Guilherme Palhares

Guilherme Palhares requested details on Tyson Foods' working capital and free cash flow guidance for 2026, asking which lines are most impactful and how working capital is being considered. He also sought clarification on the chicken business's exposure to the commodity market, specifically regarding small versus big chickens and overall spot market exposure.

Answer

CFO Kurt Calaway expressed pride in the $1.2 billion free cash flow for FY25 and guided to $800 million to $1.3 billion for FY26, acknowledging the operating income and CAPEX ranges. He noted that some inflationary movement on working capital is likely with sales growth, indicating free cash flow will exceed dividends. CEO Donnie King explained that Tyson participates in both small and big bird programs, with value-added products in both. He emphasized aligning with strategic customers to grow collective business rather than focusing on price arguments, noting that value-added business grew twice as fast as commodity or segment average in the past year.

Guilherme Palhares from Santander asked for JBS's perspective on the table egg industry, the prospects for its Mantiqueira joint venture, and whether there are similar growth opportunities in the U.S. market.

Answer

Global CEO Gilberto Tomazoni described the investment in Mantiqueira as a new wave of growth and diversification, with the strategic goal of becoming a global leader in the category. He highlighted eggs as an affordable, healthy, and growing protein source with opportunities for branding and value-added products, confirming it is a priority for growth in both Brazil and the U.S.

Guilherme Palhares asked for the main drivers behind the 5% growth in US costs, which outpaced volume growth. He also inquired about the outlook for wage inflation and labor availability.

Answer

President & Global CEO Fabio Sandri addressed the labor market, explaining that the company strategically overstaffed its plants to 105% in Q2 to prepare for potential market impacts and maintain operational stability. He noted that the company maintains competitive wages region by region and has seen success in staffing, benefiting from some labor reduction in the foodservice sector.

Guilherme Palhares requested more detail on the 2025 CapEx plan, asking for a breakdown between expansion and maintenance and the main locations for expansion. He also asked for an explanation of the broiler mortality issues, seeking to understand the split between disease and genetics.

Answer

CFO Matt Galvanoni clarified that most growth CapEx is for projects that will add capacity in 2027 or later, with a plant conversion being impactful in 2026. CEO Fabio Sandri explained that the mortality issues are connected to a new broiler breed that has better yields but is weaker against respiratory diseases. He stated the industry is learning to manage the new breed and expects the situation to improve over time.

Guilherme Palhares of Santander asked for more details on the strategic rationale behind the company's recent acquisitions in Saudi Arabia. He also inquired about the progress of the BRF+ efficiency program and the current state of production capacity, questioning if further investment is needed to support volume growth.

Answer

CEO Miguel de Souza Gularte explained that investments in China and Saudi Arabia are aligned with market opportunities and are designed to leverage the strong Sadia brand reputation in those regions. CFO Fabio Mendes Mariano added that while the BRF+ program delivered over BRL 300 million in Q1, opportunities for further efficiency gains remain. He confirmed that targeted investments are underway to expand capacity by 3-5% in the medium term to meet projected demand, while the focus on efficiency continues.

Guilherme Palhares asked for an outlook on the monetization of tax credits and its impact on cash generation, and requested more detail on the performance dispersion across operations under the BRF+ 2.0 program.

Answer

CFO Fabio Mariano explained that monetizing federal tax credits will take time, while the company actively optimizes state-level credits, citing a recent transaction with Marfrig. He also noted that returning profitability allows the use of accumulated tax losses. CEO Miguel Gularte described BRF+ as a continuous improvement culture across all divisions, not just a program with a finish line. He emphasized that the goal is a synchronized, excellent company, not 'islands of excellence,' fostered by healthy internal competition and shared learnings.

Guilherme Palhares from Santander asked for more detail on the industrial gains from the BRF+ 2.0 program, such as improved yields and lower mortality, and their forward-looking impact on unit costs. He also inquired about the company's current level of idle capacity and whether utilizing it would require significant new investment or if efficiency gains alone would suffice.

Answer

CFO Fabio Mendes Mariano quantified the Q1 BRF+ captures, with BRL 227 million from field indicators (hatching, mortality) and BRL 107 million from industry gains (yield). CEO Miguel de Souza Gularte explained that efficiency gains, such as a 1-2% increase in yield, are equivalent to opening a new plant. He confirmed the company has installed idle capacity, which is an opportunity, not a dead weight. He stated that the current level of investment is sufficient to capture these opportunities, and the company is confident it can respond in a timely manner to utilize this capacity for growth.

Guilherme Palhares inquired about the planned post-merger management and director reporting structure. He also asked for clarification on the cutoff date that determines a shareholder's right to withdraw from the transaction.

Answer

Executive Marcos dos Santos stated that the management team is already consolidated and working effectively, and the integration will happen naturally with guidance from independent board committees. Executive Tang David clarified that the cutoff date for withdrawal rights is the publication date of the relevant fact, and shareholders who choose to withdraw will not be eligible to receive the proposed special dividends.

Guilherme Palhares of Santander inquired about the sustainability of high price premiums for prime beef in the U.S. and asked for a breakdown of the 35% cost reduction in South America, focusing on labor's contribution and the status of deboning capacity.

Answer

Executive Timothy Klein explained that strong U.S. premium beef demand is partly seasonal but also reflects overall market strength, expecting spreads to remain wide as supply tightens. Executive Rui Mendonca clarified the cost reduction is based on lower fixed costs per unit from high volumes, with labor comprising 70-80% of those fixed costs.

Guilherme Palhares of Santander requested an outlook for the Argentinian market, particularly concerning cattle retentions. He also asked about the price gap between different beef cuts (Prime, Choice, Select) in North America and its expected impact on profitability.

Answer

Rui Mendonca, an executive, acknowledged that Argentina's margin was below expectations due to smaller cattle supply, high inflation, and currency imbalances but expressed optimism citing positive government actions. Timothy Klein, CEO for North America, explained that consumers continue to demand higher quality beef, allowing the company to maintain price spreads for Prime and Choice cuts despite record supply.

Guilherme Palhares inquired about the performance dynamics between different grades of beef in North America, particularly the narrow spread between Choice and Select cuts. He also asked for the company's perspective on its exclusion from the B3 Corporate Sustainability Index (ICEI) and how it was addressing the issue.

Answer

Timothy Klein, CEO of North America, explained the narrow Choice-Select spread in Q1 was a temporary supply issue and is now returning to normal levels. Paulo Pianez, a sustainability executive, addressed the ICEI exclusion, stating it was based on a single 'reputation' criterion that uses negative press clippings, which he argued does not accurately reflect Marfrig's top-tier, independently verified sustainability performance and high scores in other areas of the index.

Guilherme Palhares requested an update on the Argentinian market, seeking expectations for volume and pricing performance as inflation eases and the market normalizes.

Answer

Executive Carlos Eduardo Lisboa expressed a positive long-term outlook for Argentina, noting that key economic indicators and the beer industry are improving sequentially. He stated that Ambev's volumes were in line with the industry, maintaining stable market share. He affirmed the company's commitment to investing in its brands and executing its revenue management plan, positioning Ambev to lead the category's eventual recovery.