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BRF SA (BRFS)
Q4 2017 Earnings Conference Call
February 23, 2018, 08:00 ET
Abilio Diniz - Independent Chairman
Jose Drummond - Global CEO
Lorival Luz - Chief Financial & IR Officer
Isabella Simonato - Bank of America Merrill Lynch
Gabriel Lima - Bradesco S.A.
Thiago Duarte - Banco BTG Pactual S.A.
Alexander Robarts - Citigroup
Antonio Barreto - Itaú Corretora de Valores S.A.
Botir Sharipov - HSBC
Previous Statements by BRFS
» BRF-Brasil Foods S.A.'s (BRFS) CEO Pedro De Andrade Faria on Q3 2016 Results - Earnings Call Transcript
» BRF-Brasil Foods S.A.'s (BRFS) CEO Pedro De Andrade Faria on Q2 2016 Results - Earnings Call Transcript
» BRF-Brasil Foods' (BRFS) CEO Pedro Faria on Q1 2016 Results - Earnings Call Transcript
Now we hand the call over to Mr. Abilio Diniz. You may begin, sir.
Good morning, everyone. Thank you for joining us at this conference call. Thank you for listening to us and for giving us the opportunity and chance to talk to you. I consider this moment to be very important to the company. As a chairman of the board, I consider this to be very important to me, and this will be reflected in my following message.
Yesterday, we had a meeting in our Board of Directors, we talked a lot, and I took the message home and thought a lot about it. And at the end of the day, I decided to do what I usually do. I said, Abilio, open up, speak from the heart, look upwards, ask for some light and move forward. And that's my intention. That's what I intend to do with you right now. I know you don't like so much this thing about having opening remarks. But sometimes there are models in which you have numbers, projections and then you work on your evaluations. But it's also important for you to have some patience and bear with me because I believe my message is important.
I know that for four consecutive quarters, you've been surprised by the numbers projected and the results that are lower than expected. This is clear to us. But I'd like you to know that we have also been taken aback. And this is something that I started doing since last year when we created the steering committee. The management is always eager to go for more. We want to have clear number, transparent information so that we can all provide information that are really realistic, with a lot of clarity in our projections. As we speak, in addition to sharing numbers, figures and plans for the future, we have to recover our credibility. People have to trust the company, confidence in management, in myself and everything we'll be delivering. So that's a critical moment, and I want to recover this credibility starting today. Since mid-2016, I've been having more a protagonist than a chairman should be or usually is. And there are some reasons behind it. I don't regret at all. I think it was important. It is the best I could have done to the company being actively engaged.
In second half of 2016, the company clearly showed that it was facing challenges and more challenges would come, high grain prices, international prices and commodity problems and also in-house problems, our problems with our management. In early 2017, I created a steering committee at a board level, and we were more directly engaged with the management at that time with Pedro and the managers who were at the company at that time. And I guess, the steering committee brought two important things. First, we include the quality of our numbers, having more agile information. Agility is the name of the game today. We have more concrete information at that time, not as we should, but we started working on it, and now we have a centralized company again. The company was decentralized. What is right or wrong? Should it be centralized, decentralized? There is no right, no wrong. The company had been too decentralized for a while. So we had regions far from the control center. And in this company, we'll have to keep our eyes open and integrate a long chain. So once again, the company is centralized. I think it was absolutely key to the business, which was started during early last year.
So we were surprised and taken aback with an episode that I never imagined I would have in my life, something that was really shocking, Operation Weak Flesh. You have no idea what it was about. You don't know what the impact was to this company and to other companies, too. We had very serious problems, problems in the market, closing the doors to us. 7 million broilers are slaughtered per day, not per year, but per day. Imagine, when you break the chain, when you break such a long chain, there is things interrupted, think about the impact in ports, harbors, distribution centers, our raw materials, our products, our inventories. We had some imbalance since late 2016. It's true. It has to be admitted. But Weak Flesh still requires some actions, and we have been actively working on it as you see in our numbers today. But that was a terrible episode. The markets closed the doors and then started to renegotiate prices. And now conditions are more favorable to buyers, and things are more challenging to us, debtors. But we are overcoming step-by-step, but we still have plans that have not been fully released.
So this episode was really shocking, a huge impact. And most of the earnings last year were not only related to Weak Flesh, but mostly related to it. So March and in April, we had election of the new board, and one of the things that I clearly stated in the new board was, this company has to be more focused on brands and on people. The big mistake in the previous administration was in terms of people management. So I want a guy who is an expert on people, on brands and our board members interested and very competent. So I'd like to tell you that we had an excellent choice. And that's where I met Drummond. I just knew him by name. I had never met him. So I interviewed him. We had meetings. And Drummond said this word the first moment we sat down to talk, and it was a word that changed the game and that's how I started admiring him. He mentioned the word humility and then we were talking very candidly. And we also have Marcos to be the head of the marketing committee, Flávia Almeida, my partner at Peninsula, to talk with human resources adequately. The most important thing at a company is people, have people at a right place and then let them organize their own processes. And we also have excellent board members like Fransisco, Walter and they greatly contribute to improve our numbers, information, the audit committee. I guess, today, we have a concrete block at the board focused on the best to the company. But in the middle of the year, we clearly realized that something else had to be done. We had to do an extra mile, go the extra mile, have a new management, a new man in charge, a new CEO. I talked to Pedro. We negotiated with the board, and we decided to do it in a very organized manner. August 31, we announced that Pedro would leave us in December and then we started searching for a new CEO in a very organized manner, led by the personnel committee at the board. Drummond was elected and chosen. He was chosen on November 22. And then he - after the appointment, he took office and he is here with us to talk to you for the first time. I consider this to be a success. We were very well organized and the outcome is here today. And what I really believe is that, well, it all boils down to people. Everything starts with people. And today, about BRF team, not only Drummond, but you from the market used to criticize, well, you don't have experienced people in the industry. But today, we have a human resource guy, who has 20 years of experience at a global company and working in several parts of the world, experience from different countries, different people, totally different cultures.