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BRF SA (BRFS)
Q3 2015 Earnings Conference Call
October 30, 2015 07:00 AM ET
Pedro Andrade Faria - Global CEO
Augusto Ribeiro - VP, CFO and IR Officer
Flávia Faugeres - General Manager, Brazil.
Rodrigo Vieira - VP, HR
Pedro Leduc - JP Morgan
Thiago Duarte - BTG Pactual
Gabriel Lima - Bradesco
Viccenzo Paternostro – Credit Suisse
Fernando Ferreira - Merrill Lynch
Previous Statements by BRFS
» BRF-Brasil Foods (BRFS) CEO Pedro Faria on Q2 2015 Results - Earnings Call Transcript
» BRF-Brasil Foods' (BRFS) CEO Pedro Faria on Q1 2015 Results - Earnings Call Transcript
» BRF-Brasil Foods' (BRFS) CEO Pedro Faria on Q4 2014 Results - Earnings Call Transcript
We have an assessment questionnaire on the table, it’s important to return that to us, filled out, of course, because we would like to have information from you in a transparent manner so that we can - a few of the relevance of this meeting and that’s also part of our meeting quality, the best meeting of 2015. So we do need to have that base, those filled out questionnaires in order for us to be part of that award.
So now I would like to tell you who we have here on the panel. Pedro Andrade Faria, Global CEO of BRF. Pedro, please. Also, Augusto Ribeiro Junior, VP and CFO and IR Officer; Flávia Faugeres, General Manager for Brazil. She is also with us. And Rodrigo Vieira, VP of HR, also in our meeting today. I would like to ask you to have your phones on mute or on vibrator that that we have no further interference as possible in the meeting. So thank you very much. I will turn to the floor to Mr. Faria so that he can start our meeting today. Thank you.
Pedro Andrade Faria
Good morning, everyone. It is a great pleasure to be here. Ricardo, thank you very much. Thank you - for this partnership. This is a long-lasting one that we have had for 33 years in a row with BRF and also the prior companies Sadia and Perdigão taking part of one of the main pillars of the capital industry, capital market industries in brazil, so it’s great to be here in this quarter earnings call and also very relevant in our communication agenda with investors is to hold this BRF today. Here we are in Sao Paulo to kick of the process. On Monday we will be in New York and Tuesday in London. At least once a year we bring detailed information about our company. The whole team is here and then we can discuss several topics about the company in the medium and long runs. I would like to start by telling you what I believe is important for today.
And these are the topics that we brought to guide the meeting and after that, we will time for a Q&A session. So what we wanted to bring to you first and that’s a very relevant topic, it has to do with the cultural transformation process that we have gone through in these last two years and a half. It starts in a very further way when Mr. Diniz came to chair the board and we also brought Rodrigo that he is here on the panel. He is responsible for management of VP and he is going to tell us a little bit this history, which has the largest and allow the company to have the results that I consider to be very satisfactory in this last quarter and this last half of the year.
And also what I would like to say, it has to do with the results of this third quarter is that in this last two years and half the company has had a very good well succeeded process of internationalization of its process. We have challenged the results and the company in Brazil to the current situation, but we do have a record result in the company in our broad markets. And the results really have been reached, thanks to our dedication to the operations we have had of taking part in this consumers’ life out of Brazil where we try to show that in a very clear manner.
And third what we would like to share with you in this market dialog is what we have had in the company. We consider that after these two years and a half we have gone through where we had a lot of turnaround, a lot of discussions in terms of fixing of things here and there that were important and reducing and increasing productivity, because of those two things that I mentioned, we do have a clear growth agenda that will be permeated by two strategic themes which is consumerization. There is no return there, because we are getting closer to the consumer. We are going forward advancing, so that we can have valid products and also the company is becoming more internationalized. This is really - and it behaves as a multinational company, so this is what we are going to bring to you. Augusto is here with me. Flávia is responsible for the Brazilian market and I am sure that she has a lot of interesting points or view to share with us. We will discuss the results of the third quarter.
We know that we have specific topics we will be addressing. So very briefly I would like to start being as brief as possible about our ambition and why do we wake up every day to work and what we believe to be our dream, what we aim and what we are looking for in the first live show in a very clear manner and we are not being arrogant here. We do see a possible path ahead. This is a company that is the most inspiring and relevant food company in the world. We have three main pillars. This is a global food company, focused on the brand and its consumer oriented. We know the origin of the two companies that are part of it. It’s a company manufactured oriented. We are productive, efficient and we wanted to keep on being in it and the company has changed itself about brands and consumers.
Also we occupy a leadership position. We know where we want to be at in the last two years and half we clearly defined relevant markets in which we believe that we are able to be leaders at and we even had to take difficult decisions of leaving some markets, some segments and countries where we did not see long term conditions to be leaders or either a business environment that would make sense.
And finally, our supply footprint, this is what really supports the company. We have a footprint that is global. We will talk about an accelerated investment process where our productive capacity is gaining international projection. So our marketing strategy really wants to establish Sadia as a global brand and we have protein based food. We do not have a global brand in the world and we believe that the brand that has the most strength in the world to become that in the next five years is Sadia. This brand has a revenue of over $4 million. We know that this is revenue of $1 million, so we believe that Sadia and with the focus that we wanted to provide with open markets and we will capture more market share and this could be the first global brand in the food segment in protein based one and we have also been able to follow to that possibility.
We went out of some business that were strategic for the company and now we are finding four key categories and we want to be leaders there in terms of innovation, quality and portfolio. Obviously, one thing that is very important to us and there has been strong change in the last years which are our added value products that are based on poultry and pork cuts. We have international growth supported by the category in the Middle East, Asia and Latin America, cold cuts as well. That is another area and an icon product of the company whether the ham and we know that we have room to grow innovation also there. Better products is another area in which we can add value to our portfolio and a process that has been - has not grown that much in the last years, but we have a strong pipeline of innovation bringing convenience, which is already to eat meals.
And finally if we turn to a global possibility in the market we are and we intends to keeping leaders in Brazil. We have a strong sound base that has been reached in the Middle East and we also see strong growth possibility in the adjusted markets. Latin America for us has gone through a fast process of reconfiguration and also our support of our investments to-date. So we are glad to announce recent acquisitions in Argentina and based on that experience in Argentina, we have also room to grow in another few - other few in Latin America. We have interesting experiences and we have promoted growth in Asia specifically in the Southeast where Sadia is already a reality market such as China, Hong Kong and Singapore. And we believe we have a path to grow there and even mirroring ourselves in our market in the Middle East.
And finally we have no markets; we are looking at interesting possibilities in the African markets. We work every day trying to improve our competences and now we have defined our management model in three main competences in which we wanted to develop ourselves and grow. This is sustainable production chain. In addition to being sustainable, it has to make sure that each part of it has competitive sustainability, environmental sustainability, economic sustainability, also innovation. This is going to be the main driver over the next five years of growth of the company that globally.
I will not talk much about people now, because we have another part of the presentation just for that, but that’s what has allowed the company to get the results I am mentioning now. Also quality, it is always connected to our products. In 2015, we increased our quality standard and that is seen by each one of the metrics that we follow and we do have a strong associated investment that we want to be leaders in quality. We have the support of our brands. We report results today that in the way they are related to record investments in communication and marketing in all our brands never in the history of both companies so much has been invested to position our - and we have the three most admired brands in Brazil and globally also we have a great knowledge and preference in Russia and Middle East. That is an investment and the support in our brands that is unprecedented.
And finally, really our greater competitive advantage, which is our service; the service we provide to the market, how we present ourselves commercially and logistically to our clients. So these are the six skills, the six capacities in which we are concentrating everything that we have to do. Now talking specifically about the capacities, you see a large figure, but this is the consolidated management model of the company that starts by our cultural leverage which is our program called Viva BRF. I have a lot of colleagues here that do share that with me. This is a great movement that we were able to develop in the last two years and have unified the company along values that we believe [indiscernible] in which we believe a lot. These six drivers or competences that I mentioned and I will talk about each one of them.