BRF SA Q2 FY2024 earnings call

• Financial Performance: BRF had a record second quarter with 22.3% revenue growth, EBITDA of R$2.6 billion, net income almost R$15 billion (22% higher than Q2 2023), free cash flow R$1.7 billion, inventory cycle at 76 days (record low), and leverage at 1.4 times EBITDA (lowest in nine years). - Segment Performances: Brazil's EBITDA margin was 15.7% with volume growth in processed products; International market EBITDA margin improved 4 points from export price recovery and new markets; Ingredients and Pet segment at 11.9% EBITDA margin. - Operational Initiatives: BRF+ 2.0 continued to improve operating indicators; new products launched in frozens, desserts, and cold cuts in Brazil; 57 new export permits in 2024; 90% traceability of indirect range suppliers in Amazon and Cerrado biomes; 35% electricity from clean sources; Sadia started offsetting 100% of Hot Bowls and Mac'n Cheese packaging.

Brazil: Achieved an EBITDA margin of 15.7% with significant volume growth, particularly in processed food categories. International Market: EBITDA margin improved by 4 percentage points due to recovery in export prices, new markets enabled, and strong performance in Turkey and GCC. Halal market saw a 1.2 percentage point increase in market share. Ingredients and Pet: Reported an EBITDA margin of 11.9%. Revenue contributions: Brazil's processed products and international market's export price recovery were key drivers.

• BRF expects to continue leveraging BRF+ 2.0 to enhance operating indicators and capture efficiencies. - Plans to add 40 new permits by year-end to expand market reach. - Optimistic about sustained growth in domestic and international markets, utilizing BRF+ 2.0 and new permits to drive expansion.

• Macroeconomic environment could cause results to differ materially from projections. - Sanitary issues like Newcastle disease can disrupt operations and require product redirection. - Market dynamics and balance between offer and demand may impact pricing and volumes.

Q: About international market portfolio, new permits, and offer dynamics.

A: Miguel and Fabio discussed new permits, market stability, growth in Halal and Middle East markets, and balance between offer and demand.

Q: About cost curve, capital allocation, and pricing premium.

A: Fabio talked about cost curve expectations, capital allocation plans (dividends, repurchases, organic/inorganic growth), and sustainability of pricing premium.

Q: About offer and demand in Brazil, and poultry production.

A: Fabio and Miguel discussed market balance, storage, demand stability, and poultry production dynamics.

Q: About production capability and international markets.

A: Miguel and Fabio discussed new permits, market diversification, and performance in MENA region.

Q: About tax credits and BRF+ 2.0.

A: Fabio talked about tax credit monetization, and Miguel discussed BRF+ 2.0 as a continuous improvement culture.