BRF SA Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Financial Performance: Net revenue reached BRL 15.4 billion, 3% higher than Q2 2024. EBITDA for Q2 was BRL 2.5 billion, totaling BRL 5.3 billion YTD. Net income was BRL 735 million Q2 and BRL 1.9 billion YTD. Leverage was 0.43x LTM EBITDA, the lowest in history.
• Brazil Operations: Consistent evolution with EBITDA growth, highest Q2 sales volume in Brazil, over 330,000 customer points of sale, new product launches, and positive results from the Marfrig partnership.
• International Operations: Healthy margins via geographic diversification, halal market expansion, growth in processed products in GCC and Turkey, and new export authorizations.
• Efficiency and Growth: Annual improvements in poultry and swine conversion/yield, plant utilization, and volumes sold, with progress since 2022 at 50% higher than historical average.
• ESG Highlights: Recognition in climate change initiatives, Education for the Future campaign, and fifth transparency and integrity report.

Segment Performance

• Brazil: Reported EBITDA of BRL 1.3 billion with a margin of 16.4%, driven by successive volume growth, especially in processed products. Achieved highest second quarter sales volume in Brazil with a customer base exceeding 330,000 point of sale. Launched new products in pies, ready-to-eat snacks, and pork cuts, and saw positive results from the partnership with Marfrig brands.
• International Market: EBITDA margin of 17.3% due to geographic diversification. In Saudi Arabia, launched Sadia Fresh chilled chicken line; in Turkey, processed product volumes grew 7% year-over-year, maintaining market share leadership. Direct export segment had 11 new export authorizations in 2025, contributing to price maximization.
• Ingredients and Pets: Segment reported EBITDA of BRL 52 million. Pet division complemented SAP implementation, expanding customer base by 8%. Ingredients continued diversifying product and market portfolio.

Guidance

• Anticipate resumption of markets like China and Europe once avian flu restrictions lift, expecting traction in these destinations.
• Brazil's high consumption suggests prices may remain resilient.
• Continued expansion of export options and focus on value-added products to maintain competitive edge.

Risks

• Avian Flu Impact: Previous episodes posed challenges, but learnings from past events improved contingency plans. Ongoing impact in China and Europe remains a risk.
• Market Volatility: Fluctuations in international market prices and supply/demand dynamics, especially in regions affected by avian flu or local economic conditions.

Question and Answer

Q: About avian flu impact and reallocation, specifically on pork cuts in China A: BRF has 198 new export authorizations, allowing reallocation of products. Mitigated impact through contingency plans, including redirecting products to internal market and pet food division.

Q: About cost reduction and commodity prices A: Animal feed costs expected to decrease in H2 2025, with potential benefits carried into 2026.

Q: About price resilience and mix effect in Brazil A: Brazil's consumption is high, prices resilient. Processed goods portfolio performance contributes to strong revenue growth, with volume and price increases.

Q: About future fundamentals and margins in Brazil A: Demand for food products, including value-added ones, is resilient. No significant change expected in demand, with focus on maintaining profitability through management metrics.

Q: About inventory and avian flu learnings A: Inventory not exorbitant, plans to reduce inventory by leveraging market reopenings and pricing strategies. Learnings from past episodes improved contingency plans and communication.

Q: About Banvit's performance in Turkey A: Turkey's excess poultry supply pressures prices, but focus on added value products and integration with Brazilian operations to improve performance in H2 2025.