1Q18 Results May 11, 2018 Disclaimer This presentation may contain - PowerPoint PPT Presentation

1Q18 Results May 11, 2018

Disclaimer This presentation may contain certain statements that express BRF S.A. (“BRF”) management’s expectations, beliefs and assumptions about future events or results. Such statements are not historical facts and are based on currently available competitive, financial and economic data of the industries in which BRF operates. The verbs “anticipate”, “believe”, “estimate”, “expect”, “forecast”, “plan”, “predict”, “project”, “target” and other similar verbs are intended to identify these forward-looking statements, which involve risks and uncertainties that could cause actual results to differ materially from those projected in this presentation and do not guarantee any future BRF performance. The factors that might affect performance include, but are not limited to: (i) market acceptance of BRF’s products; (ii) volatility related to the Brazilian economy, as well as the economies of the other countries in which BRF has relevant operations, the financial and securities markets and the highly competitive industries BRF operates in; (iii) changes in domestic and foreign legislation and taxation, as well as government policies related to the domestic and foreign animal protein markets and related markets; (iv) increasing competition from new entrants to the Brazilian and international markets; (v) ability to keep up with rapid changes in the regulatory and technological environments; (vi) ability to maintain an ongoing process for introducing competitive new products and services while maintaining the competitiveness of existing ones; (vii) ability to attract customers in domestic and foreign jurisdictions. Other factors that could materially affect results can be found in BRF’s annual report on Form 20-F, as filed with the U.S. Securities and Exchange Commission, particularly under the “Risk Factors” session. All forward-looking statements in this presentation are based on information and data available as of the date they were made and BRF undertakes no obligation to update them in light of new information or future development. 2

Highlights 1Q18 Volume | 1,225k tons  +5.0% y/y in Net Operating Revenues, expansion of (1Q17 Volume | 1,158k tons) gross margin by 1.1 p.p. y/y to 18.7% and one of the Others lowest LTM SG&A levels since 2014: 15.9% 7% (7%)  Increase in the number of points of sales in Brazil → Poultry Processed 46% 191,000 (+13.5% y/y) Foods (42%) 41%  Adjusted EBITDA reached R$802MM → margin of 9.8% (43%)  Europe: none official publication yet published by the European Commission. In 2017: volume to Europe Pork 6% (7%) originating from Brazil → 3-4% of total volume and 4- Others Southern 5% (7%) 5% of Net Operating Revenues Cone 5%  Launching of campaigns: Qualy – “A Vida Mais Qualy” (5%) and Perdigão – “É Brasa” Brazil 44% International (43%)  Election of the Board of Directors → 10 members with a 23% (29%) mandate of 2 years; 6 new members and 4 with experience from previous mandates OneFoods 23% (17%) 3

Consolidated Results Highlights Indicators 1Q18 1Q17 Var. Volume (Ktons) 1,225 1,158 +5.7%  9.9% growth in sales of In Natura products and 1.0% Net Revenues (R$ MM) 8,203 7,809 +5.0% growth in Processed Foods Gross Profit 1,537 1,376 +11.7% Gross Margin 18.7% 17.6% +1.1 p.p.  Free Cash Flow: (R$238) million in 1Q18, an improvement of EBIT (R$ MM) 296 68 333.4% R$1,361 million EBIT Margin 3.6% 0.9% +2.7 p.p.  CAPEX: R$467 million EBITDA (R$ MM) 783 506 +54.8% EBITDA Margin 9.5% 6.5% +3.0 p.p.  Net Debt/Adjusted EBITDA LTM Adjusted EBITDA (R$ MM) 802 570 +40.7% = 4.44x Adjusted EBITDA Margin 9.8% 7.3% +2.5 p.p.  Robust liquidity = R$7.3 billion Net Income (R$ MM) (114) (286) +60.2% in cash + US$1.0 billion in revolver credit facility Net Margin (1.4%) (3.7%) +2.3 p.p. 4

1Q18 Performance – Brazil 1Q18 Volume | 545k tons Indicators 1Q18 1Q17 Var. Volume (Ktons) 545 498 +9.6% Poultry Net Revenues (R$ MM) 3,746 3,654 +2.5% 25% Average Price (R$/kg) 6.87 7.34 -6.5% Processed Foods 70% Gross Profit 780 942 -17.2% Pork 5% Gross Margin 20.8% 25.8% -5.0 p.p. 1Q18 Highlights EBIT (R$ MM) 155 307 -49.4% EBIT Margin 4.1% 8.4% -4.3 p.p.  In Natura → +22.7% Processed Foods → +4.7% y/y EBITDA (R$ MM) 374 514 -27.2%  # Clients: 191,000 points of sales EBITDA Margin 10.0% 14.1% -4.1 p.p. (+13.5% y/y) Adjusted EBITDA (R$ MM) 351 496 -29.2%  45.7% market share, +1.1 p.p. y/y, primarily in the self-service Adjusted EBITDA Margin 9.4% 13.6% -4.2 p.p. wholesale channel 5

Brazil | Portfolio and Sales Volume Sell in – In Natura Volume (Ktons), avg./month Portfolio vs. Average Price Evolution (NOR/kg) 18.4% 22.5% Processed Foods In Natura Average Price (NOR/kg) 7,34 7,19 7,13 6,97 6,87 56 47 50 48 45 44 41 40 590 539 545 2015 2016 2017 1Q17 2Q17 3Q17 4Q17 1Q18 498 495 148 146 169 134 134 Sell in – Processed Foods Volume (Ktons), avg./month 443 393 376 364 361 3.0% 4.7% 2014 2015 2016 2017 1Q18 147 142 130 131 126 126 121 120  Higher sales volume of In Natura products continued to pressure average price comparisons y/y 2015 2016 2017 1Q17 2Q17 3Q17 4Q17 1Q18 6

Brazil | Market Share and Price Index Price Index (PI) Evolution – Processed Foods*  +1.1 p.p. y/y increase in BRF market share Share of Processed Food* Relativity (%) Processed Foods PI* (100 basis)  Price index detachment vs. largest 100,0 competitor 97,0 96,0 96,0 94,0  Increase of number of clients in +23k clients a/a, expanding distribution coverage 118% 115% 116% 113% 113% 42.4% 43.5% 44.1% 44.4% 43.5% CLIMOV Index: Number of Clients (000) 1Q17 2Q17 3Q17 4Q17 1Q18 13.5% Price Index (PI) Evolution – Margarines 191 187 Share of Margarines Relativity (%) Margarines PI (100 basis) 175 171 168 100,0 99,0 97,0 93,0 91,0 137% 134% 129% 127% 123% 1Q17 2Q17 3Q17 4Q17 1Q18 59.7% 59.1% 59.8% 60.2% 59.8% 1Q17 2Q17 3Q17 4Q17 1Q18 Source: BRF and Nielsen (*) Filled/ Frozen/ Cold Cuts 7

1Q18 Performance – OneFoods 1Q18 Volume | 277k tons Indicators 1Q18 1Q18* 1Q17 Var.* Volume (Ktons) 277 199 222 -9.9% Processed Net Revenues (R$ MM) 1,838 1,334 1,316 +1.4%% Foods 13% Average Price (R$/kg) 6.63 6.70 5.94 +12.8% Poultry 87% Gross Profit 380 317 213 +48.4% Gross Margin 20.7% 23.7% 16.2% +7.5 p.p. EBIT (R$ MM) 57 49 (44) - 1Q18 Highlights EBIT Margin 3.1% 3.7% (3.4%) +7.0 p.p.  Ex-Banvit: strong margin expansion EBITDA (R$ MM) 157 113 21 +435.2% and recovery EBITDA Margin 8.5% 8.4% 1.6% +6.8 p.p.  Average prices in US$: +8.8% → best supply-demand balance Adjusted EBITDA (R$ MM) 148 103 35 +199.0%  DDP Volume: 65.9% of total → +9.7% Adjusted EBITDA Margin 8.0% 7.7% 2.6% +5.1 p.p. y/y * Pro forma ex-Banvit 8

1Q18 Performance – International 1Q18 Volume | 276k tons Indicators 1Q18 1Q17 Var. Others Volume (Ktons) 276 331 -16.7% 8% Net Revenues (R$ MM) 1,824 2,113 -13.7% Processed Poultry Foods 61% Average Price (R$/kg) 6.61 6.38 +3.6% 19% Gross Profit 266 176 +51.1% Pork Gross Margin 14.6% 8.3% +6.2 p.p. 12% EBIT (R$ MM) 82 (44) - 1Q18 Highlights EBIT Margin 4.5% (2.1%) +6.6 p.p.  Adjusted EBITDA margin → 13.1% EBITDA (R$ MM) 227 103 +119.7% (+8.0 p.p. y/y) EBITDA Margin 12.4% 4.9% +7.5 p.p.  Average prices in Reais: +3.6%, (↑Europe/Africa and ↓Japan) Adjusted EBITDA (R$ MM) 239 109 +119.7%  Volume restrictions Adjusted EBITDA Margin 13.1% 5.2% +8.0 p.p. 9

1Q18 Performance – Southern Cone 1Q18 Volume | 61k tons Indicators 1Q18 1Q17 Var. Volume (Ktons) 61 54 +13.2% Poultry Processed 18% Foods Net Revenues (R$ MM) 592 527 +12.4% 62% Average Price (R$/kg) 9.67 9.74 -0.8% Gross Profit 60 59 +1.6% Pork 20% Gross Margin 10.2% 11.3% -1.1 p.p. EBIT (R$ MM) (16) (16) -3.0% 1Q18 Highlights EBIT Margin (2.7%) (3.0%) -0.3 p.p.  DDP Volume: 61.5% of total  Volumes: +13.2% y/y, highest sale of EBITDA (R$ MM) 2 (3) - turkey to Chile EBITDA Margin 0.3% (0.5%) +0.8 p.p.  21.8% depreciation of the Argentine Adjusted EBITDA (R$ MM) 3 (2) - Peso (ARS) in 2018  Higher raw material costs pressured Adjusted EBITDA Margin 0.5% (0.4%) +0.9 p.p. gross margin 10

Market Scenario & Perspectives | Grains Soy Meal – CBOT (US$/ton) 400  Consolidation of the crop failure in Argentina 350 vs. initial projection (24% corn and 34% soy) 300  In Brazil, seasonal climate issues and exchange 250 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 rate volatility may impact grain prices Corn – BMF (R$/bag)  Cost of feed in 2Q18 will be higher in the 50 annual and quarterly comparisons 45 40 35  Potential USA-China relationship issues may 30 impact commodity prices 25 20 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 11