Lucas Ferreira

Lucas Ferreira asked for clarification on SQM's lithium production capacity in China, specifically if 50,000 tons are already being produced and if there's potential for further expansion next year. He also inquired about any retroactive payments SQM might owe Codelco for 2025 upon the finalization of their joint venture agreement.

Answer

Carlos Díaz Ortiz, General Manager Lithium Potassium Division, confirmed 100,000 metric tons of lithium sulfate production (equivalent to 50,000 LCE), with 20,000 tons from their Dexin plant and 30,000 tons from third parties, and plans to increase production and evaluate expanding their own plant. Ricardo Ramos, CEO, stated that a dividend payment to Codelco, related to their tonnage share, will be accounted for in SQM's financials as soon as the joint venture agreement is finalized.

Lucas Ferreira asked for clarification on SQM's lithium production in China, specifically if they are already running 50,000 tons and if there's capacity for further expansion next year. He also inquired about potential retroactive payments or cash transfers SQM might owe Codelco for 2025 once the joint venture agreement is signed, and how this would impact free cash flow.

Answer

Carlos Díaz Ortiz, General Manager Lithium Potassium Division, SQM, confirmed that SQM expects to produce around 100,000 metric tons of lithium sulfate in China this year (equivalent to 50,000 tons LCE), with 20,000 tons from their Dexin plant and 30,000 tons with third parties. He noted plans to increase production and evaluate expanding their own plant capacity next year. Ricardo Ramos, General Manager and CEO, SQM, stated that a dividend would be paid to Codelco next year, related to the tonnage belonging to Codelco per the JV agreement, and this value would be accounted for upon agreement finalization, with details publicly available.

Lucas Ferreira of J.P. Morgan asked for an update on CapEx, inquired about lithium production costs in Atacama, including potential cost reductions from the ongoing ramp-up, and sought initial views on the cost evolution at the Mt. Holland project.

Answer

Carlos Díaz Ortiz, General Manager of the Lithium Potassium Division, stated that SQM is actively implementing cost reduction initiatives and expects nominal operational costs in Chile to decline this year, a trend already visible in Q1. Andres Fontannaz, Commercial VP of SQM International Lithium, reported that the Mt. Holland operation is cash positive even at current prices. He noted that while costs are higher during the ramp-up phase, the project has an attractive long-term cost structure. CEO Ricardo Ramos added a summary, expressing a positive long-term view and emphasizing that SQM is the best-prepared company to benefit from an eventual price recovery.

Lucas Ferreira of J.P. Morgan inquired about lithium production costs, asking if the Atacama expansion would lead to cost dilution and seeking initial cost views for the Mt. Holland project. He also re-asked about CapEx.

Answer

Carlos Díaz Ortiz, General Manager of the Lithium Potassium Division, confirmed that SQM expects a decline in nominal production costs in Chile due to cost reduction initiatives and improved yields, a trend already seen in Q1. For Mt. Holland, Andres Fontannaz, Commercial VP, stated the project is cash-positive even during its higher-cost ramp-up phase and is expected to have an attractive long-term cost structure. The CapEx question was deferred as previously answered.

Lucas Ferreira asked for a ballpark breakdown of the $700 million expected working capital investment for 2026, distinguishing between volume growth and pricing effects. He also inquired about the implications of the flattish guidance for biological assets, specifically whether it implies stable placements or is primarily driven by grain prices.

Answer

Guilherme Cavalcanti, Global CFO of JBS, estimated the 2026 working capital investment could be half from volume and half from pricing, but emphasized its high variability based on grain, livestock, and finished product prices. He clarified that the flattish biological assets guidance primarily reflects the assumption that grain prices will not be significantly higher next year, as biological assets are valued through their feeding costs (grains).

Lucas Ferreira asked Guilherme Cavalcanti for a ballpark breakdown of the $700 million expected working capital investment for 2026, specifically how much is attributed to volume growth versus pricing. He also inquired if the flattish guidance for biological assets implies stable or not significantly growing placements, given industry inflation and the cost of grandmothers.

Answer

Guilherme Cavalcanti (Global CFO, JBS) estimated the $700 million working capital investment for 2026 could be half from volume growth and half from pricing, but emphasized its high variability due to grain, livestock, and finished product prices. He clarified that the flattish biological assets guidance assumes grain prices will not be significantly higher next year, as biological assets are primarily valued through their feeding costs (grains).

Lucas Ferreira of JPMorgan Chase & Co. asked for clarification on JBS's free cash flow breakeven scenarios for 2025 and 2026, particularly regarding CapEx for new processed food projects and the mechanics of the $250 million cash impact from hedging activities.

Answer

Global CFO Guilherme Cavalcanti provided a detailed breakdown of the free cash flow breakeven components for 2025 ($5.5B) and 2026 ($4.5B), including CapEx, working capital, and interest expenses. He explained that the hedging impact is a temporary cash margin deposit due to rising cattle prices, which is expected to return as physical purchases are settled.

Lucas Ferreira sought clarification on the expected low single-digit volume decline for Mexico in 2026, whether it was an illustration or a firm forecast, and the strategy for a 30% calorie reduction. He also asked about the progress of Mexico's leaner structure and the drivers of market share gains in Brazil outside of Rio Grande do Sul, noting signs of slowing consumption in Brazil.

Answer

CEO Ian Craig confirmed that a low to mid-single-digit volume decline for Mexico in 2026 is the current expectation, factoring in the excise tax, cycling the previous year's backlash, and the World Cup. He noted that further productivity adjustments are still needed. The transition to lower-calorie options will be gradual and respectful of consumer tastes. In Brazil, despite consumption softening, growth is driven by market share gains in regions outside the South, supported by additional capacity and go-to-market strategies. Investor Relations Director Jorge Collazo reiterated that the Mexico volume outlook is preliminary.

Lucas Ferreira with JPMorgan inquired about the specific low single-digit volume decline expectation for Mexico next year, the company's strategy and timeline for achieving a 30% calorie reduction in sugary drinks, and the progress on Mexico's leaner operational structure. He also asked for clarification on Brazil's performance outside Rio Grande do Sul, focusing on market share gains, pricing, execution, and consumer dynamics amidst a general slowdown.

Answer

CEO Ian Craig confirmed the low to mid-single-digit volume decline expectation for Mexico next year is a preliminary estimate, factoring in the excise tax impact, the absence of last year's consumer backlash, and the World Cup. He noted remaining adjustments for productivity in Mexico and a 'shock plan' for savings. Regarding calorie reduction, Ian Craig stated it would be gradual, incentivized through promotional grids and baseline price differentials, without expecting material sweetener savings. For Brazil, Ian Craig acknowledged consumption softening but highlighted share gains outside the southern region as the driver of growth, benefiting from a tough base last year. Investor Relations Director Jorge Collazo reiterated the preliminary nature of the Mexico volume outlook.

Lucas Ferreira of JPMorgan Chase & Co. asked for Coca-Cola FEMSA's expectations for the second half of the year, particularly concerning initiatives in Mexico to navigate the challenging environment, market share trends, and revenue growth. He also inquired about the drivers behind Brazil's performance and the potential for a volume rebound.

Answer

CEO Iain Craig García detailed that Mexico's performance was impacted by a consumer backlash, a softer economy, and adverse weather, but noted market share has fully recovered in the modern channel. He outlined affordability initiatives targeting the traditional channel. For Brazil, he attributed the volume dip primarily to weather, expressing confidence in a rebound supported by strong share gains and digital tools. CFO Gerardo Cruz Celaya added that Mexico faces an easier comparison base in the second half.

Lucas Ferreira of JPMorgan Chase & Co. asked for Coca-Cola FEMSA's expectations for the second half of the year, particularly regarding initiatives in Mexico to address market share and affordability, and for more detail on Brazil's performance beyond weather impacts.

Answer

CEO Iain Craig García outlined a conservative second-half outlook for Mexico, citing economic and weather headwinds. He noted market share has been fully recovered in the modern channel but a gap remains in the traditional trade at the 20-peso price point, which is being addressed. For Brazil, he attributed the volume dip primarily to weather and expressed confidence in a rebound, highlighting strong underlying share gains and the success of the 'Juntos Plus' digital tool. CFO Gerardo Cruz Celaya added that Mexico's H2 comparison base is less challenging.

Lucas Ferreira asked if recent strategic changes in Mexico were yielding results in April and whether the slow start to the year impacts the full-year budget. He also inquired about margin improvement opportunities and consumer trends in Brazil.

Answer

CEO Ian Marcel Craig García confirmed that market share in Mexico is recovering but noted that increased competitive intensity was not in the original plan. Executive Jorge Alejandro Pereda added that strong South American performance helps offset Mexico's slow start, so the budget is not being materially adjusted. For Brazil, Ian Craig cited operating leverage and new capacity in profitable segments as margin drivers and stated they are not yet seeing a consumer slowdown in their territories.

Lucas Ferreira of JPMorgan Chase & Co. asked about the company's pricing strategy, questioning if there is room for price increases given strong demand and capacity constraints. He also inquired about the drivers of Argentina's relative volume outperformance and the outlook for that market.

Answer

CFO Gerardo Celaya stated the focus is on sustainable growth, with revenue per case tracking inflation, supported by mix improvements via Juntos+. CEO Ian Marcel Craig García explained the Argentina strategy focused on affordability to maintain household penetration during the crisis. He is optimistic about a recovery, noting improving trends, but expects a tough 2024 before a return to growth in 2025.

Lucas Ferreira of JPMorgan Chase & Co. asked about the specific triggers the company is waiting for to begin hedging the next sugar season. He also inquired how the entry of Tether as a major shareholder has influenced Adecoagro's growth strategy and its approach to new projects like the Bitcoin mining MOU.

Answer

Renato Junquera Pereira, Sugar, Ethanol and Energy VP, stated that prices should react as the market recognizes Brazil's weaker-than-expected crop, which will trigger more hedging. CEO Mariano Bosch added that Tether supports the company's disciplined capital allocation culture. He characterized the Bitcoin mining project as a small-scale test on 5% of their energy to explore potentially high returns before committing further.

Lucas Ferreira of JPMorgan Chase & Co. questioned if new majority shareholder Tether has specific plans to monetize Adecoagro's significant land holdings, which are often undervalued in the stock price. He also asked about any plans to improve the stock's trading liquidity, a historical concern that could be exacerbated by Tether's large stake.

Answer

Executive Chairman Juan Jose-Pineyro Sartori acknowledged that land is typically undervalued in public companies but stated it is a core long-term asset for Tether. He confirmed they are actively working on mechanisms to better crystallize this land value for shareholders. On liquidity, Mr. Sartori argued that the effective trading float may not have been dramatically reduced and that removing 'NAV discount traders' could reduce overhang. He reiterated a commitment to achieving a high stock price and a liquid, well-covered stock.

Lucas Ferreira from JPMorgan Chase & Co. asked for an outlook on the fundamentals of the chicken and swine industries for 2026 and whether a significant change is expected. He also questioned if the 15%+ EBITDA margin in Brazil is a sustainable new level for the company, given its improved operational and commercial execution.

Answer

CEO Miguel Goulard described the global protein market as having a perfect balance between supply and demand, with no fundamental shifts expected. He emphasized that BRF's focus on value-added products provides resilience. An executive added that modest global production growth forecasts (under 2% for poultry in the US/Europe) support this stable outlook. Regarding margins, management stated that while a specific level cannot be guaranteed in a cyclical industry, BRF is now a much stronger, more resilient, and competitive company capable of navigating challenging scenarios effectively.

Lucas Ferreira asked about the drivers behind the strong volume growth in Brazil's processed products segment, its sustainability, and the company's corresponding plans for CapEx and potential capacity expansion.

Answer

CFO Fabio Mariano attributed the double-digit volume growth in Brazil to a combination of a favorable consumption environment and superior commercial execution, including increased penetration and items sold per customer. He noted that BRF's growth outpaced the market, implying share gains, particularly in processed cuts and frozen categories. He expressed optimism for sustained volumes and stated that the company will evaluate capacity expansion investments from 2025 onward if the growth trend continues.

Lucas Ferreira of JPMorgan Chase & Co. inquired about the international market, specifically the drivers behind the strong increase in chicken breast prices and the potential for resuming exports to Europe. For the Brazil segment, he asked if the price pressure from cheaper raw materials on processed products is over and if there is room to increase prices and recover volumes.

Answer

CEO Miguel de Souza Gularte attributed the international success to new licenses, particularly 8 plants for the U.K., allowing BRF to re-enter markets and focus on higher value-added products. CFO Fabio Mendes Mariano addressed the Brazil segment, explaining that average price comparisons are affected by the absence of the seasonal holiday portfolio from Q4. He noted that while some categories like margarine face price pressure due to lower input costs (soybean oil), the overall consumption environment is recovering, supported by improved Brazilian income.

Lucas Ferreira asked for guidance on the outlook for below-EBITDA lines, specifically the volatile non-derivative financial expenses, and whether these impacts are expected to persist over the next twelve months.

Answer

CFO Guilherme Fleury de Figueiredo Ferraz Parolari explained that while it is difficult to forecast, the underlying drivers, such as FX losses from dollar purchases in Bolivia and the need to repatriate cash, are not expected to change materially. He implied that this line item would likely not normalize to zero in the near future.

Lucas Ferreira asked about the company's cash distribution policy, questioning if there is potential to increase shareholder returns, possibly beyond a 100% payout, by taking on more leverage.

Answer

CFO Guilherme Fleury de Figueiredo Parolari responded that the recent dividend announcement reflects a continuous review of their cash position. While not commenting on future payout levels, he reiterated that the company consistently evaluates returning cash to shareholders through a combination of Interest on Capital (IOC), dividends, and share buybacks.

Lucas Ferreira from JPMorgan Chase & Co. asked for the 2025 outlook on marketing investments and distribution costs in Brazil, particularly in light of the renewed focus on the Skol brand and organic growth initiatives.

Answer

CFO Lucas Lira explained that Ambev's strategy is to fund sales and marketing investments through efficiencies gained in distribution and administrative expenses, driven by DTC integration and their ZBB (Zero-Based Budgeting) culture. CEO Carlos Eduardo Lisboa reinforced this by describing their 'flywheel' strategy, where digital transformation optimizes the business, freeing up resources to reinvest in category growth.

Lucas Ferreira requested a breakdown of Brazil's performance by channel, such as on-premise versus off-premise, and how this performance relates to the competitive environment and pricing strategies, particularly at the bottom of the pyramid.

Answer

Executive Jean Neto highlighted that a key growth driver is the third-party distributor and wholesaler channel, which is an asset-light model performing very well. He also noted that the off-trade channel is performing slightly better than the on-trade channel this year. In terms of product segments, he reiterated that the core-plus segment, led by Budweiser, was the fastest-growing for the company in the quarter.

Lucas Ferreira requested an outlook on Moove's expected capital expenditures for the next one to two years, considering the reconstruction after the fire. He also asked if any clauses within the Cosan Nove structure could be triggered by a potential capital increase at Raizen.

Answer

Executive Rodrigo Alves stated that there is no CapEx estimate for Moove's reconstruction at this time, as a large portion is expected to be covered by insurance and the company is still finalizing its alternative production strategy. Regarding Cosan Nove, he explained there are no specific trigger clauses, but a significant change in Raizen's capital structure would likely necessitate a renegotiation of the Cosan Nove arrangement.

Lucas Ferreira asked about the sensitivity of the debt service coverage ratio to foreign exchange and interest rate fluctuations, and whether the net effect would be helpful or harmful in reaching the 1.5x target. He also inquired how the challenging global and Brazilian economic environment is impacting the group's risk appetite and strategic priorities.

Answer

Executive Rodrigo Alves acknowledged that a potential interest rate increase makes the scenario more challenging, although the company swaps most of its debt to a floating CDI rate. He agreed that the higher-for-longer rate environment necessitates more discipline in capital allocation, which is why it remains a core focus for the company. This discipline is seen as crucial for navigating the current economic landscape.

Sought confirmation on whether the dual listing proposal is the same as the 2023 version, asked if the CapEx forecast will remain around $2 billion for the next two years, and questioned if planned price increases for Seara's processed foods have already been implemented.

Answer

The listing proposal is confirmed to be exactly the same as in 2023, with minor technical changes. The $2 billion CapEx figure is the current basis for planning but could be revised. Regarding Seara's pricing, the company emphasized that price increases must be 'deserved' through value creation, efficiency, and mix management, rather than just passing on costs.

Lucas Ferreira of JPMorgan Chase & Co. inquired about the sustainability of South American margins given rising cattle prices, the role of confinement in cattle supply, the product mix, and Marfrig's standalone 2025 outlook for CapEx, working capital, and liability management, including potential BRF dividends.

Answer

Executive Rui Mendonca attributed strong South American performance to a resilient model featuring large, efficient plants, a high mix of value-added products, and over 90% occupancy from confinement cattle. Executive Tang David projected flat working capital and lower maintenance CapEx for 2025, emphasizing debt reduction. An Unknown Executive added that Marfrig's standalone cash generation is sustainable, supported by asset sales.

Lucas Ferreira from JPMorgan Chase & Co. sought clarification on working capital, asking about the impact of a future 30% volume increase and the net effect of the Minerva asset sale. He also questioned the impact of potential BRF dividends on Marfrig's capital structure and allocation priorities.

Answer

Marcos dos Santos, an executive, explained that working capital released from the Minerva asset sale will offset consumption from volume growth, resulting in no major fluctuations. He also stated that cash from the Minerva sale and BRF's performance provide Marfrig with flexibility for capital allocation, including buybacks, while remaining financially conservative. An executive added that utilizing fiscal losses will also improve cash conversion.

Lucas Ferreira inquired about the outlook for the drop credit value in North America, which has been declining and impacting margins. He also asked about Marfrig's leverage and whether increased dividend payments from its subsidiary BRF could accelerate deleveraging at the parent company level.

Answer

Timothy Klein, CEO of North America, stated that the drop credit has recently stabilized, with the main decline attributed to edible tallow. He noted a potential for improvement as soybean oil futures are rising. Marcos dos Santos, an executive, highlighted BRF's strong Q1 performance and structural improvements, stating there is a 'high likelihood' of BRF paying dividends to Marfrig in 2024, which would support deleveraging.

Lucas Ferreira asked for details on the month-by-month sales evolution during Q4 and into early 2025. He also inquired about the profile of stores planned for 2025 and 2026, including their size, and the expected CapEx per store.

Answer

Executive Belmiro de Gomes stated that December sales were weaker than expected for the entire market but recovered in January and February to a trend similar to Q4. He detailed that new stores planned for 2025 are high-return projects, mostly in the Southeast, averaging 5,000-6,000 square meters with a CapEx of around BRL 70 million per store.

Lucas Ferreira from JPMorgan Chase & Co. asked if the company would reconsider its policy of not hedging commodities and FX given the volatile environment, and requested details on Q3 volume trends and the performance of the premium segment.

Answer

CEO Patricio Jottar Nasrallah firmly stated that CCU's policy is not to hedge and it will not be changed, arguing it is more cost-effective long-term. He also explained that the premium beer segment in Chile has stabilized at around 50% of volume, significantly higher than pre-pandemic levels, and he expects it to remain there without major changes.

Asked about the company's hedging policy, clarification on Q3 volume trends, and the performance and outlook for the premium segment's mix.

Answer

The executive firmly reiterated the company's policy of not hedging commodities or FX. He explained that the premium beer segment has stabilized at around 50% of volume, significantly higher than pre-pandemic levels, and they expect this mix to remain stable for the rest of the year.

Lucas Ferreira from JPMorgan Chase & Co. questioned if the company would reconsider its policy of not hedging commodities and FX given market volatility. He also asked for clarification on Q3 volume trends and the performance of the premium segment, and whether mix would be a tailwind.

Answer

CEO Patricio Jottar Nasrallah firmly stated that CCU's policy is not to hedge, arguing that it ultimately costs shareholders money through intermediary fees. This policy will not change. Regarding the premium segment in Chile, he noted it has stabilized around 50% of beer volume, down from a peak of 60% but still well above pre-pandemic levels of ~25%. He expects this level to hold for the rest of the year without major changes.