Miguel de Souza Gularte: Good morning, Renata. In regards to capacity, we have seen not only this quarter we ended, but the prior quarter that there is a balance, very — a very interesting balance between offer and demand for reasons that we have approached it already, the economic thing. So new destinations for exportations, new markets, and the environment of consumption, not only in Brazil but also other geographies, other locations, showing positive signs. What we have to have present is that this balance today, it is extremely based on this environment, this general environment. And we don’t see, at least in the short run, any indicator that this is going to change. We see, at least that in the first quarter, very balanced first quarter between demand and offer, and we should expect the signs in the second quarter to project the rest of the year.
I would say that we are very much tend to paying close attention to it, and we don’t see a problem in this aspect, but we see an opportunity.
Renata Cabral: Perfect. Very clear. Thank you.
Operator: Our next question is from Leandro Fontanesi from Bradesco BBI.
Leandro Fontanesi: Good morning, everybody. Thank you. I would like to, there are question about processed products, brands, Sadia, Perdigao. In the presentation, you mentioned you had 39% market share for processed products. I would like to hear from you what you see in terms of potential for these brands and how do you see the question of volume versus price. And your competitor some time ago had announced an expansion plan. How do you see this competitive scenario in terms of process products? And the second question, please, you talked about the question of dividends that would be a controller’s decision. This line, your leverage evolved a lot, which is something very welcomed. But in case of cash generation continues strong, and you reduce this leverage more, what options did you have in using this capital? Thank you.
Fabio Luis Mendes Mariano: Good morning, Leandro. I’m going to start answering with by market share. And I can tell you that according to the last reading, the last quarter, the market share kept stable in regards to the prior quarter. In the current context, I believe that there are changes in price relativity. BRF continues to influence positively the value of categories that it acts on. In specific cases, we had — we try to take the first step in regard to the whole price dynamics. This is associated as you placed to main brands, the leadership that the company exerts in all the subcategories we have act on. So to give you a highlight in the last reading, the category that most advanced was the category for cold cuts. So in regards to dividends and possibilities of investments, I just mentioned in the prior answer, CapEx, the investments related to growth.
And obviously, this is going to depend on the execution of our plans and also depend on the context of market context. But, especially, in the question of compensating shareholders, Miguel and we from management, we are taking the effort to improve BRF profiles, making the conditions to be profitable and create, add more and more value to shareholders. The way of compensation for the capital, it depends on the controller and the council to determine.
Leandro Fontanesi: Great. Thank you.
Operator: Our next question comes from Thiago Duarte from BTG Pactual. Thiago, your microphone is open.
Thiago Duarte: Hello. Good morning, everybody. Good morning, Miguel, Fabio. I have two questions. The first, taking the opportunity. I think this is something that consolidates the efforts of the past few years of improvement and efficiency and profitability. And I would like to take this opportunity to bring a discussion that I think that was really present in the history of the company in the past and a more distant past that that is not present — hasn’t been present for the past few years was just to hear from you a little bit what you understand to be the margin, the profitability, structural profitability of the business. What levels of margin do you understand to be able to deliver at the light of all efforts that we are seeing and the profitability of the business.
So I think that this would be my first question within that if you could — within what you can share and be factual. And the second question, more focused on the quarter, I would like to ask you to talk about a little bit about the revenue dynamics in Brazil. We see a drop in the year end when we break by segments. It was pulled mostly by process products. The same time, when we looked at inventory composition, we see highs in finished products inventories. And I don’t know how much of this is Brazil or domestic or foreign market, but it draws the attention a little bit. And I don’t know if there’s any mismatching between sales. I believe it can come back go back to normal or something carried from the prior quarter. I would like to understand the dynamics of top line in Brazil at the light of the comments that being made over good demand and a good scenario for consumption in the internal domestic market?
Those would be my questions.
Miguel de Souza Gularte: Good morning, Thiago. I’m going to answer first, and I think Fabio will take the second question. Eventually, BRF has a footprint and brands, and all aspects that we had. It’s a company that should perform within that. I’m just making a comment based on what we know from the potential of the company. I think that when you have the performance program like BRF+, you have somehow you not only change the fundamental, the foundations, the operational foundations of the company, but you also make a process that these foundations, makes the company more resilient. So we’ve been working on that at all segments and divisions. Another important aspect, BRF+ has a characteristic that gives funds or provides foundation to these possibility, which such as all the aspects of our business, starts in the field, KPIs in the field, inclusion, mobility.
It goes to the industry where you have yielding, you have productivity, cost, man hour. You have advances to commercial area. You have commercial execution. You have you can add new customers over 7,000 customers in this quarter, and you make that at all locations. If you go to logistics, a very important thing in our business, you have a company that today has rates that are really high, and these rates are improving. Not only you sell to new customers, but you deliver the products that you sold. So this is critical. Another important aspect is you start to have within the process of licenses, that’s 23, 24. You also have a very interesting possibility of choice. You can choice — to be able to choose in our business is something extremely complex from the variable standpoint to be able to choose the commercial destinations.
This also helps the resilience of the results. All these factors end up influencing and give us the conviction that the company should perform. We also had an increase in exportations, BRF exportations, in regards to the prior quarters, continuous improvement in gains. Obviously, when you increase the participation of processed products and products have been exported, you increase the possibility of bringing better results. And another very important aspect is premium price that is embedded, not only the Sadia brand that is fully known, both domestic and foreign market, and the Perdigao brand, very much present in all locations. So I think that this set of attributes and circumstances makes us really confident to work to be resiliently a company.
Factors that are independent of our will. And from our side, we’re going to continue working to be a high performance and high portfolio company, delivering the value, that the market expects from us. I’m going to hand over to Fabio to answer your second question.
Fabio Luis Mendes Mariano: Good morning, Thiago. Your question was about revenue in Brazil or income in Brazil to talk a little bit more about that. Two angles, two perspectives to explore. The first one, volume. I wanted to make it clear that we don’t have any change in demand. It’s not that we have this from volume, the trade-offs that I already commented in prior questions. Volumes that were traded in Brazil and started to be destined to other markets, new possibilities of trade associated to new licenses. We also faced, one of in this first, trading ’24 difficulties because of the Inspector strike. So additional challenges in regards to sales volumes. It’s important to remember that we made this work over the last nine months of simplification of market portfolio, domestic market portfolio.
Basically, 20% of SKUs, the company decided to eliminate SKUs that actually, destroyed value. So had a strategic role could maximize or minimize damage to the company. This was a factor that I would like to remind you of. And in the question of price, I have already highlighted some categories like margarine that was already mentioned. And we have spottedly a mix, change embedded, especially sausage, volume, and some other SKUs, but that’s what justifies the movements that you have seen in Brazilian market.
Thiago Duarte: Very clear. Thank you both.
Operator: Our next question comes from Thiago Bortoluci from Goldman Sachs. Please Thiago, your microphone is open.
Thiago Bortoluci: Hi, Miguel. Hi, Fabio. Good morning, everybody. Just congratulations for the results. Impressive, the speed of your turnaround. I would like to explore a little bit the perspective of growth. We talked a lot about costs and maybe for Miguel, the size, and the amount, the size of volume that we would like to see from now on. Correct me if I’m wrong, but when we look at the trend of ’23 and the first quarter in ’24, you had a slight drop in volume in Brazil with an external — international expansion, but still consolidated the production. It seems that your production with 60, 70 base, which seems to us that the first decision was to have a BRF, leaner BRF, focusing on profitability of the operation, and then go back to growth.
So I think that from this angle, the first question, are we in a moment of re-speeding volume? On the second angle of this question? If so, what is the impact of a BRF, a little bit more focused on volume could have on this balance of offer and demand that we have seen over the past six months. That in a moment that maybe this perspective of grain, which suggests a more aggressive market. So the question about growth, where BRF is in this volume recovery cycle. And what is the role that BRF has in this supply operation? How could this impact the operation or the balance between offer and demand?
Miguel de Souza Gularte: Good morning, Thiago. Answering your question, obviously, when you start the process of turnaround, the first thing you do is to correct some type of situation from the commercial standpoint dedicated through the BRF+ program in this process, created in 2023. Fabio explained really well the SKUs were that were not profitable. And many of them still produced in third-parties. On the other hand, BRF still has a very major challenge in the sense of occupying the idle capacity. The company has idle capacity to occupy. Could be an advantage that allows us to grow organically, but is a challenge that we have and should perform. From the standpoint of future, obviously, the strategic guidance of the company, the companies have always had growth and change in growth is part of the strategy for BRF, obviously.
