Q3 2025 JBS SA Earnings Call
Speaker #2: Good morning and welcome to JBS's third quarter of 2025 results conference call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time.
Speaker #2: As a reminder, this conference is being recorded. Any statements eventually made during this conference call in connection with the company business outlook projections operating and financial targets and potential growth should be understood as merely forecasts based on the company's management expectations in relation to the future of JBS.
Speaker #2: Such expectations are highly dependent on the industry and market conditions and, therefore, are subject to change. Our present with us today, Gilberto Tomazzoni, Global CEO of JBS, Guilherme Cavalcanti, Global CFO of JBS, Wesley Batista Filho, CEO of JBS USA, and Christiane Aziz, Investor Relations Director.
Speaker #2: I'll turn the conference over to Gilberto Now Tomazzoni, Global CEO of JBS, Mr. Tomazzoni, you may begin your presentation.
Speaker #3: Good morning, today. The third quarter everyone. of 2025, once Thank you for joining us again, demonstrated the strength and consistency of JBS, a global multi-protein platform.
Speaker #3: And more important, how we operate with discipline, agility, and resilience. We achieved a record net sales with growth across all business units. This performance reinforced the balance and scales of our operations and shows our ability to manage the platform proactively and mitigate the impact of local market cycles.
Speaker #3: Net income reached $581 million, and a return on equity over the last 12 months was 23.7%, reflecting solid, sustainable performance. We continue to navigate a challenging capital cycle in the United States, marked by historically high prices and tight supply.
Speaker #3: Even in this environment, JBS Beef North America delivered a record net revenue supported by resilient domestic demand while cattle availability remained limited, consumption held steady, and the team continued to execute with discipline.
Speaker #3: Although cattle value remained elevated, they were not sufficient to offset higher cattle costs. Australia was a clear highlight, with profitability staying strong. Supported by improved cattle availability and healthy global demand, the region continues to play an important role in diversifying our geographic exposure and balancing results across proteins.
Speaker #3: In Brazil, Friboi delivered another consistent quarter with solid performance in both export and domestic sales. The team is threatened relationship with the key customers through our value creation approach and remains focused on operational excellence and disciplined execution.
Sara also posted another quarter of consistent results in the period, but is still impacted by restrictions to export to Europe and China.
Which have recently been released.
The business maintained healthy margins, given by a disciplined commercial strategy, effective mix management, and continuous innovation in its product portfolio.
Initiative such as the launch of high protein. Ready meals, developer of a dedicated air fry portfolio.
And a partnership that bring the brand clothes to the consumer.
Including with Netflix, we illustrate our ongoing commitment to innovation, innovation, and value creation.
And in the United States, our chicken and pork business also remains resilient.
Pilgrim, price continues to grow supported by a diversified portfolio in ongoing efficient game.
To prepare food segment, stood out with sales. Raising more than 25% in US.
While operating in Europe and Mexico, we also outperformed our market.
In pork, lower grain costs and, instead of demand, created a positive environment. However, supplying constraints continue to limit overall market growth.
This results show how we operate in our Global platform, managed, the scales efficiency.
Uh, sharing knowledge across the region.
And make it quick: an informative decision to protect performances.
We continue to invest in Innovation and value added products as part of our long-term strategy.
Threatening brands and expanding higher-margin categories remain central to sustainable growth.
We end the period with the leverage of 2 uh 39 times.
Fully alignment with our long-term targets.
Overall, the company remains stable and well positioned.
Global protein demand continues to rise.
And JBS is prepared to capture this grow with a balanced portfolio, solid execution, and a long-term perspective.
Thank you again for joining us today. I will now turn the call over to the glare, who will work with us through the financial results and more details.
Thank you, Thomas. Oni. Let's now move on to the operational and financial highlights of the third quarter 2025
and if I reached a record of 22.6 billion,
I just a little bit dying IFRS totaled, 1.8 billion dollars which represents a margin of 8.1% in the park.
I just repeat that in us. Get comparable total, 1.6 billion dollars which represents a margin of 7.2% in the quarter.
Adjusted operating income was $1.3 billion, with a margin of 5.5% in IFRS and 5.6% in U.S. GAAP comparable.
Net income was 581 million in the quarter and earnings per share of 0.52 cents excluding non-recurring items. Adjusted. Net income would be 602 million in earnings per share of 54 cents per share.
Finally, the return on Equity was 24% and the return on invested Capital was 17%.
The free cash flow of the third quarter of 2025 was 388 and 83 million representing a difference of 612 million dollars compared to the third quarter of 2024 mainly due to the following factors.
Adjusted with that increases 319 million, but excluding non-cash items. We have a reduction of 230 million driven by the impact of the beef cycle. In US, avian flu in Seattle and higher cattle costs in JDS Brazil.
An increase of $226 million in capital expenditures, mainly growth capex.
An increase of 258 million in working capital, mainly reflecting higher revenues and cost resulting from the increasing livestock prices.
Our cash conversion Cycles in days, remained stable in relation to the previous quarter.
Not considering a guidance but simply updating the cash flow break, even a bit by exercise. It is expected to increase to 6 billion dollars in 2025 into 5 billion dollars in 2026 driven by Capital expenditures 2 billion dollars in 2025 and 2 billion dollars in 2026 already. Including maintenance capex. Although 2026 budget is still to be approved.
Working capital.
Expected to increase to 1.3 billion dollars in 2025 and 700 million in 2026.
The the 2025 increasing nominal terms is related to higher prices, higher sales volumes increased cost of livestocks and fulfilling the pipeline of organic expansions. It is worth mentioning that 2026 working capital depends on variables, not in controls of the company, like grains and livestock prices.
Legal settlements of 400 million dollars in 2025.
Biological assets of 6750, million dollars in both 2025 and 2026.
Interest expenses of 1.15 billion dollars in 2025 and 1.5 billion dollars in 2026.
Please in expenses of 500 million dollars for 2025 and 2026.
Last week we completed another that issuance in Brazilian Capital markets, the total amount of agree business. Receivable certificates was approximately 570 million with 2/3 places in a 40 year trench, the longest ever completed in the Brazilian Capital markets as a result. Our ProForm average that maturity reached at 15.4 years with an average cost of 5.2.
6% per year.
Leveraging increases to 2.39 times in the third quarter against 200, and against second quarter of 2025, primarily due to 319 million dollars, decline in the last 12 months to be that and the payment of 362 million in share buyback.
In this regard, we announced that the completion of a $600 million share, buy back program. We believe this represents an efficient use of cash. Given the current evaluation multiples relative to our global global peers and The Leverage at comfortable levels.
Approximately expansion capex of 1 billion dollars. We expect to end the year with leverage below 2.5 times.
Our 3.4 billion revolving credit lines and 4 billion dollars available cash. Combined it with the expected cash generation in the coming quarter. Provide us with the flexibility to continue executing our expansion, capex and value creation projects. While maintaining a healthy and robust, balance sheets.
With that in mind I would like to open to question and answer session.
Thank you. The floor is now open for questions from investors and analysts. If you have a question please click the raise hand at this time.
Okay, thank you. Our first question is from Mr. Lucas musi from Morgan and Stanley? Go ahead, Mr. Wy.
Good morning, everyone. Thanks for taking my question. I have 2 quick ones.
The first one is related to the expansion topics, uh, the ongoing expansion topics.
Uh especially related to the pork expansion uh that you placed in Iowa. Uh if you could share more details on what should we expect as it pertains to to revenue expansion or volume expansion into next year as you start. Uh opening up those additional uh capacity expansions in us4
Work. Um, and my second question is related to to us chicken.
The third quarter is all the PPC, we're very solid, especially in the US. Uh, but given that chicken prices are significantly down our significantly down into the fourth quarter. If you could give us an update, uh, on what you are seeing in the fourth quarter, as it pertains to profitability, especially in the US, um, if uh, maybe the commodity part is suffering a bit, but, uh, a bit more resilient on the other part of the, the portfolio.
And coming into the 2026, if you still see, um, a solid supply and demand Outlook, uh, given USDA still very constrained outlook on, uh, chicken Supply in the US. Also, in the light that 1 of your competitors, uh, was talking about cycling through a new genetic line, that was a bit better than than the 1 that was being used in the last, uh, 2 years or so. So, maybe a little bit more details on us. Chicken Dynamics, both on a bit on the short term and looking in 2026. Um, those are my questions. Thank you, everyone.
Good morning. So on the extensions we're doing in in prepared foods in the US. Um, so it's 2, 2 plants that we announced in Iowa, right? So 1 is, is the very plant that we're going to produce sausage there. Uh, and the other 1 is in Ankeny that we're going to do uh further ready to eat bacon and ready to eat sausage. Um, those are
A very complimentary to what we are doing today so we we produce a lot of bacon in the US. We're going to start producing sausage that's going to be uh you you know it's going to use a lot of our trims. A lot of our the meat that will come from our South South meets that we're going to harvest in that same plant. So it's very complimentary on the supply side of our of our
Of our, uh, business. And very complimentary on the business on the sell side as well, because there is a sales side because there is a lot of, um, a lot of Demand right now from our customers there. So we think it's going to be a quick ramp up. That's what I'm getting at for those plants next year, you're not going to see any impact because they're going to still be under construction finalizing. And, uh, we're just breaking ground right now in in 1 of those plants and the other 1, where it's going to be more putting equipment and lead time for the equipment. So you're not going to see anything for next year 2020. Uh, 7 is, when you're going to start seeing a ramp up and start for us to start doing uh you know, get starting to see the revenue and the extra margin that's going to come from those businesses in our Port division. Um,
Those 2 businesses, you could expect something around 750 uh 500 between 500 and 750 million dollars of revenues as we as we ramped it up. So something like that. And we we see the margin for this this this extra business in the in the higher higher, double digit margins for for that. So um we're very excited about that and we think we're it's going to be a relatively quick ramp up.
For these plants, given the complementarity on the supply side and on the south side.
Weeks, they a little bit increase in terms of the price.
And we, but when a lot for PPC, PPC has a balanced. Uh, portfolio. We have a small board, we have middle boards, and our big boards and we have prepared. Then prepare is part of the part of their portfolio. We are remain confident about the about the the chicken Market next. Uh, next year in us, even in Brazil because even that we see that increasing terms of the the 1 day chicken uh uh we we we see that the product is limited uh because we have a restriction in the infrastructure and the availability of genetic you mentioned the new genetics of coffee.
Yes, there is a new genetic of coffee. It still start to go to the market, but it is not something that you you put in the market, is a quick reaction, because you talk about genetic, you have time to get to the market, we we, in our view, uh, we will be more availability of chicken.
But the, but the, uh, the
Uh, remained, very very strong. If you haven't consideration that Brazil that this year will be. So if the year to today, they are flat compared to last year. And domestic in in the export Market is in a lot of demand. Because uh, and if you just make the comparation with part Park in Brazil,
Park is parked 14%, uh, more than the last year and chicken is flat. It is because chicken, then that availability of chicken is part because of, uh, uh, some Market was closed. Uh, and now was limited as can mention it Europe and, uh, and China, and I think it's next year will be. We see that there will be the strong Market export Market from Brazil. We see the market from us. See look, we are still with this uh, uh, growth in terms of, uh, 1 day chicken place. It we remain very confident about next year.
Very clear. Thank you very much. Thomas on Wesley.
Thank you. Our next question is with Isabella, Simon with Bank of America. Go ahead Mrs. Simon.
Hi everyone. Thank you very much for taking my question. I think, as you guys have been mentioning, right? And learning, you mentioned a higher working capital consumption given.
Given higher raw material prices but also given growth, right? And I wanted to maybe reconciliate when you look at the Topline growth of this, this quarter or, or the year to date, right? And, and you try to look at the volume growth,
Can you can you tell us? I mean, how much came from?
Uh, first of all, what was the the the volume growth overall? But and how much came from expansion and new new
new new operating lines and Etc because I think
At some point we have a tough time, right? Uh, looking at the expansion capex, you have been doing that, you should continue to do it translate that into into Topline growth right, which has actually been quite quite strong. So if you could break down, I mean, what has been as a result of, of Topline growth of your organic expansion. I think that would be, uh, would be quite helpful and, and second, uh, going back to, to the chicken Market. Um, and especially in Brazil, right? Both bands from Europe, and China, have been removed.
Uh, if you guys could explore a little bit, how have you been seeing the export market now in the fourth quarter, and the dynamic also of the mix, and that includes the domestic market of Seattle, uh, I would appreciate it. Thank you.
Hi Isabella. Uh, so um, the major part of the working capital consumption was really due to prices. Uh, in terms of volumes, I would highlight Pilgrim's Pride in JBS Brazil, which had an increase of 3%. Uh, in Seattle, where we have been making investments in organic expansion, we had volumes growing by 8%. On the other hand, again, we have been in some business units where prices grew up by 16% sometimes 24%. Uh, so basically, the main uh, the main uh,
This first increase revenues increasing costs and consequentially increase uh in working capital.
We the question about, uh, is available to the chicken Market if understood. Well, it's about the Brazilian chicken Market. How we see that export Market in this next quarter and next next year,
Uh, is it correct?
Yes, especially because the the main headwind which was the ban right from China and Europe. I understand that. That's gone. So
Yes, yes, they just lifted, uh, restriction from Europe and, and from China, they know that this is too important Market from Brazil because uh, with Brazil is uh, they optimized the leaks of the car as in, in these 2 marks. Spray a very important role even for Sara, is much more impact because Sara is the, is the have a strong market share in Europe and then to reopen Sara, it's, it's far. Make a lot of difference and of course, for
China, for all of the market, me, a lot of differences. Sara is the leader in the sport Market from Brazil. They are suffering more than the others. And, but now, I see that the strong Market, we not see any constraint in terms of demand. Uh, we are a strong demand and, uh, and uh, we see that, uh, next year, we will continue this demand because overall, we see that demand for protein remained. Very strong
Not just for chicken, but for beef and for, for look Brazil, export this year compared to last year, year to date 14 and and chicken was stable stable because of restrictions? Uh, but next year, I think Brazil will be get the same truck as before. And, uh, even there is more I mentioned before the, when they answered. The, this, uh, request is more chicken in the market, but the limit to grow, there is a limit to grow because infrastructure you are not build the build the chicken house. Uh, very easy. You, you have some genetic or restrictions to increase production even that measure was mentioned before the new genetic from Gobi, but will we take time to go to the market and to be effective? We not see really
Uh, we see more volume next year, but we see demand, uh, more than compensated.
Understood, thank you very much.
Thank you. Our next question comes from Mrs. Heather Jones with Heather, Jones. You may, go ahead and Mrs. Jones,
Mrs. Jones, uh, your microphone might be muted.
Hello. Are you able to hear me now?
Yes. Go ahead. Okay, thank you for choosing questions and good morning. Um my question to related to the US uh red meat business, I guess.
First on the um, North American.
Um, beef business.
The volatility that we've seen in Futures, in the Futures curve. Recently, just wondering if you could help us understand how that may, uh, affect your Q4 results,
And then my second question is on pork.
Uh,
The sequential Improvement in y'all's um, results stands in sharp contrast to Industry benchmarks as well as your competitors. So I was just wondering if you could explain what drove that strong sequential Improvement despite what was really tight spreads Etc. Thank you.
Hi, Heather. This is Wesley. So, um, on the default activity, for sure when you have markets, uh, you know, you know, Futures being as volatile as as as we did, it creates instability and results. So, including fact, including factors on the other hand. It's it's, it's, it's showing a decrease in cattle cost. So on the other hand, it could help a little bit too cut out is is is is is suffering a little bit in the recent weeks. So um but when you're having stability like that in the future, there's always it's always a challenge because
Um, it could, it could, it could create losses for us, um, with our hedge hedging position. So, um, but but, but overall, you know, on top of just the, the, the, the, the, the, the, the, the future is being more volatile.
Quarter just historically. Anyway. So um, so yeah, I think, I think that could create a challenge for the fourth quarter, uh, on the beef business on the pork side. Yeah, there this is this, this this pork business that we've, we've we operate in the US. I I think there, I don't know. I I, you know what I can call say about of our about our businesses, we have very good plants. You know, all of our plants are, you know, are 4 of our 5 plants are, are double shift plants, they're very modern, they're very well invested within adding, a lot of value added in in in our business. So if you went back,
On History, we will, we will be producing very little prepared, foods and nowadays. It's becoming more and more of a bigger business of, of ours and and we we intend to grow as as I mentioned in the last, uh, answer to Lucas. Um, the other thing too, it's it's a business that we've developed that. We we're, you know, we're it's very integrated. We are integrated on the, on the live side we're integrated on the, on the, on the prepared side. Uh, we have key customers that are very, uh, good good for us. I don't know how to pinpoint 1 thing or another Heather. I I think I couldn't do that that because it's a lot of very little, a lot of things and it's a very consistent business of ours. So operation Excellence is a big deal in that business.
Um and and if you look at our our margins historically, they're pretty stable, and it's a pretty uh, stable business for us. Uh, I mentioned, you know, on the on the last call on the second quarter that, you know, it was a little bit of a tougher quarter for us. Um,
That margins were going to come back and here we are. They are back. And I, you know, I'm still pretty optimistic about the the, the fourth quarter as well. Um, it's a pretty good business for us. I, I don't know how to put it in a different way. It's uh, it's a business that's very consistent and very integrated on both sides and operates at a high, very high level.
Okay, thank you so much.
Thank you.
Thank you. Our next question comes from Thiago jari with btg. Go ahead, Mr. Jarte
Hi, good morning. Thank you very much. Hello to anybody. Uh, I have 2 questions here. Uh, the first 1 is
Actually, this is an extension of some of the remarks that Giladi made during the presentation regarding capital location that you mentioned.
The share. Bye back and the dividends and and and it remain, and how comfortable you remain with the with the leverage, uh, of the company towards the end of this year. Uh, my question is,
How how m&a opportunities fit into this strategy uh, over the past several months, there have been rumors about JBS participating in potential bids for for different companies, especially in the US.
so, so my first question is really about
How confident or not?
You mentioned that you will have M&A opportunities to invest, particularly in the prepared food segments, which has been the focus.
1 of the main targets, uh, as you have been saying for for quite some time. So so that's the, that's the first question.
The second question is, I think, more to Wesley.
Um, there's an interesting chart in the company's presentation where you show the the retail price for us, beef pork and chicken. And and what we have been seeing is that, you know, beef beef. Retail prices are close to all-time high chicken and import prices. Haven't really followed suit even though they remain higher but they haven't been following suit. Uh, and the price ratio between beef and the other protein is is is is also at the all-time high, right? So so my question to you Wesley is, how do you see
Those Trends unfolding going forward, right? Should we think more about beef demand at some point? Going off because of high prices and hampering further price hikes or do you believe that this this this High beef prices will continue to offer support?
For the other proteins to just continue to rise and catch up with beef, right? I think that's how you see the this very unique situation of protein prices and and how the consumer will will behave on the back of that. Those are my questions. Thank you so much.
So, in terms of capital location, uh,
We are looking at the moment but in case it appears a good opportunity. Uh, the first thing that I'm going to do is because I want to keep investment grade, uh, is to higher rating, the assessment from rating agencies. So, at the end of the day, I rating agencies will tell me what will be the capital structure that I that that I should have in terms to pursue that m&a. Um, and today we have more flexibility, uh, in shares given that we have 2 class of shares in the listed denies it. Um, so at the end of the day, I'm very confident that we can push through any type of m&a once the opportunity appears. Um, and but the, the end of the, the capital structure will be dictated by the radi agencies.
So a few things about this, this deep prices and beef prices versus for. So first thing, I mean just supply and demand. This this prices are going to be the sort of levels where that they are. As long as supplies is is is you know, tight. When supplies, you know, increase obviously you're going to see uh probably this price is, you know, fall and and the the market adjusts to a more, a more normal level and this is just, this is just what we should expect and it's what has happened in the past. So having said that, I think it's a big Testament to the demand of beef to see, you know, even entry-level beef items. Like ground beef. Being at the price levels where they are and they're still, they're still strong.
Strong demand for it. So it's just big Testament of the, for the, the quality of the product. And the and the just the structural demand that there is for all those products. Now as it relates to, to, to pork and chicken,
Again, there is some obviously, uh, um substitution, you know, between the 3 protein and obviously when beef is expensive and um, you know, people uh, you know, be pork and chicken is are good options for somebody who's who's, you know, trying to to find affordable a more affordable option than beef, so it kind of create it. Generates it, it drives a little bit of demand for for pork and chicken. And we obviously, when as, as as as as long as we have tight beef supplies, we're going to see.
Higher demand for other proteins as well. Um, and yeah, so that's what we've been seeing now.
Is it going to be a lot more than what it is? I don't know. It depends a lot on this, on this beef supply.
um,
I think I think it's, you know, it's we, we're we're getting very close here to the, the bottom of the trough of, of this, of this cattle Supply. So, uh, shortage so, um, I think, you know, we'll we'll, we'll see what happens. But if we have more demand, if we have more supply for beef, we should see beef fall. And, and, and, and, and uh, the
That come back to a normality. If not, then obviously chicken and pork are a big option for a budget, you know, for a more affordable protein solution.
Thank you so much.
Thank you. And our next question is from Gustavo Triano with ital. You may go ahead, Mr. Toano.
Hello everyone. Thanks for taking my my questions, my my first 1 is on Ciara actually and more focus on uh, processed foods here in the domestic markets. So some competitors reported and like strong margins and volumes in the quarter. So just when it's touch based on how is your margin performing in in the segment in the quarter and what we could expect for for these margins going forward. And uh, if you could come and also on the ramp up of the hole and just plan that we, we discussed a couple of quarters ago. And uh, if we could expect more volumes to come, uh, within the, the, the process would segments here in Brazil would be great. And, uh, the second question relates to Australia, actually, and we saw higher cattle prices in the region, uh, in the quarter and despite that margins remain, quite resilient. And uh, you just want to understand a little bit more what to expect for the fourth quarter, because cattle prices kept increasing and uh, just wanted to to hear from you guys. How
Whether you see the balance between demand for Australian beef and Supply, going forward to understand what a little bit more on the margins uh in the region. So if you could comment on the beef margins going forward and also how the other businesses in Australia, are performing such as 1, or the processed foods operations compared to the beef margins that you reported in the quarter would be great. Thank you very much.
Thank you for the question.
I think it's s is just mention about the performance of the brand.
Uh, the holds out penetration of the brand increase, compared to the last year, we have increased, the penetration, and, and the, and the good things about the penetration that we grow in repurchasing, uh, more than last year means that the brand is strong. We are getting preference. We are getting top of Market, top of mind, because of our leadership in Innovation, we are bringing new things from the market, then the brand is very, very healthy. And and we are grow. We are growing. We are grow, the, the margins. And we are grow the volume and prepare.
uh,
Uh you asked about a specific about Ronan. Ronia is is full and double sheet and and bread products. And the the other part of uh SASS and hot dogs and they we are working. We are working 2. Uh, and uh, we are now uh, thinking about the extension of the, the plant.
Means that the Rolanda is, we are in reality, we build the, we the Builder. The build was preparing for this pension. Now we have to, we are in the part of them. We have put the machines. Now this machine is full. Now we are considered to extend.
Uh, in terms of volume, we are not disclosed, uh, margin by category. But I can share with you that uh, in terms of volume we have grow and domestic Market quarter last year with quarter of this year uh 70% in the Marvel and domestic markets.
And, uh, and in terms of price, we have increased 5.5% in terms of price. So it's, we, we combining all of the products we sell in domestic Market.
Uh, go to Australia.
Uh Australia is a is a they are performance very well I know that it but the price of Life Carol increase but demand from Australia is very strong. We export 75% of we produce in Australia and it's a it's a our operation there is a strong focus on export and export of this strong demand. Hello it demands this strong from Brazil is strong from Australia. The demand of beef is strong because we increase the income of the population and because of this
End up with the new generation want to eat more protein. And because of the adoption of the new drugs in this cell jp1 and so on and let's see. Look uh we we see for the next year, we are very confident about the business there. Uh,
The availability of cut is, uh, it's good.
And the other piece I like, uh, like the salmon is that we have there. We had in the past, some some challenge in terms of the disease with this is this is over. We are uh we are now performers in the more than 20% of margin of this business there. A park is going very, very well. We are increased the productivity, we share in best practice with the Brazil with us with us that bring a lot of Leverage for our business. There we are investing in the in the in the in the to update all of the all of the Farms that we have there, then they help us to increase the yield in good for the Ditty and uh say look we are we are bullish in Australia business that we have there and I think tax year we are seeing a stronger stronger results from Australia as well.
That's super clear. Thank you very much.
Thank you. Next, we have been with Barclays. You may go ahead, Mr. Th.
If there's going to be some retention, is it just to to get a little bit of a sense? How to think about 26 in the US beef business, uh, versus 2025 and then my my second question is uh related to working capital. Um, I remember back uh in the second quarter, you've talked a lot about building inventory putting into the cold storage because of the product that wasn't
Shipped out to China. So just want to understand how you how we should think about the timing and the delay uh, to basically put into our models as to when this inventory is supposed to come down a little bit, how long is it going to take you uh to to ship this, uh, ship this out? Thank you.
Hey been so uh, when it comes to beef so 2026. Yeah, we're going to, we're seeing have, uh, have a retention, is happening, a few more retention overall, you know, just a piece of data, you know, this quarter USDA numbers. We, we we processed 545, non-fed or C C, the cow's water was 545,000 just as a reference, Q3 of 2022 was 973. So we're almost half of the calcio of a few years ago. So I mean it it's a, it's a very important number in my opinion. And and we're seeing
Um, you know, also just, you know, our team members traveling and meeting people, seeing that, that, you know, it is happening.
um,
so yeah, we think 2026 will still be a challenging Year from a supply perspective and then probably from there. It starts, getting gradually better not, it's not going to be a, an overnight, you know, get completely better. But it's going to be a, a gradual improvement from 27 forward. Um,
So that's how we're seeing this on the, on the working capital side for Porky was a very, very short term thing. Uh that was restricted to the second quarter of 2025 did not carry forward into the uh third quarter. We cleared all of that inventory that that that um had issues uh you know because of all the tariffs going back and forth, so no, no worry about that.
Yep, the working capital was more related to like, out of Brazil, on what you had to build because of maybe an influencer actually.
On the status side, yeah, no, no, no worries. But I mean, it's helpful in the park side as well. Thanks for the...
Oh, I did not see that. The Sara? There is a, we sell? Uh, all of the uh, uh,
Additional, additional, uh, uh, number. I think the value yet, because even Blue, I don't see any CRA. It's normal. The inventory of CRM, we don't see Park. We sell a lot. We are the leader in this Park. We are the leader in this part, Chicken.
Is normal.
I'll take it to the follow-up. Thank you very much.
Thank you. Next we have uh Mr. Benn Mayhew, from Bank of Montreal, go ahead Mr. Mayo.
Hey, thank you for taking the questions. Um, first question is just on Sara, just wanted to revisit the, uh, headwind with, uh, the China. EU export bans on chicken. Is there any way to quantify the headwind during third quarter? And, you know, the expected recovery pace of of that headwind. That'll be my first question.
Second question has to do with, um,
just the Brazil and Australian Cattle offsets for for the US and just remind us on the beef Cycles there. So it's my understanding that Brazil, the cycle plays out kind of first, where availability gets Tighter and then second
Second is Australia with with kind of a longer tail and, and more of a hedge against the pressures that we're seeing in the US. So if you could just elaborate on that, um, a little more thanks.
Yes, that the constraints to expire the Restriction to export to China and Europe is updated a big role in terms of Sara export, develop possibility of Sara because Sara is have the strong market share in Europe. In Europe is the premium Market of breath
We are not able to export to Europe. We changed this volume for the other Market. When we go to the other Market with this extra volume, we have a pressure in this market with extra volume. Now we can, we can back to re-export to Europe. That means that we reduce the pressure in other Market. The other Market will be helped to increase the market as well, for the breath. Then it is a huge impact is, is difficult to say, how is the impact? Because there is a conjoint impact in the, in the business. The other thing about about China China is a place that very important rule in terms of the optimization of the carcass do do we that we solve the to China is a premium Market compared to the other markets. Of course, it's the same like explain about about the Europe about breath doing. This is the same. We move the wing from the, from China to the other market. Now we are back to to Sal
To China and the other thing, and important that the Feds and PS that we are, we are not market for all of it and power that we have. Now, we reopen that, is reopened, it will make a really extra revenue from the company. So look, this is a very important impact in this Arab business.
uh,
about about the uh, uh, the pride increase the price of livestock in in Australia and Brazil. Yes, this includes the price, but
the the cutout more than compensate to increase the price of the life channels, we see strong demand from the, from the Australia. We are, we are sold out our volume in Australia. Uh, we we are seeing we are not see that it will be an impact. Next year for Australia will be, will be a strong strong, uh, strong year and Brazil. Yes, Brasil that is some some reduction in the earth, uh, the availability of, but the reductionism, uh, considered the top, we we got, uh, the, this year and last year, we grow more than 20%. Now some restrictions, but still much higher than the before. Means that we the market in Brazil will be keep. We see a strong Market next year as well and, and just to complement, obviously that there is a, you know, as, as the US exports a lot less, especially to
To Asian countries and other North American countries.
it is a
You know, a direct correlation to us or to Australia and Brazil, export volumes being being stronger, right? As as as we need more domestic beef in the US, we keep more beef in the US export less out of the US automatically. You're going to see uh, an advantage to our, our businesses in Australia and Brazil. And that's a, and that's a very important correlation that that helps minimize the, the impact of of of of the recycling in the US
Thank you, guys. That's very helpful.
Thank you. Next question. Comes from Carla cassella with JP Morgan. Go ahead, Mrs. Kasala
Thank you for the question. Um, you mentioned the um, Brazilian debt financing that you did. I'm just wondering, you know, is that, was that sold to the public markets or are there any concentration there of, um,
of holders. And then I'm not sure if you gave a rate that you're paying on that.
Hi Carla. So about the rate. Uh, yes, that depends on the branches. We had, uh, branches; the longest one was a 40-year branch. I was inflation plus 8%, but on a swap basis, when you swap to dollars, it's a dollar plus 6.2%. So all the trenches were launched at the...
Rate that inside our, uh, Bond curve in us. So that's when a condition for any that insurance, uh, is that it has to be, uh, inside my investment grade curve. So that's what happened uh, with this uh uh, with this uh, local debentures that we issued. Uh there was a lot of individual investors demanded but also uh treasuries from Banks. Uh that generally they they continue to be selling to individual investors uh throughout the next month. Uh because individual investors has a tax exemption on this kind of local debentures and that's the reason why on a swap at basis? Uh, it is issued inside my bond curve. Okay.
You have cash flow in Brazil. So, um, do you see over time putting more or less, um, debt in Brazil, or are you well balanced, where you'd like to be now in terms of Brazilian debt versus U.S. debt?
Right. Yeah, if you my of my revenue is 12%. Of my ra total revenues is generated in Brazilian rise. Currently. Uh, I have around 10% of my debt in Brazilian rise. So, I still have some room, uh, to put, uh, some local debentures that, um, and, and, and to be to balance, uh, and have no need to hedge. So I have this, uh, current. I don't have currency exposure. So I still have some room to have more area of that but not that much. So I I'm almost, uh, where I want, I want to be in terms of uh uh current exposure balance. That is my that in reality. The more or less equivalent uh to my reality is revenues. Okay, that's great. And then just 1 other question, you mentioned the 2.5 times. Leverage Target for year end, is that using IFRS ibida or us comp?
Yes, IFRS to do that. So we'll be below 2 and a half times in IFRS.
Okay, great. Thank you very much.
Thank you, Carl.
Our next question comes from Enrique Bruislen with Bradesco BBI. You may go ahead, Mr. Bruislen.
Hello everyone. Thanks for taking my questions. Uh, a few follow-ups here on on select, uh, first. The the seasonal offering is now at year end have been gaining, I think relevance in your portfolio. So just like to hear a little more on on how, you know your expectations are for this year and especially thinking about the the domestic Market here in Brazil.
Uh, the second on on the production growth that we see for the Brazilian market, right? The there, there is the date of of 7% growth in the breeder, flock placements, in Brazil this year. Uh, I know there are some bottlenecks, so I would just like to hear from you. If, if you see that as a good proxy for what we should think about Supply growth going forward, or again, if, if given bottlenecks, uh, it should be, it could be a smaller number, uh, and the and the third 1, uh, on the export prices, we see this softening of export prices at the margin. As you mentioned, Tom amazonie. Uh, the question is, whether that's entirely related to the to the point you mentioned before about relocation of volumes from Europe and China to to these other markets.
Or if you also see maybe some signs of weakness in some specific markets, I think that would be really helpful in terms of thinking about how Seattle will shape up going forward. Thanks very much.
Uh, thank you, Ricky, for the question. Uh, uh,
First, the question for this video of, uh,
that, uh,
We see that this is a big cam, more and more important because we develop a portfolio of products to attend to this market, which is the critical Christian market that we have at CS and some other products.
The the market is, uh, we we plan to grow and, uh, uh, above the next year and we are, we are still strong Market. We are just this morning before to have this call. I talked with the people from Ciara, how it's going, how, how is going to operation, uh, great operation and say? They are very confident and happy with the demand so far. Of course, this is the first demands go to the retail. Then the, the the second demand, you need to the, the consumers, buy the products in the Shelf. But so far we are seeing strong demand from the retailers. We are not see that, uh, any constraint in terms of the volume to sell the in the air and
Be some, uh, some of news about that the Brazilian Market is the retail Market is constrained, but for our category, we are not see this constraint, we are sell, not just the the product for the Christmas, uh, Christmas event. But just the current products, the portfolio, we have, we are selling, well, we are not see this constraining our portfolio.
Uh, uh, the second Quest, if I understood it, is about export, correct?
If the 7% Premier block is...
Okay. Thank you. Thank you uh, about the, we see now the uh with this uh, reopened Europe and reopen. Uh China, we see you, we are
Uh, opportunity for increase the price.
Because some of the market with extra volume I mentioned before, was the present because we not just us. But all of the Brazilians need to sell in this. The, the markets there is for for uh, for for these products, mainly for crafts in in wing, and sad opportunity, for this product to grow in terms of price, we are see some movements already in the market and, uh, I yes for but the average price for crescent will be higher for sure, because even we are not increase the price or just to accept New Market, it will be increase. Our average price
And uh, what what is what is the the the challenge in terms of volume or price in external markets, is the small bird that's going to Middle East, is this? This is remain very, very challenged Market because they are uh, there is a local production. Uh, uh, and uh, the Brazilian before who was a, was a big market for
Even the small bird the greeners. And now with that, now we compete with the local production. This is, if you consider all of the market, we consider, this is the most difficult Market.
And about the increase in terms of the genetic, you mentioned that the breeders, uh, see us, uh, but they increase. But they need to increase in order to replace the old ones because we have restrictions in terms of availability of genetic before breeders before.
all of the market or the Brazilian producers, keep longer the, the, the, the, the bullets, the breeders, in the, in the, in the, in the, in the, in the, the farms, in order to compensate, uh, the the the
Not availability of the new 1 now, and then, this is not good in terms of productivity and demos of because, uh, when they get older, uh, you you will the eggs that you came from. Come from them is uh, the last, uh, aab more mortality. And now it's an opportunity to have a to have a more healthy age in terms of breeders and see, uh,
Brasilio, I mentioned before that if you looked at Brazil in this, in this, this year with a strong demand for external Market on demand for protein, we are not growth. We are not grow because a lot of restrictions really that come from the Indian truth. I believe that next year, the, the export from Brazil will be strong as we saw. Now, in the, in, the last month was, was the 1 of the record is far from Brazil. I believe that Brazil will be a compensate next year. Uh, what we are not able to export this year in the, for the, for the market.
That's very clear to me. Thanks very much.
Thank you. Next question comes from John Bongard with Mizuho. You may go ahead, Mr. Bongard.
Good morning. Thanks for the question.
Um, I'd like to ask about JVS Brazil uh you know thinking forward from here on the revenue side, can you speak to how resilient you expect domestic demand will be given higher prices just you know your expectations for for resilience there and then second how export opportunities are evolving for Brazil and I'm curious about maybe the structural opportunity to diversify exports across Asia. Um, you know, Korea, Japan, maybe some opportunities to supply more into Mexico, the trade deal with the EU and mercur. How do you think about new export opportunities for Brazil that are
Longer lasting and in 2026. Specifically, the ability for any incremental demand from exports to support prices and minimize the pressure on profit margins from higher Cowell costs. Thank you.
Will be strong for the next part to Brazil, Brazil in the last I think in the last 2 years open more than 100 new new markets and they keep they keep open market from Brazilian export from beef. And uh, we, we see a strong demand and I think will be remain next year, the demand for the market and they are more than compensate. The, the, the increase, the cost of livestock more than compensate, and the domestic Market is remaining strong as well. I think is, uh, for beef. We we beefed, we see that I will be good, uh, next year, for all of the market, even in Brazilian Market. Because in Brazilian Market, we have developed a special work with our key customers. We, we managed we call category management, 2.0. That we are managed. Uh, the category, uh, inside of the retails, we manage the portfolio. We manage
The presentation, we train the people that they take care of the butcher area and the good. The good news from that beside to increase the volume of the beef. They are, they increase the volume for all other categories. Made means that they retail they have a partnership with the free boy. They are able to grow, not just in this but show all of the categories that we have a, a strong problem, here is a mature program.
It's proved the results here in Brazil and external markets, I think is the Standard Market is demanding is huge. We are not seeing restriction on that.
Thanks amazonie.
Thank you. Our next question comes from Thiago bertil Luchi with Goldman Sachs. Go ahead, Mr. Borto Luchi.
Yes. Hi, good morning everyone. Thanks very much for taking the questions. I also have 2, the first 1 and I think, is for Wesley. Uh, I remember Wesley early in the year, you mentioned a bunch of investments into your USB operations, right? Uh, and we know, obviously, those are aiming for the medium-term, not necessarily the cycle, but I just like to understand from you, uh, given the Run rate profitability that you are delivering their, uh, how much of those Investments or any other work you could do in terms of efficiency could help protecting a little bit. Um, um, the sequential Evolution into 2026, uh, and how comparable, you think, margins could go, uh, on a sequential year versus where we are, uh, year to date. This is the first 1 and the second 1. Uh, I think it's for a, uh, you have the soft guidance, right off, uh, return.
1 billion dollars per year to shareholders, either through dividends or buybacks. I know this year was very special due to the listing, but you are delivering a run rate closer to $2 billion, maybe $1.5 billion. If you exclude the dividends related to the listing.
Does it mean maybe there might be space for you guys to be a bit higher on shareholder returns particularly as you mentioned, there's no clear money on the table for next year. Thank you very much. Those are the questions. Thank you very much.
So the the the Investments we're doing are not going to impact 2026, they're going to impact 2027 going forward. So uh, you shouldn't be seeing anything there, actually, it's perfect timing. If you think about it because 2026 will still be a a low Supply uh, for cattle. And and all of those plants are going to be, you know, with their their revamped and and, and, and extra a better efficiency better capacity for use for value added items. Even for more volume in, um, in the into 2027, which is when things should starting to look better, at least better than 26 and and then from then on get better. So it's actually the time in there, couldn't have been better. Um, just overall we should probably think of, uh, 2026 being a a year. That's a margin perspective. I think would look similar to what 2010 25 look like.
Uh, for the first quarter, that's always a cash consumption quarter. So generally those decisions will start to be doing uh, in second quarter next year. So probably returns will be more secured to the second half of 2026. But I think we are confident that uh we can continue to have uh the dividends of around a billion dollars uh per year as long as we can keep leverage on our comfort zone. Um and again any excess we will be deciding uh,
In terms of shared by backs, or extra dividends, uh, and also depending on how many opportunities.
Fair enough. Thank you very much both.
And our next question is, we thought Mr. Lucas. Ferreira with the JP Morgan. Go ahead Mr. Fairer know, so
Hi guys, I hope you hear me well.
Uh, a quick follow-up on that 700 million expected, uh, working capital Investments for 2026 just ballpark numbers. Uh, how much of that is a volume growth and how much is is pricing. So, just we have a sensitivity here of
You know how things could go? Thank you.
Hi. Um, I would I would say could be half and half the 700 million dollar. As I mentioned in the beginning, depends on a lot of variables that is out of our control. So basically I I did an average of many years before, but we want to to all depends on 3 things on grains prices in livestock, prices and finish, it product prices, this can swing a lot. So, this is again, the, the 700 is working capital is something that is really what can swing more, uh, in terms of what we forecasting, uh, for next year. So maybe I can we can even have a neutral, um, value, right? No, not consuming not releasing except for the biological assets that you'll always be consuming. That's why I separate biological assets, but again, but this number was just an average uh of years before uh, because we will have some volumes that will impact that special from the expansion that we did, that we do. But the main uh impact will always be
On the prices of these three elements that I mentioned.
Thank you for a quick follow-up on the biological assets that you're guiding pretty much like, um,
Like a flattish number writing dollars.
Um, obviously there's the effects affect. Uh, but can we assume giving all the industry inflation and the cost of know, grandmothers Etc that this implies also that your
And often assume that chicken is most of this biological assets, right? That, that be your placements are sort of a flattish or at least, not growing significantly. Is it fair to assume
It's because the main uh, the main variable that in fact, this is the grain prices. So basically, we are considering that grain prices will not be much higher next year so we can consider it flattish. Okay.
Thank you because the livestock the chicken and pork they they they basically are valued through their cost of feeding. That's the grains.
Perfect, thank you very much.
Next question comes from porhum Sharma with Stevens. Go ahead.
Uh, thanks for the question. Um, I just wanted to follow up on some of the, um, some of the hedges you talked about last quarter. I think you mentioned you put on, uh, you took a $250 million loss.
Due to some of the hedges. I was just uh,
You know, curious, uh, if you're able to share.
How much of that rolled off in 3Q and how much, um, are should we expect to see roll off in in 4 q?
Hi puran. Yes, bear in mind that we're talking about the caching pack of the derivatives because they offset on the physical purchase. Uh but you're right on the third part that we have these impact uh on this negative impact that uh, will be so far. It's been with the decrease in future markets is being offsetting from a cash standpoint. In the fourth quarter of course this depends from now to the end of the quarter how is the the behavior? But so far we are releasing cash on the derivative side but bear in mind that it is off on a on a margins basis. It's offset by the physical purchases.
Great, thank you for that, caller. And just, um,
Um, you mentioned this, these supplies, uh, the industry supplies still remain constrained. I was just wondering, you know.
Just given where hog production margins are at why don't you think you've seen any uh signs of expansion? And you know the last Hogs and pigs report uh seem to indicate that we're not going to see any expansion. I think other players within uh pork processing or are also walking away from
You know, raising Hogs. So at this point when you look at your integrated operations, do you see, do you see the the shorter hog Supply situation here in the US as a benefit to your business?
Um given you know, just where hog production margins are at or is it is it more of a negative just given that it would be uh it'd be impacting your your pork Packer side of your business would just love your thoughts on that.
For so we we, we see all this year, we have a lower lower volume of skills next year, we're probably going to see higher skills um, this this this helped. Uh, it's better. It's better than the zero and we either will be better than this year, so we might get more Hogs into next year. Now, this whole strategy of of uh, how much Hogs we raise,
How much, you know, we are, we are basically a quarter 25% of our more or less 25% of our of the Hogs, we process. We raise. It's a number that we, we think is what we like it. We like it to be around that. Um, so our Hogs our hog, um, uh, procurement is, is very well balanced. You know, taking risk on hog prices, corn, or corn risk. Hot risk can and there is some cutout businesses as well. That's, uh, hard that we buy index on on cutouts. So it's a it's a very um,
The way we buy, Hogs is the way that minimizes volatility on on each 1 of the indicators. So even in years that we don't have a great uh, operations in a great revenue or a great result in in Hogs, uh, in hog production.
Um, it it it it ends up not being a terrible year for us. I think the way that we buy Hogs and the way that we structure our hog procurement allows us not to feel huge impacts if 1 of these 3 uh uh pricing indexes, you know, cut out grain or Hogs. If if they have big swings we're able to kind of hedge that a little bit so we're not we're not you know obviously we want our pork, our pork processing and our pork uh hard production to to to to to to to do well at the same time. But if 1 of those worse and the other 1 does better it's it's it's almost a head for us.
Great, thank you very much.
Next question comes from Leonardo Alencar with XP. Go ahead, Mr. Alencar.
Hi everyone. Good morning. Thanks for taking my questions. I would like to discuss a little bit further about Brazilian cattle.
This year was just surprised— not surprised to the upside, but then we don't have much visibility for 2026. So first, what's your base case for KO availability the next year?
And second, um, next scenario, maybe potential scenario of a title supply of Cayo and should be the view of this. This project is retail stores that will be building up for a long time. Now, should be viewed that as a margin head, or maybe this scenario of retailers with lower margins and squeeze, it margins will be a good opportunity to increase the pace of growth in that area. Those are more two questions. Thank you.
In Brazil, we see that.
Information. We have that will be last uh 3 to 5%. But this is the this is the market information about different search from 3 to 5 percent. But but uh Leonard is important to see the 3 to 5 percent for a high high level. It's a and this is still a lot of skills available in the market.
This is 1 thing that we see that marketing and and and free boy have a nice special program to to uh, to purchase in the the the kale in the market we are long-term strategy with the farms in order to to have uh reliable Supply along the year.
Is 1 Thing. The second thing we see the Brazilian Market grow a lot of uh, the pit lot.
And, and the, the the rate of growth the physiologic, it's a, it's incredible rate because uh, with the booming of the uh, ethanol called industry in Brazil, uh, the availability of ddg helps to enhance the diet of the car and uh, and the combination of the Improvement of genetic and the Improvement of diet. And we we see that the the, the age, the the the the size of the, the field of the Brazilian beef increase.
And this is another point that you need to put in consideration because of that. We are improve the quality we improve and we improve the uh uh
I say we improve the as
Uh quality of the product that is going to the go to, to the artist. And this is that because of that, we are so uh, so excited about the Brazilian Market because if you compared to Brazilian to the West us are us as less than a half of Brazilian herds and they produce more beef. The opportunity. For Brazil grow, beef Market is a huge, huge opportunity to in terms of genetic, in terms of diet, and terms of management of the of the Earth.
it is 1 thing and the other thing you
About our stock store.
The Swift store was developed because we, we believe that the, the, uh, Frozen beef. It's a, there is a market and they, and if you sell Frozen, we we save some, uh, some weight in the chain, some youths that, uh, when you sell fresh, we are losing the yield and during the process, till to go to the consumers.
And the the consumer attitude, they go to the market, they not go every day to the to the stores. Uh, they go 1 day, they buy, they go to home and they they frozen they make and this was the idea to develop the concept why they chose. And and at home, when they further that home, they don't have the best condition to Frozen. Let's, let's Frozen the the meat inside of the plant that we save the youths, and we get better products. And this was the idea to develop a this market. And this Market going well, and we not compete with our customers because we have the solution to put in store in the store. Some of the customers they want to have this Frozen Frozen beef inside of this. In the store, we go there and we build on a swift store inside of the store. This is 1 1 segment. We are growing and the other segment is that I mentioned before these, are they cut?
Or management. We are we are we call a SOI free boy. You are butcher that we are. We are teach the, the, the the, the the people that operate the butcher, uh area.
Uh, in order, they are preparing to attend better. The consumers, and the other way, we help them to define the mix.
And to define the presentation of the each 1 of the cuts. And then that is a, that is a win-win strategy because they don't just sell more Meats, but they sell more the others products inside of the store.
Okay, that's pretty much the details. Thank you. Thank you very much.
Our next question comes from prio. Ori with Barclays, you may go ahead.
Million for next year. Can you just walk us through sort of what specifically is driving that? Um, and then my second question is just around any progress you've made with regards to updating your bond ticker? Um, I know that's something that you guys have been discussing for a little bit, so just wanted to see where you were there. Thank you.
I appreciate it. So, basically, this year, the increase was mainly because of livestock prices and also finished product prices. Next year, as I mentioned, there are a lot of variables of business searching, so I just...
Made an average of last year's because this is again, depends on the virus that I mentioned before. So, so I can, I can tell you what, uh, this year, it was mainly for other reasons, uh, of livestock prices and finish it, uh, about the prices and some increasing volumes, uh, the thicker. Uh, we are in the process of, uh, of making, uh, the Envy. So our our Netherlands company now as a CO issue as well. So these will mean uh see a restructuring. So maybe with this, uh,
With this argument of being restructuring, we will ask Bloomberg if now they can take the ticket a busy from the sticker but that's that's what that's our next trial will be. Once we finish making the Envy as a full issue.
Great. Thank you. Do you have a a timeline around that possibly? And then just 1 final question around whether you've gotten any indications from bndes around how they're thinking about um selling down their uh existing holding which is for sale. Thank you.
Um, no. We don't have a time frame, but I think by next year, uh, we'll have the the restructuring of the co co issue are in place and the end. Yes, we have. Um, no news on that.
Great, thank you so much.
Our next question is with Igor guedes with the gal, you may go ahead Mr. Great.
Great is your microphone might be muted.
Good morning. Good morning everyone. Are you listening to me?
Yes.
Okay, uh, good morning everyone. Uh, thank you for the opportunity. Uh, my question is about U.S. sport. Uh, we understand that although domestic demand...
Remains resilient supported by, uh, consumers.
Switching to cheaper, pertains margins. Still seems to reflect the effect of weakness uh for byproducts. And of all uh the operation has made progress in expanding, its high value added portfolio.
Including the strengthening in prepared product line. Uh, but this has not yet been enough to offset the contraction factors. Uh uh,
Uh, we, uh, we have an agreement, uh, at Chinese. Uh,
Uh, uh, at a Chinese products will be subject to a 40% tariff in new us. Do you think this agreement will be unable to return uh, of sales of byproducts, and of thought to China with the administration of the 2 countries, reaching a better understanding on tariffs is possible to see this margin Improvement. Going forward. Thank you very much.
Good morning. So all the, if we, we have more markets for our products,
Including offers it's always better and it's always moving be be better for margins overall to have more options. Well, margins are not compressed because of that. I mean, we're just back to a to a 10%. Uh, if it's not here close to what we had been operating in in the previous quarters except for the second quarter. So, uh, margins are not, are not compressed because of that right now. It's just uh, it was compressed on the second quarter because of a some back up that we had on on the experts but not not not anymore. Oh and again obviously if we have more Market access for meter for office or for any 1 of our bike products is always, it's always, it's always positive but I wouldn't say that margins are compressed because of that though.
Okay, thank you very much.
Thank you, ladies and gentlemen. With there being no further questions, I would like to pass the floor to Mr. G.
Guide us today and, uh, it's your continued interest in JBS this quarter. Once again, I want to highlight the strength of our global protein platform and the way that we operate it with discipline. That guides our work every day. As we close, I want to express my appreciation to our more than 280,000 team members around the world; they are committed to excellence. This is the foundation of our performance and the reason we continue to deliver consistent and long-term value. Thank you.
Speaker #3: participation and have a nice day.
This concludes the conference call held by JBS. Thank you very much for your participation, and have a nice day.