Thiago Bortoluci

Thiago Bortoluci asked Wesley Batista Filho about the impact of investments in U.S. beef operations on efficiency and sequential margin evolution into 2026. He also inquired about JBS's shareholder return strategy, specifically if the current run rate, which is higher than the $1 billion annual soft guidance, indicates potential for increased returns, especially without clear M&A opportunities for next year.

Answer

Wesley Batista Filho, CEO of JBS USA, clarified that U.S. beef investments will impact from 2027 onwards, not 2026, which he expects to have similar margins to 2025 due to low cattle supply. Guilherme Cavalcanti, Global CFO of JBS, stated that shareholder return decisions are primarily driven by leverage, aiming to maintain investment grade. He confirmed confidence in continuing $1 billion annual dividends, with any excess decided in H2 2026 based on leverage and M&A opportunities.

Thiago Bortoluci asked Wesley Batista Filho about the impact of JBS's U.S. beef operations investments on protecting sequential margin evolution into 2026, given current profitability. He also asked Guilherme Cavalcanti if JBS might increase its shareholder returns (dividends/buybacks) beyond the soft guidance of $1 billion per year, especially if no major M&A opportunities arise in 2026.

Answer

Wesley Batista Filho (CEO, JBS USA) clarified that U.S. beef investments will impact from 2027 onwards, not 2026, and that 2026 margins are expected to be similar to 2025, with the timing of investments being optimal for when supply improves. Guilherme Cavalcanti (Global CFO, JBS) stated that leverage is the main variable for shareholder returns, aiming to maintain investment grade. He expects to continue $1 billion in annual dividends, with any excess for buybacks or extra dividends decided in Q2 2026, depending on M&A and cash generation after Q1.

Thiago Bortoluci asked about José Antonio Fernández Garza-Laguera's vision for FEMSA, specifically what he would do differently as CEO and the future role of Coca-Cola FEMSA within the overall portfolio, linking it to the capital allocation framework.

Answer

José Antonio Fernández Garza-Laguera, CEO of Fomento Económico Mexicano, expressed strong appreciation for Coca-Cola FEMSA, highlighting opportunities in digital transformation, organic growth across regions, and its potential role in industry consolidation through M&A. Regarding his leadership, he emphasized a greater sense of urgency, meticulous financial management, and a demand for excellence across the organization, aiming for faster decision-making in capital allocation to position FEMSA as a leading global proximity retailer.

Thiago Bortoluci from Goldman Sachs asked about the new CEO's vision for FEMSA, specifically what he intends to do differently, and the future strategic role of Coca-Cola FEMSA within the company's portfolio, in the context of the capital allocation framework.

Answer

José Antonio Fernández Garza-Laguera, CEO of Fomento Económico Mexicano, expressed strong appreciation for Coca-Cola FEMSA, highlighting its potential for organic growth, digital transformation, and M&A opportunities in South America and Mexico. Regarding his leadership, he emphasized a greater sense of urgency, counting every penny, and instilling a culture of excellence and speed in decision-making, particularly in capital allocation, to achieve FEMSA's ambition of being a world-leading proximity retailer. Martin Arias provided a follow-up on Alvaro Garcia's question.

Thiago Bortoluci from Goldman Sachs asked for details on the same-store sales weakness at OXXO Mexico, particularly the 'loss of competitiveness,' and followed up on portfolio optimization and net unit growth outlook for the Health division and Grupo Nos in Brazil.

Answer

CFO Martín Yániz clarified the competitiveness issue relates to product presentation mix (e.g., multi-serve returnables) rather than SKU pricing, which they are addressing. Director of IR Juan Fonseca distinguished that the Health division in Mexico is undergoing a major restructuring with store closures, while Brazil's Grupo Nos remains in a high-growth phase despite minor closures of early-cohort stores.

Thiago Bortoluci asked about the same-store sales dynamics at OXXO Mexico, particularly the noted loss of competitiveness, and also inquired about portfolio optimization in the Health division and at Grupo Nos in Brazil.

Answer

CFO Martín Yániz clarified the competitiveness issue relates to product presentation mix (e.g., returnables) rather than pricing, and noted OXXO's product overlap with hard discounters is only about 20%. Director of IR Juan Fonseca distinguished that Mexico's Health division is undergoing a major restructuring with 400+ store closures, while Brazil's Grupo Nos remains a bullish growth story despite minor adjustments.

Thiago Bortoluci inquired about the momentum for Proximity Americas, focusing on OXXO Mexico's traffic share loss, the impact of sustained traffic decline on growth appetite, and the evolution of the gross margin mix from financial services and commercial income.

Answer

Jose Antonio Fernández, CEO of the Proximity and Health Division, attributed the traffic slowdown primarily to calendar effects, cold weather, and the broader economy, noting only marginal share loss to the traditional trade, particularly in tobacco. He affirmed that the store expansion strategy remains robust due to high returns on invested capital. CFO Martin Arias Yaniz added that financial services and commercial income continue to be significant drivers of gross margin expansion, with more opportunities ahead.

Thiago Bortoluci of Goldman Sachs asked about the deceleration in OXXO's traffic and the feasibility of an acceleration. He also requested a breakdown of the SG&A pressures that diluted the strong gross margin expansion at the operating level.

Answer

Executive Juan Fonseca explained that the high traffic growth seen post-COVID was not sustainable and that a 1% growth rate is a more realistic long-term aspiration. CFO Martin Arias Yaniz clarified that the significant SG&A increase was primarily due to accelerated investments in building out the platform and capabilities for OXXO's Latin American expansion, particularly in Colombia, rather than just labor pressures in Mexico.

Thiago Bortolucci from Goldman Sachs asked about the balance between foot traffic, pricing, and profitability in Brazil, what initiatives might reignite same-store sales, and for preliminary demand trends in July for Brazil and Mexico.

Answer

CEO Luis Raganato acknowledged a challenging macro environment in Brazil where positive comparable sales were driven by higher average check rather than traffic volume. He highlighted the success of the 'Mekidojia' value campaign and the 'Mekifest' digital campaign in increasing visit frequency and identified sales. Raganato confirmed that Mexico's strong sales performance was continuing into the third quarter.

Thiago Bortoluci of Goldman Sachs inquired about the company's early views on the potential 6x1 labor reform in Brazil and sought details on the restaurant opening pipeline for 2025 and beyond, including the mix of freestanding versus mall locations.

Answer

CEO Marcelo Rabach reiterated the 2025 guidance of 90-100 new restaurants, emphasizing a disciplined, gradual increase to maintain strong ROIs. He confirmed the focus remains on high-return freestanding units but noted the company is also opportunistically pursuing mall locations. CFO Mariano Tannenbaum added that the company is analyzing the potential impacts of the 6x1 labor reform, believing any changes would be gradual and manageable.

Thiago Bortoluci of The Goldman Sachs Group, Inc. asked about the company's balance sheet and low leverage. He inquired about potential interest in assets from The Coca-Cola Company's refranchising process and, if none, the possibility of higher dividends. He also requested an update on FX hedges.

Answer

CEO Iain Craig García confirmed that while refranchising assets are interesting, KOF is not being considered for current opportunities outside the Americas, which brings the company closer to addressing its 'inefficient capital structure.' CFO Gerardo Cruz Celaya indicated that guidance on capital allocation could come by year-end and provided a detailed breakdown of FX hedge positions for 2025 and 2026.

Thiago Bortoluci of Goldman Sachs Group, Inc. asked about the company's low leverage, its interest in Coca-Cola's refranchising assets, and the potential for increased shareholder returns. He also requested an update on FX hedging positions.

Answer

CEO Iain Craig García confirmed that while some refranchising assets are interesting, KOF is not part of the solution for current opportunities outside the Americas, which brings the company closer to addressing its 'inefficient capital structure.' CFO Gerardo Cruz Celaya indicated that guidance on balance sheet strategy would come by year-end or early 2026. He also detailed FX hedge positions, noting Mexico is hedged at MXN 20 per dollar for 2025 and 2026.

Thiago Bortoluci asked about the operational protocols and slaughter timeframes related to the new avian flu case, drawing comparisons to past incidents. He also questioned whether the outbreak could trigger a Material Adverse Change (MAC) clause and affect the terms of the merger.

Answer

Miguel de Souza Gularte, CEO of BRF, detailed the Ministry of Agriculture's regionalization protocols, expressing confidence that the situation would be controlled, supported by BRF's contingency plans. Executive Fabio Mendes Mariano commented that it was too early to assess the MAC clause's applicability but noted a similar past event had no material effect and reiterated the company's intent to close the deal. Executive Marcos dos Santos emphasized that the merger strengthens the company against such challenges.

Thiago Bortoluci from Goldman Sachs asked if taking Marfrig private is an option given the controlling group's increasing stake via buybacks, and questioned the advantages of remaining a listed company with a low free float.

Answer

Executive Marcos dos Santos asserted that taking the company private 'was never a matter of discussion' and is not in their plans. He highlighted the benefits of being a listed company and described the current share buyback program as an attractive investment. He expressed confidence that the stock's daily liquidity remains comfortable.

Asked for clarification on the percentage of the business mix that is value-added or prepared foods to help with valuation post-listing. Also inquired about the nature of any regulatory pushback or requirements received during the listing process.

Answer

The company explained that classifying 'value-added' is complex, with percentages varying from 15% to 50% depending on the definition, but they are working on providing more clarity. Regarding the listing, they have just filed and have received very few, simple questions from regulators related to accounting figures, with no significant pushback.

Thiago Bortoluci of Goldman Sachs inquired about BRF's growth perspective, asking if the company is at a turning point to refocus on volume after a period of prioritizing profitability. He also questioned what impact a more volume-focused BRF could have on the industry's delicate supply-demand balance, especially with a favorable grain outlook.

Answer

CEO Miguel de Souza Gularte stated that while the initial turnaround phase focused on correcting issues like unprofitable SKUs, the company has a major challenge and opportunity to occupy its existing idle capacity for organic growth. He emphasized that the natural trend is to pursue growth, but always with a focus on profitability, driven by innovation and value-added products. He clarified that growth for its own sake is useless and must be sustainable and strategic.