Leonardo Alencar

Leonardo Alencar asked about the base case for Brazilian cattle availability in 2026 and, in a potential scenario of tighter supply, whether the Swift retail stores project should be viewed as a margin hedge or an opportunity to accelerate growth in a lower-margin retail environment.

Answer

Gilberto Tomazoni, Global CEO of JBS, projected a 3-5% reduction in Brazilian cattle availability for 2026, but emphasized that this is from a high base, meaning supply remains much higher than in previous years. He highlighted Friboi's long-term supply programs with farms and the significant growth in feedlot operations, improving genetic and diet, which enhances beef quality and yield. He explained that Swift stores were developed to capture value from frozen beef, reduce waste, and meet consumer habits, and they do not compete with existing customers, offering solutions for in-store frozen beef sections.

Leonardo Alencar asked about the base case for Brazilian cattle availability in 2026, given the positive surprise in 2025 but limited visibility. He also inquired if the Swift retail stores project should be viewed as a margin hedge in a potential scenario of tighter cattle supply, or an opportunity to accelerate growth if retailers face squeezed margins.

Answer

Gilberto Tomazoni (Global CEO, JBS) projected a 3-5% reduction in Brazilian cattle availability for 2026, but emphasized that this is from a high base, leaving ample supply. He highlighted Friboi's long-term supply programs with farms and the significant growth of feedlots, driven by ethanol corn industry byproducts, which improve cattle diet, genetics, and yield, making Brazil's beef market opportunity huge. Regarding Swift Stores, he explained they were developed to capture value from frozen beef (reducing waste, improving quality) and do not compete with customers, offering solutions for in-store frozen beef sections and category management programs (Soggy Friboi/Friboi Butcher) that benefit retailers by increasing sales across categories.

Leonardo Alencar from XP Investimentos asked for a deeper discussion on the U.S. beef cycle, considering external factors like Mexican cattle import issues and Brazilian beef tariffs. He also inquired about the demand outlook for chicken in China once import restrictions are lifted.

Answer

Wesley Batista Filho, CEO of JBS Foods USA, acknowledged the short-term relevance of the Mexican cattle situation but disconnected it from the long-term herd rebuild cycle. Global CEO Gilberto Tomazoni reiterated his positive outlook for the chicken business, citing strong global demand that should readily absorb supply once markets like China reopen.

Leonardo Alencar asked about the performance dynamics between on-trade and off-trade channels amid adverse weather and economic pressures. He also sought more clarity on the pricing strategy across different categories, particularly between premium and core segments.

Answer

CEO Carlos Eduardo Klutzenschell Lisboa explained that the on-premise channel was more significantly impacted by the adverse weather. He noted that pricing initiatives began in March across all segments, with the rate of increase aligning with inflation, supplemented by positive mix effects from premiumization. He stressed the strategy is to balance long-term pricing goals with short-term cost inflation and portfolio health.

Leonardo Alencar asked about costs, questioning if the 5.5% to 8.5% guidance for Brazil beer COGS was now conservative after a positive Q1. He also sought to reconcile Ambev's positive volume report with industry data showing a production decline.

Answer

Executive Carlos Eduardo Lisboa clarified that industry production data can be misleading in the short term and that Ambev's Q1 2024 production was unusually high, affecting the comparison. CFO Guilherme Fleury de Figueiredo Parolari added that while the Q1 cost tailwind was expected due to hedging, the company is maintaining its full-year cost guidance for now, as significant FX and commodity pressures are still anticipated starting in Q2.

Leonardo Alencar asked about several topics: the impact of weather on beer consumption, the outlook for COGS given aluminum and FX volatility, and whether the business in Argentina has reached its bottom.

Answer

Executive Jean Neto noted that positive temperatures in Q2 were offset by higher rainfall, and a healthy job market also supported the industry. He suggested Argentina may have bottomed in April/May, with a reverting trend in June/July. Executive Lucas Lira added that while current commodity and FX rates are a headwind for COGS, it's too early to determine the full-year impact due to ongoing hedging. Jean Neto also highlighted BRL 1.5 billion in recent cost-efficiency investments.

Leonardo Alencar from XP Inc. asked for an outlook on domestic demand for the second quarter, following an atypical first quarter. He also sought commentary on the export market, including the effects of Avian flu and potential tariff impacts on pricing dynamics in key regions like China.

Answer

CEO Miguel de Souza Gularte stated that the domestic market's supply-demand dynamic remains 'extremely balanced and very active,' similar to Q1, with sustained pricing power. Regarding exports, he noted that previously depressed prices are beginning to reverse in some geographies and that, so far, there has been no significant impact from tariffs, with volumes to China remaining stable.

Leonardo Alencar from XP Investimentos asked about the interplay between seasonal effects and structural operational improvements from the BRF+ program in Q1 2024, questioning if the strong performance is the new recurring baseline. He also inquired about the potential for further grain cost benefits and whether the favorable international pricing dynamics seen in Q1 would continue, particularly in the Middle East and Asia post-Ramadan.

Answer

CEO Miguel de Souza Gularte explained that fundamental changes, driven by the BRF+ program since late 2022, have made the company more resilient and less susceptible to historical seasonality. He emphasized that the program is now embedded in the company's culture, focusing on manageable factors to improve performance. Gularte confirmed that a gradual price improvement was anticipated and capitalized on through new export licenses (25 in Q1, plus 2 more for the Philippines), which provide more commercial options and diversity. He sees a resilient pricing environment continuing into the second quarter.

Asked about the potential impact of new U.S. and Canadian tariffs on the company's expansion plans in the U.S. and whether this might shift investment focus to other geographies. Also inquired if any impact from tariff uncertainty was felt in Q1 2025.

Answer

Executives stated that while tariff impacts are hard to predict, their long-term vision for growth in the U.S. is unchanged, as the business primarily serves the domestic market. The company's global platform provides resilience against such trade issues. No specific impact from tariffs was felt in Q1, but there could be some in Q2.

Leonardo Alencar asked about the margin outlook for Marfrig's North American operations in Q2, noting a seemingly delayed seasonal improvement. He also inquired about the distribution of operational efficiency benefits between continued and discontinued operations in South America, particularly concerning export upsides.

Answer

Timothy Klein, CEO of North America, acknowledged a slow start to Q2 due to wet weather but reported a recent surge in demand for the barbecue season, expecting margin expansion. He affirmed that Q2 and Q3 are typically the strongest quarters. Rui Mendonca, an executive for South America, clarified that operational planning and export benefits are applied similarly across both continued and discontinued operations, with a focus on profitability.