduction in grain cost, as well as the average price of live hogs. Furthermore, through continuous efforts and improvement results, such as expanding the value-added portfolio and improving commercial and portfolio execution, the EBITDA margin returned to normalized levels in the second half of the year. Here we have Pilgrim Sprite.

Amy: Out the year, we observed a normalization in production accompanied by the reduction in grain crop as well as the average price of life hops. Furthermore, through continuous efforts and improvement resolves such as expanding the value added portfolio improving corp, commercial and portfolio execution. The EBITA margin returned to normalized levels.

Amy: The second price of the year here, we have Pilgrim's sprite here there was an increase of net revenue by 10% on Q4 of 'twenty twenty-three when we compare it to Q4 F. 2022 and remained stable in 2023 in the annual comparison like other business use it units mentioned 2023.

Unknown Executive: Here there was an increase in net revenue by 10% in Q4 of 2023 when compared to Q4 of 2022 and remained stable in 2023 in the annual comparison, like other business units mentioned. 2023 was marked by high volatility of the commodities market at the beginning of the year, with quality prices beginning at historically low levels due to the oversupply in the industry, especially in the heavy big bird segment.

Amy: Marked by high volatility of the commodities market at the beginning of the year Palti prices began at historically low levels due to the oversupply in the industry, especially in the heavy big Bird segment in.

Unknown Executive: In the U.S., however, through a better balance between supply and demand, price gradually stabilized. Although cost inflation remained high despite the challenges faced, the company remained focused on executing its strategy and managed to improve results in all the regions. As we saw...

Amy: In the U S. However, it's through the better balance between supply and demand price gradually stabilized although cost inflation remain high despite the challenges facing the company remain focused on executing our strategy and manage to improve the results in all the regions as we saw.

Amy: The improvement in profitability in carrot and all the business units throughout 2023 we expect deep North America. Similarly, the path remains positive for 'twenty 'twenty form with emphasis on J B S. Australia, Sierra P. P. C N U S. Pork now we can go to our Q&A session.

Operator: The improvement in profitability incurred in all the business units throughout 2023, except beef North America. Similarly, the path remains positive for 2024, with emphasis on JBS Australia, Sierra PPC, and US Pork. Now we can go to our Q&A session. Ladies and gentlemen, we will now begin our Q&A session. In order to pose a question, please click on raise your hand. To withdraw your question from the queue, please click on lower your hand.

Speaker Change: Ladies and gentlemen, we will now initiate our Q&A session in order to pose a question. Please click click on raise your hand to withdraw your question from the queue. Please click on lower your hand, and our first question comes from Tiago Bartolo seat.

Thiago A. Bortoluci: Our first question comes from Thiago Bortoluci, from Goldman Sachs. Mr. Thiago, you have the floor. Hello, everyone. Good morning, and thank you for the presentation. I am sure that you have talked about each one of the units in detail, but I wanted to hear from you in this first quarter how you have felt the demand in the U.S. at the end. And, in general, when I look at prices, they are bad, especially for TPC and Big Break, but also for Port.

Thiago A. Bortoluci: Old Man sex, Mr. Chad will you have the floor.

Thiago A. Bortoluci: Good morning.

Thiago A. Bortoluci: Hello, everyone. Good morning, and thank you for the presentation.

Thiago A. Bortoluci: I am sure.

Thiago A. Bortoluci: Oh that you you have talked about each one of the units in detail, but I wanted to hear from you and dispersed corridor, how you have failed.

Thiago A. Bortoluci: Demand in the U S at the end and in general when I look at our prices.

Thiago A. Bortoluci: Great.

That are banners, especially to be seen big break but also.

Thiago A. Bortoluci: In pork driver does has a lag to sequentially batters spreads.

Thiago A. Bortoluci: This has led to sequentially better spreads in pork, demand in the U.S. Is it reacting? better than what we saw last year. What is the mix like between proteins and commodities with added value and what is the impact this will have on the margins of the international operations in this first year? And here, perhaps, also, if you have any insight for being eventually thinking that you have a little bit more pressing power?

Thiago A. Bortoluci: In pork demand in the U S is it reacting.

Thiago A. Bortoluci: Rather than what we saw last year.

Thiago A. Bortoluci: <unk> is the mix line between proteins and commodities with added value and want to ease the impact. This will have in the margins of the international operations. In this first year and here. Perhaps also if you have any upside to Kirby eventually thinking that you'd have a little bit more pricing power there.

Gilberto Tomazoni: This is my first question. The second question, I don't know whether Wesley is present on the call, but this question could be referred to him or to Tomazoni, and we've seen an Announcement from the Board of Directors to be voted on at the next meeting. So the return of the comptroller more... directly to the core of the company, would that somehow change the company's strategy and vision, as Tomazoni commented, and would that lead to accelerated growth? somehow.

Thiago A. Bortoluci: This is my first question. The second question I didn't know whether Wesley as president of the call, but discretion could be referred to him our tuitama zoning.

Thiago A. Bortoluci: We've seen.

Thiago A. Bortoluci: An announcement.

Thiago A. Bortoluci: Are the changes in the board of directors are to be voted in the next meetings. So the return of the controller more.

Thiago A. Bortoluci: Directly and acquired a company would that somehow change the company's strategy and vision as comas, Domo zani common Ted and would that lead to accelerated growth.

Thiago A. Bortoluci: Somehow.

Thiago A. Bortoluci: <unk>.

Thiago A. Bortoluci: And also what is the next step in terms of global expansion for J B S.

Gilberto Tomazoni: And also, what is the next step in terms of global expansion for JBS? Well, good morning, Thiago. I'm going to answer your first question. The demand in the USA, with the inflation rates we've seen in the U.S. We've seen two important things. First of all, of course, we can see the cost of being... at higher levels and a higher demand for pork and pork products, and it also has to do with the availability of the raw materials, so we can see more activity in retail for a fork and in poultry. We've also seen, I'm sorry, in beef, a higher demand for cuts that have a lower price. This is not necessarily bad, even for beef, because what really matters at the end of the day is the average price of all of the cuts.

Speaker Change: Well good morning, Chuck I'm going to answer your first question the demand in the USA.

Chuck: Or the inflation rates, we've seen in the U S. We've seen two working things are first of all scores. We can see the cost of our beef at higher levels and a higher demand for pork and poultry.

Chuck: Yes.

Chuck: And it also has to do with the availability of the raw materials. So you can see more activity in retail.

Chuck: Flora.

Chuck: Pork and chicken.

Chuck: Voting in in poultry, we've also seen Oh, I'm, sorry in beef, where we've seen a higher demand.

Chuck: Four.

Chuck: Cuts that have a lower price.

Chuck: Morning.

Chuck: This is not necessarily bad even for beef because what really matters at the end of the day.

Chuck: Is the average <unk> price.

Chuck: Of all of their cuts. So we can see a leveling of the higher costs, we can see a higher demand for the historically less expensive gods.

Gilberto Tomazoni: So we can see a leveling off of the higher cuts, and we can see a higher demand for the historically less expensive cuts. And they are compared to other products who are perhaps a little bit more expensive. But the total demand, we can see a strong demand, but... because of the inflation rates in all categories. I'm not talking about proteins in food alone, and this is something that has been a trend in the U.S. lately. So this has to do with demand in the USA. Good morning, Thiago.

Chuck: And there compared to other products, who are perhaps a little bit more expensive, but the total demand we can see a strong demand there but.

Chuck: Because of the inflation rates are in all categories I'm not talking about proteins and food alone and this is something that has been a trend in the U S. Lately. So this has to do with the demand in the USA.

Chuck: Good morning, Thiago. Thank you for your question.

Chuck: Yeah.

Chuck: With.

Chuck: Regarding their presence southwest laying the board I wanted to make a comment.

Gilberto Tomazoni: Thank you for your question. Regarding the presence of Wesley on the board, I wanted to make a comment. They do not have any impediment to taking a seat on the board or to having any executive role.

Chuck: They do not have any pediment to take his seat in the board or to have any executive wrong. They are.

Gilberto Tomazoni: They are those who, along with the founder, have leveraged the company from a small butchery in the state of Gaia into the largest provider worldwide, and this further contributes to the success of JBS. In terms of the change in strategy, I don't think that there has been a change in the short-term strategy. Of course, the strategy of the company that you can see and that we disseminate on our website. It hasn't changed since the IPO, which is a growth in... Value Added Product, the development of strong distribution platforms where I can have operational excellence. This is a long-term strategy that we have pursued. Along with that, the diversification of our platform, and the start of salmon farming in Australia, which only shows our diversification strategy. The experience with this activity has been better than expected, and we believe that we can do with it what we have done with poultry and pork. This long-term strategy will remain. It has been very successful for the company and has enabled the company to become what it is now. Regarding the listing. We've talked about it for some time now. It is a strategic priority of the company. It has, uh..., two important facts.

Chuck:

Chuck: The.

Chuck: Those who along with the founder.

Chuck: They have leverage.

Chuck: Yes.

Chuck: The company transforming a small buttery in the state of guys into the largest supplier or provider worldwide and this further contributes to the success of J B S.

Speaker Change: In terms of the change in strategy I don't think that there has been a change in the short term strategy of course on the strategy of the company that you can see and we disseminated in our website it hasn't changed since the IPO.

Speaker Change: <unk>, which is a growth in.

Speaker Change: Value added products.

Speaker Change: The development of strong distribution platforms, where I can have operational excellence. This is a long term strategy that we have pursued along with manta the diversification of our platform Oh, So the start of salmon and.

Speaker Change: Australia, which only shows our diversification strategy.

Speaker Change: Our experience.

Speaker Change: With this activity has been better than expected and we believe that we can do with that what we've done with poultry and pork. This long term strategy.

Speaker Change: We'll remain it has been very successful for the company and has enabled the company to become what it is now.

Speaker Change: Regarding the listing.

Speaker Change: We've talked about it for some time now it is a strategic priority of the company.

Speaker Change: Yeah.

Speaker Change: It has.

Speaker Change: There are two important facts are we can add value any trees.

Gilberto Tomazoni: We can add value and increase the number of our investors participating in countries where we do not participate right now. This can leverage huge amounts for the company. In addition to that, it provides a lot of flexibility for the company's growth. We are also going to have other equity opportunities to fund our growth, not only in terms of debt. So it is strategic. We have already announced that we have reconfigured our files.

Speaker Change: Number of our investors participating in countries, where we do not participate Rainer does can leverage huge amounts for the company. In addition to that it provides a lot of flexibility for the company's growth.

Speaker Change: We're also going to have other equity opportunities to fund our growth not only in terms of debt. So it is a strategic we have already announced.

Speaker Change: That Oh, we have a reconfigured our files we.

Ricardo L. Alves: We are also answering or responding to prior questions. We're now going to wait for anything else to provide them, and we will move on to the registry and call for an assembly. We're only in the first quarter, and we have enough time to be able to conclude it by the end of the year. Well, thank you, Tomazoni. Our next question is from Ricardo Alves, Morganstown. Please proceed. Good morning, everyone.

Speaker Change: Are also answering or responding to prior questions. We're now going to wait for the virus.

Speaker Change: Yes.

Speaker Change: E C N.

Speaker Change: Great.

Speaker Change: When we do not have.

Speaker Change: Anything else to provide them, we will move on to the registry and.

Speaker Change: Call for an assembly.

Speaker Change: In the first we're only in the first quarter and we have.

Speaker Change: Enough time to be able to conclude it by the end of the year well. Thank you Tama zani.

Speaker Change: Yes.

Speaker Change: Our next question is from Ricardo Alves Morgans down.

Speaker Change: Please proceed.

Speaker Change: Oh.

Speaker Change: Good morning, everyone. Thank you for the call I apologize for having lost the initial part of the call and so perhaps I will ask you to repeat some aspects. The first question was about the listing and you've just answered about it I would like to say that we are really focused.

Ricardo L. Alves: Thank you for the call. I apologize for having lost the initial part of the call. And so, perhaps I will ask you to repeat some aspects. The first question was about the listing, and you've just answered it. I would like to say that we are really focusing on concluding the listing for 2024. And just to confirm my understanding of it.

Speaker Change: Hang on concluding the listing for 'twenty 'twenty, four and just to confirm my understanding about it.

Wesley Mendona Batista Filho: The second, Regarding U.S. beef, we discussed this in the last call, but in the second and third quarter, your margins were a little bit higher than expected because of the company's spreads. And now, according to our accounting, the margin on U.S. beef was below what we had anticipated according to the industry's spread. So I wanted to ask you if there are any factors that are specific to your operations or something that we are not aware of in SG&A. But I would like to know what the outlook for U.S. beef is going to be for 2024. So I wanted to know what really impacted your beef distribution in the U.S. and the outlook for this year. And my third and last question is about Sierra, and once again, I apologize for having lost at the beginning of the call.

Speaker Change: The second question.

Speaker Change: Regarding U S beef.

Speaker Change: We discussed this in the last call, but in the second and third quarter your margins were a little bit higher than expected.

Speaker Change: Cause of the company's spreads in now according to our accounting the margin of U S. Beef was below what we had anticipated according to the industry spread. So I wanted to ask you. If there are any factors that are specific to your operations or something that to we.

Speaker Change: We are not aware of in SG&A, but.

Speaker Change: But I would like to know what the outlook for U S. Beef is going to be for 24. So I wanted to know what really impacted your meat distribution in the U S and the outlook for this year and my third and last question is about Sierra and once again apologizing for having lost the beginning of the call.

Gilberto Tomazoni: Tomazoni, you mentioned double-digit margins in the quarter. I would like to ask you to confirm that. Taking into account decisionality, because you came from 6% of margin in the fourth quarter so that we could achieve better results in the first quarter, this seems to be something that is driven by cost. We do not know what your grain availability is, but I wanted to have a little bit more detail about your operations for this quarter. Well, thank you, and good morning.

Speaker Change: Tim Rezoning, you mentioned double digit margins in.

Speaker Change: The corridor.

Speaker Change: I would like to ask you to confirm that taking into account the seasonality because you came from 6% of margin in the fourth quarter.

Speaker Change: So that we can achieve better results in the first quarter. This seems to be something that is driven by cost we.

Speaker Change: We do not know what your grain availability is but I wanted to have a little bit more.

Tail about ear operations for this quarter well. Thank you and good morning, I was tarrant are from the U S. In the fourth quarter as Guillermo commented in his presentation.

Wesley Mendona Batista Filho: I will start with the U.S. In the fourth quarter, as Guilherme commented in his presentation, it was somehow atypical for us. There was a relevant decrease in the price of, it was 97 at the beginning of the..., that half of the year, and it closed at 9.62, approximately. And this variation was very significant. It was not typical and had an impact on our results. It had a relevant impact in the fourth quarter, I would estimate that some of the negative etcetera we have in the division resulted from this effect. Regarding the outlook for B's business in the U.S., we do not think that the fourth quarter reflects what we expect for 24. It was a very challenging half of the year.

Speaker Change: Got you.

Speaker Change: It was somehow a typical for us.

Speaker Change: There was a relevant decrees and in the price of oil.

Speaker Change: It was 97 and the beginning of the.

Speaker Change: That's half of the year and it closed at 962, approximately and this variation was very relevant.

Speaker Change: It was not typical and had an impact on our results.

Speaker Change: Sure.

Speaker Change: It had a relevant impact in the fourth quarter I would estimate.

Speaker Change: That was half of the negative add to that we have in the division resulted from this effect.

Speaker Change: Yes.

Speaker Change: Regarding the outlook for being business in the U S.

Speaker Change: We do not think that the fourth quarter reflects what we expect for 'twenty four.

Speaker Change: Thanks very much.

Speaker Change: It was a very challenging half of the year.

Ricardo L. Alves: We also had the issue of song variation and future amounts, but we do not think that this volatility of five cents will remain, and therefore, we do not expect it to have a name plaque on 24. The 24th is going to be a challenging year; we will have the normal seasonality, the fourth quarter and the first quarter are usually... And then, I think that our margin will be in the low single digits. Or, if the worst scenario comes through, we will break even. This is what we see for the market. Anyway, it is going to be a challenging year, but we do not expect it to be similar to what we had this quarter because of this atypical event. Well, Ricardo, I understand that the first question about priority in listing has been answered, and the prior question as well.

Speaker Change: We also had the issue of the strong variation.

Speaker Change: The.

Speaker Change: Future.

Speaker Change: Amounts are.

Speaker Change: But we do not think that this volatility of five cents will remain.

Speaker Change: And therefore, we do not expect it to have any plaque.

Speaker Change: On 24.

Speaker Change: 24 is going to be a challenging year, we will have the normal seasonality there.

Speaker Change: The fourth quarter was in the first quarter is usually.

Speaker Change: Weaker.

Speaker Change: And then I think that our margin will be in the low single digits.

Speaker Change: Or if or in the worst scenario comes through we will breakeven. This is what do we see further market anyway. It is going to be a challenging year.

Speaker Change: But we do not expect it to be similar to what we had this quarter because of this atypical <unk>.

Speaker Change: Event, well Ricardo I understand that the first question about the priority.

Speaker Change: In listing has been answered.

Ricardo L. Alves: In the prior question and so I will move on to your third question regarding Sierra we've talked about it since the beginning of the year.

Gilberto Tomazoni: So I will move on to your third question regarding Sierra. We've talked about it since the beginning of the year that we had businesses that were performing below their potential in North America. Wesley has just commented on it.

Ricardo L. Alves: That.

Ricardo L. Alves: We had been in businesses that were performing below their potential.

Ricardo L. Alves: America.

Ricardo L. Alves: In our North America, whereas Lee has just commented about it but in the case of Sierra I would like to clarify that Sierra did not have and does not have any.

Gilberto Tomazoni: But in the case of Sierra, I would like to clarify that Sierra did not have and does not have any increased the brand's participation to 90% and repurchases re... [inaudible] And the causes for these problems have been identified. We are already taking care of some measures to respond to them. And also, in the fourth quarter, we had some events that had some impact.

Ricardo L. Alves: Oh man.

Ricardo L. Alves: Problems in terms of the market do we have.

Ricardo L. Alves: Increase the brands for them.

Ricardo L. Alves: Dissipation to 90% and.

Ricardo L. Alves: Repurchases reach.

Ricardo L. Alves: 80%. These are high numbers the problem was Sierra had to do with the operational inefficiencies related to process you'd and also the lack of availability of equipment and the causes for these problems.

Ricardo L. Alves: Have been identified.

We are already taking care of the <unk>.

Ricardo L. Alves: Some measures to respond to it and also in the fourth quarter, we had some events that had some impact when we change processes.

Gilberto Tomazoni: When we change processes, there is a whole process that should be in place in terms of capacity building, and this is something that we will see more significantly in the first quarter of the year. Sierra has the potential to deliver margins. Two-digit margins in the first half of this year. And in addition to that, we still have not reached optimal efficiency levels in the Rolandis plant, which is very automated.

Ricardo L. Alves: There is a whole.

Ricardo L. Alves: Yes says that should be in place in terms of the capacity building and this is something that we will see.

Ricardo L. Alves: More significantly in the first quarter of the M C.

Ricardo L. Alves: <unk> has a potential to de lever.

Ricardo L. Alves: Margins.

Ricardo L. Alves: Two digits margins in the first half of this year.

Ricardo L. Alves: And in addition to this.

Ricardo L. Alves: We still have not reached optimal efficiency levels M. D. Roland is planned it is a very automated a demand time to synchronize all of the steps of the process and this is only normal or a plan.

Gilberto Tomazoni: It demands time to synchronize all of the steps of the process, and this is only normal for a plant that has so much technology involved. But once everything is concluded, this automation will increase the company's productivity. You mentioned grains. We have always maintained a strategic inventory. We never take the risk because we never risk the fact of not being able to feed our herd.

Ricardo L. Alves: And that has so much technology involved.

Ricardo L. Alves: But once everything is concluded this ultimate realization will increase the company's productivity.

Ricardo L. Alves: Okay.

Ricardo L. Alves: A little bit.

Ricardo L. Alves: Hugh you mentioned grains.

Hugh: We have always maintained a strategic inventory, we never take the risk because we never risk the fact of not being able to feed our hurdles and this dilutes with the entry of new volumes.

Gilberto Tomazoni: And this dilutes with the entry of new volumes. I'm talking about corn and meal. This is natural, and we will see the effect throughout the years, and these are incremental effects that will up to So when the price is stable, this incremental effect no longer exists. The reaction is, now we are seeing the effect of all the actions that we have adopted throughout this period, and we observed this during the last month of the year, and it will be more present during Q1. Due to all of these things, we are highly optimistic in terms of the upcoming quarters that SEATA will face. Thank you very much, Tomazoni, and thank you very much, Wesley.

Hugh: I'm talking about corn and meal. This is natural.

Hugh: And we will see the effect throughout the years and these are incremental effects that up too.

Hugh: So when the price is stable this incremental effect no longer exists. The reaction is now we are seeing the effects of all the actions that we have adopted throughout this period.

Hugh: And we observed this during the last month of the year and it will be more present during Q1 due to all of these things. So we are highly optimistic in terms of the upcoming quarters that sad I will face. Thank you very much domo zonian. Thank you very much was.

Hugh: Lee.

Hugh: No.

Gustavo Troiano: Our next question is from Gustavo Troiano from Italy. You may pose your question, Mr. Gustavo. Well, good morning to everyone.

Doubled Troiano: Our next question from <unk> doubled troiano from Ito you may pose your question Mr. Gustavo.

Gustavo: Well good morning to everyone. Thank you for taking my question. There are two points that I would like to highlight one regarding Australia.

Gustavo Troiano: Thank you for taking my question. There are two points that I would like to highlight, one regarding Australia. Yeah, you have regained relevance within this quarter. I would like to better understand if this margin improvement quarter on quarter is due to beef. How did the other segments perform in Australia?

Gustavo: <unk>.

Gustavo: You have regained relevance within this quarter I would like to better understand if this margin improvement quarter on quarter is due to beef.

Gustavo: How did the other segments perform in Australia, now that I'm talking about Australia, and thinking about what is coming we've seen a significant increase regarding.

Unknown Executive: Now that I'm talking about Australia and thinking about what is coming, we've seen a significant increase in revenue, and I would like to know if this margin in the cattle business is sustainable, all because of the... And now cash generation, there is a significant increase in working capital, you know, which were the great drivers and if there is a seasonal component. I don't know if there are other liabilities within your... your cash flow that could release one billion this year if you could. Tell us, who is the driver of this line?

Gustavo: Close quarter and quarter I would like to know that if this margin in the cattle business is sustainable.

Gustavo: Although all because of the.

Gustavo: Because the food and now cash generation.

Gustavo: There is a significant increase in working capital you know.

Gustavo: Which were the great dry voles and if there is a seasonal component.

Gustavo: I don't know if there are other liabilities within Europe.

Your cash flow that this year released 1 billion if you could.

Gustavo: Tell us what is the driver of this line.

Well good morning, Australia, and thank you for your question in Australia.

Unknown Executive: Well, good morning, Australia, and thank you for your question about Australia. All our businesses operate on the blue. We would like to highlight that we are starting a very positive beef cycle, and this was the main driver of margin increases, and this year and the upcoming two years, this will be the driver of positive margins, and now the other businesses, the salmon business, will have had good performance. PORC has also presented good results in terms of performance, also product, and process product. It is an extremely stable business. There are no ups and downs here.

Gustavo: Yes.

Gustavo: All our businesses operate.

Speaker Change: On the Blue, we would like to highlight B.

Speaker Change: Beef, we're starting a very positive beef cycle and this was the main driver of margin increases.

Speaker Change: And this year in the upcoming two years this will be.

Speaker Change: Okay.

Speaker Change: Drivers of positive margins and now the other businesses. The salmon business will has had good performance pork has also presented good results in terms of performance also product processed products.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: It is an extremely stable business there are no ups and downs here. Therefore on our Australian businesses are part of the Devil you talked about the aroma.

Unknown Executive: Therefore, our Australian businesses are positive. You talked about the Aroba, and I've observed. Well, we underwent a strong rainy period in Australia, and we had difficulties displacing the animals to be processed. And this is why the restriction and availability drove the price of the Aroba upwards. But this was just a one-off situation.

Speaker Change: And I've observed.

Speaker Change: This is.

Speaker Change: Okay.

Speaker Change: Well, we underwent a strong rainy period in Australia and their word and.

Speaker Change: And we had difficulties in displacing the animals to be processed.

Speaker Change: And this is why do you restriction and availability drove the price of the Arroba upwards, but this was just stuff.

Speaker Change: A one off situation this has been normalized.

Unknown Executive: This has been normalized, and rainfall has gone back to normal. And I believe due to this, we will have a Q1 much more aligned than Q4. But when we compare it to Q1, to Q1 of next year, and to last year, it's much better. Gustavo, talking about the cash flow. I'll talk about Q4 and the year in Q4. We felt the impact that we feel every year. That is something that we call livestock deferral.

Speaker Change: And rainfalls have gone back to normal and I believe due to this we will have a Q1 much more aligned than Q4, but when we compare it to Q.

Speaker Change: Two Q1 of next year much of last year much better.

Speaker Change: Gustavo.

Gustavo: Talking about the cash flow I'll talk about the Q4 and that you're on Q4, we felt the impact that we feel every year that is something that we call livestock deferral, we delay.

Unknown Executive: We delay payments of livestock from December to January at our customers' request. This effect was $330 million in Q4. We also had an inventory reduction in Q4. This is due to efforts throughout the year. We've asked our team to focus on working capital. So this was a drop of $170 million in inventory during Q4 and a tax refund in the U.S. of $60 million. Therefore, we have impacts on our free cash flow and to reach $150 million. This was due to operational improvement of EBITDA of $200 million. So this is how we reached $750 million of free cash flow for Q4. Now, as you mentioned, the impact of working capital from $1.4 billion can be divided into three reasons. We had a tax refund from the U.S. of $60 million plus credit monetization of taxes in Brazil and other credits.

Gustavo: We delayed payments of livestock from December to January at our customers' request. This effect was $330 million in Q4. We also had an inventory reduction in Q4. This this is due to efforts throughout the year. We've asked our team to focus on working cap.

That'll. So this was a drop of $170 million of inventory during Q4 and are a tax refund in the U S of $60 million.

Gustavo: Therefore, the we have impacts on our free cash flow and to reach 150 million. This was due to operational improvement ex of EBITA of $200 million. So this is how we reach $750 million all free clash of free cash flow.

Gustavo: So for Q4 now.

Gustavo: Now as you mentioned the impact of working capital from $1.4 billion you can divide this in.

Gustavo: And three reasons, we had the tax refund from the U S up $60 million plus credit monetization of taxes in Brazil, and other credit here, we have around $400 million of impact here.

Unknown Executive: Here we have around $400 million of impact here. We also have around $350 million in inventory impact. This is because of the price of grains, the lower amount of grains, and our cash. We have accounts receivable, and accounts payable. Thank you very much for your answers. Our next question is from Thiago Duarte, BTG. Mr. Thiago, you have the floor.

Gustavo: We also.

Gustavo: We have around $350 million in inventory impact.

Gustavo: This is because the price of grains, and the lower amount of Grace and our cash.

Gustavo: Cycle, well, we have accounts receivable accounts payable. Thank you very much for your answer.

Gustavo: No.

Gustavo: Our next question from Chi I'll go Duarte BTG, Mr. Chagal you have the floor.

Chi Duarte: Good morning to everyone. Thank you very much for taking my questions I would like to go back.

Thiago A. Bortoluci: Good morning to everyone. Thank you very much for taking my questions. I would like to go back to the U.S.

Speaker Change: Two U S beef and SATA.

Thiago A. Bortoluci: Beef and Seattle, and perhaps this perhaps explains half of the negative EBITDA of the quarter. Now, when we make this adjustment and compare it to your main competitors that have already reported their results, historically, your margins have been slightly above your competitors. And here you're talking about future adjustments. I would like you to elaborate on how your sector or the industry sees a lack of feedstock. I don't know if there are other elements that can explain the margin delta. I don't know the cattle around the plants of the company or things around these lines. I really don't know if there are other elements that Wesley could point out.

Chi Duarte: And perhaps.

Speaker Change: I know that a lot has been said I would like more color more granularity when we think about U S. B term west lease day, there's the impact of the typical variation of cattle and.

Speaker Change: With me.

Speaker Change: This perhaps explains half of the negative EBITDA of the quarter now when we make this adjustment and we compare it to your main competitors that have already reported their results.

Speaker Change: Historically your margins have been slightly above your competitors and is.

Speaker Change: And.

And.

Speaker Change: Q2 revenue and and here you're talking about the futures adjustments I would like to I would like you to elaborate how your sector or how the industry.

Speaker Change: How the industry sees lack of feedstock I don't know if there are other elements that can explain the margin Delta I don't know cattle around the plants of the company or things around these lives I really don't know if there are other elements that was Lee could point out to.

Speaker Change: And going back to say Ida.

Wesley Mendona Batista Filho: And going back to Zeada, you spoke of bioproductivity indicators, improvement of processes, and the pains of growth when you added capacity to the Rolandia plant. Now, just to better quantify this, Manzoni, I do understand that the ramp-up of Rolandia is one of the main explanations, especially when I analyze Q4 for a margin that is still below par, especially when we compare it to the margins of the competition. Is this interpretation correct?

Speaker Change: That's good.

Speaker Change: You spoke of bio productivity indicators improvement of processes.

Speaker Change: And the pains of growth when you add capacity to the Rolando plant now just to better quantify months only.

Speaker Change: I do understand that the ramp up of whole lunger is one of the main explanation, especially when on that analyze Q4 for a margin that is still below par, especially when we compare it to the margins of the competition does this interpretation correct I Bill.

Wesley Mendona Batista Filho: I believe that the efficiency indexes have already been lower in Q4 in terms of impact when we compare them to the last year. I would like to better understand the size, how much each element contributes to this, and what we expected, regardless of the market and regardless of the impact of the great variation that we had in the futures market at the end of the year. Now, we have been improving our commercial side. I believe we're highly satisfied with this area, especially during Q1 of last year. We, our performance was below what we expected.

Speaker Change: Leave that the efficiency Inglett says have already been lower in Q4 in terms of impact when we compare it to the last year I would like to better understand the size and how.

Speaker Change: How much each element contributes here for this.

Speaker Change: Nominal.

Starting with beef in the United States. There is no diode even with the readjustment. The result is below expectation. We've already mentioned this when we are carrying out a number of improvements in our operations. We do believe that the historic results of 2023.

Speaker Change: <unk> were below what we expected regardless of the market and regardless of this impact of the great variation that we had in the futures market and the end of the year now we have been improving our commercial side I believe were highly reassured with this area, especially.

Speaker Change: During Q1 of last year.

Speaker Change: We our performance was.

Speaker Change: And below what we expect the do we see.

Wesley Mendona Batista Filho: We see marketing our improvement was relevant, although the industrial improvement, The speed of them is slower, in order to turn around the industrial side. But we're highly optimistic, Thiago. We actually see that when it comes to efficiency, when it comes to yields in our unit, well, it is an improvement. We haven't closed the cycle. It takes time to mature.

Speaker Change: Marketing our improvement was relevant.

Speaker Change: Although the industrial improvements.

Speaker Change: The speed of them are slower.

Speaker Change: In order to turn around the industrial side, but we're highly optimistic chagal Lee we actually see that when it comes to efficiency you when it comes to yields in our <unk> and our unit well. It is improvement we haven't closed the cycle. It turn it takes time to.

Speaker Change: Mature there is nothing there is there are no structural problems in a region or in another region well.

Wesley Mendona Batista Filho: There are no structural problems in a region or in another region. Well, during 2023, anyway. We saw that the spread between the capital prices from North to South was historically high, but we believe that this is This Doesn't Explain a Different Margin. This doesn't explain... worse performance than the market. And now we're going to focus internally; we're going to focus on the in-house stuff and the things that we can control, and that is what we're doing. Now, regarding SEADA.

Speaker Change: Well during 2023.

Speaker Change: We saw that.

Speaker Change: The spread be cleaned the cattle prices from north to South West historically high but we believe that this is this doesn't explain a different margin.

Speaker Change: This doesn't explain them.

Speaker Change: Worse performance than the market.

Speaker Change: And now we're going to focus internally, we're going to focus the in house stuff and the things that we can control and it is what we're doing now regarding SATA.

Gilberto Tomazoni: Do you want to better understand how much the Rolandia plant ramp-up is the reason why we perform below par? I just wanted to add that it's not only Holandia.

Speaker Change: You want to better understand how much the rolanda plant ramp up.

Speaker Change: Has.

Speaker Change: That is the reason why we perform below par I just wanted to add that it's not only haul lunger.

Gilberto Tomazoni: Remember that we, well, we mentioned this because this is one of the greatest investments, but during the past four years, we invested $8 billion. This is an ensemble of improvements... increase in capacity in a number of plants. Yes, there is an important impact from all of these ramp-ups, but what is important is fine-tuning an entire chain. We work in a very long chain. When you have to synchronize everything, well, it takes some time for everything to be at the same pace.

Speaker Change: Remember that we met when we mentioned this because this.

This is one of the greatest investments, but during the past four years, we invested 8 billion.

Speaker Change: This is an ensemble of improvements of <unk>.

Speaker Change: Increase of capacity in the number of plants, yes. There is an important impact from from all of these at ramp ups, but.

Speaker Change: But what is important.

Speaker Change: That is fine tuning an entire chain, we work in a very long chain.

Speaker Change: When you have to synchronize everything well it takes some time for everything to be in the same pace.

Guilherme Palhares: So, you know, it's a machine. So we adopted changes; we changed how we managed our structure. So all of this takes some time to see results. This is why I feel extremely reassured during Q1 because things are moving at the pace that we expect. And as of this, we will just have incremental improvement. Okay, it's clear. Thank you very much. The next question is from Guilherme Palhares Santander. You have the floor.

So you know it's a machine.

So we adopted changes we changed how we managed our structure.

Speaker Change: So all of this takes some time to see results. This is why I feel extremely reassured during Q1, because things are moving at the pace that we expect and as of this we will just have incremental improvements.

Speaker Change: Yeah.

Speaker Change: Okay. It's clear thank you very much.

Speaker Change: No.

Speaker Change: Our next question from Gilead.

Gilead: Polyadenous Santander you have the floor.

Guilherme Palhares: Good morning and thank you for taking my questions. I would like to ask about the U.S. business and also about the adjacent businesses. In the past two years, we've seen the company, Other, we've seen other businesses, U.S. Biff, and you've embarked on the retail market. We see Swift.

Gilead: Good morning.

Gilead: Turning and thank you for taking my questions.

Gilead: Sure.

Gilead: Yes.

Polyadenous Santander: I would like to ask about the U S business and also to give us something like that.

Speaker Change: About the adjacent businesses in the past two years, we've seen the company.

Speaker Change: The U S.

Speaker Change: Others, we see another business U S Biff and you've embarked in the retail market, we see swift.

Speaker Change: <unk> in Brazil, and in U S. U S. Beef. We've also seen Bev EDA that I believe that is within U S. Beef I would like to better understand how these businesses have contributed to your result.

Gilberto Tomazoni: Transcribed by https://otter.ai, Do you believe that if there is some type of deterioration in terms of these businesses, well, we've consolidated Vivera within JBS Beef. Of course, this represents an average. It is very small when we compare it with the entire business. I don't believe that the impact that Vivera offers will have a great effect.

And looking at the end of the years I, if you could make a balance of the businesses that you have carried out in these two geographies could you Tal about could you talk about your performance in these two businesses is and do you believe.

Speaker Change: Do you believe that if there is some type of deterioration in terms of these businesses well, we've consolidated veeva within J B S. Beef of course. This is this represents an average it is very small when we compare it as the entire <unk>.

Speaker Change: Business I don't believe that the impact that the Verde.

<unk> offers will dilute.

Speaker Change: It gives great effects.

Gilberto Tomazoni: But as the business dimensions are so different, I don't believe that it's sufficiently relevant. Swift here in Brazil, within JBS Brazil. It's been consolidated in JBS Brazil. We are now at a growth phase, a growth phase of the business. On average, Swift ends up pulling up the margin of the beef operation, or, I'm sorry, pushing it down.

Speaker Change: But as the business dimensions are so different I don't believe that it's sufficiently irrelevant.

Speaker Change: Yes.

Speaker Change: Swift here in Brazil.

Speaker Change: Is.

Speaker Change: Yes.

Speaker Change: Within Jbs, Brazil.

Speaker Change: It's been consolidated in Jbs, Brazil.

Speaker Change: We're now at a growth phase.

Speaker Change: Our growth phase of the business.

Speaker Change: Yes.

Speaker Change: In average.

Speaker Change: Swift ends up pulling up the margining of the beef operation.

Speaker Change: Oh, I'm, sorry, pushing it down.

But I'd like to remind you that whenever we say jbs, Brazil in la we're not only talking about our beef operation, even though beef is or a major operation, but we have businesses, which are a combination of other businesses energy generation fertilizers biodiesel and other businesses that are in glu.

Gilberto Tomazoni: But I'd like to remind you that whenever we say JBS Brazil, we're not only talking about our beef operation, even though beef is our major operation, but we have businesses which are a combination of other businesses, energy generation, fertilizers, biodiesel, and other businesses that are included, and also a leather operation in JBS Brazil. So we have to take into account this whole set of businesses we have embedded in JBS Brazil. Thomas and Denise, if you could follow up on this model of growth in the number of stores.

Speaker Change: You did and also a leather operation in Jbs, Brazil.

Speaker Change: So we have to take into account this whole set of businesses, we have embedded in jbs, Brazil.

Speaker Change: Oh my goodness.

Speaker Change: Thomas Internecine, if you could make a follow up on this is a model of.

Gilberto Tomazoni: So what we've seen in the last two years of more accelerated investment takes into account what it can become in the future. So could you let us know how the operation is doing today and would you be able to expand that to other markets as well? Well, this business started based on a belief we have that this beef operation chain causes significant losses, related to refining, among others, and consumers when they go to the market and buy the product. They use the fresh product one day, and then they freeze it. This freezing is never optimal because it creates large water crystals.

Speaker Change: Growth in the number of stores. So what we've seen in the last two years of more accelerated investments.

Thomas Internecine: Taking into account what the he can become in the future. So could you let us know how the operation is doing today and would you be able to expand that to other markets as well.

Speaker Change: Well this business is tied to it based on a belief we have.

Speaker Change: Then there's a beef operation change.

Speaker Change: All it has a significant losses.

Speaker Change: Related to refining among others.

Speaker Change: And consumers when they go to the market and buy the product.

Speaker Change: They use the fresh product one day and then they freeze it.

Speaker Change: This freezing is never optimal because it creates a larger water crystals when they crossed a.

Isabella Simonato: When they freeze, a lot of the value is lost. And that's why we are convinced that we must have a business that is frozen at the origin, so that you can prevent all of these problems from happening. We started with this project, and we're now taking it to our clients in our stores. And it is a maturing project. Our objective is to keep on developing, learning from, and growing as consumers accept our value proposals. Thank you very much. Our next question is from Isabella Simonato, Bank of America. Please proceed. Good morning, Tomazoni, Wesley, and Guilherme. Thank you very much.

Speaker Change: Along with the value is lost.

Speaker Change: And that's why we are convinced that we must have a business that is frozen at the origin.

Speaker Change: And so that you can prevent all of these problems from happening we started with this project. We are now taking it to our clients in our stores.

Speaker Change: It is a maturing project our objective is to keep on developing.

Speaker Change: Morning from.

Speaker Change: From it and it can be as.

Speaker Change: Large as our consumers accept our value proposal.

Speaker Change: Thank you very much.

Speaker Change: Thank you.

Our next question is from Isabella She Bernardo Bank of America. Please proceed.

Speaker Change: Okay.

Speaker Change: Good morning, Tim Rezoning Wesley engineered me, thank you very much.

Isabella Simonato: I wanted to have a follow-up, focusing on market conditions. It is very clear what you can see internally, what you can do in terms of improvements, but could you tell us a little bit more about the scenario, especially about export prices in the domestic market? That will help us better understand what you can do beyond the first quarter.

Isabella: I wanted to have a follow up focusing on market conditions. It is very clear.

Isabella: What you can see internally.

Isabella: What you can do in terms of improvements them, but could you talk a little bit more about the scenario, especially talking about export prices in the domestic market that will help us better understand what you can do beyond the first quarter.

Wesley Mendona Batista Filho: This was my question. My second question, Wesley, is that I wanted to confirm what you said about margins in the U.S. and break even and low single digits. It wasn't very clear to me, so could you better specify that? Well, good morning, Isabella. I'm going to answer this for the whole year of 24, to be more specific.

Isabella: This was my question My second question, whereas Lee is that I wanted to confirm what you said about margins in the U S and break even and low single digits.

Speaker Change: It wasn't very clear to me so could you better specify that will good morning, Isabella I'm going to answer this for the whole year of 24 to be more specific okay. Excellent. Thank you very much well I'd like to remind you to the first quarter end of four.

Wesley Mendona Batista Filho: OK, excellent. Thank you very much. Well, I'd like to remind you that the first quarter and the fourth quarter are always the worst ones, and the two in the middle are always the best ones.

Speaker Change: Quarter are always the worst ones and the two in the middle or all of the best ones.

Gilberto Tomazoni: On average, this is our expectation in terms of our results. Whenever we talk about the market, and now more specifically about the consumer market, we are very optimistic about it. And if you look at the different categories where Sierra works with prepared foods, all of them increased last year, and they continue to grow this year. We have come to a good point where we are increasing. We're very positive about the domestic market demand, including Chicken, both for chicken and prepared foods.

Speaker Change: In average this is our expectation in terms of our results whenever we talk about the market and now more specifically about the consumer market. We are very optimistic about it and if you look at the different categories, where scenario works with prepared foods all of them increase.

Last year and they continue growing this year, we have come to a good point to where we are increasing our product offer.

Speaker Change: We're very positive about the domestic market demand.

Speaker Change: Looting.

Speaker Change: Chicken.

Speaker Change: Both for chicken and prepared foods.

Gilberto Tomazoni: Also, beef is not related to Sierra, but beef has also had an increased demand. The consumer market in Brazil is very positive. The international market for chicken also has Adjusted Offer and Demand, and you will see that according to the results that were shared, it's not different from Mexico or England. It's an operation, and the chicken business, in general, has been favored by lower costs, and we have commented on that, and a very balanced offer and demand in all of the markets. It's a very positive moment for this business. But it's a lot more difficult.

Speaker Change: So beef is not related to Sierra that beef has off had an increased demand.

Speaker Change: The consumer market in Brazil is very positive.

Speaker Change: The international market for Chicken also.

Speaker Change: Has it.

Speaker Change: Adjusted offer and demand and you will see that according to the results that were shared it's not different from Mexico or England.

Speaker Change: It's an operation and the chicken business in general.

Speaker Change: The market has been favored by lower cost.

Speaker Change: And we have commented about it Ed.

Speaker Change: In a very balanced offer and demand in all of the markets.

Speaker Change: It's a very positive moment for this business.

Speaker Change: Yes.

Is a lot more difficult.

Gilberto Tomazoni: Brazil has increased pork production. International markets have also had a retraction, and I'd like to remind you that the main producers and exporters, the U.S. and the European Union, The U.S. has increased its exports. However, international demand is not very strong in the markets we are operating in.

Speaker Change: Brazil has increased our pork production.

Speaker Change: International markets.

Speaker Change: <unk> also had a retraction and I like to remind you that the main producers and exporters.

Speaker Change: The U S and European Union.

Speaker Change: The U S housing freezes exports.

Speaker Change: The international demand is not very strong in the markets. We are operating at we have opened are.

Gilberto Tomazoni: We have opened our markets, but we still need to grow more. The market is very competitive for pork. It is very clear. Thank you very much.

Speaker Change: Markets, but we do need to grow more the market is very competitive for pork route.

Speaker Change: Okay.

Speaker Change: It is very clear thank you very much.

Speaker Change: No.

Speaker Change: Our next question is from Lucas for hate at J P. Morgan. Please proceed.

Lucas Ferreira: Our next question is from Lucas Ferreira, J.P. Morgan. Please proceed. Good morning. I have two questions.

Speaker Change: Okay.

Yes.

Good morning, I have two questions. The first one is more specific.

Lucas Ferreira: The first one is more specific, about Porto. We had some adjustments in the market, the prices of commodities went down, and good results were reported for the quarter. I want to know what your outlook is for the next 24 months.

Lucas: I'm Belcourt, though we had some adjustments in the markets at the prices of commodities went down.

Lucas: And the good results were reported for the quarter I want to know what your outlook is for 24, whereas Lee has said that the demand is doing well, but we can see the number of offers.

Wesley Mendona Batista Filho: Wesley has said that the demand is doing well, but we can see the number of offers. And so I'd like to know if this is only to accommodate this higher demand, and if the prices are doing well. And so my question is, if you see upside in profitability with PPC, more specifically for the U.S. And the other question: Isabella Simonato, Guilherme Cavalcanti, Lucas Ferreira, Ricardo Alves, Thiago Bortoluci, how have the costs of the work behaved. Thank you very much, in response to your question about chicken in the U.S., Lucas. You understand it correctly.

Lucas: And so I'd like to know if this is only to accommodate this higher demand on the prices are doing well and so my question is if you.

Lucas: For seeing upside in profitability for the year with Bp's theme or specifically for the U S and the other question.

Lucas: Okay.

Lucas: Is about work in Brazil, you had higher exports to China.

Lucas: And I would like to know if this will significantly contribute for the profitability of the business throughout the year and also.

Lucas: With.

Lucas: The average prices are improving in your case and how the.

Lucas: Cost of the pork has behaved thank you very much.

Wesley Mendona Batista Filho: There has been a balance between offer and demand. We believe that we're going to have a very balanced year in terms of offer and demand, and therefore, our projection is that this market will remain as it is now in terms of margins. And I would like to remind you that we have a strategy of Very Well-Balanced Channels.

Lucas: Okay.

Lucas: Yes.

Lucas: Yes.

Lucas: In response to your question about chicken in the U S.

Lucas: Lucas.

Lucas: You understood. It correctly, there has been a balance between offer and demand.

Lucas: We believe that we're going to have a very balanced ear in terms of offer and demand and therefore our.

Lucas: Projection is that this market will remain as it is now in terms of margins and I would like to remind you that we have a strategy.

Lucas: A very well balanced channels, we are present in five segments in value added products.

Wesley Mendona Batista Filho: We are present in five segments in value-added projects, where we've grown a lot with the JustBear brand. It has excellent growth in the category of breaded products with significant gains in the market. We also have the supermarket trade, Threshold Service, and we also have the Big Bird and Small Bird segments, and therefore, this set of businesses is well-balanced. Right now, we can see a significant growth in big birds, the so-called big birds, which is raw material, essentially. But even when it's not doing as well, it still does not harm us.

Lucas: Where we've grown a lot.

Lucas: With the just bare brand.

Lucas: It's had accidental growth indicator gray of our branded products with significant gains in the market. We also have the supermarket trade.

Lucas: Trussell service.

Lucas: And we also have the big bird and small bird.

Lucas: Segment and they are for this set of businesses.

Lucas: Aren't well balanced right now we can see a significant growth in big birds, the so called big birds.

Lucas: Which is a raw material essentially.

Lucas: But even when it's doing not as well, it's still does not harm us.

Wesley Mendona Batista Filho: To summarize, we're very enthusiastic about the chicken business in the U.S. The other question you raised has to do with the increase in exports, including to China. Yes, we had significant improvements. Talking about bovine animals, we had 41 plants.

Lucas: To summarize we're very enthusiastic about the chicken business in the U S.

Lucas: The other question you raised it has to do with the increase in exports are including to China, Yes, We had significant E proved.

Lucas: Talking about bovine we had 41 plants, we added 24, which is significant and J B S was.

Gilberto Tomazoni: We added 24, which is significant, and JBS was present on the 24th with 10 plans approved to correct that difference we had in terms of the market. And if you compare the market share we have in the processing market now with the number of plants, we're still lying behind.

Lucas: <unk> and 'twenty four with 10 plants approved in that.

Speaker Change: Correct, that's a difference we had.

Speaker Change: In terms of the market and if you compare the market share we have in the processing market now with the number of plants were still lying behind.

Speaker Change: Got it.

Speaker Change: Thank you.

Speaker Change: No.

Gilberto Tomazoni: What is the impact on the market? Of course, with an increase in the number of plants, you can increase the offer to that market. To us, as JBS, this increases our flexibility a lot in terms of what we can produce and also in terms of mix. It is all very favorable. What we can see in China is that the market, which suffered a lot of impact immediately after the pandemic, and we had projects in the stock with more advanced data, and then we had a period where Brazil could not export. And then the figures were normalized.

Speaker Change: What is the impact in the market.

Speaker Change: Of course with increasing the number of plants you can increase the offer to that market.

Speaker Change: To us as J B S. This increases our flexibility are locked in in terms of what we can produce and also in terms of mix. It is all very favorable what we can see China is that the market, which was suffering a lot of impact and Italy out.

Speaker Change: After the pandemic.

Speaker Change: And we had projects and the stock with more advanced Jan and then we had a period.

Speaker Change: Where brazil could not export.

Speaker Change: Yes.

Speaker Change: And then then figures were normalize do we had a significant.

Gilberto Tomazoni: We had significant improvements, but when we look at the mid and long term, in terms of offer, the natural trend is that the premium we have for these markets might not even exist anymore in the long term, and so. The Beef Scenario is positive in Brazil. With these market openings, not only China, Brazil opened its market beautifully. We can add Thailand, Malaysia, the Philippines, among others.

Speaker Change: Improvements about when we look at the mid and long term.

Speaker Change: In terms of us for the natural trend.

Speaker Change: Is that the premium we have for these markets.

Speaker Change: My to not even exist anymore in the long term.

Speaker Change: And so.

Speaker Change: The beef scenarios positive in Brazil.

Speaker Change: With these market openings are not only China, Brazil opened its market a beautiful Lee we can add that Thailand, Malaysia, the Philippines, among others, Brazil has expanded a lot.

Gilberto Tomazoni: Brazil has expanded a lot. Its access to the market, which is very positive for Brazilian products. Furthermore, we can see that, structurally speaking, especially in China, we are going to have an increase in per capita consumption. We have more consumers in the middle class. Increased income means more potent consumption.

Speaker Change: It's access to markets, which is very positive for our Brazilian products.

Speaker Change: Furthermore, we can see that structurally speaking, especially in China. We are going to have an increase in the per capita consumption. We have a more consumers and middle class increased income means more protein consumption in China.

Gilberto Tomazoni: Beef is aspirational, and we believe that we are going to benefit from this whole process, and the local producers have a lower capacity to meet this demand. So I emphasize that this is one of the advantages we have in the diversification of the company. We, in the U.S., have a cycle, as Wesley has just mentioned; we have had some challenges.

Speaker Change: Beef is aspirational and we believe that we are going to benefit from this whole process.

Speaker Change: Absolutely.

Speaker Change: And the local producers hasler.

Speaker Change: Lower capacity to meet this demand Psi emphasize that this is one of the advantages we have in the diversification of the company win in the U S and have a cycle as wisely has just mentioned we have had some challenges are the beef cycle.

Speaker Change: Got it.

Gilberto Tomazoni: It has a trend. But within the same category, we have three businesses. Of course, they have different sizes, but at different moments, regarding chicken, a different protein type.

Speaker Change: It has a trend too.

Speaker Change: Two decrees.

Speaker Change: But within the same category, we have three businesses of course, they have different sizes.

Speaker Change: But in different moments.

Speaker Change: And.

Speaker Change: Regarding chicken different protein type.

Gilberto Tomazoni: Enables the company to continue growing, generating cash, and expanding. This is one of the competitive advantages of JBS. I keep on reinforcing this. The market is beginning to learn more about this competitive advantage, which enables us to have sustainable growth in the mid and short term.

Speaker Change: Enables the company to continue growing and generating cash of expanding this is one of the competitive advantages of jbs I keep on reinforcing this the market is beginning to learn more about this competitive advantage, which enable us to have sustainable growth.

Speaker Change: In the mid and short term.

Speaker Change: Okay.

Gilberto Tomazoni: Thank you, Mr. Tomazoni. As we have no further questions, I would like to hand it back to Mr. Gilberto Tomazoni for his final remarks. Well, I would just like to thank all of you for participating in our conference call, for your questions, for the opportunity to explain our business, and to thank all of our employees, over 270,000 of them, because these results are due to the effort and dedication of all of them. Thank you very much. The JBS conference call has come to an end. I would like to thank everybody for their participation and have an excellent day.

Speaker Change: Thank you Tomas Ronnie.

Speaker Change: Okay.

Speaker Change: As we have no further questions I would like to hand, it back to Mr. Hubert talked almazan for his final remarks.

Speaker Change: Well I would just like to thank all of you for participating in our conference call for your questions for the opportunity to explain our business and to thank all of our employees over 270000 employees. Because these results is due to the effort and dedication of all of them. Thank you very.

Speaker Change: Much.

Speaker Change: D J B S Conference call has come to an end I would like to thank everybody for their participation and have an excellent day.