JBS SA

BOVESPA:JBSS3

Earnings Call Transcript 2021-Q1

[Operator]

Good morning, everyone, and thank you for waiting. Welcome to the JBS First Quarter of 2021 Results Conference Call. With us here today, we have Gilberto Tomazoni, Global CEO of JBS; Guilherme Cavalcanti, Global CFO of JBS; Andre Nogueira, CEO of JBS USA; Wesley Batista Filho, CEO of JBS South America; and Christiane Assis, Investor Relations Director. This event is being recorded. [Operator Instructions]

Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of JBS management. They involve risks and uncertainties because they relate to future events and therefore depend on circumstances that may or may not occur.

Now I'll turn the conference over to Gilberto Tomazoni, Global CEO of JBS. Mr. Tomazoni, you may begin your presentation.

[Gilberto Tomazoni, executive]

Good morning, everyone. Thank you very much for your presence in this first quarter 2021 results presentation call. We -- as we all demonstrate during this presentation, the company had an excellent operational result in this quarter. Net income in this quarter reached BRL 2 billion. Net revenue reached BRL 75 billion in the quarter. That net revenue for this first quarter in 2021 was the same of the net revenue for the whole year of 2012, and only 8 years have passed.

To be successful, our company must deliver short-, medium- and long-term sustainable results on behalf of all stakeholders, team members, shareholders, customers, consumers, society as a whole. We believe that business are agent of transformation, and our focus is on being a healthy company, comprises a healthy people, on a healthy planet. This is why we put sustainability at the heart of our strategy, and we have assumed that the most significant commitment in the history of JBS, to become a net zero company by 2040. That's why the company joined the business ambition for 1.5 degrees from the United Nations Global Compact, by which we committed to define science-based goals to reach net zero across our value chain until at most in 2050, an objective that JBS proposed to achieve 10 years early. That's why we created the Fund for the Amazon to invest in social development of the people that live in the biome, invested in biotechnology and reforestation. Our diversified platform and geography and type of protein has demonstrated important resilience in our results.

Regardless of the challenge we face, our business units have responded well and made progress in every important financial indicator, including net revenue, EBITDA and net income. JBS operation in U.S. turned in an exceptional performance, with record numbers in comparison with all previous first quarter, driven by strong domestic demand and a gradual resurgence of foodservice sector and by growth in export demand, led by the Asian market.

Pilgrim's Pride also had a sound quarter following the recovery in demand in United States. In foodservice, business is improving and we have maintained our pace in the retail sector. The diversified portfolio and global consolidated operation have enabled us to weather the market challenge that the pandemic has present.

Seara continues its rise, due to our focus on our value-added products supported by well-established brand and innovation. The business recently rolled out a new category of product within the cold cut segment. Levíssimo Seara, produced 100% from pork loin, resulting in a significant lower fat and sodium content. Seara has also ventured in the fish and seafood segment. In Brazil, outstanding a challenged scenario, our cattle business has focused of strengthening the brand, building a close relationship with our clients and getting a better understanding of our consumer. In addition, we have managed to implement an efficient strategy, taking the advantage of geographical location of our manufacturing facility to absorb production and preserve our processing capacity.

The company, as has been its history, remain active in evaluation M&A opportunities that are aligned with our business strategy and that makes sense in terms of economic value. At the same time, we maintained our focus on the company's organic growth. In U.S., our new Italian specialty plant already has found a name in Columbia, Missouri. Investment announced for growth -- investment announced for organic growth at Seara and other business around the world are ahead of schedule.

In line with our strategy of being an important global player in the plant-based segment, we announced a proposed acquisition of Vivera in Europe. With sale of EUR 85 million, Vivera is the third leading plant-based company in terms of market share in Europe, with a presence of 25 countries. In addition, Vivera brings technological knowledge that will accelerate our innovation in this strategic segment, which includes our Incrível brand by Seara in Brazil and our OZO brand Planterra in the United States.

Our low financial leverage and our comfortable debt maturity schedule have enabled us to continue to generate significant shareholder returns, repurchasing BRL 3.9 billion in shares between January and April of this year as well as a record dividend payment of BRL 2.5 billion, representing a yield of 7.9%.

We also made significant sustainability advancements. During the quarter, Pilgrim's Pride became the first global meat and poultry company to offer a sustainable -- sustainability-linked bond. The $1 billion bonds is tied to the company greenhouse gas emission reduction targets. JBS is also investing in circular economy by using -- ensuring the waste and by-products are used as a raw material to create sustainable value. In Brazil, we are building a fertilizer factory, a biodiesel plant and an extension to our plastic packaging recycling plant.

Another significant advancement made during the quarter was bringing online our Transparent Livestock Farming Platform in the Amazon biome region. This tool, which employs blockchain technology, enabled us to extend our socio-environment monitoring system to suppliers of our cattle suppliers. We also opened 13 green office in our processing units across Brazil. These offices will be used to help farmers improve the environmental performance in these farms. We believe this inclusive collaboration approach will contribute to advance the livestock farmers in Brazil.

The company continued commitment that tangible initiative that most -- demonstrate that sustainability is not longer merely a pillar underpinning our business strategy, but the criterion by which all our initiatives are guided. We are confident that this is the best approach to create value and contribute to the society. Our size and global scale give us the opportunity to have a tremendous positive impact on our supply chain and our sector. We know that trust is vital in this process of transformation, we'll build it through dialogue, listening and transparency. We believe this not only the right things to do, but the only option for the future of our shared society.

With all this, we will maintain our economic growth while we'll be more sustainable, more actable and more inclusive, creating job and living in harmony with Planet Earth.

Thank you. Now I will pass to Guilherme, and he will give the details about the financial results. Guilherme, please.

[Guilherme Cavalcanti, executive]

Thank you, Tomazoni. Please let's move to Slide 13 with the financial and operational highlights of the first quarter 2021 and where I would like to highlight that we continue to advance in our long-term strategy, delivering growth combined with financial discipline and a focus on operational efficiency.

In the first quarter of 2021, we achieved a net revenue of $14 billion or equivalent to BRL 75 billion, which is 33% higher than the first quarter 2020. JBS adjusted EBITDA was $1.3 billion or equivalent to BRL 6.9 billion, which represents an EBITDA margin of 9.1%, a record margin for the first quarter. In the last 12 months, adjusted EBITDA was also a record, totaling $6 billion or equivalent to BRL 32.5 billion. Net income was BRL 2 billion in the quarter, reversing the loss in the first quarter 2020, which was impacted by a negative result of the exchange rate variation of the period. In the last 12 months, net income was BRL 12.6 billion.

It's worth remembering that the net income of the first quarter 2020 had an impact of BRL 8 billion of exchange rate variation. With the reduction in our balance sheet exposure to foreign exchange rates, both in regard of debt with third parties as well as intercompany debt, the impact in the first quarter 2021 was only BRL 100 million. In the second quarter 2020, this impact was BRL 2 billion. With the current exposure, even with a more depreciated exchange rate scenario at the end of the second quarter, we won't have a significant exchange rate impact. And therefore, the accumulated net profit in the last 12 months tends to increase, indicating a good profit for the year of 2021 and, consequently, a good minimum dividend to be paid in 2022.

Free cash flow for the quarter was negative by $636 million or equivalent to BRL 3.5 billion. In the last 12 months, free cash flow totaled $2.8 billion or BRL 15 billion. Despite the 75% growth in EBITDA compared to the first quarter of 2020, the company's net debt increased by $1.1 billion due to the seasonal cash consumption of the first quarter in addition to other nonrecurring factors with emphasis to the negative variation in the line of trade accounts payables and supply chain finance in approximately $271 million or BRL 1.5 billion, mainly due to the concentration of payments at the beginning of the year according to the usual seasonality.

The payment of $207 million or BRL 1.1 billion of settlements in the quarter, $217 million or BRL 1.2 billion of interest paid and premium for prepayment of bonds, approximately $430 million or BRL 2.9 billion in share repurchase in the first quarter of the year. As a result, net leverage was 1.67x in dollars and 1.76x in reais. Excluding the settlement as well as the share repurchase, the leverage would have been 1.6 in reais and 1.5 in dollars. Given that the long-term leverage to pursue by our indebtedness policy is to stay between 2 and 3x net debt to EBITDA, we were able to return capital to our shareholders via share buyback in a more significant way as disclosed in the ICVM 358 forms.

Thus, the carry of JBS shares remain extremely positive to the shareholders. The dividend paid now in 2021 in the amount of BRL 2.5 billion represented a 3.1% yield. And adding the repurchase of the shares in 2021 until April in the total of BRL 3.8 trillion, we already delivered a total yield of 8% year-to-date. In addition, it is worth to mention that the JBS share price appreciated 40% this year while BOVESPA appreciated 3.5%.

Given our robust balance sheet, which is the result of our operational performance, along with our financial discipline, we were able to return to the shareholders at the same time that we invested in the growth of the company. Accordingly, our capital expenditures for the quarter totaled BRL 1.7 billion, of which BRL 1 billion were investments in modernization and expansion.

For another consecutive quarter, we reduced net interest expenses. In this quarter, the reduction totaled $18 billion compared to the interest expenses in the first quarter of 2020. All other things being equal, we project interest expenses of approximately $600 million for the year of 2021, which represents a savings around $140 million compared to 2020.

In relation to the new issues, on May 5, we issued another successful [ grant ] a local bond in Brazil in the amount of BRL 1.65 billion. I also highlight that, once again, we demonstrate our role and commitment in ESG issues through the issuance of a sustainability-linked bond by PPC in the amount of $1 billion linked to our efforts to reduce the greenhouse gases emissions. It is worth mentioning that this bond is the first of this kind issued by a global poultry company.

To conclude this slide, I would like to highlight the announcement of the agreements we made for the acquisition of Vivera for the value of EUR 341 million, which is the third largest plant-based products company in Europe, with a relevant presence in the Netherlands, United Kingdom and Germany, among other 22 countries. This demonstrates that, despite all the challenges faced in a year of pandemic, we continue to advance in our long-term strategy of having a global and diversified production and distribution platform evolving towards value-added products and brands.

Now please let's move to Page 16, where we have our debt profile. As I mentioned earlier, net debt in the first quarter was $10 billion, which represents a net leverage of 1.76x in reais and 1.67x in dollars. The cash position of BRL 10.3 billion are equivalent to $2.1 billion, together with the revolving of BRL 10.5 billion, equivalent to $1.8 billion, allowed JBS to end the quarter with a total availability of BRL 21 billion, which is more than 3x higher than the short-term debt and enough to pay the debt until the mid-2026.

Moving to the pie chart at the bottom of the slide that highlights that our average cost of debt in dollars of 4.9% per year is the lowest ever recorded by the company. However, it is still 1.2% above the interest on our bonds for the same average term of 6.3 years. Therefore, it means that we still have a potential opportunity to reduce around $140 million in financial expenses.

In addition, it's important to note that only 9% of our indebtedness is in the short term. That is very -- that's a very comfortable position. Also, the U.S. entity has 82% of the total debt, which is in line with our free cash flow generation. And thus, it generates greater cash efficiency and less exchange rate exposure of the company's balance sheet.

Let's move to the business unit's performance. Starting with Seara on Page 17, we have first -- on the first quarter 2021, net revenue growing 34.4% in the annual comparison and reaching BRL 7.8 billion. In the domestic market, net revenue totaled BRL 3.9 billion, which is 33% higher year-over-year. Once again, the prepared foods category was the highlight, with growth of 3.2% in volumes sold and 22% in average sales price in the period. This performance is a result of the investments in quality and innovation made by Seara in the recent years.

Also important mentioning that, through the consumer preference, Seara brand has been consolidating its leadership in several categories. In frozen foods, Seara increased its advantage to 3.9 percentage points in market share value compared to the second brand, completing 22 consecutive months in the leadership, coupled with a reduction of 8.7 percentage points year-over-year in the price gap in relation to the competitors. In the export market, net revenue was BRL 3.9 billion, an increase of 35.4% year-over-year due to an increase of 14.6% in the volumes sold and 18.2% in the average sales price.

Adjusted EBITDA for the quarter totaled BRL 933 million, which represents a 5.2% reduction year-over-year, with an EBITDA margin of 12% compared to 17% in the first quarter 2020. This contraction is mainly due to the challenging scenario in terms of production costs, notably grains, which according to Esalq data, posted increases of 93% and 61% in soybean meal and corn, respectively. These increases have been partially mitigated, thanks to the company's focus on operational efficiency, combined with an increase in sales price as well as a better mix of market channels and products.

Now moving to JBS Brasil on Page 18. We see revenues for the quarter growing 41.3% year-over-year, reaching BRL 11.5 billion in the quarter. In the domestic market, which accounted for 61.5% of the business unit's revenue, net revenue totaled BRL 7.1 billion, an increase of 41% year-over-year, with the highlight for the fresh beef segment, which posted an increase of 22.3% in the average sales price and 6.4% in the volumes sold. In the export market, net revenue registered an increase of 41.2% year-over-year, reaching the amount of BRL 4.4 billion. The highlights were the fresh -- were the sales of fresh beef, mainly to China and Hong Kong. The EBITDA totaled BRL 236 million in the quarter with an EBITDA margin of 2%, a contraction of 2 percentage points compared to the first quarter last year. The business margin was impacted by the increase in the average price of cattle, which according to CEPEA-Esalq data grew about 51% in the period.

Finally, in line with our commitment to the sustainability and positive impact of our business on society, we launched through JBS Leather unit a product with nanotechnology that inactivates the COVID-19 virus, ensuring antiviral action on coating for furniture, accessories and vehicles. Also, through JBS new business unit, we developed an innovative product for studio construction, the green flooring made from recycling of a type of plastics from our operation that was previously destined to landfills.

Now moving to Slide 19, JBS USA Beef and now speaking in dollars and in U.S. GAAP. JBS USA Beef revenues reached $5.6 billion in the first quarter 2021, an increase of 7.7% year-over-year, with EBITDA margin of 9.6%, the highest ever recorded by the unit in the first quarter. In North America, the business performance continues to be driven by a wide availability of cattle ready for slaughter. Therefore, despite the impact on the increase in the cost of feed, the price of live animals remains lower than in the first quarter 2020. Besides that, the domestic market remains with a strong -- remained strong, thanks to the performance of the retail segment and the beginning of the recovery of the foodservice segment.

In the international markets, industry exports have benefited from the reduction in beef production in other global regions and registered an exceptional performance in the period, notably to China. It's worth noting that the company sales grew at a faster pace than the others of the industry, contributing to a gain in market share in the international market. In the plant-based segment, the OZO brand launched new products and is already available in more than 3,000 stores in the United States and export into Canada and Mexico. In the near future, the OZO brand will also be available in Europe and Australia.

Now talking about Australia and New Zealand, the performance of the Beef unit in the region continues to be impacted by the low availability of animals for slaughter. On the other hand, Primo Foods remains focused on innovative products, increasing its market share in the category in which it operates and generating solid growth in margins.

Now moving to JBS USA Pork. Net revenues was $1.6 billion, an increase of 8.1% year-over-year, mainly due to the increase of 11% in sales price. The EBITDA was $128 million, with a 7.9% EBITDA margin. The margin of the Pork business in the United States began the year under pressure, mainly due to the increase in the price of hogs, which was affected in the period by a challenging weather of the winter condition, which caused logistics disruption and affected the health of the animals. In addition, the cost of product -- producing hogs had increased with the rise of the price of grains, which are raw material for feeds.

On the other hand, the reduction in volume of pork produced in the period, given the impact of the weather conditions and the shortage of labor, combined with the higher-than-expected demand growth, boosted the price of domestic pork meat, which minimized the impact of the increase in the cost of live hogs. Due to the reduced production, the volume of American pork exporter for the period was also below for the -- on the annual comparison. The reduction in exports from JBS USA to the other markets was partially offset by the increase in exports to China during the period.

Now moving to Slide 21. Pilgrim's Pride presented net revenue of $3.3 billion in the quarter, an increase of 6.5% year-over-year. The EBITDA was $254 million, with a margin of 7.8%. In the U.S., the market environment improved throughout the quarter, including the challenging February, in part due to the weather event in the Southeast of the country, before a very strong recovery in the end of the quarter. Additionally, given the increase in the vaccination and loosening of restrictions, demand has been incrementally improving, especially in foodservice channel, while demand in the retail and QSR channels remained strong due to PPC strategic partnership. The market for commodity large bird deboning experienced the largest improvement with the increase in the prices throughout the quarter.

In Europe, despite the significant impact of COVID-19 and the increase in the cost of feed ingredients, Moy Park operations continue to show improvement in the results and clearly to continue to positively contribute to the results. Mexico had another strong quarter following a robust performance during the second half of 2020, driven by a balance in supply and demand and continuous improvement in the operation performance. The prepared food operation also performed well with improved demand.

To conclude, I would like to move to Page 22 that shows that our exports continue -- amounted to $3.4 billion in the first quarter, with Greater China representing 30% and Asia as a whole representing 52% of this total.

With that, I would like to open for our question-and-answer session.

[Operator]

[Operator Instructions] Our first question comes from Ben Theurer, Barclays.

[Benjamin Theurer, analyst]

Tomazoni and team, first of all, congratulations on those strong results for the first quarter. I have 2 questions, if I may. So question #1, just a little bit on what you're seeing on the industry dynamics in the different markets. And I think you've nicely alluded to it that, obviously, in Brazil, you're seeing a lot more input cost pressure as different grain costs are going higher. You're still working on offsetting that a lot in price increases. We're also seeing a similar situation happening to a degree in the Pork business in the U.S. We're having some headwinds on PPC as well on the cost side that's coming through.

So just in general with this whole grain inflation, cost inflation, how confident are you within the different regions to bring pricing through and to ultimately maintain the strong level of profitability which you still have in the first quarter? That would be my first question.

[Guilherme Cavalcanti, executive]

Ben, so to start with Brazil, we had a quite sudden increase in price -- very sharp increase in cost, sorry, that has -- price has taken a while to follow the grain price. But we feel that this grain cost in Brazil is a structural condition for -- to stay here for a while. And we're going to adapt our pricing. And obviously, we need to work on efficiencies as well to mitigate this cost increase.

We're very confident for 2 reasons. One, we -- because of the work we've done in the past -- last few months, we've been able to pass a part of that cost increase on to price. We feel there is more space going forward. But on top of that, also because of the work we've been doing with improving the mix, obviously, when we have a big sharp cost increase likely as we've had, you have to increase price to return to normal margins. But also, we need to do a very, very strong work on selling more value-added items to be able to offset some of this business [ headwind ] to have long-term better margins. So we're confident.

Same thing with beef. We obviously -- again, cattle cost went higher very fast. And beef now is following, and we think we'll be able to normalize in the short term. But this cost will most probably be accounted going forward, and we're going to have to adjust our business model to that [indiscernible].

[Benjamin Theurer, analyst]

Just to stay quickly within Brazil, would you consider cutting some of the production levels in Brazil to also kind of cut little lower levels of production, just to help support price as well? Just to stay in Brazil quickly, before we go to the U.S.

[Andre Nogueira, executive]

Yes, Ben, that's not in our plans for now. We don't feel that's necessary to do that, especially because of the consistency of the work we're doing with [indiscernible]. Same goes for [indiscernible] and Seara. We've been building partnerships and bringing strong value-added work, and we don't feel that we need right now to cut back on production.

[Benjamin Theurer, analyst]

Okay. Perfect. And then in the U.S., what are you seeing there?

[Guilherme Cavalcanti, executive]

Ben, thanks for the question. Let's break this down in a few areas. First, the grain price. The grain price, of course, impact more direct to the chicken production in U.S., in Mexico, in Europe. With the market condition that we have today, Ben, we have been able and strongly believe that we'll be able to continue to pass through this cost, okay? Because if you look at the more commodity side of the market, that the big bird, the price of the cow to big bird now is 64% higher than it was in the same time of last year, and this is demand-driven. And in other parts like Europe, we have more formula base that there is a pass-through, take a little bit more time, a few months. But when you are from a base, we're going to pass the cost of the grain to the final price.

The other pressure that we have is -- that's more specific in the U.S. is the labor. And labor cost is going up. We just did another round of increasing compensation in several of our plants. And again consider the condition of the market in beef, pork and chicken, we have been able to pass through this incremental cost.

The cattle in Australia is another source of increasing cost for us. We buy cattle in the market. The cattle is very high in Australia right now. Offsetting this, price -- or selling price is very, very high, but not enough to offset. So we are not making money in Australian beef or lamb right now. We're making money and all the other small businesses are making good money, and with the margin in premium, premiums growing. But the beef and lamb in Australia are not. But we have no plans to reduce our production there. We think that we have a very efficient operation, we have very good customers in the global market. We continue to supply this customer in the market. We need to adjust for the new reality of the cattle price until the cycle change, and I don't think that's going to happen before next year.

[Benjamin Theurer, analyst]

Okay. Perfect. And then my second question was around your bid you've put out for the plant-based business in Europe. Could you give a little more update on what you think how this is going to turn out and how you think this can be combined with the efforts you've had on plant-based within Brazil, but also within the U.S.? I was thinking Brazil what's with Seara and then what's with OZO in the U.S. Just give us a little bit of an update, a few bites to chew on, so to understand where you're heading with the different initiatives in the 3 major markets.

[Gilberto Tomazoni, executive]

Ben, thank you for your question. We, as you know, we -- plant-based, it is a segment that we want to be an important player. We don't know how will be the size of this segment, but we will be, for sure, we will be an important player in this segment. Vivera was an opportunity for us to grow faster in Europe. And we have -- we believe that we have a lot of synergy in terms of other business we have today, Brazil and U.S. in terms of technology, in terms of market technology, in terms of new product development. This is, I think, will be faster all of the other operations. And as well the opportunity for grow Vivera volume with the synergy we have in other markets. And at the moment, we are keep business as is, all of independent. But maybe in the future, depends on the conditions, we are creating a global plant-based organization.

[Operator]

Our next question comes from Carla Casella, JPMorgan.

[Carla Casella, analyst]

On that acquisition of that business, is that going to be included -- which subsegment will that be included in?

[Gilberto Tomazoni, executive]

Sorry, Carla, you are asking for other acquisitions? Could you repeat the question? I think it's -- I've not understood well, your question.

[Carla Casella, analyst]

Okay. No, the European plant-based business that you were just referring to, is that going to be included in -- which division will you include that in your financial results?

[Andre Nogueira, executive]

Carla. Here's Andre, Carla. It will be under the JBS USA overall. We did not define yet if you go be a stand-alone or to be part of another division. So we would -- after the acquisition, we will define that.

[Carla Casella, analyst]

Okay. And then you've mentioned a few times that foodservice is starting to grow again. Can you just update us, when you look at each category, what percentage of the business is foodservice and where you see that longer term? Because I think it's moved around a bit. You've grown so much to your value-added that foodservice, I'm assuming, is a lower percentage than it used to be, if we could get an update.

[Andre Nogueira, executive]

So first talk about U.S., Carla, I think the foodservice is recovering. I think that when this is finished down if there's recovery between U.S. in foodservice and retail, I think that we'll go back to what was before or very similar to what it was before. I don't think that we're going to see any relevant change compared to how it was before. The difference that we're seeing in U.S., and these apply for all the 3 proteins, that export is taking more and more market share. And this is a trend that I don't see changing. Consider the growth in Asia and how Asia overall is absorbing more and more protein from the global -- I commented this last time. I'd like to put an emphasis on that. If you look very mature markets like Japan and Korea, they import between 50% and 60% of the total protein that they use, beef, pork and chicken, the combined base. And I think that the other accounts do go in that direction. They will take many, many decades to arrive there, but that's the direction because they are growing consumption in a much faster pace than what they can grow their protein production.

So if you look at China today, China came from 5% in the past, and now they're relying 14%. They're still far away from what's the market share that the import protein represents for Japan and Korea. That's a more mature mark. So I think that at the end of the day, in U.S., foodservice will represent at the end a very similar percentage than it was before. Our value-add will continue to grow, but value-add will go to foodservice, too. If service -- foodservice is a big -- the plant that we start to run now in our fully cooked bacon, in reality foodservice will represent a higher market share than retail. We'll just start to run this plant. We're going to start to run this plant this month in May, at the end of May, and foodservice will be a big part of that.

One thing that I think that's worth to call the attention, Carla, is -- and I think that we underestimate that a little bit when foodservice closed in March and April last year, foodservice had a long pipeline for you to have a steak or a breast meat in a restaurant to serve you, a lot of processed and -- [ usually, I'm taught new tricks ] to this, between our production and the final use. A much longer pipeline than there is, for example, in retail.

We did not suffer last year when foodservice closed. We did not suffer too much. Well, the demand in retail was so high that the foodservice was able to sell that product to the retailer. And our production U.S. dropped -- in U.S. and Canada dropped in April. But now that foodservice is coming back, we can see that they need a long pipeline. So there's a lot of inventory that needs to be built between us and the final user. So -- and we are seeing strong demand in U.S. I think that's part because of that. Just projected that when Europe had reopened foodservice and Asia reopened full servicing too. So I think that we're going to, very strong demand for foodservice because we need to fill all despite the line of product to be able to serve the final consumer at the end.

[Carla Casella, analyst]

Okay. Great. And can you give us just a percentage of foodservice by protein like chicken versus beef versus pork in a normal market, not right at this moment?

[Andre Nogueira, executive]

I'll come back to you on that, Carla. But for sure, chicken is the highest one in terms of foodservice, followed by beef and pork. And the fresh is the smallest one. But then we need to put all the process in pork, but chicken will be the highest one, following beef and then pork.

[Operator]

This concludes today's question-and-answer session. I would like to invite Mr. Tomazoni to proceed with his closing statements. Please go ahead, sir.

[Gilberto Tomazoni, executive]

I'd like to thank you all of our team for the great, great work and say for all of you that we at JBS remain committed to our purpose, to feed people around the world with the best in an increasingly sustainable manner. Thank you.

[Operator]

That does conclude the JBS audio conference for today. Thank you very much for your participation. Have a good day, and thank you for using Chorus Call.