JBS Q1 2026 Earnings Call - Record Sales Mask Beef Weakness as Management Prioritizes Cash Over Growth

Conference Call Moderator, Call Moderator, JBS: Good morning and welcome to JBS’ First Quarter of twenty twenty six Results Conference Call. At this time, all participants are in listen only mode. Later, we will conduct a question and answer session and instructions will be given at that time. As a reminder, this conference is being recorded. Any statements eventually made during this conference call in connection with the company’s business outlook, projections, operating and financial targets and potential growth should be understood as merely forecast based on the company’s management expectations in relation to the future of JBS.

Such expectations are highly dependent on the industry and market conditions and therefore are subject to change. Our present with us today, Gilberto Tamazoni, Global CEO of JBS Olivier Michalacante, Global CFO of JBS Wesley Batista Finho, CEO of JBS USA and Christian Aziz, Investor Relations Director. Now I’ll turn the conference over to Gilberto Samazoni, Global CEO of JBS. Mr. Samazoni, you may begin your presentation.

Gilberto Tamazoni, Global CEO, JBS: Good morning, everyone. Thank you for joining us today. The 2026 was a challenging period for JBS shaped by market volatility, seasonality, operational disruption and change in a global trade growth. This is consistent with what we have been signaling. We understand the nature of our business and the cycles we operate in, and we manage the company with that in mind.

In the environment, we remain focused on what we can control: operational excellence, cost discipline, agility and long term value creation. JBS delivered net sales growth of 11%, reaching US21 billion dollars and record is a record for the first quarter. Net income was $221,000,000 and EBITDA totaled approximately US1.1 billion dollars with a margin of 5.2%. Leverage increased to 2.77 times, reflecting pressure on earnings and cash generation, while we continue to strengthen our liability profile, extending average debt maturity to approximately fifteen point six years. From an operation perspective, the quarter reflected both the challenge of the cycle and the resilience of our platform.

In beef North America, the environment remained very difficult. EBITDA was negative US230 million dollars with margin at 2.3% negative, impacted by contained cattle supply and higher costs. During the quarter, we advanced organizational and operational adjustment across our U. S. Beef platform, focused on rationalizing, researching and simplifying our structure in more challenging phase of the Carol cycle.

As the business as business has evolved, several areas were already operating in an increased and integrated way. Building on that, we brought together fed beef, the three business units, have fed beef, regional beef and case ready into a more unified structure. This is a natural step. It reduces duplication, improve coordination and allow us to leverage our scales and talent more efficiently, while strengthening decision making and position the business to improve performance over time. These actions are part of a broader effort driving efficiency across the company.

Our focus is to extract more value from existing assets, improve productivity and enhance execution through technology, automation and data. At FreeBoy and Pilgrim’s, we have been developing a piloting artificial intelligence initiative for over a year to support better decision making, commercial execution and operational efficiency. And we are now scaling this capability globally. At Ciara, we continue to advance automation and process improvement to increase productivity, improve product equality and support expansion of higher value added categories. These reflect our approach to decisive.

We act early, focus on what we control and position the business for a stronger performance ahead. This quarter once again highlighted the importance of our diversified platform. Despite the headwinds, our business helped balance the consolidation performance. Ceara delivered an EBITDA margin of 15.5%, supported by strong export demand, innovation and growth in value added products, despite currency pressure and cost inflation. The outlook for poultry in Brazil remained positive, supported by balanced supply demand, including adjustment in breeder placement and continuous demand growth.

JBS Brazil reported EBITDA margin of 4.5%, a second to higher first quarter margin in its history, supported by a disciplined commercial execution and favorable demand. Freeboya also delivered a strong top line performance with a solid demand both domestic and in exports. The China safeguards created adjustment in the global trade flow during the quarter, but our team responded quickly, managed volume within the quota structure and developed alternative markets such as United States, Mexico, Indonesia, preserving value and expanding our commercial footprint. In Australia, margin reached 7.1% and operational fundamentals remained positive. In Queensland, cattle conditions are the best we have seen in the last three years, reinforcing our positive outlook for the business.

In The United States, Pilgrim has a softer quarter impacted by seasonality and plant adjustment. These actions were necessary to improve efficiency, enhance productivity mix and better align our footprint with demand. The adjustments have been completed and we have already seen improvement trends. U. S.

Pork remained stable with a sign of gradual improvement supported by more balanced supply and demand dynamics. Cash flow in the quarter was also impacted for growth CapEx with investments focused on efficiency, especially value added products and strengthening our global footprint, truly aligning with our long term value creation. Looking ahead, the fundamental of our global protein remains strong. Beef supply continues to be constrained in key markets, poultry demand remains solid and our brands continue to gain relevance with consumers. Seasonality, we are bringing an important role.

The start of barbecue season in The United States typically supports stronger consumption across protein and improved industrial conditions to coming quarters. At the same time, we will remain disciplined. Our priorities are clear: operational excellence, strict control on cash generation. We also remain focused on enhancing the company’s long term position in our global capital market, including creating the conditions for further expanding our participation in relevant equity indices over time. We continue to review costs, optimize resources and improve productivity across the business.

We understand the cycle. We operate with discipline and we are taking the right action to navigate the current environment while strengthening the company for the future. Thank you. I will now turn the call over to Guillermo, who will be through the financial results in more detail. Guillermo, please.

Olivier Michalacante, Global CFO, JBS: Thank you, Tomazoni. Now let’s now move on to the operational and financial highlights of the first quarter twenty twenty six. Net sales reached a record of $22,000,000,000 for our first quarter. Adjusted EBITDA in the IFRS totaled $1,100,000,000 which represents a margin of 5.2% in the quarter. Adjusted EBITDA in U.

S. GAAP totaled $960,000,000 which represents a margin of 4.2% in the quarter. Adjusted operating income was $516,000,000 with a margin of 2.4% in IFRS and $444,000,000 in U. S. GAAP with a margin of 2.5%.

Net income was $222,000,000 in the quarter and an earnings per share of $0.21 Excluding the non recurring items, adjusted net income would be $241,000,000 and an earnings per share of $0.23 per share in the quarter. Finally, the return on equity was 22% and return on invested capital was 15%. Free cash flow in the first quarter twenty twenty six was negative at $1,500,000,000 compared to a cash consumption of $970,000,000 in the first quarter twenty twenty five. In addition to the seasonal cash consumption that typically occurs in the first quarter, the main drivers of a higher cash burn compared to the same period last year were a decline in adjusted EBITDA of approximately $400,000,000 reflecting the weaker operating results an increase in capital expenditures, which more than doubled compared to the first quarter twenty twenty five, totaling $566,000,000 driven primarily by expansion CapEx of $319,000,000 compared to $79,000,000 in the 2025. In addition of $252,000,000 working capital impact resulting from the higher livestock suppliers payment deferral as previously flagged in our last earnings call.

It is worth noting that if we execute the same level of livestock deferral in the 2026, this impact will be offset on the free cash flow for the full year. Notably, capital consumption was already below the same period last year, because excluding the additional $252,000,000 in deferred livestock payments, working capital would have been approximately 23% better compared to the first quarter twenty twenty five. In the first quarter, we also strengthened our balance sheet with the issuance of $2,500,000,000 in bonds in the market and the tender offer of $1,450,000,000 This allowed us to extend our debt maturity profile reaching an average debt term of fifteen point six years and an average cost of 5.7%. We have no significant debt maturities until 2031. Our leverage ended the year at 2.77 times in line with our long term target of keeping net debt to EBITDA between two and three times.

Our $3,400,000,000 in revolving credit lines and $3,500,000,000 in available cash provide us with the flexibility to continue executing our expansion CapEx, value creation projects and shareholder returns while maintaining a health and robust balance sheet. Last night, we also announced that beginning next quarter, we will voluntarily file forms 10 ks, 10 Q and eight ks with the SEC prepared under IFRS and supplemented on the earnings release by certain indicators reported under U. S. GAAP. This initiative is expected to broaden our eligibility for key benchmark indexes such as S and P Composites 1,500 family.

With that in mind, would like to open up for the question and answer session.

Conference Call Moderator, Call Moderator, JBS: Thank you. The floor is now open for questions from investors and analysts. If you have a question, please click the raise hand at this time. If at any point your question is answered, you can remove yourself from the queue by clicking lower hand and questions will be answered in the order they are received. Ladies and gentlemen, the first question comes from Isabela Ximonado from Bank of America.

Ms. Ximonado, you may go ahead.

Isabela Ximonado, Analyst, Bank of America: You. Good morning, Tomazoni, Guilherme, Chris. Thank you for the time. I have a couple of questions. First, Guilherme, if I may ask you for that breakeven EBITDA exercise you do every quarter, that’s really helpful.

If you could just walk through that, we really appreciate. And also to the point of cash, right? And your leverage is pretty close to three times, right? I know that’s now that’s not how rating agencies look at that. But if you look to the EBITDA U.

S. GAAP, right, is even higher than that. So I was wondering, you mentioned before, right, a CapEx of $2,400,000,000 for this year and $1,300,000,000 of expansion. If that continues to be the goal, right? Or if you are reviewing that not only for this year, but going forward, what type of levers you have, right, to bring leverage down, assuming you don’t have a big jump, right, in your EBITDA for the next eighteen to twenty four months.

So that would be my first point. And now also about The U. S. Beef business, right, I think we have been discussing that for a while now about how the cycle apparently has changed, right, or is being different than the previous down cycles. And there’s a matter of really how the cattle herd can be rebuilt at this point as the sector goes through generational transitions and issues.

I mean, do you see the business model changing going forward? I mean, any type of vertical integration that would make sense on the cattle part for you to be supportive of the cattle herd growth over time? That would be my second point. Thank you.

Olivier Michalacante, Global CFO, JBS: Hi, Isabella. So on the first question, I think it’s early. We’re still reviewing our estimates. And again, there’s a lot of variables that’s not in our control. But I would say that for this year, the breakeven EBITDA the cash flow breakeven EBITDA will be anything between 5,700,000,000 and $6,000,000,000 That’s our better estimation.

Terms of cash usage, you’re right, the leverage reached 2.77. So bear in mind that our long term target is to be between two and three times. We being in this range, we think we keep investment grade above three times. And we enter on the attention zone where we were when we start to reviewing things like you mentioned capital expenditures, dividends and so on. Our dividend limit is at 3.75%.

And I think it’s worth mentioning that in 2023, our leverage reached 4.84 in the third quarter. And we kept investment grade because of the cyclicality nature of our business. Because in 2024, the leverage came down without any effort to 1.89. In fact, the in 2024, I even unwind the discount receivables. So 2024, we used we will be printing a $2,800,000,000 free cash flow, but I used $500,000,000 to unwind discount receivables.

So I printed $2,300,000,000 free cash flow. So that’s the kind of leverage that the leverage that we have to use, because we are not we don’t use these levers recurrently exactly to be able to use whenever we need. So for example, I could increase my discount receivables again for anything from 500,000,000 to $1,000,000,000 in discount receivables that I unwinded in 2024 when the cash flow was robust. I can also increase my supplier vendor finance because we have space for that. But these all have costs.

So we use only if needed. So that’s how we will be managing leverage. So second quarter, we may be closer to our up range limit on the long term target. But bear in mind that the second semester, there’s always a strong free cash flow generation. So we expect to end up the year in our target zone of between two and three times net debt to EBITDA.

And as long as we keep inside this range, we’ve been managing to keep the $1,000,000,000 dividends that we already announced and around 1,000,000,000 in growth CapEx. If you look at since 2019, we did an average of expansion CapEx of almost $1,000,000,000 with an almost $1,000,000,000 average dividend as well. So I think being in this range, I think we can keep the space of growth CapEx and dividends, but we will always be monitoring according to our leverage, which is our main variable for capital allocation decisions.

Wesley Batista Filho, CEO of JBS USA, JBS: Isabella, good morning. So obviously, herd revealed in the cycle of The U. S. Business is taking longer than we all wish for. But for the industry to have any integration on the especially on the cow calf side of the business is just not realistic for a few reasons.

It’s very specialized and the people that do it have very special knowledge that’s very different than what we do. And other than that, especially on the cowcalf side of this supply chain, it’s very expensive, right? Expensive not as in price. I mean, it’s expensive. It has a lot of you need a lot of land and you need to manage a lot of land to be able to have a significant amount of livestock and that’s not our business.

So we’re not looking into that.

Isabela Ximonado, Analyst, Bank of America: Super helpful. Thank you.

Conference Call Moderator, Call Moderator, JBS: Thank you, ladies and gentlemen. The next question comes from Enrique Brusolin with Bradesco. You may go ahead, Mr. Brusolin.

Enrique Brusolin, Analyst, Bradesco: Hello, good morning, everyone. Thank you for taking my questions. I have two also on U. S. Beef.

The first is to understand a little bit more the profitability you delivered in the quarter. We know it’s a seasonally weak Evolving into the barbecue season, right? We continue to see spreads that seem to be pressured as they were

Wesley Batista Filho, CEO of JBS USA, JBS: Henrique, maybe can you repeat the question? We lost half of the question. Can you repeat, please?

Enrique Brusolin, Analyst, Bradesco: Sorry, sure. The first one is if there was anything extraordinary in Q1 U. S. Beef margins such as hedges or even the impact from the Greeley strike? And the second is how you see margins evolving into the barbecue season?

Spreads appear to be pressured back to the levels they were in the beginning of the year. So how you see this favorable seasonality playing out under the current environment?

Wesley Batista Filho, CEO of JBS USA, JBS: So no, there wasn’t anything extraordinary from a hedge perspective or even the whole strike situation didn’t have a meaningful impact on our quarterly results. Nothing to do with that. It was simply margins, especially in January and February, were for sure very, very challenging and probably one of the most challenging periods we’ve ever seen in history. So talking about the next quarters, we expect obviously to be better than what we had in Q1. But for sure 2026 will be a more challenging year than 2025.

Enrique Brusolin, Analyst, Bradesco: That’s clear, Wesley. Thank you very much.

Conference Call Moderator, Call Moderator, JBS: Thank you. Our next question comes from Benjamin Theriaire with Barclays. Mr. Theriaire, you may go ahead.

Benjamin Theriaire, Analyst, Barclays: Hey, good morning. Tom, Luzon and Guy. Just two very quick ones. So first, can we talk a little bit about Australia and some of the cost headwinds, what you’re seeing on the Australian cattle cycle maybe and if there was something in particular in the first quarter that drove a little over 300 basis points margin contraction? And then second, if you could share a few thoughts as it relates to the capital price in Brazil.

It’s been very erratic and volatile. So any background, any interpretation of what we should think about going forward for the Brazilian capital price?

Guillermo Gutilla, Analyst, DTG: That would be helpful. Thank you very much.

Gilberto Tamazoni, Global CEO, JBS: Hi, Ben. Thank you for your question. Related to Australia, the only operation was very strong. We had a good quarter in terms of volume and sales. And impact when you compare to the last quarter last year, the first quarter last year was FX was around 15% devaluation valuation of the Aussie.

And this is the whole impact of the disease. The business remains strong in Queensland that where we have 40% of the cattle herds, the conditions the environment conditions for pests, best we have seen in the last three years. And then we have remained very positive with the Ostela business. About the volatility in Brazil, it’s cattle, it’s normal because as you know, Brazil is focusing to accomplish the quota in China quota and all of the players in the market try to produce as much as they can in order able to reach a part share of the quarter. It is normal, the price of the carol increase.

But you saw in the last two weeks, the price start to go down. And we see that if the quota will be achieved, we believe that at the June, the volume should be down and the price of the carol should be down as well in a way to accommodate that to where Brazil will be put in an additional 1,000 tons per month. This is normally that what we see in the situation that less cattle will be harvest and the price of the cattle will be down. I think it’s a part of the we are seeing it as normal.

Guillermo Gutilla, Analyst, DTG: Okay, perfect. Thank you very much.

Conference Call Moderator, Call Moderator, JBS: Thank you. And now Guillermo Gutilla from DTG would like to ask your question. You may go ahead, Mr. Gutilla.

Benjamin Theriaire, Analyst, Barclays: Tomazoni, Guilherme and Guadalupe. Good morning. So we have two questions here also. The first one is regarding SIARA. So just want to discuss a little bit more about the margin of the company.

So margins stay at quite strong levels, but they declined sequentially. So if you could provide us a bit more information on what drove the sequential decline, if it was more related to the pork business, the chicken or maybe something else, like any color you can provide us would be very helpful. And if I may just do a quick follow-up also in The U. S. Beef, there was some new reports like pointing to the postponing of the measure, but there was also the possibility of lower U.

S. Beef import tariffs. So how are you guys seeing this for The U. S. Beef segment and also for JBS Brazil and Australia that should also benefit kind

Guillermo Gutilla, Analyst, DTG: of from this? Thank you.

Gilberto Tamazoni, Global CEO, JBS: Guilherme, related to Ciara, Ciara increases its sales volume both domestic and export. Demand for all of the products remain very strong. The only explanation is the FX. If you take the FX compared to the last quarter, you see the FX impact will be around 10%. And this is more than justify all of the business is very strong.

We are very confident with the results of the economy the common quarters.

Wesley Batista Filho, CEO of JBS USA, JBS: And on The U. S. Beef, Guilherme, so if tariffs are lowered, I actually see this as and there is a more a bigger income of Australian and Brazilian beef and from other geographies as well. I see this as mostly in a lot of in a big sense very complementary. The U.

S. Has really gone into a production system that prioritizes prime and choice and heavier cattle. And today just the percentage of select cattle that we see is a lot smaller than what we use it to have is basically a very, very small minority of cattle nowadays is ungraded or low graded cattle. So I think increase in imports potential increase in imports could complement that production that we’re doing a lot less of. And I actually think that the byproduct of having this priority of higher marbled, more premium beef that we are production system that we have in The U.

S. That we have a lot of fat trim as part of our production. Actually, you could almost argue it’s one of the main primals. One of the main products that comes out of cattle is fat trim. And the only reason why our fat trim is valued so high and it has such a good value is because we have available lean.

And if we don’t have available that available lean, we actually could see our Fed cutout actually reduce. And the price of that well marbled beef actually have to be higher because we don’t have the credit for that fat trim. So my point is, in some cuts, yes, you would probably be in a way competitive with domestic production. But I would say that the majority of what potentially would come in would actually be pretty complementary and not what we’re targeting to produce in The U. S.

Right now.

Benjamin Theriaire, Analyst, Barclays: Very clear. Thank you.

Conference Call Moderator, Call Moderator, JBS: Thank you. And our next question comes from John Baumgartner from Mizuho. You may go ahead, Mr. Baumgartner.

John Baumgartner, Analyst, Mizuho: Hi, this is Isabella on for John. Thank you for taking our question. So could you please discuss the next step that JBS plans to take in terms of increasing its presence in value added need? Is there still more to do on the M and A front to secure assets? And does JBS have the necessary brands and assets right now for the next steps in its growth?

And in terms of going to market, should we expect a strategy similar with the partnership between Sierra and Netflix in Brazil? Or is there a different approach that you plan to take? Thank you.

Gilberto Tamazoni, Global CEO, JBS: Isabel, in terms of M and A, it’s we are it’s part of our routine to look all the times the opportunities for M and A for growth. But this moment, we are focused on cash generation and to personal excellence and this is the focus of the company now.

Isabella, Analyst, Mizuho (on behalf of John Baumgartner): Okay. Thanks.

Conference Call Moderator, Call Moderator, JBS: Thank you. And our next question comes from Laura Hirata from Santander. Mrs. Hirata, you may go ahead. Mrs.

Herada, if you’re trying to speak, you might be on mute.

Isabella, Analyst, Mizuho (on behalf of John Baumgartner): Hi, good morning. Can you hear me? So good morning, everyone. Thanks for taking my question. Actually, I have two from my end.

First on Sierra, the exports now have become somewhat more challenging in key markets as a result of disruptions in The Middle East, while we also saw the European Union considering banning retained exports from Brazil. So it would be very helpful to understand how Sierra adjusted its commercial strategy in response to that environment both in terms of logistics and also in terms of pricing? And if I may add, you announced you’re going to start publishing 10 Q and 10 ks filings, which we see as positive in terms of eligibility for U. S. Indexes.

In this sense, what are your expectations for JBS’ next step towards being included in those indexes? And I was wondering if you could share with us some thoughts on the accounting standard study that this broader discussion could potentially bring? That’s also my answer. Thank you.

Gilberto Tamazoni, Global CEO, JBS: Laura, I will start to answer the question about Feara that you have made and Guilherme will be answering you about this the 10 Q 10 ks we published. First, you asked about The Middle East War and how this impact the business. I will tell you this is the neutral impact because we have an input of cost additional because you need to skip some port and you need to use trucks for internal transportation to reach the customers. But demand in terms of volume is remained the same, remained strong as it was before. And the extra cost was driven by the market, means that we’ll, let’s say, this is neutral, this war in the business so far.

Related to the European that you mentioned, it’s very new. I know that Brazil will provide the necessary clarification to the European Union regarding to the technical guidance related to the subject. And for our side, we see Brazil is fully compliance with European Union requirements. And the other thing is important to clarify, import point that is part have been not been suspended. I think we have a period of clarifications and this has not impacted the business so far.

And we are very confident Brazil will be find will be a reach in agreement with the European Union. And for our side, we continue to monitor the matter.

Olivier Michalacante, Global CFO, JBS: Regarding indices, it’s worth mentioning that today only around 40% of our free float is it comes from passive funds, which in this sector generally this number is 60%. And the reason is that is because we are not on the main indexes yet. However, we already have we think we already have the necessary criteria for the Russell. We entered last year last September in the Foods U. S.

As a U. S. Company. So now May, June, we have rebalancing of Russell. It’s not in our control, but there’s chances that we enter into Russell creating demand for the shares.

And now having more than 50% of our sales in U. S. And if we do 10 ks and 10 ks, and in June, we’ll complete one year of list of having our primary listing in U. S. This makes us eligible to the S and P family.

So that’s the perspective in terms of the index. In terms of accounting standards, we are Netherlands Incorporated. So the IFRS is the accounting standard for that. But in our press release, we put all the relevant information in U. S.

GAAP. So you can compare and also the bridge from IFRS to U. S. GAAP. So with that, we think we can reach U.

S. Investors that are used to U. S. GAAP and they have the comparability and reach also European investors and Latin American investors that are used to IFRS.

Isabella, Analyst, Mizuho (on behalf of John Baumgartner): That’s super clear. Thank you, guys.

Conference Call Moderator, Call Moderator, JBS: And our next question comes from Leonardo Alenso with XP Investmentals. You may go ahead, Mr. Alenso.

Guillermo Gutilla, Analyst, DTG: Hans I would like to discuss a little bit more about U. S. Beef. As you mentioned that the strikes in the first quarter wasn’t really impactful for the results. Would you say that without the strikes, situation would be a little worse for the first quarter or not?

Or even if there’s any lingering effects for the Q2 from this strike? Another thing I would like to understand from your side that we’ve been discussing this for the last few quarters, but just to get an update regarding the Mexican border, if you’re expecting that to open anytime soon, if you think that would change the supply side in the short term could be tailwind for this second quarter, maybe for the second semester. So two questions for you. Just one thing about Sierra, you mentioned some of the new regarding the exports Middle East, really wish that. But then looking on the domestic side, we’ve been seeing some erratic performance from prices between Natura or Fresh and Processed Goods.

It looks like in the beginning of the year, we saw some strength from the Processed side. And now we are seeing some transitioning to the more to the Natura. So just to get an understanding here what you’re seeing if there is a demand softening or if it’s just short term pick up, let’s say, so just to get a better view from Sierra on the domestic market as well? Thank you.

Wesley Batista Filho, CEO of JBS USA, JBS: Bernard, just on the strike situation, we were able to redirect volumes in other plants. So we didn’t lose volume because of this strike. There were maybe costs here and there that were extraordinary, but nothing significant enough to justify doing any adjustments or anything like that, that’s relevant to the market. So we decided to just leave it as is with the result because it wasn’t significant. Mexico border opening for Filerquero, absolutely no question.

It’s the most important thing that could ever happen in the short term to get some sort of relief on the supply side on beef in The U. S. Obviously, the USDA has been super, as always very responsible in making sure that that’s done whenever they feel the situation or they have assurance that the situation from the Mexico side is exactly how they want so that they keep screw on outside of The U. S. But having said that, whenever that The U.

S. Whenever and if that ever happens with the U. S. Government feeling that it’s the right time, absolutely would be the most significant thing that could happen to normalize supply in this industry in the short term.

Gilberto Tamazoni, Global CEO, JBS: And Leonardo related to your question about chicken in Brazil. Chicken in Brazil, we start the year beginning of the year I think January was a little bit softening. And this quarter, but then February and March that recovery, I think is the market demand in Brazil very strong and the demand in export is strong. We at that time with the last quarter we discussed that the statistics show that Brazil will be grow high volume because of the genetic will be higher. And at that moment I saw that I said that we’re not seeing the market, but I don’t know statistical, but the reality statistical was some mistake that the association that republished the numbers and correct the information that the market will be grow around 10%.

So you’re talking more about 4%. But 4% is really it is I think it’s balanced with the demand. We have a standard demand in the normal growing domestic market.

Guillermo Gutilla, Analyst, DTG: Okay. Think we’re isolated. And some other just to be clear, you said this improvement, but then it’s mostly in Natura or Processes or both?

Gilberto Tamazoni, Global CEO, JBS: No. Processes, we are the market is we can say stable. The market is not low, but we are you say we are flat, but we sell more value added, more premium products than the low the more commodity products. And but the demand, if you saw the demand in January was weak, but they recovered in March, We are we made a very good sales that we are confident that the combination of our strategy to distribute in domestic market, different chain or different category of product, we are able to manage this situation. But for chicken, it’s very strong demand.

For processed product, It’s strong in the premium and soft in the more commodity.

Guillermo Gutilla, Analyst, DTG: That’s clear. Thank you. Thank you.

Conference Call Moderator, Call Moderator, JBS: You. And our next question comes from Heather Jones from Heather Jones. You may go ahead, Mr. Jones.

Wesley Batista Filho, CEO of JBS USA, JBS: Hi, Jones. This your try

Conference Call Moderator, Call Moderator, JBS: to speak. You may be on mute.

Isabela Ximonado, Analyst, Bank of America: Hi. Are you able to hear me now?

Wesley Batista Filho, CEO of JBS USA, JBS: We’re there you go.

Gilberto Tamazoni, Global CEO, JBS0: Thank you. My question is on North American beef. And just due to a variety of factors, including drought, it just seems like the herd rebuild rebuild is getting pushed out and likely be much more slow and meager than expected. And then like you mentioned, the border reopening. So it just seems like even if everything goes right from here, we’re looking at, like, late twenty eight before any significant increase in cattle availability.

So it would seem additional industry rationalizations required. And so I was just wondering when do you see that happening and wondering if JBS has considered rationalizing some capacity, maybe one of your smaller facilities. So just hoping you could help me how to think through that. Thank you.

Wesley Batista Filho, CEO of JBS USA, JBS: So Heather, you’re right. It’s especially with this drought, it’s going to delay the herd rebuild. It’s I don’t think it we further liquidate, but it’s probably going to delay the herd rebuild here. Look, we’re not really focused on that right now with this talking about plant rationalization and all of that. So we’re focused just on making our business better with the things that we can control given the footprint we have.

So that’s not something that we’re looking at the moment. And it’s very difficult for me to speculate on anything else, right? Because anyway, it wouldn’t be appropriate for me to speculate on other players in the market. But we’re not looking at that right now.

Conference Call Moderator, Call Moderator, JBS: Thank you. Our next question comes from Ricardo Alves from Morgan Stanley. You may go ahead, Mr. Alves.

Gilberto Tamazoni, Global CEO, JBS1: Thanks everybody. Good morning. Thanks for the call. One question for Wesley, one for Guilherme. First on U.

S. Beef, Wesley, please. As we think about the grilling season, protein inventories are down big time in The U. S, red meat is down, chicken is down. And when you look at beef purchases to be delivered in June, July also down big time 15% or so.

How do you feel about channel inventory today when you’re thinking about retailers and foodservice as we head into the green season? These data points, I think that my point is that these data points would indicate whether there’s a lot of upside to cut out prices in the very near term. I wanted to see if you have that view or on the flip side, maybe it could also indicate that demand is expected to be softer, I guess, I don’t know. I don’t think that that’s the case, but it is a possibility. So I just wanted to hear from you what you get from retailers and food service in your conversations on ground.

I think that that would be helpful for the very short term on the cutouts. That’s my first question. The second question, really quick one to Guilherme. The pretty significant CapEx expansion that we’ve been discussing for the past couple of months and we saw that taking place in the first quarter. Could you detail a little bit more, I know that maybe you cannot quantify by division, but at least the main projects that you’re working on for the rest of this year just so that we have a better idea of what’s going on in your U.

S. Pork division, even projects that you’re doing on U. S. Beef, PBC and so forth. I think that that would be helpful as well, just a reminder of the CapEx expansion.

Thanks everybody.

Wesley Batista Filho, CEO of JBS USA, JBS: Ricardo, on beef, cutouts has already started the year already compared to the same time last year much higher than 15% higher than on the whole quarter than compared to the same period of time. The reason is lower volume and demand continues to be strong. So you have a constant demand and a shorter supply. Price tends to go up when that happens. So looking forward, I would expect it’s difficult to we have to wait and see and see how that’s going to impact demand in this potentially higher prices.

But supply is tighter. So we’ll see what happens there. But we’ll probably see demand stay continue to stay strong. And we know the supply is kind of short. So there is a potential for it.

But we’ll have to wait and see.

Olivier Michalacante, Global CFO, JBS: Hi, Ricardo. So the main projects continue to be ones announced. So the Pure Ranch Prepared Foods facility in Walker County, the Akane, Iowa fully cooked bagel and sausage facility, the Perry, Iowa fresh sausage plants Cactus, Texas and really Colorado modernization of the beef processing plants. Then we have investments in Brazil in biodiesel and the Paraguay chicken plant and also the Oman acquisition. Bear in mind that the Oman acquisition will not be a cash effort given that it will all be financed with the local banks there.

Conference Call Moderator, Call Moderator, JBS: And our next question comes from Lucas Ferreira with JPMorgan. You may go ahead, Mr. Ferreira.

Gilberto Tamazoni, Global CEO, JBS2: Hi, everyone. Thanks for taking my questions. Two follow ups. One is on Australia. It seems like you guys have a sort of a constructive view there on the quality of pastures in the business.

I just wanted to understand potentially the trend for margins there once at least if you look at the Australian dollar remains even a bit stronger than the levels we’ve been seeing in the first quarter. And cattle prices seems to be sort of stable, but with the MLA outlook of some reduction in slaughtering this year, right, with the changing cycle. So I don’t know in the regions you guys operate and all the other businesses in Australia, to think about margins going from here, if it’s also some seasonal effects that should help lifting the margins going forward? And number two is on still on The U. S.

Beef. Wesley, just so I understand your comment, you mentioned that

Guillermo Gutilla, Analyst, DTG: you expect 2026 to

Gilberto Tamazoni, Global CEO, JBS2: be more challenged than 2025. Last year, you had a 1.5% negative margin. Should we expect a weaker margin this year, given your comments? And then 2Q was particularly weak last year, right, over the minus 2.9% margin. I remember the issues with the hedging, etcetera.

So should this sort of a weakness more skewed towards the second half? Or how to think about also the evolution of the business from here? Thank you.

Gilberto Tamazoni, Global CEO, JBS: Lucas, thank you for your question. Related to Australia, I think where we operate, we are very positive in terms of the volume that will be harvest this year. I think it will be not different than last year. Some period of the year I think will be higher. I mentioned at the beginning in one of the answer that we have Queensland that where we are main operation that the climate condition is very positive.

I think it’s the best in the last three years that and this is this show us that there will be the common modes will be a good supplier and talk about supplier. Then you talk about demand. Demand is very, very strong from and I think it’s not just in U. S, but all of the premium markets that Australia sell that Japan, Korea and other ones. Japan is very Australia is very well positioned for catch this benefit from this demand, the growth demand, global protein and growth demand.

So we are positive where we operate. That will be a great year for GBS Australia.

Wesley Batista Filho, CEO of JBS USA, JBS: Look, as we so I’m going to

Gilberto Tamazoni, Global CEO, JBS: say this without giving any guidance, but you could

Wesley Batista Filho, CEO of JBS USA, JBS: expect this year versus last year. I’m talking marketing general to be one, one point five percentage point worse than last year. About 1%, I think, is fair. Obviously, then we have our internal dynamics, right, how our operations are. And like you said, last year we had some hedging impact in a specific quarter.

But overall, you could expect the market to be 1% to 1.5 percentage point worse than the last year.

Gilberto Tamazoni, Global CEO, JBS2: Perfect. Thanks very much everyone.

Conference Call Moderator, Call Moderator, JBS: Next, Jack Carden from Stephens would like to ask a question. You may go ahead, Mr. Hardin.

Gilberto Tamazoni, Global CEO, JBS3: Hi, this is Jack Hardin on for Piran Sharma. Thanks for the question. For U. S. Chicken, consumer demand remains strong, partly supported by Thai beef supplies, but broiler processing margins remain below mid cycle levels.

How do you assess the current supply demand balance in chicken? And do today’s margin levels suggest the industry needs to moderate production? Thanks.

Gilberto Tamazoni, Global CEO, JBS: Steve, see very balanced in the chicken demand in U. S. We had in the beginning of the year that big bird was a little bit very challenged. And but this is that the price of breast recovering during the quarter. We see that demand is strong.

In value added and prepared, we have strong demand. And all of the business, all of the other categories that Pilgrim sell in domestic market in The U. S, it’s all of them are positive. And when you look for the side in supply, we see better balanced supply demand. We are positive with our business in insurance business.

Conference Call Moderator, Call Moderator, JBS: And our next question comes from Thiago Borodichi from Goldman Sachs. You may go ahead, Mr. Borodichi.

Gilberto Tamazoni, Global CEO, JBS3: Hey, guys. Good morning, everyone. It’s always a pleasure to talk to you. Thanks for the Q and A. I think the question goes to Tomazoni, and this is just to try to gain perspective beyond the quarter on the benefits from diversification and portfolio.

Tomazoni, this was a very rare quarter where we saw very strong demand. Actually, you mentioned in three business units record high sales for our first quarter. But at the same time, virtually all the business units delivered lower margins versus last year. I think the exception was Brazil beef, which one could argue that this quarter, particularly diversification didn’t quite help you. I think my question for you is, once you think about the year and the buildup, you mentioned the grilling season in The U.

S, obviously, year end brings seasonality also to Brazil. Where are the opportunities where you think margins could show some clearer sequential improvements? Where are the main risks? And how would you expect diversification to help you going forward? Thank you very much.

Gilberto Tamazoni, Global CEO, JBS: Okay, Thiago. Good question, Thiago. I’m very positive with diversification because when you look for our results this quarter, if you compare to the last quarter, the difference is around $400,000,000 If and we can explain this difference with two business units. First, U. S, VPUS.

I think the results of the VPUS was impact around 50% of the difference of our EBITDA. And as we feel you have explained about that. And I think we reached the bottom of the results. I think we made some we are we see that the common quarter, we cannot say they will be improve a lot, but I think it will be better than it was this quarter. The market condition didn’t change, but I think we are more balanced.

And we made some adjustment in our structure that I think will help us to navigate even inside of the company with the low cost of operation, more synergy and outside synergy in terms of commission. I think this is one of the things that give us more confidence about that the results will be better than it was this quarter. If you can add any question.

Wesley Batista Filho, CEO of JBS USA, JBS: I was just going to add Thiago that I think a good way to think about diversification is always more so than comparing every time to the always on the comp versus last year. If you look just at the absolute number, right? You have pork USA and Sierra with double digit margins. You have Australia, even though this quarter was a lower quarter than what it has been, it’s still in a very positive high single digit. Right when you have The U.

S. Beef U. S. At the low cycle, if you went back five years ago, you would probably see all of the other businesses at a lower margin and beef higher. And I think the other way to look at this diversification as working even in this quarter is when you compare our portfolio of businesses with any one of our peers, right?

And each one of them could be that they are in a singularly in a market and that market is really good or really bad. But our businesses are always going to have our portfolio of business is always going to give a more stable kind of result versus our peers just based on the uniqueness of our diversification. So I think I would say that even in this quarter that was a weaker quarter the diversification thesis that we have is actually pretty evident in my opinion.

Gilberto Tamazoni, Global CEO, JBS: And just to end finish my point of view that we start that 50% was beef in U. S. The other 50% was Cubist. Cubist need to adapt its portfolio to the market demand. We before U.

S. Was just focused to export they use the breast, the white meat and export the dark meat at the export leg quarters. But the market changes. There is a demand in domestic market now in U. S.

For dark meat. And Pugls need to adapt its layout of the three factories in order to be able to supply the demand of the market. Then we stopped for two weeks, three plants, then this was affected the results and the climate conditions affected as well. Then these two things explain the difference in terms of the results compared to the last year, dollars 400,000,000 that $200,000,000 in the Pilgrims and around $200,000,000 in the B. This is one thing about that.

The other thing is, you mentioned that the other business not delivered, that was the FX. FX was affected Sierra and FX was affect Australia. This is if you want to explain the business is that FX Sierra in Australia and the Pilgrim that I explained and beef in U. Well, this is one thing about the results. The other thing, if you talk about diversification, of course, if you have just beef in U.

S, we have a really tough situation. But as we have managed different business in different geography, we are able to compensate. If you compare just a single company with one business, that will be a huge difference. Of course, the electrification is working. And I believe that this difference in terms of cycle is normal in our business.

We need to be able and to focus and manage the business in when they have the low level, we need to be better than the other competition. At the high level, we’ll be better than the competition. This is the part this is the game.

Gilberto Tamazoni, Global CEO, JBS3: Very true. Thank you very much, Tomaszoni and Lindsey.

Conference Call Moderator, Call Moderator, JBS: Thank you. And our next question comes from Renata Cabral at Citi. You may go ahead. This is Cabral.

Gilberto Tamazoni, Global CEO, JBS4: All right. Thank you so much for the space for questions. My first one is a follow-up related to the last one, diversification, but in the angle of GLP-one adoption, it was already mentioned by company’s management that the adoption of GLP-one, it’s structural shift towards hyperplane diet, of course, particularly in The U. S. As the adoption is higher right now due to costs.

So could you please calibrate to us how tangible this trend is already in your day to day business? Are you seeing measurable change in the consumer behavior already? For instance, it was the different perceptions of the consumers for PPC. So in terms of innovation, GLP-one is something that you think about when you are elaborating a new product and mix in terms of smaller portion or anything different. And this focus to in The U.

S. But even for Brazil, are you seeing already this trend? Or you think the contribution can come in the future? And since you are investing in expansion for Seara, so do you have this in mind in terms of the future products that you are going to release on those investments? So this is my first question.

The second one is related to grain prices that has been positive for the company for a while. Right now, there’s the discussions on the potential risks on the annual and fertilizers costs.

Isabella, Analyst, Mizuho (on behalf of John Baumgartner): So if you

Gilberto Tamazoni, Global CEO, JBS4: can share your outlook for 2026, 2027, it would be great as well. Thank you so much.

Gilberto Tamazoni, Global CEO, JBS: Thank you for your question. When you talk about GLP-one, I think is GLP-one is one of the factors that is affecting the global consumption of protein. When you look for when you say when we are saying here that strong demand for protein is globally in all of the market. And this is affected by, of course, as you mentioned GLP-one. But GLP-one, I think, is now the most important issue.

I think this is the perception and not just perception, but the knowledge that protein is very important for to have even in the new generation or in the older generations. Because if you want to have longer life, you need to eat more protein. If you want to have muscle in the beginning, you need to eat protein. That protein become very important for all of the generations. The second, the regulatory, if you saw that the U.

S. FDA changed the pyramid. They invent the pyramid because that they put that you need to have more protein in order to have more health. Then to eat more protein is healthier and this is globally. And then there is about this new technology about medicine that is because you want to lose weight.

And if you lose weight, you need to eat more protein in order not to lose muscle, lose fat. And this is it’s not in one country. I think this is globally. We see that it will be continuous, high protein, the consumption. And we are it’s not new in order now.

What we see the new now, all the companies try to adapt the portfolio to have more protein. Even that the companies that work in high carbonate product, now they want to adapt for more protein. But if you look our corn, our corn is focused on protein that we don’t need to adapt our core. We need to accelerate what we have done so far. We are for example, we have launched high protein line of products in Sahara and other parts of the world.

And are And we are work and innovation in order to facilitate how the people eat protein. For example, use our fry for simplify the life if you want to cook at home. And you will see that the people cook more at home. And if I say you, we have the right portfolio for the right brands, And we not see that tenders, we see that it is structural. They eat more protein.

And we are investing in of the innovation in order to facilitate that to and the second question, I understood that you asked about grain, about the cost of the nutrition of the animal. Look, if you look for say, global inventories being at a comfortable level, there is significant volatility in the market. And I think it’s a lot of uncertainty regarding to the weather conditions and the fertilizer costs. If you look for corn, globally demand remained very strong. Appium support the market even with the recent pressure in the grain price.

I think it’s the tendency is to increase the price because of the weather, because of the fertilizers. But in terms of what we see in part of our company, I can tell you that we believe that we are well positioned from a risk management perspective. While the crop position have improved, we remain prepared for the potential volatility, including the possible reduction in the Brazilian safrinha crops.

Gilberto Tamazoni, Global CEO, JBS4: Thank you so much, Tomazoni. Super clear. Thanks for sharing your thoughts on GLP-one as well. Very complete answer. Thank you.

Conference Call Moderator, Call Moderator, JBS: Thank you. And our next question comes from Riccardo Biotatji with Zapro. You may go ahead, Mr. Bojadi.

Gilberto Tamazoni, Global CEO, JBS5: Hi. Good morning, everyone. Wesley, a couple of follow ups here regarding North America. The first one, besides the tariffs discussions this week, there were some reports about the potential deregulation in the cattle industry. So in your view, what can be really done to incentivize ranchers to raise more cattle sustainably, I mean, in the longer term?

And what is the likelihood of any potential policy change happening this year in that regard? The second point here on the overall protein demand in North America. This summer, we have the FIFA World Cup happening in North America, right? So can we expect here any meaningful impact coming from that event, specifically in North America, maybe a stronger than usual barbecue season or something like that? And lastly, on prepared foods, this is a more broad question for the company.

We see many CapEx initiatives to build or expand capacity in prepared foods. So my question is if you can quantify a little more how fast prepared foods are growing within JBS portfolio? And do you have any particular long term targets for this category to represent in your overall portfolio in the long term? Thank you, guys.

Wesley Batista Filho, CEO of JBS USA, JBS: Good morning. So on the deregulation for sure, I mean, as we see cowcalf producers and ranchers in general trying to rebuild herd and deciding to rebuild herd regulation and over regulation can be, you know, an obstacle. And anything the government does to help the ranchers is very helpful. For sure, it’s important. On the protein side, demand is pretty strong overall.

How impactful would the FIFA World Cup be? I don’t know. I think it’s it’s helpful. It’s not it’s not negative. But I you know, there is I I think it might be relevant in a few a few days of the the next few months.

And but but I I don’t know. I don’t think it moves the needle enough to to say that this substantially structurally changes the how we’re going to see the overall summer and spring year for this demand.

Gilberto Tamazoni, Global CEO, JBS: Or about our strategy for value added, we don’t have a specific target for value added. We want to increase the share of prepared foods in our portfolio. And why we want to do that? Because when we talk now a lot about cycle, where is the low part of the cycle or high part of the cycle. Prepare, there is practically no cycle, that the demand normally is very stable and with higher margin.

And because of that, we are prioritizing our investment in the prepared food and brands. We are investing in brands and we are investing in the line of prepared food. And if you saw that investment we have Guilherme just mentioned before the investment in U. S. About sauces.

It’s a breakfast sauces. It’s value added. Pilgrim’s value added from breaded plant. And you saw in Brazil some investment, OCR was focused on that. We are prioritizing investments in value added.

This is the fact. We are not at a specific target on that.

Gilberto Tamazoni, Global CEO, JBS5: That’s clear. Thank you very much guys.

Conference Call Moderator, Call Moderator, JBS: Thank you. And our next question comes from Priya Ohri Gupta with Barclays. You may go ahead, Ms. Gupta.

Gilberto Tamazoni, Global CEO, JBS6: Great. Thank you so much for taking my questions. Hilarie, can we talk a little bit about how we should think about net leverage trending through the end of the year? I think earlier, a couple of months ago at CAGNY, in particular, we had talked about scope for net leverage to be below 2.5 times this year. And it sounds like it could be ending the year sort of in the upper range of that 2.5x to 3x area.

I just want to make sure that we’re thinking about that correctly. And as part of that, you highlighted through the new issuance and tender that you did recently. However, it does look like you tendered less than you issued. Should we expect some of that incremental amount to get deployed to debt reduction later this year or just kept on the balance sheet? And then the second question I had was just on the free cash flow breakeven.

You talked about it being 5,700,000,000 to $6,000,000,000 now. Last quarter, you had said it would be 5,700,000,000 So if you could just walk us through what’s driving the higher end of that range now that would be helpful. Thank you.

Olivier Michalacante, Global CFO, JBS: Hi, Bria. So from a leverage perspective, you’re right. I think the perspective to end this year more likely to be between two point five and three times given again the weaker results we had in the first quarter. In terms of the tender, we did bear in mind we have $1,000,000,000 in dividends to be paid in June. But our cash position is still at $3,500,000,000 which is around at least $500,000,000 around 500,000,000 to $600,000,000 above our minimum cash given our cash conversion cycle and the different geographies that we are around the world.

So we have space to buy bonds with excess cash. But this decision will probably be done in the second semester when is the period that where our cash generation is stronger. In terms of the free cash flow breakeven, it’s just an estimate. I think the accounts that we have continue to be on the $5,700,000,000 Working capital in the first quarter was better than the first quarter last year. But going forward, I just gave this range because there’s a lot of moving things like energy prices that could impact grains.

We much would be this impact basically on fertilizers and energy in the grain prices that could move working capital if prices go up. So that’s why I gave the range from 5.7% to 6% or because of the uncertainty that we have given all the volatility in the markets.

Gilberto Tamazoni, Global CEO, JBS6: Great. Thank you. And just a quick follow-up. If you do think about looking at further debt pay down, should we expect you to use a similar approach to what you did in the beginning of the year? Or could you take other considerations into account sort of thinking through the interest expense reduction versus maturity management and absolute debt reduction?

Thank you.

Olivier Michalacante, Global CFO, JBS: Yes. The approach will be absolutely the same given that all my debt including the $2,900,000,000 maturing in 2032, they all the coupons are below treasury. So it’s not worth it to pay any of those debts. So any repurchase would be on ’34, ’33, ’35 spots. The 34, for example, is the highest bond, which we still have $300,000,000 outstanding that could be a possible target.

Thank

Gilberto Tamazoni, Global CEO, JBS6: you. Very clear.

Conference Call Moderator, Call Moderator, JBS: Thank you. And our next question comes from Matthias Enfield with UBS. You may go ahead, Mr. Enfield.

Gilberto Tamazoni, Global CEO, JBS7: Hi, all. Good morning. Thank you for your time. My first question on the beef demand in Brazil. We’re still seeing it quite resilient in spite of prices.

So I’m just trying to get a sense if you’re getting pushback from retailers or pushback on the margin on demand growth and or demand reduction? And what’s the size or scale that we could expect for demand down in Brazil in U. S. Beef as a result of higher prices? And then my second question is on sort of a longer term view around production.

We’re seeing quite a lot of restrictions to trade flows, be it quotas or sanitary barriers for exports. I know the company is planning to diversify, but whether there are some additional regions that could become focus for investments in the midterm such as rest of LatAm or more investments in Europe that could help circumvent those sanitary and trade flow restrictions in general? And how you’re incorporating that into the longer term investment

Guillermo Gutilla, Analyst, DTG: decisions that the company is taking? Those are the

Gilberto Tamazoni, Global CEO, JBS7: two questions. Thank you.

Gilberto Tamazoni, Global CEO, JBS: If understood well, you asked about the demand for beef in Brazil and beef in U. S?

Gilberto Tamazoni, Global CEO, JBS3: Yes. Yes, both are.

Gilberto Tamazoni, Global CEO, JBS: But look, we in Brazil, given that we had the higher price of cattle and the higher price of meat, the demand in Brazil remains strong for beef and for all of the proteins. And we talk about JBS. We and now with I think it’s with the end of the quarters of China, May the price of cattle will be decreased. And I think we will be more favorable to sell in domestic market. It is important that we have developed category management two point zero, say that we are we call a soggy reserve.

It’s in Brazil that we manage inside of the store of our customers the budget area. And this show that the store they have our model, they sell not just more meat, but they sell more for all of the stores. And this project is get a strong reception from our customers. And because of that, I see that even now with this situation that after the quota of China end, we are I think is we are very well structured even in Brazil, even in U. S.

To manage the volume for our business, FreeBoy. I think it’s in U. S. Whether or we have to comment a little bit about the demand, but I think demand

Wesley Batista Filho, CEO of JBS USA, JBS: continues strong, Matteo, is we think all the things I already mentioned before on just the overall protein trend and people understanding more about nutrition prioritizing protein. We’ve seen that. And just the overall preference also for protein and especially beef has been pretty strong. So that’s how we see the demand in The U. S.

Gilberto Tamazoni, Global CEO, JBS: I think this is related to the first the question first we answered about the demand of protein, GLP GLP-one and the other factor that is booster all of the consumption protein consumption globally. I think if Matteo, if I’m right, your question about the investment, the fluidity space of our investment, is it correct?

Gilberto Tamazoni, Global CEO, JBS7: Yes. How you’re considering restrictions to trade sales with quotas and sanitary barriers into your investment process investment decision for the mid long term? Thank you.

Gilberto Tamazoni, Global CEO, JBS: I think we are very well positioned in where we produce and where we sell our product. I think as we built this global platform And you look at it, are produced where is the most competitive way to produce. And we are present to sell where the market demand is. Then I think it’s in terms of balance, we are well balanced. Of course, now our focus now for this year is to cash generation.

We are not looking forward to new projects in our portfolio. We just start with the project in Paraguay. We started the project in Oman. I think now we need to develop this project in the greenfield that we are working on. No any new projects in our pipeline now.

Gilberto Tamazoni, Global CEO, JBS7: Awesome. Super clear. Thank you.

Conference Call Moderator, Call Moderator, JBS: Thank you. And our next question comes from Igor Guediz with Jamelle. You may go ahead, Mr. Guediz.

Gilberto Tamazoni, Global CEO, JBS8: Can you hear me? Yes. Okay. Thank you very much for the opportunity. The first question is about CapEx.

We observed CapEx essentially doubling year over year. And it came slightly higher than expected reflecting an acceleration across the platform, but mainly related to renovation projects stemming from the downtime at PPC with capacity expansion initiatives. It would be interesting to understand if you can share with us how the capacity expansion is progressing from a numerical standpoint? How much of increase you expect to achieve based on what production levels and whether we can expect CapEx to normalize as early as second quarter? And my second question, I would like to get your perspective on what might happen in the second half of the year regarding the filling of China’s quotas.

As you have already mentioned, it’s possible that cattle prices will fall in Brazil given the quarter is being front loaded faster than initially expected, which could reduce the number of slaughters in the second half of the year, leaving more cattle on hand and lowering price per Ahoba. But my question is more focused on the cutout side of the domestic markets. Do you think it’s possible that with the reduction in exports, part of the volume will be directed to the domestic markets. And with more meat supply here, the cutout price might face downward pressure. I would like to take your view on this variable going forward.

Thank you very much.

Gilberto Tamazoni, Global CEO, JBS: Look, we are when you talk about the CapEx, we are put $1,000,000,000 in CapEx for expansions. The grow CapEx as we call, grow CapEx. And this is we are not disclosure one by one, but because many business unit in the different types of the CapEx. It will be different. It’s difficult to explain the volume because one is the number of chicken, the other is the volume of well prepared food and to put together will be difficult to explain that we are not disclose that.

But the CapEx is as you mentioned is if you compare for the last year it’s higher because we are seeing this strong demand. But we are not seeing now any moment that we need to review the CapEx because we are seeing the cash generation for the second semester of the year will be strong. But this is something we can see in the future. If you because it’s capital expansion, we can postpone or we can give more time to do, but we are not looking now because we are not see that it’s necessary for now. But could be in the future is something that we can take a look.

The other thing about the Brazilian situation about the market situation about beef, We say that the end of cut of China, we may the number of cattle will be harvested for the English will be down should be down because we need to accommodate this, I mentioned, 120,000 tons per month for beef. We need to find a market for that then the increase will be reduced the number of cattle will be harvested. And if you reduce the number of cattle will be harvested, combined with more availability of cattle for feedlot, we believe that the price of cattle will be down as well, means that carol could be down because more volume domestic, but the price of beef will be down as well. Then I see that the spread between the both price, the carol and the live carol will be remained or depends in our case, could be enhanced that we have value added product. When you talk value added product, not with processed product, it’s value added raw products that I mentioned you, better representation, better way to serve the customer in different cuts of beef.

That if you look for our side, I think it’s we are very well structured in Brazil and outside of Brazil to take advantage the impact of this end of the quarters of China.

Gilberto Tamazoni, Global CEO, JBS8: Okay. Super clear. Thank you very much.

Conference Call Moderator, Call Moderator, JBS: Ladies and gentlemen, there being no further questions. I would like to pass the floor to Mr. Gilberto D’Amazoni.

Gilberto Tamazoni, Global CEO, JBS: I would like to thank you everyone for joining us today and all JBS team members for their dedication. And you look ahead, we have not changed our focus, execution, efficiency and disciplined capital allocation and cash generation. That is what allow us to deliver consistent result and build a long term value creation. Thank you.

Conference Call Moderator, Call Moderator, JBS: This is the end of the conference call held by JBS. Thank you

Gilberto Tamazoni, Global CEO, JBS1: very

Conference Call Moderator, Call Moderator, JBS: much for your participation and have a nice day.