MBRF Global Foods Company S.A. ($MBRF3)

Good morning, ladies and gentlemen. Welcome to MBRF 2025 Earnings Call. This call is being recorded. You can watch the replay ri.mbrf.com. The slide deck is also available for download. [Operator Instructions] Let me remind you that these forward-looking statements are based on beliefs and projections of the MBRF management as well as information currently available. They involve risks and uncertainties because they relate to future events, and therefore, they depend on circumstances that may or may not occur. Investors, analysts have to take into account that industry factors, macroeconomic situation can make these forward-looking statements materialize substantially differently. We have Miguel Gularte, CEO, Mr. Tim Klein; and Mr. Jose Scoseria Rey, our CFO. I'll give the floor to Mr. Gularte for his presentation.

Good morning. Welcome to MBRF's quarterly earnings call. Today, we are presenting for the first time the full year consolidated results of a company that was formed in 2025 already as one of the world's leading food companies with more than 130,000 employees, 425,000 customers and a portfolio of iconic brands widely recognized. We reached record results with a net revenue reaching BRL 164 billion in 2025, up 12% year-over-year, and volume growing 4%. These results reflect the strength of our strategy and the consistency of our investments. We expanded capacity to keep up with growing global protein demand with a clear focus on driving revenue through higher value-added products in line with our long-term strategy. Despite a tougher backdrop with avian influenza bringing poultry exports and U.S. cattle cycle weighing on supply, our operating model proved resilient. Adjusted EBITDA for the year came in at BRL 13.2 billion, with an 8% margin. Net income reached BRL 359 million, underscoring the strength of our operating model, and the progress we've made on efficiency with BRL 1 billion captured over the year. To walk you through the 2025 results for the fourth quarter, I'd like to invite our CFO, Jose Ignacio Scoseria Rey, and I'll come back for the closing remarks.

Good morning, everyone. Thank you for joining MBRF's earnings call. We will walk you through our 2025 consolidated results, covering North America Beef, South America Beef and BRF. Let me highlight a few key figures for 2025. We delivered BRL 164 billion in net revenue, up 11.9% year-over-year. Adjusted EBITDA came in at BRL 13.2 billion with an 8% margin. Net income totaled BRL 358 million for the year. Operating cash flow reached BRL 13.1 billion. We closed the year with leverage at 3.3 LTM EBITDA. On the next slide, on the left-hand side, you can see total volume and segment performance year-over-year. Volumes were up 3.9% versus 2024, driven by South America Beef and BRF. Of the reported revenue in 2025, which amounted to BRL 164 billion. North America beef accounted for 47%. BRF for 39%; and South America beef for 14%. Adjusted EBITDA totaled BRL 13.2 billion in 2025, with BRF contributing 78%, south America, 17% and North America 5%. In terms of currency, 71% of our revenue is dollar linked and 27% is in reals, reinforcing our geographic diversification and multi-protein footprint, revenue is split as follows: 45% from the U.S., 25% from Brazil, and the remainder mainly across Asia, the Middle East and Europe. Value-added process products accounted for 39% of total volumes. Let's now move to performance by segment. I'll turn it over to Tim Klein to walk you through North America.

Thank you. Let's begin on Slide 6, where I will comment on the results for the year. Starting on the first chart on the left, sales volume was 2.3% lower than the same period of the previous year. Industry slaughter volume was down 5.9% as a result of reduced cattle placements and extended feeding periods. High fat cattle prices relative to feed cost of gain, coupled with high replacement cattle prices, contributed to reduced cattle placements and extended feeding periods. As a result, live weights have increased significantly. Net sales were BRL 13.8 billion, an increase of 11.8% versus last year. EBITDA was BRL 133 million, 54% lower than last year with an EBITDA margin of 1%. Beef demand in fiscal 2025 was strong with the wholesale demand index higher by 12.7%. Although box beef prices have increased, it was not enough to offset higher cattle prices. Now I move to Slide 7, where I will talk about U.S. market data. Starting on the left, USDA reported Kansas live cattle prices averaged $230.42 per hundredweight up 22% versus last year. The USDA comprehensive cutout averaged $368.36 per hundredweight, up 19.3% and while the USDA reported drop credit increased 1.9% to an average of $11.48 per hundredweight. The USDA cutout ratio was 1.60 versus 1.64 last year. As expected, the cyclical decline in cattle supplies exacerbated by the drought conditions in recent years has resulted in record prices and reduced capacity utilization across the industry. We continue to be encouraged by strong beef demand and expect this to continue as we move through this part of the cycle. Now I will pass to Ignacio.

Thank you, Tim. Let's move to Slide 8 for South America's performance in 2025. Volumes exceeded 1 million tons, up 14.6% year-over-year. In the middle chart, net revenue reached BRL 22.2 billion, up 20% versus 2024. On the right, adjusted EBITDA came in at BRL 2.2 billion, up 28.1% year-over-year. This resulted in an EBITDA margin of 10.1%, up 60 bps year-over-year. This performance reflects productivity gains from recent investments, higher plant utilization and a stronger focus on value-added products. On to the next slide. On the left, volumes are up more than 40% versus Q1 2024. In 2025, exports accounted for 59% of total revenue. Asia, represented 47% of South America beef exports, with China accounting for roughly 4% of consolidated net revenue. We've been working to broaden our go-to-market options. In this context, Europe grew 4 percentage points from 13% in 24% to 19% today. Exports from South America to the U.S. represented 22% in the period. On Slide 10, BRF delivered record volumes this quarter up 4.3% year-over-year. In the domestic market, volumes continue to grow, with process products gaining share in the mix. In international markets, strong execution helped offset poultry exports restrictions. Net revenue totaled BRL 64.7 billion, up 5.8% year-over-year. EBITDA came in at BRL 10.4 billion, in line with 2024 numbers, with a solid 16.1% margin. On the next page on your left, we highlight consistent execution in the domestic market with a customer base up 8% and volumes up 18% versus 2023 and market share gains in processed foods. Innovation continues to support results. On the right, our seasonal portfolio maintained brand leadership during the Christmas season in Brazil. On Slide 12, we highlight BRF's performance in international markets. Volumes grew in GCC markets process products reached record levels and gained 1.3 percentage points in market share. Our competitive budget in the region remains a key driver of performance in Turkey and the Southern Cone transit volumes also reached record levels, supported by our strong brands in these regions. For direct exports, we have secured 230 new plant approvals since 2022. At the end of 2025, we were clear to resume poultry exports to the EU, improving our sales mix and with positive impact on profitability. On the next slide, we outline our key investment projects. We stepped up investments to strengthen competitiveness amid rising demand for protein and value-added products, reinforcing our value creation strategy, builds on efficiency, scale and global reach. In processed foods, we highlight the new plant in Jeddah, Saudi Arabia, expected to come online in the second half of '26 and expansions in branded lines in Uberlandia and Kezad at the UAE or in the UAE. In poultry, we are expanding slaughter capacity at our Lucas do Rio Verde facility. In beef, we continue to expand slaughter capacity across Brazil, Argentina and Uruguay. And we announced the expansion of the pouch line at Pampeano. On the right, we highlighted 3 M&A transactions completed in 2025, totaling BRL 1.1 billion. Processed foods plant in Henan Province, China, launch of local slaughter operations in Saudi Arabia through Addoha poultry company, expansion into gelatin and collagen through a 50% stake in Gelprime, increasing exposure to higher value-added products and boosting margins. From Slide 14 onward, we cover our capital structure. On Slide 15, we report roughly BRL 1 billion in free cash flow for 2025. Full year operating cash flow came in at BRL 13.1 billion. CapEx totaled BRL 5.3 billion in M&A investments, BRL 1.1 billion. Financial expenses totaled BRL 5.7 billion. It's worth noting that CapEx in 2025 was over BRL 2 billion higher than in 2024, mainly driven by M&A activities and capacity expansion projects at BRF positioning the company for future growth and rising protein demand, as shown on Slide 13. On the next slide, we show consolidated net debt at year-end 2025. Net debt stood at BRL 43.4 billion at the end of Q4 2021, up 5.1% quarter-over-quarter. FX effects were the main driver of this increase. Leverage came in at 3.3x. It's important to note that current leverage reflects the U.S. cattle cycle with North America beef delivering 1% EBITDA margin in the last 12 months. On Slide 18, we highlight key ESG progress. 100% monitoring of the cattle supply chain. CDP AAA rating climate, water security and forests. We are now at 100% in cage free eggs across all operations, 80% to renewable energy across operations. Thank you. I'll now hand it over to our CEO, Mr. Miguel Gularte, for his closing remarks.

Thank you, Ignacio. As a wrap-up, I'd like to reaffirm our commitment with sustainable growth and consistent value creation, and BRF continues to deliver record performance, strengthening its protein platform to meet increasingly strong demand. In North America, the beef business delivered steady revenue growth throughout the year, supported by resilient beef demand even in a tighter cattle supply environment. In South America beef, full year performance clearly reflects the capacity expansion investments with solid gains in volume, revenue and margins strengthening the business' competitiveness. At BRF, record volumes in the period reinforce its growth trajectory, particularly in processed foods. The resumption of exports to the EU opens up new opportunities to expand our footprint in key markets. We also completed the acquisition of a 50% stake in Gelprime expanding our presence in gelatin and collagen in reinforcing our diversification strategy with a focus on higher-margin value-added categories. By the end of 2025, we made solid progress in optimizing our corporate structure, including commercial integration. Now with most of Brazil, covered by a single sales team as well as supply chain and value engineering initiatives. We remain focused on delivering the identified energies -- synergies with BRL 600 million expected to be captured in 2026, backed by the continued operational improvement and disciplined execution, our efficiency program delivered BRL 1 billion in gains in 2025. We continue to invest heavily in developing our people. We reached a record 1.8 million training sessions, totaling 4.2 million hours, reinforcing our focus on building high-performing teams. We reaffirm our commitment to building one of the world's leading food companies ready to compete, grow and create value sustainably. Finally, I'd like to thank our Chairman, Marcos Molina, for his strategic guidance which continues to keep us on the right track. I also thank our shareholders and the Board for their continued support as well as our customers, integrated producers, suppliers and the communities where we operate. Also thank you to those more than 130,000 employees across the globe who are fundamental to deliver our results. Thank you.

[Operator Instructions] First question comes from Gustavo Troyano from Itau BBA.

I have 2. The first one is about BRF. It's a more prospective question focusing in the Middle East since the company has a lot of exposure, and we have the conflict ranging in that region. Can you give us an update on the possible or the potential impacts to believe that this impact is going to be long-lasting. If the conflict continues, what's going on today and what could happen if the war keeps raging? And I would like to approach that both from the logistics and the supply as well as from the demand side, have there been any major changes? And my second question is to Tim about spreads in the U.S. What should take on what's behind that increase in spreads in March? Can that be attributed to better supply shutting down accounts at Tyson or the strike at JBS, what would be behind those spreads? Is that improvement enough to change the outlook for 2026. That's it.

This is Miguel. Gustavo, let me now address the Middle East. We have to go back in time a little. As of 2024, due to strategic reasons because of the Newcastle disease and then the possibility of the avian flu outbreak in Brazil, we made that decision strategically to keep operational inventory in the destination countries. By doing so, our inventory levels raised gradually. So costs to store abroad is higher than that of storing in Brazil. We made the decision back then. Now we're now through that conflict those measures we took due to sanitary reasons remain valid. So we do have the possibility now during a war, our inventory is kept in those countries destination. But let me point out that BRF has operations in the region -- has had operations in that region since the 1970s, so we do have logistics expertise in the area. That expertise allows us to not only provide that inventory that is already there. But as well as the fact that closing the Strait of Hormuz, the meats or the beef that were in the ocean were redirected to operational ports, and once they get there, we distributed that internally through maritime freight or buy land using trucks, and we were able to distribute the products throughout the Middle East. That was very important to us, because this is a proof of 2 very important characteristics. Number one, we did not have any major problems in delivery to these regions. So we are shipping according to business as usual. In the segments, we provide can be distributed through the land or the highway grid we have available. There have been no disruptions to these markets and our customers there. In other words, we are reaching our goals, 100%, which is to supply the demand. On the other hand, as far as prices are concerned, that market was demanding more and prices were on the rise. When the war broke out, this was strengthened actually. The first thing that people do is to buy water and buy food. If you have that availability like we did, we can actually adjust prices accordingly. On to the cost side. Well, the war freight that the maritime companies are imposing now that was absorbed by the market fully. Even beyond that, so the situation in the Middle East indicates a market that was growing, already correcting prices. A company that has been there since the 1970s, we are very well positioned. We do have the logistics expertise that has come to be vital now. So we can operate that logistics infrastructure ports that are after the Strait of Hormuz are not operational, but we can redirect those products to other ports. I think Tim can now answer his question, to your second question, actually.

Yes. Thank you. What we saw when we came into the year, January and February, we had, as you know, record losses. The improvement we saw in March were really driven by 2 events. Number one are the plant closures that were announced that took place in mid- to late January, which really rebalanced the capacity across the industry, improving the utilization rates and the margin outlook for 2026 and beyond. The real positive has been beef demand has been very positive through this whole time period. As we go into the March period, the plant closures along with reduced hours across the industry, tighten the supply of box beef box beef prices went up. So is it enough to change our outlook? Yes. We feel the capacity reductions that have taken place are going to put us in a good position for 2026. In fact, we're expecting our numbers to be at or above where 2025 ended up.

And [indiscernible] from Bradesco asks the following question. I actually have 2 questions about BRF, Number one, can you elaborate on Q1 performance, especially when we look at that small margin contraction that occurred sequentially, what was the role of the season package international and domestic performances. I have the impression that the domestic performance was a little slower. Is my interpretation correct? What is behind that? And what's your take for the start of 2026. My second question is about investments that have been made in recent years. Volumes were very strong throughout the year. So here is my question. What is our -- or should be our take in 2026 when we look at BRF volumes.

Good morning, Enrique. Well, what we can say as far as Q4 performance was for BRF, I think your reading is correct. When we compare quarter-over-quarter, margins were being reduced partially offset by the season campaign, which was good. And there was some positive contribution from the international markets, especially Halal, as Miguel said, the prices were positive in that region, both the CRF and the distribution businesses provided a positive contribution and some EBITDA expansion. This has more than offset the worst quarter of the year in Turkey. Performance was not good, but has already been showing signs of improvement in 2026. Your interpretation was correct. Brazil was offset because of that seasonal campaigns. But we had some effects from the avian flu that impacted prices of in natura products that ends up impacting the pricing policy we implement. Q4 was under the pressure of the in natura products, and consumers were skeptical despite the record of processed products in December. While the demand was there, there was a pressure from the in natura products that impacted -- that was impacted by the avian flu ended up putting pressure on the domestic prices. So before you answer the second question, let me just piggyback on that answer. I think we have to take into account Q4 numbers, but it's, of course, connected to what happened after. International markets, we're under some price adjustments that was made clear earlier this year. We chose to reduce our inventories at the beginning of the year, as we always do, so that we can improve prices, and we did. And now 2026, we were operating at a scale. There were some margin compressions for the market, but not troublesome. That was not a trend. This was a one-off event. And now this minor limitation is now being corrected. On the other hand, as far as international markets are concerned, prices were on the rise, and when we look ahead, I think it's important to make that disclaimer and look into the future. Now we are enabling the pre-listing and BRF has 12 plants that have been approved, adding to those 14 that were authorized for the U.K. This new 230 destinations that we have opened up in the past 3 years will show the resilience and the demand we expect. It's well balanced. It will supplement international and domestic markets. Everything is in line with the demand. We move away from that avian flu scenario was difficult to overcome, but we did. We delivered a very good year despite the avian flu. We executed the merger that was very well thought out, but it's been very well executed. And this is going to take place in the coming quarters. Part of it has already been concluded, and we expect to keep on moving on in Q1, 2 and 3 for 2026, and the market is avid for protein. Protein is the #1 focus for consumers, and we have to be prepared for the CapEx that Jose will explain. We want to meet all the market requirements with our brands like we have been doing, Sadia, Perdigao and quality brands, there will be on the tables that Brazilian consumers and it's going to be the #1 preferred brand. And of course, the in natura prices will impact the quarter and there's that margin compression. But processed foods account for 2/3 of our portfolio. So we can easily mitigate that pressure from the in natura market. As we can see in Q4, and it will remain the same in 2026.

Looking at volumes, as we said before, we were delivering higher volumes of boxed beef. What I can tell you, moving forward, and we emphasize that in our presentation, we have CapEx for 2025 and 2026, heavily focused on that portfolio of process food. 2025 in Brazil, we added a capacity of almost 100,000 tons a year, mainly cold cuts. For 2026, the CapEx project or processed food in Brazil will add an annual capacity of 60,000 tons a year. So between the 2 years, we are adding 160,000 tons a year to our capacity of processed food, almost 10% increase over the current volume. In the international market, we created the Kezad market. Now the Jeddah plant and we acquired the Henan plant. The 2 projects had a capacity of 100,000 tons a year. The international market is performing 300,000 tons of processed food. So we are going 33% in our international capacity overall and besides. We have the third line poultry, the third poultry line in Lucas. So overall, we've already increased our CapEx in 2025. We delivered different projects that free up capacity. And in 2026, that trend will continue, and will give us the possibility to continue the growth path that we delivered in the past few years.

[Operator Instructions] Our next question comes from Isabella Simonato, Bank of America.

I'd like to follow up on the question on BRF. In natura, if you could just go over the capacity increase or poultry slaughter in Brazil, I don't think I was able to quite understand the figures. And along those lines, if you could give us some color on the supply scenario. And also poultry production, I think that are diverging visions between what you said and the market, but I think in Q2, we will see a more relevant poultry supply in Brazil. If you could go over how you see that production increase and go over your figures again? That's my first question. The second question has to do with the cost of grains. We see a rise in commodity prices due to the war. There is a discussion on how fertilizer prices can affect production in the next 12 months, not to mention the El Nino effect in Brazil. So how are you positioned vis-a-vis your raw materials and other drivers that may put more pressure on costs like freight that will help us understand margins looking forward.

Isabella, I'll start the answer and Ignacio will chime in. The first point I'd mention is that today, we see a market when supply and demand remain balanced. If you look at the published data yesterday by income it shows placement that was 11% smaller in February as compared to the previous month. That had already dropped 10.8% compared to December. So the market is adjusting. We also had a few days ago, the hatching index that was very low historically above 75%. From a production standpoint, we don't see any imbalance between supply and demand. On the other hand, we had a foreign market that is here for products in all geographies. That certainly if you have competitive protein like poultry, we can navigate through this scenario and capitalize on those advantages. And by the way, these advantages are also available for beef. I'd like to remind you that our strategic option made by BRF 2 years ago to create large industries allows us to have competitive costs and that competitive cost working with differentiated brands and products in different markets. Another important aspect, irrespective of how important that slaughter reduction is for 2026. We had made a decision in the past to work with our own feed lot between 25% to 30% of the cattle coming from our own feedlots. To conclude in the case of cattle, 25% to 30% of cattle coming from our feed lots, irrespective if the slaughter drop is 4% to 6%, that hasn't been defined. We don't have tangible numbers to quantify that, but we are quite confident for our industrial plants. We are fully capable of not only capturing the price advantage that beef will bring, demand will exceed supply and because of our business model and geographic operations. It's important to say that the CapEx that was asked about, Ignacia mentioned very well, the investments we made in the case of the Promisol plant, we are still at a ramp-up phase that plant will reach Q2 with a capacity of 30% above what we have today. So we are still at our ramp-up phase. So we do see a balanced supply and demand scenario with international prices on the rise, and that applies to both beef and poultry. Work, it begins the year more slowly. But during the year, there is a price adjustment China head, the largest and best spring holiday in its history, the growth of delivery platform, the main platform in China grew 100%. Fast food restaurants grew 24%, and snacks and fast food, 42% rather, and full menu restaurants grew 24%. So we see a scenario where any variation we find in supply will be absorbed by demand and we see a scenario where supplementary proteins will be present. That is protein will be the focus of every table in every geography.

Well, let me address your question 2. The -- we'll have 150,000 head of poultry a day in Lucas do Rio Verde. Our slaughter capacity today is almost 100 million ahead of 6.3 million actually. As to the second part of your question about grains, this is our take. We have short-term drivers as to production for both corn and soybeans. This is very positive indeed. Production is expected of 130,000 tons for this year, '27 for the summer and then double crop corn, their planting corn for 2026 now. We don't foresee any major environment problem that would impact it. Soybeans, is expected to reach record numbers. Brazil at 100,000 tons. The green scenario is very positive across the board. Well, prices of fertilizers may go up already for the summer crops and the decision to purchase fertilizers for the double crop will take place in Q3. So we don't see any major problems on the short term. We don't see any major substantial impacts. Of course, if the war rages on for longer, if it reaches the second half of the year, and then farmers will have to make a decision for the fertilizer purchases for the double crop. There can be impact there, but there are still time before we get there. The impact now is not impacting production in the short run. As far as freight costs, I think it's too soon. It's a very volatile market as we speak. There may be some impacts driven by oil prices, but still too early to come to a conclusion. It will be determined by the length and the intensity of the conflict.

Our next question comes from Lucas from JPMorgan. Lucas, over to you.

My first question is about China and Europe, poultry exports and Turkey exports. What does the ramp-up look like after the markets reopen, especially China, that was a margin detractor last year or flows as expected? And what can you expect for the rest of the year if we don't have major restrictions? I believe we won't have, do you expect a normal year of exports. Question number two, you spoke about CapEx, but I wanted to ask the opposite considering the uncertain scenarios, loan curves going up, interest rates falling at a slower pace and all the uncertainties, isn't your leverage at a level that generates concern? I understand your vision that the leverage is consistent with a lower cycle in the U.S. But my question is, doesn't your current leverage generate any concern? Is there any room to defer CapEx to alleviate pressure on leverage.

Lucas, I'll start, and then Ignacio will follow. On China, we are very encouraged because in record time, we were able to approve the Henan plant. Major players operating in the local market. The plant is operational. And the operational and commercial schedule is ahead of budget, so the Henan plant fully operational. With the substantial demand in the spring holiday, we see that China will positively generate demand. Unlike the situation of beef where there are safeguards. And by the way, we are prepared for that. We have a plan to face a possible reduction. And this reduction, I'd like to say, shouldn't impact the domestic market. We are speaking about 600,000 tons in China reduction of beef year-on-year. 4% reduction of cattle. We have over 12 million so no major problem, an excellent opportunity for poultry and pork. This is already happening in Q1, China showing to be very active, adjusted prices, adjusted beef has its price adjusted almost every hour and for poultry and pork, there is a recovery that we already expected and this is truly happening. So we're very encouraged with the international market. And the MBRF operation in China will give us results faster than expected. Ignacio, second part of the question.

As to CapEx, yes, most of the projects we highlighted have impacted our cash flow already. If you look at the LTM CapEx in Q4 is at BRL 6.4 billion, even with the pipeline of projects that are currently underway. Looking ahead, that CapEx is expected to drop. Q4 was a one-off event. That was the prime compression and other one-off impacts. Therefore, Q4 number is above the run rate. And LTM for Q4 is above what we can expect from now on. So we couldn't execute on that pipeline with that similar CapEx. We expect to keep that down at BRL 1 billion. If you consider a scenario in a huge -- in which you would have more operational deterioration that CapEx could be redirected to BRL 3.5 billion. So we have room. We have time to postpone projects if needed. We do have that flexibility. In other words, we'll keep on monitoring the cash generation, but the projects we selected will provide positive and certain return will take into account volumes and the returns of these projects based on the capacity we have already delivered. We are filling up that capacity. We are delivering volumes. In other words, we remain confident that these projects will provide very attractive results, and it's going to be positive to the company. As to the leverage now, of course, that increase in the quarter was related to the dollar factor. We decided to keep leverage under control. This is one of our top priorities. With the different perspectives from different businesses and the margins for the 2026. So despite the low cycle at national debt, as Tim said, 2026 will be better than 2025 numbers, but still at a very low level and interest rates that is not going to drop as expected, so anyway, the company can still generate cash and maintain leverage under control. On top of that, there's the synergy we are going to deliver this can be a buffer to absorb any deterioration of the scenario, BRL 600 million from synergies that will be delivered in 2026. Again, leverage is a matter of concern. Yes. But we believe we can both be more flexible and adjust the timing of the CapEx, but we are very confident that the projects in which we are investing and developing can yield returns because the track record indicates so in 2025. For example, we've had results, volumes and execution in sales as well.

Our next question comes from Thiago from BTG.

I'd like to touch on 3 points on CapEx. When we look at the 2025 CapEx, excluding M&As, I think it was BRL 5.3 billion, right? You mentioned it would be smaller than BRL 6.4 billion in 2026. Looking at 2026, how can we see the evolution of CapEx, it was BRL 5.3 billion last year? Do you envisage a reduction due to the maturity of investments or is this a sustainable level for this year? That's question number one. Number two, I'd like to hear your take on the profitability evolution for beef South America, considering the spike in cattle prices we see this year. Then I'd like to mention the positive impact you had in the past 3 years due to the nature of our portfolio of more processed food longer contracts. So when the price of cattle dropped, that gave you better margins. Is the opposite also true or if you understand, you can mitigate problems in your profitability in South America. And question number three, about BRF's margin in the domestic market. Miguel, you said that the pressure we saw in Q4 was mainly based on fresh products. I'd like to hear from you the profitability of your regular process food portfolio looking at Q4 compared to previous quarters, and if possible, your projections for 2026.

Thiago, let me start answering on beef margins, and then I'll turn it over to Ignacio. What do we see in the beef market? Irrespective of the geography, Uruguay, Brazil and Argentina, we see reduced supply, but Brazilian cattle is still competitive. The kilogram of car gas in dollars. Ahead in Brazil is $4.2 per kilogram in Argentina. It's over $6.3 or $6.4 per kilogram of car gas weight. In Uruguay, there has been an adjustment, but Uruguay reached $5.50. And today, $5.10 per kilogram of car gas weight, added to the Chinese safeguards that was the major destination of South America beef because of our operations in Brazil and Argentina and Uruguay, we can mitigate quotas and navigate this wave of higher prices that the safeguards brought. Why do I say that? Uruguay received quotas of over 300,000 tons, Uruguay usually sells 150,000. Argentina received 420,000 tons, if I'm not mistaken. And today, they sell more than 400,000. And Argentina received 80,000 tons from the U.S. So looking at the beef market, we do have a good expectations that these margins are not only sustainable, but they can also grow. If you look at our model, adding value through our brands like Sadia, Montana, having one commercial team working on all proteins that also has a positive effect and the possibility we have to redirect part of our beef production to a higher demand in the Middle East because of the logistics expertise we have there. And also, in the case of Uruguay and Argentina, we can occupy the Brazil Mylos in the beef market. As for the margin in process food, I'll give you more details. What I meant to say is that fresh products was the main reason for that value reduction in the quarter when there is a drop in fresh products, it also leads to a drop of values in process food. What we saw -- as we planned, we wanted to start a new price list in January 2026 for some categories. Obviously, the year always starts more slowly, that's expected already. So January, we had one situation that evolved in February, and the same applied to March. So processed food prices are expected. We observed that evolution. The same applies to margarines. We increased price significantly in those powers came into force as planned. Another important aspect about the Brazilian market is that we started 2026 with low product and raw material inventories to capitalize on that situation that we expected, and we believe that the year would improve quarter-over-quarter, and we want to deliver 2026 better than 2025.

The question about CapEx, the answer is yes. It makes sense to think about inorganic CapEx based on what you said similar to the levels we had in 2025, just like you said. I have to point out that we do have options if this scenario worsens, we can reduce that CapEx and maybe cut down on projects or extend them or bring that number lower at the BRL 4 billion level if necessary according to the market conventions. But again, the number you pointed out makes sense.

[Operator Instructions] Mr. Thiago Bortoluci from Goldman Sachs is up next.

I would like to address 2 topics. The first question is maybe to you, Ignacio, I think it was clear when you talk about leverage and capital discipline, but that curve would involve some things that are not under your control. But that's something that you can control. Actually, that's the liability management portion of it. We've seen sequential growth in that level in Q4, part of it is related to exchange rates, but you've had positive origination, right? How are you preparing the balance sheet for the amortizations you have scheduled for the next 12 months just yesterday, you announced these numbers. But my interest is to better identify what the best debt costs would play out throughout the year. That's my first question. And then I'll ask another, if I may.

Well, as you said, both gross debt and the cash is up in Q4, the company policy was to accelerate that origination, especially in an election year. As you said, we announced the cancellation of 80 million in bonds. Well, we capital raised the 30-year series and the bond that we are repurchasing about 200 bps as far as costs are concerned. Some bonds are maturing this year between May and September, amounting over USD 500 million at both Marfrig and BRF. In other words, we have an increase in the short-term debt that is maturing this year. That's why we decided to increase funding. And as of Q3, that debt level is going to come down and that additional cash will be used to amortize that debt. It's a matter of timing. We anticipated some of that capital raising when prices were attractive, and we'll keep on monitoring whenever opportunity arises, at lower costs than our debt costs, we are going to make good use of those windows of opportunity. But we wanted to be prepared. We want to adopt a conservative approach to face that maturing curve.

My second question is to Miguel about South America. Of course, we have 2 important factors in 2026. One is availability and the capacity ramp-up that you've already explained fully. My question is to help us understand the composition of your revenue in South America in 2026. What's the contribution of the growth volume? What would be possible taking into account these 2 factors I want to understand, I want to predict what the additional capacity could be in a more pressured scenario in Brazil?

Well, Thiago, let me start to talk about Brazil. But we have to take that into account in the South American scenario. The Promissao plant alone will have a ramp-up possibility of 20% requiring no additional investments just allocating the investments we have already set forth. It's at 28% to 20% growth in the first half of 2026. Now let me address the other countries. Uruguay is already resuming what their levels organic exports using the National Beef platform, the possibility of using safeguards for other countries to have better prices in beef from Uruguay and Argentina. Now on to Argentina per se. You have the American quota of 80,000 tons adding to the Hilton quota that Argentina is selling at record prices, both Hilton and Argentina and Brazil and Uruguay. We are now using higher prices -- record high prices. So South America is according to plan, is operating according to plan. When we picked the model of that industrial footprint, that was a decision that will be important if we can focus on areas that have better cattle supply. You have plants in 2 producing states to have cattle supply. Of course, if Brazil suffers that, they will be under that pressure, too, but we are very well positioned. You have maybe 30% to 25% of your demand will be self-supplied by our feedlots. So we have these many advantages to work on that feedlot cattle for those that are special quality that will reach special markets, special customers to produce that branded beef. So the scenario for South America, as far as beef is concerned, the supply is not smaller. We can grow within our operation and, of course, implementing healthy prices. But let me point that out once again. This is going to be an important year. Well, they will buy Magaro at the drugstore and they'll buy meat at the supermarket.

To your last point, considering everything you mentioned for South America, 2-digit growth in volume for 2026 is doable, that will depend because we must analyze country by country. In Brazil, we have growth capacity. The growth should be about 20%. There is daily slaughter growth, the Promissao plant that was slaughter 18% more. So our total slaughter would be almost 2 digits, a little less than 2 digits in Uruguay, we can grow. But Uruguay is a country. This is a country where production is connected to the climate. So let us see the water balance because cattle in Uruguay, 90% is backgrounded, and there is no prediction of any weather -- major weather events. So Uruguay will resume its slaughter volume. We will be able to capture that volume. In Argentina, I see a more stable situation. I see an excellent year from the standpoint of demand and stable supply. In Argentina, there is a raw material price misalignment cattle that started undergoing adjustment. Argentina was always based on the domestic market to set prices. Now with the turmoil in the international market. Hilton pod in record prices extra 80,000 tons from the U.S. and the possibility to serve that wave of safeguard volumes that China imposed, Argentina may have advantages -- an advantage for export packers. We are beginning the year. We have to wait some more time. In a nutshell, our volume increase should be from 7% to 8% for the total of South America.

And once again, congratulations on your results.

Our next question from Ricardo Alves from Morgan Stanley.

I have 2 follow-up questions. One goes to Tim in the U.S. Tim. I'd like to hear your take on steer prices in 2026 compared to 2026. I think the consensus today is an increase of 8% to 10% because of the cycle. But on the other hand, what you mentioned, Tyson, reducing capacity, strikes that are talked about the return towards the end of the year of exports from Mexico into Mexico. So when you add all up, I'd like to hear your vision for steer prices for this year and the cattle supply that you're going to have? That's my first question. My second question would go to the BRF team. Miguel already addressed poultry supply in Brazil on the production side, your message was clear, Miguel. And the situation is under control. But when we consider the Middle East, I know that this is not visible today, it might be too early to have that discussion a possible oversupply to the Middle East. It's good to know that you have all that ability to reallocate your operations through different parts did because the relationship you started developing in the 70s. But I imagine other players don't have that. So there may be an increase in local supply. We had a problem with new capital some time ago, avian flu last year, and it resulted in higher domestic supply, even if it's temporary. So despite your comments, when you look at the market as a whole, do you see any risk of excess supply if the crisis extends? What makes you comfortable about the local supply.

Tim, over to you.

Yes. In answer to your question, I believe the USDA is forecasting 8% to 10% higher on steer prices in 2026. We're not quite that high, given the capacity reductions we've seen, but it will be higher than last year, but I don't think it will be that much higher. And part of that will be, if we can get Mexico cattle coming across, that will certainly temper the price increase.

Let me just answer that question 2. What we have been doing, not only in the Middle East, we had a record January, February was the best year for poultry exports, and we expect in March to be the same. Well, demand overall, international demand is at a very important level, and when you take into account additional demand exporting from Rio Grande do Sul to China now that the Newcastle restriction has been lifted as well as exports to Europe. In a nutshell, the Middle East may impact exports, but at the same time, exports overall are reaching record number. This is what the data shows us. This will mitigate the risk of having the domestic market as the sole alternative if a company will run into problems to export to the Middle East.

That was very clear, Ignacio for the color. Thank you, Miguel. That was very, very enlightening. Thank you.

Mr. Igor Guedes from Genial asks the following question.

Can you hear me now?

Yes.

My first question is about BRF. The issue in Turkey has been impacting results in recent quarters. Prices are coming down due to oversupply, considering the fact that your operation there does not export that much, what is the strategy you are considering adopting to minimize that impact. Are there any scenarios that the company is thinking about that you could share with us? And my second question is about synergies after the merger. You talked about BRL 608 million worth of gains in 2026, most of it as a guidance to the market. How is it going to be absorbed? Is it going to be more gradually distributed throughout the 4 quarters? Or would that efficiency curve would be more substantial in the second half of the year? My question is about the distribution of that synergy gain.

Let me answer the question about Turkey. Well, there was a supply increase in 2025 in that market. The supply put pressure on local markets. Now it's already been adjusted, and that started in late 2025. Now Q1, we have positive numbers. In the case of BRF, we adjusted our lodging. We better priced the product mix and this has been yielding good results. In other words, the market is adjust itself overall. BRF is doing the same. And there is that mix adjustment. We are adding more added value products and processed products. And at the same time, we have sped up the BRF mice program to be more effective in capturing those synergies, both from the operation in Brazil and the operation in Turkey. Today, we have efficiency programs in place that are already effective in Brazil for over 2 years now. We are speeding up those programs in Turkey. There was room -- there was a possibility to do that, and we are speeding things up. I'll turn it over to Ignacio to answer the second question.

About synergies. First, in Q4, the impact of restructuring. So the first synergy that we had, had to do with the structure, the adjustment of our corporate structure. We made that adjustment in Q4. And we have a nonrecurring cost that we disclosed in our material, so BRL 230 million in the year. We already concluded 90% and we will now reap the results over the quarters above the commercial block that represented another BRL 60 million during the year. We are concluding the execution of the plan in Q3. So those BRL 60 million should be -- should start giving us results starting in Q2 on supply chain and other initiatives, the intensity should accelerate in the second half of the year. If we go pillar-by-pillar, amounting to BRL 600 million out of the BRL 600 million, half should start in Q1 and the other half should have a greater weight in the second half of the year.

The Q&A session is concluded. I would now like to turn it over to Mr. Marcos Molina for his final thoughts. Mr. Molina, over to you.

Good morning, everyone. Thank you very much. First and foremost, I would like to command the whole MBRF team in 2025, they generated excellent results on the part of National Beef. I'd like to congratulate team and the whole National Beef team, 2025 was a challenging year. And we managed to perform positively making a difference in the whole industry as a result of the investments we made over the past years in added value products and increased efficiency. Our South America beef, we had a ramp-up in our plants, in Brazil mainly. It's not easy to ramp up your plants while it's operating. We had increased capacity that was quite substantial. And for 2026, we expect to conclude that increase in capacity. On the BRF side, we increased the volume of processed foods, an increase in our portfolio. Excellent sales. During the holiday season. So MBRF was able to increase its share resuming growth in the past few years, thanks to the effort made by Miguel and the team of putting the company on the right track to make it ready to grow. On our finances, we raised money in Q4 to make payments in 2026. We increased our inventory of grains and trucks. We are prepared now with an inventory that is prepared for 2026 to face possible changes because of the war and weather events. So for 2026, the company has never been so prepared for the year, we see a scenario of lower cattle supply, but increased capacity, our own feedlots. Our operations working in profitable levels we also see increased protein consumption, both in Brazil and internationally because protein has stood out among all commodities. 12 new plants approved to export to Europe. Now MBRF is going back to the European market after 7 years. The new Mercosur pod that is a very important hallmark for Brazil, something we wanted for a long time. And we'll be able to participate with the Mercosur pod. It starts now in May, and it will ramp up over the years and that will significantly benefit our business. There are events like the quota. The effect on taxes of BRL 5,000 or income tax. The wave of income tax for those earning less than BRL 5,000 the Middle East. This is an event that shows our flexibility of coming out stronger showing that despite a war scenario, we were able to serve our customers and provide food security in the Middle East. So it's an excellent challenge for the company to display its strength. Overall, for the U.S. that 2025 was a challenging year. Our lowest level since the acquisition in 2018. In South America, we are well positioned with our large plants now being a multi-protein company, we can use the BRF sales channels with sustainable growth. On the poultry side, we see a global poultry demand, the domestic market, consuming more poultry because of increased beef prices. So my vision for 2026 is quite bullish for the protein market, both in Brazil and globally. The company, as I said, is on the right track. The train is moving already and we are well positioned to make progress with speed in order to show all the effort we made in the past 4 years. So thank you very much, and I'd like to congratulate our whole team.

MBRF's Earnings call is now concluded. I hope you all have an excellent day.