Tanmiah Food Company ($2281)

[indiscernible] First Quarter 2026 Earnings Call of Tanmiah. Today, we have with us the senior management of the company. The meeting will comprise of 60 minutes, starting with a quick presentation followed by the Q&A. [Operator Instructions] Without any further delay, I would hand over the mic to Laura for introduction of the management and for the management to start with the presentation. Over to Laura.

Thank you. Good afternoon, everyone, and thank you for joining Tanmiah Food Company's Q1 2026 Earnings Presentation. We're grateful to Al Rajhi Capital for hosting us once again. My name is Laura Frega, Tanmiah's Head of Investor Relations, and I'm joined today by our Chief Financial Officer, Mr. Fadi Qutishat; and Mr. Marcos Delorenzo, the Chief Executive Officer of Tanmiah's Fresh Poultry division. Our Q1 2026 financial results were published earlier today and are available on Tadawul as well as our Investor Relations website. Please note that today's discussion may contain forward-looking statements, which are subject to the risks and uncertainties detailed in our disclaimer. After the presentation, the management team will be happy to take your questions on our performance, strategy and outlook. With that, let me hand over to Fadi, who will take you through the key highlights and business performance for Q1 2026.

Thank you, Laura. [Foreign Language] Good afternoon, everyone. Q1 2026 has been a quarter of continued disciplined execution against our strategic priorities with progress across all 4 of our strategic pillars remaining firmly on track. On commercial excellence, continued expansion into GCC markets drove a 30% year-over-year increase in revenue. We sharpened our channel approach and optimized distribution to 453 routes across KSA and the GCC. The value-added breaded chicken products, which we launched late in 2025, are available in over 400 outlets. Innovation momentum also continued, including the launch of local Shaqra Pepper in the Taste Secrets line, which was recently awarded the Product of the Year, Gulf Edition by Gulf Foods. Turning to our asset base. We have delivered lower production costs from new assets, added 6 farms to this -- to support the PPL ramp-up and remain on track to commission the new mega hatchery and feed mill in the second half of 2026 with full utilization of our new PPL facility in the Majmaah targeted in Q4 2026. Store optimization has also improved average store revenue on Popeyes increasing by 29% year-over-year. On operational excellence and cost optimization, when the regional disruption happened, we acted early to secure grains and key input materials, doubling our feedstock to ensure continued operations. We brought down financing costs by SAR 5 million quarter-over-quarter, driven by reduced long-term balance and somewhat lower rates partially offset by FX and managing working capital effectively. Some of our sustainability initiatives, which are covered in detail in later slides, are already delivering bottom line impact with LPG conversion pilots completed ahead of schedule and broader rollouts now underway. And finally, on the digital and people side, we've advanced SAP S/4HANA as the enterprise data backbone, scaling e-commerce and direct-to-consumer digital channels and rolling out a new retail sales and CRM solutions. We have also strengthened engagement with our colleagues across our sites through a series of initiatives and structured development programs like wellness programs, train the trainer programs for internal capacity building. To sum it up, we are executing as planned and confident these initiatives will translate into improved profitability as they mature through the year. We will continue to drive this momentum forward and actively manage any external geopolitical pressures. We can move to the next slide. Our platform spans the full value chain from farming, feed through processing, distribution and restaurant operation. Across the Kingdom and GCC, we have continued to selectively build on our existing asset base, added 6 new farms for our agri business and optimizing our Popeyes' network. This footprint reflects our scalable business model and enable us to synchronize front-end investment to support the ramp-up towards our engineered capacity of 795,000 birds per day. Our customers reach continue to grow across the region. We served nearly 14,000 stores during the quarter, up approximately 12% year-over-year in KSA and about 16% in GCC. Looking at the revenue mix, KSA remains our core market at 92%, with Bahrain contributing 4%, the UAE at 3% and the remaining percent from other GCC markets, including Kuwait. You will notice a gradual diversification compared to Q1 last year, and that's a deliberate shift as we scale our regional presence. Importantly, this footprint isn't just about scale. It's about optimizing our cost to serve, improving logistic efficiency and leveraging our distribution network to protect margins as we grow. I will now hand it over to Marcos to walk you through the asset optimization and the key highlights of the Agribusiness segment for the quarter.

Thank you, Fadi. Good afternoon. [Foreign Language] Going to the next slide. As we discussed in previous quarters, our focus has been operationalization and full utilization of the assets we built. In Q1, that reflects this structural approach is reflected. Capital expenditure came to SAR 37 million, down significantly from 204 million in Q1 last year, an 81.6% decline. This is a deliberate shift as we move past peak investment and directly our attention towards the utilization and returns. Today, our agribusiness platform has an average capacity of 795,000 barrels per day with SAR 82 million in lease right-to-use assets and SAR 156 million in remaining CapEx commitments. On the optimization front, the new mega hatcher and feed mill are on the track for the second semester of 2026. We are adding processing lines within the existing facilities to meet growing QSR demand. Energy saving and LPG conversions continue across the farm network, and our contract with Chinese partners to develop up to 100 broiler houses in KSA offers a capital-light path to future capacity. Going to the next slide, #8. Turning to the Agribusiness segment in more detail. What truly sets Tanmiah apart is our unique capability in large chicken production, bigger birds, currently operating at a life weight range of 1.8 to 2.2 kilograms, a capability we have successfully maintained since 2019. This is advancing food security in the Kingdom by uniquely delivering larger-sized chicken for further processing with superior quality and the highest food safety standards, supported by our Saudi Made, Saudi GAP and BRCG grade AA+ certifications and a versatile product portfolio to serve for every channel we operate. A testament to our innovation-led approach is winning the Go Food Product of the Year award for the fifth consecutive year, most recently in our further processed range and the Taste Secrets Shaqra Pepper, a product made entirely from local ingredients and already resonating strongly with consumers. We expanded our portfolio of Tanmiah further processed items breaded range chicken, including strips -- breaded strips, breaded burgers, fillets and nuggets, all made with 100% fresh chicken. We also introduced our newest Taste Secrets product developed with local producers using Shaqra Pepper, a heritage ingredient recognized under the National Taste Saudi initiative. By sourcing the pepper from local farmers, we celebrate traditional Saudi flavors with supporting rural communities and promote sustainable agricultural practices. This fresh marinated spice chicken breast reinforces our -- from our land for our people positioning. This innovation-led approach is just not about awards, it's a deliberate strategy to further diversify our mix towards higher-margin, value-added products that are less exposed to commodity price volatility and more aligned with where Saudi consumer preferences are heading. Let me now to the next slide. Let me walk you through the key highlights for the quarter, starting with agribusiness, which includes fresh poultry and animal feed and health products. Revenue reached SAR 669 million, up 5.6% year-on-year, reflecting health demand for fresh poultry and continued commercial expansion across our network. We reached 604,000 birds per day processed. It's a double-digit increase year-on-year. Agribusiness segment net income came at SAR 11 million, down 69% year-on-year, but showing strong momentum compared to last quarter in 2025 when the segment reported a loss of SAR 8.8 million. This is a significant quarter-on-quarter improvement of 222%. The net income margin contracted 992 basis points to 1.6% year-on-year, reflecting the impact of higher fuel, utility and logistics costs, alongside softer performance in our animal health -- animal feed and Health business, which declined 12.3% year-on-year. Fresh poultry volumes grew 8.6% to 43 million birds, supported by a higher average selling price and strong sales momentum. On distribution, as Fadi mentioned, we streamlined to 453 routes as part of our ongoing effort to optimize logistics and efficiency without compromising market reach. I will now hand it back to Fadi, who will take you through the restaurant operations segment and financial performance in more detail.

Thank you, Marcos. The trajectory is generally encouraging for the restaurant operations. Revenue grew 42.2% year-over-year to SAR 62 million, driven by strong campaigns that delivered meaningful customer engagement across the network. The store base grew 10.6% year-over-year to 94 outlets and aggregator transactions now represent 57% of the channel mix, up 740 basis points. The restaurant segment recorded a net loss of $12 million, representing a net income margin of negative 19.2%, a significant improvement year-over-year. This is a meaningful step in the right direction as the business matures with unit economies progressively improving as the store network scales and fixed cost absorption strengthens. Overall, it was a quarter of solid top line momentum across both segments. While profitability in agri business came under pressure from cost headwinds, the improvement trajectory in restaurant operation is encouraging and reflects the maturing of the platform. Turning to our restaurant business. As I said, in Q1 was an encouraging quarter with strong commercial momentum and improving unit economies across the network. Revenue per store exponentially grew by 28.7% versus Q1 last year, 12.5% quarter-over-quarter, the highest level we have achieved. That's coming from a network of 94 stores with KSA accounting for 88% of the revenue; Kuwait, 7%; Bahrain, 5%. On a like-for-like basis, transactions grew 17% year-over-year and sales grew 12%, which tells you the underlying demand trajectory is moving in the right direction even as profitability catch up. Aggregator transactions now represents 57% of the channel mix versus 43% in-store. Aggregators have been important for reach and brand building, but we recognize the margin pressure they create and rebalancing the mix is a priority as the business matures. The campaigns launched mid-December running actively to the beginning of Ramadan, including our Ramadan All You Can Eat and offers, were a very meaningful contributor to the customer engagement and transaction growth we saw during the quarter. Looking ahead, now new Popeyes stores -- no Popeyes stores are planned for 2026 beyond the replacement or relocations. The focus is entirely on improving the unit economics, narrowing losses and building a clear path toward breakeven. On the financial performance front, building on the operational highlights we covered, let me now take you through the financials for the quarter. Total revenue reached $731 million in Q1 2026, up 8% year-over-year, driven by growth across both segments. Within Agribusiness, revenue grew 5.6% to $669 million. Fresh poultry was the key driver, delivering 43 million birds at 8.6% volume growth alongside a higher average selling price. Animal Feed and Health weighted on overall segment performance, declining 12.3% year-over-year as softer market conditions impacted feed and additives, medications and vaccine sales, though this was partially offset by day 1 chick business. Restaurant operations continued its strong top line trajectory with revenue up 42.2% year-over-year to SAR 62 million, supported by campaigns that drove customer engagement across the store network, leading to much stronger Ramadan performance compared to last year. At the bottom line, the company recorded a net income of SAR 1 million compared to SAR 23 million in Q1 last year. The year-over-year decline reflects higher fuel, utility, distribution and financing costs that largely offset revenue growth we delivered. Agribusiness contributed SAR 11 million in net income, while restaurant operation recorded a loss of SAR 12 million with minority interest at 2 million. The net profit represents a major turnaround from the SAR 26 million loss recorded in Q4 2025, reflecting 105% improvement quarter-over-quarter. Our teams have optimized distribution routes, reduced selling and distribution expenses, lowered financing costs. We will walk you through the net income bridge chart in the next slide. While the bottom line remains under pressure, the revenue trajectory across both segments gives us the confidence that as cost headwinds normalize and utilization of our assets improve, we have the foundation to rebuild margins. Zooming in on profitability, the picture reflects the cost dynamics we have been navigating. Gross profit came in at SAR 167 million, broadly flat on year with a marginal decline of 1%. The gross margin contracted to 22.8% from 24.9% as improvements in the average selling price and poultry volume were more than offset by higher fuel, utility, ramp-up costs and logistic costs alongside softer performance in the Animal Feed and Health segment. EBITDA followed a similar trend, declining 5.9% year-over-year to SAR 88 million with the margin contracting to 12.1% from 13.9%. It's worth noting that a sequential basis, this represents a meaningful recovery from Q4 2025, where EBITDA was SAR 68 million at a 9.5% margin. So while year-on-year comparison reflects a continued pressure, the quarter-over-quarter trajectory is hitting in the right direction. As utilization of our recently commissioned assets improved, our cost optimization initiatives gained further traction. We expect this to progressively flow through to margins. Now I will walk you through the bridge, which explains the key drivers behind the change in net income year-over-year and quarter-over-quarter. On a year-on-year basis, net income moved from SAR 23 million to SAR 1 million, reflecting a combination of cost headwinds, partially offset by efficiency gains and strategic expansion benefits. On the positive side, pricing contributed SAR 8 million. Volume and mix added SAR 5 million, while restaurant operation contributed a further SAR 5 million. As our Popeyes footprint continues to scale, these gains were more than offset by SAR 7 million from diesel, SAR 7 million from production ramp-up costs, SAR 6 million from inflation, SAR 9 million from financing, SAR 4 million from depreciation, all linked to our newly commissioned assets, alongside SAR 8 million from routes and branch expansions across the GCC. Importantly, much of this impact is driven by scale and investment initiatives, reflecting assets that are still maturing towards full utilization. And we expect these investments to increasingly convert into earnings as the ramp-up progress through the year. Quarter-on-quarter improvement reflects a combination of pricing discipline, cost management and operational efficiencies across the value chain. The most significant driver was pricing, which reflects the price increases we started witnessing in late Q4 '25 and improved realization across key accounts and channels. Additional quarter-on-quarter positive came from improved financing costs, primarily a result of paying down a portion of our long-term principal and a notable uplift in restaurant operation driven by our strategy of innovative menu offering focusing on local flavors. Overall, we are pleased to see the combined efforts of our teams driving a return to profitability this quarter. Turning to cash flow and working capital. This is where we see some of the clearest evidence of the shift beyond peak investment. Working capital continued to come down, reaching SAR 36 million versus SAR 325 million a year ago, with working capital days remaining stable at 91, improved inventory levels and collections versus prior quarter. On cash flow, our balance more than doubled to SAR 145 million, up from SAR 63 million at year-end. Operations generated SAR 120 million on the back of improved collections and higher utilization, while investing outflow dropped to just SAR 37 million as CapEx intensity came down sharply. As we move past peak investment, cash generation is strengthening, and we expect that trend to continue. Looking at the balance sheet, our debt structure remains well balanced. Notably, long-term debt has come down to SAR 551 million from SAR 585 million in December, approximately 6%, reflecting our focus on reducing outstanding balances. Short-term facilities stand at SAR 538 million and lease liability at SAR 739 million. Key ratios are broadly stable quarter-on-quarter with the current ratio at 1 and net debt to EBITDA of 5.46. As utilization improves and CapEx intensity stays low, we expect to progressive improvement in both returns and leverage through the year. Heading this -- handling this back to Mr. Marcos, who will take you through the ESG priorities before we conclude.

Thank you, Fadi. I want to take a moment to provide a refresher on the sustainability work we have done over the past 5 years because it's a story worth telling reiterating. Since 2021, we progressed from our first ESG cap assessment to a full 5-year strategy. GRI aligned reporting, KPMG assurance on key environmental metrics and clean energy deployment across the value chain. Our MSCI ESG rating, one of the most widely used benchmarks by institutional investors to access how company manage the ECG risks has improved 3 consecutive years from B to BB and to BBB, placing us the upper type of food companies globally. What drives our approach is our omipreneurship philosophy built around 3 principles: giving, earning and sustaining. This work together as a connected system rather than stand-alone activities. Community investment supports strong operations, strong operations fund sustainability and sustainability reinforce our ability to create long-term value. It's a practical framework, it's what sets Tanmiah apart. As we look towards 2030, our ambition remains to become the #1 global Halal sustainable protein company. Turning to the next slide. This is a slide we are introducing for the first time, and it's one we intend to report against going forward, giving our shareholders a clear and consistent view on how sustainability translates into operational and financial performance. Our framework starts with 3 fundamental pillars: people, agriculture and planet. This flow into 8 focus areas from consumer trust and innovation through the environment, circularity and DEI. What I want to draw your attention is to layer 3, the sample initiates with directly bottom line impact. You will note this concentrated around waste management, water efficiency and carbon footprint, and that's deliberate. These are the areas where we can most clearly quantify the financial return today, whether it's lower fuel cost from LPG conversions, reduced grid costs from solar or circular revenue from waste valorization. 7 of the 8 initiatives listed are already in implementation with alternative feed solutions currently in pilot. As this framework matures, we expect to expand the scope of initiatives we report on. But for now, the focus is on showing that sustainability at Tanmiah isn't aspirational. It's already contributing to the bottom line. I will hand over to Mr. Fadi.

Thank you, Marcos. As we close, it is important to put our performance and priorities in the context of the broader market environment. The industry is operating through a prolonged period of capacity expansion and elevated supply, which has kept pricing under pressure, particularly in the fresh poultry. In this environment, success depends less on growth alone and more on disciplined execution, cost control and operational focus. Importantly, the long-term fundamentals of poultry remain strong with poultry continuing to be the protein of choice. Against this backdrop, Tanmiah is well positioned. Years of targeted investments have strengthened our asset base and operating platform. Disciplined execution is driving operational excellence, improving unit economics. This foundation allows us to scale responsibility while protecting long-term profitability even in a challenging market. Looking ahead, our execution is guided by 4 clear pillars. We remain focused on customer-led commercial excellence, value-added growth, strengthening and optimizing our core asset base, driving operational excellence, liquidity management and cost optimization and enabling execution through digital capabilities and our people. Together, these priorities position Tanmiah to move from disciplined execution today to sustainable margin-led growth over the medium term with a clear focus on long-term value creation for our shareholders. Thank you. We are now happy to take your questions.

[Operator Instructions] First question comes from the line of Nada.

I have one question from my end on the quarterly volume drop. I think this is the first time we see such a seasonality, especially that in Q1, we had Ramadan and there is a drop around 9% on the volume on Q-over-Q basis. And at the same time, there was a 9% growth in the average price per bird growth, I mean. So...

On the volume side, we were -- we operated 3 days less than the prior quarter because of the Ramadan and the period. Last year, Ramadan only I think half of the quarter. This time, there was a full period during the quarter.

Okay. So can you remind us of the daily operating -- I mean, the full days of operating in a quarter. So usually, you have 77 days or 90 days. How do you calculate it actually? If I'm not mistaken, during the IPO time, on a full year basis, you have 310 days of operation.

Yes. This quarter, Nada, we had 76 days in operation. So our Q per day, Nada, was higher, as I mentioned before during my slides, was 604,000 birds per day. That's a higher increase versus 1 year ago. When you look quarter-to-quarter, this is when you compare a high season quarter like end of the year to what we faced in the first quarter with the full Ramadan coming over and the holidays. That's the main reason. Otherwise, we were increasing our volumes in Q per day.

And to answer the other question, it's 79 days. That's the typical average for the quarter.

There is a question. Can you please share the total subsidy received for the quarter?

It's in line with what we published in the financials for Q4. No change in subsidies.

At the moment, there are no further questions. [Operator Instructions] Abdullah Al Buraidi.

This is Abdullah Al Buraidi from Emirates NBD. I have a question regarding the pricing quarter-over-quarter renewal of the year and its evolvement during the quarter. And how do you see it post the end of the first quarter? Do you see some softness or hardening of prices? And if you can clarify how this evolved during the quarter? The other question is regarding Saudi Gap. We expected to hear something in March, but we didn't. So do you have any update on such regard?

Okay. Thank you, Abdullah. I think regarding pricing here, it is still -- it remains below the normalized level, reflecting the oversupply conditions we saw throughout 2025. We are expecting a further gradual recovery. We did make, and I think Abdullah would mention that our go-to-market that we've been working for the last years really played an important role on the first quarter because we were able to work through our network, including DTC network to have better, let's say, channel mix, better product mix and therefore, impacting price. So there was, I believe, a full go-to-market into play here rather than a complete recovery on the market. We do see a gradual recovery coming supported by several factors as the new cost replacement is coming. Of course, we have seen a tightening in supply as production normalizes and some excess is absorbed by the market. So the Saudi gap as a regulatory measures, you will see that being implemented. Of course, due to the geopolitical situation, you might see some, let's say, postponing for the bigger birds, but not for the whole chicken. So Saudi gaps into place, and that will impact the competitiveness of the imports as well as container prices that have doubled the price and so on and so forth. So we see that cost pressure coming, and we expect the price to further -- there is a lot of, let's say, impacting cost of packaging led by the prices of PET and oil. So we are seeing that this will impact price forward as the producers will start to have replacement costs to absorb. But our movement in the first quarter was a very strong work from our teams in mix and channel mix and product mix to bring that improvement. And we were expecting that because we were working for 3 years to have that capability.

No, no, absolutely. All appreciated. But could you quantify the price quarter-over-quarter and year-over-year for poultry specifically? And would you confirm that post the quarter, the prices has increased compared to...

Let's start from the second part, and then we mentioned to them. Yes, we have seen after the quarter 1, some movement in the price, mainly, as I mentioned to you, as the new cost is hitting everyone. We are seeing all the players moving on that or softening their discounts. So we see this happening. And in terms of quantification of the price increase, I think in the bridge, we were putting the percentage or we put on the bridge the percentage of increase. But it varies channel by channel, there were channels that we were able to have a higher increase and there were channels that we were. But I would say between 7% to 8% in price improvements, a lot led by the channel mix, and the movements we have done. But in this range, this is what we saw in the quarter 1 that we have done. And then this started from January. And this was our movement going on from January, Feb and further, we saw it coming further in March and April as well.

Our next question comes from the line of Jawaher.

I have a follow-up question on the volumes. So if I look at the magnitude of the drop sequentially, it's much higher versus the historical rates despite the recent capacity expansion. And if I'm not mistaken, we've also seen a similar trend with where they've had also lower volumes in the first quarter. So I want to understand, is this just related to the days of operation? Or could it be related to some disease outbreak? I would really appreciate more insights on this.

Thank you so much for this. For the poultry segment, no. This was completely related to the working days. We actually were ramping up volumes and so on and so forth. I think what you see for agri business is related to the decrease, Fadi can complement on that, related to decrease to our Animal Health division, Feed and Health division that decreased by 12%. On the poultry segment, when we reached 604,000 birds per day compared to 1 year ago to 540,000, we are in a much higher volume rate and ramping up our assets. You saw that we mentioned in our call that we have a capacity for 7950. So now we are working very strongly, Jawaher, to fulfill that capacity as new farms arrive, as the new feed mill and mega hatchery are coming on the next months. So we are going towards that utilization of the capacity, which is a much more efficient and modern capacity. So -- we've been on this trajectory on the Poultry segment. I think the decrease you might see here is mainly due to the animal and health -- animal and feed segment that had a decrease mainly, as Fadi mentioned, in the feed...

Additives.

And additives that we faced some seasonality in there. So -- but for the poultry segment, Jawaher, we continue our trajectory and of course, focusing in the full optimization of our build asset.

It's a growth of 8.6% compared to last year. So it's on the right track, [Foreign Language]

That's clear. I just have a follow-up on this. I'm looking at the average daily production during the quarter, which you just mentioned, standing at 604,000 birds compared to the actual capacity of 795,000 birds, which implies basically utilization below, let's say, normalized levels. So I just want to understand what is limiting the production ramp-up at this stage?

As I mentioned, we've added 6 farms, right? So the building of the entire supply chain continues as part of this journey. So we are building all the farming because the capacity kill that we have designed is [ 795 ]. But in order for you to get to that level, you have to build your farms to produce the chicken, obviously.

Just to complement, Fadi here. Jawaher, when the volumes for you to ramp up in the process, you need to ramp up all your value chain, right? We have a new mega hatchery that will come in the next month. We have a state-of-the-art feed mill being commissioned in the next 1, 2 months.

Plus what Fadi mentioned on the new farms that are being built by the Chinese partners as well as we have with farms being built with farm owners, local farm owners. So as this capacity comes along, for example, I have Majmaah 2, which is a facility that's currently operating at 50% utilization, but we have a clear plan pathway to reach the almost 95% in the next 2, 3 months. So all that is coming along. We are now, as you saw, by having a queue of 604 over 795, we are around 76%, but we are closing that down and using the most optimal and efficient assets. So that is coming to play. And this will come as we have these assets come in.

Our next question comes from the line of Mohammed Alrasheed.

My question is a follow-up just on the volume drop on a quarter-over-quarter basis. Now you mentioned that it's because of lower working days, but the drop was around 7% on a quarter-over-quarter basis. And you stated that it was lower working days by 3 days. So 3 days out of 76, that's around 3.8% or 4%. So generally, there was a drop other than lower working days and the seasonality, and this is the first time that we witness such a quarterly decline. So I'm just trying to understand what are the other factors that contributed to this.

Alrasheed, look, when I look here, 43 million birds that we have done year-over-year, there is an increase of 8.6% year-on-year. This -- our average Q for the quarter was high -- was the highest record we have achieved. 604 average on the quarter. So this is happening. So the main impact, we can do a follow-up with you, but the main impact that we have seen was only working days because otherwise, we pushed our maximum, let's say, capacities for our assets, and we have achieved that growth year-on-year with the highest ever and average on the quarter. So I think we can discuss in separate. But other than the holidays, we didn't have anything else. Our mortalities are record ever [Foreign Language] We are, Alrasheed, one of the lowest in the count, if not the lowest, even sometimes reaching below other export countries to the Kingdom. And this is the work of years and protocols in husband, everything we have been doing well, our teams is remarkable. So I didn't -- we didn't have any issue on the quarter rather than working days and holidays that we have done. All the rest, we were growing the volumes, and we can do a follow-up with you on the calculation to see, but we didn't have anything mortality. We knew many other players, R, were facing a lot of difficulties because they are able to us, and we know what's happened. But thanks God, all our teams, and this is a remarkable work of our teams. We had our record lowest mortality for the last 3 years.

[Operator Instructions] In the meanwhile, I'm going to read out some messages from the chat. There's a question, do you see the improvement in selling prices per bird to continue over 2026? I believe you have already answered this, but if you want to comment.

We don't have the magic ball, but of course, we've been working for that. We've been working for our go-to-market to support us, as Fadi mentioned, in value addition. We have seen in the quarter an improvement in Q1 per bird and per kilo. And that means a very strong movement towards channel mix, product mix. And this is -- it's a combination. It's a very strong combination when we see the bird growing and the kilo per kilo growing, which means all your mix, you are finding better opportunities. We expect going forward that the replacement costs are passed through the prices because otherwise, local players, they need to absorb those replacement costs. So we are very attentive to that. We are discussing with our clients about the situation, and we've been facing a lot of support from our clients in understanding the extra costs in grains and packaging. So we will be working to defend our profitability and strengthen even further our go-to-market.

There's another question. Can you share if there has been any impact of rising corn, soybean prices in second quarter 2026?

There was an impact in March as the market when the war started, we have made a lot of strong moves to secure our grains. And in those moves, we had to purchase grains from alternate routes, alternate countries and as well as locally. And those already came with a higher impact. So March, we saw that impacting come to us, not fully, but partially already, we saw a big impact in March. And this will come for us and for all the players in the next quarter.

But these cost impacts are primarily driven by logistics.

Yes.

And then there's a question. How are the feed prices affecting margins...

For which quarter? For the first quarter?

It's not clear. I think...

So I think for the -- if I unpack the Feed and additive and Animal Health business, feed margin for the first 1.5 months were contracted, but we're starting to see positive momentum, I would say, March onward.

There's a question. Do you expect to receive any one-off compensation from the government to offset higher feed prices similar to what happened during COVID?

We are in close conversation with the government to make sure that we have food security protected and in different dialogues, but we don't have any special programs.

There's a question, if you can please provide some clarity on the number of operating days in the first Q versus the fourth Q and how that impacted the production?

We had, according to our team here, 76 days of production versus normally 80 to 79 days. So this was mainly those holidays that happened in that period that the impact. Otherwise, we were producing. And of course, you had the shorter month, February. But we didn't face, as I mentioned before, I reiterate, we -- thanks God, we faced lowest record mortality, highest efficiency of our production, highest record volumes. So we didn't face anything rather on quarter-on-quarter basis, rather than that, there is no other impact.

I believe there's a follow-up question from Jawahar.

Management question on the Q2 performance so far. Do you expect the higher prices of the poultry to offset the higher logistics costs that you've been realizing since end of March? And how do you see that Q2 playing out in terms of margins?

We don't make the forward-looking, but what we see is that we are very attentive, Jawaher, to the replacement costs, and we don't want to absorb costs. We want very much to defend our profitability in the quarter. So we are looking for the further opportunities to pass the cost. And this is a natural movement of the poultry market globally. When you have higher logistics and input costs, you need to offset that by pricing and this is what this segment, this a sector working in that way. We will work on this manner, and we will be very attentive to not offset costs internally with profitability. I don't know, Fadi, anything to add?

Yes. We monitor this daily. That's what I would say.

All right. It seems like unless there are any further questions, seems we're nearing the conclusion of our call. We thank everyone for their participation and attendance, and we appreciate the technical questions from the community. If there are any follow-up questions, please feel free to direct them to our Investor Relations team, myself and my colleagues. And thanks again for attending and for your time.

Thank you. Thank you, Laura. Thank you, management. Thank you, attendees. Have a great day.

Thank you so much. [Foreign Language]

[Foreign Language]