Marcos Molina - Chairman Martin Secco - Global CEO Marcelo di Lorenzo - Strategic Planning and Investment Relation Officer Frank Ravndal - CEO, Keystone Foods Ricardo Florence - CFO, Marfrig Group Andrew Murchie - CEO, Marfrig Beef

Lauren Torres - UBS Alex Robarts - Citi Antonio Barreto - Itau BBA Andrew De Luca - Credit Suisse Pedro Leduc - ‎J.P. Morgan

Good morning, ladies and gentlemen. At this time, we would like to welcome everyone to Marfrig Global Foods SA conference call to present and discuss its results for third quarter of 2015. It’s worth mentioning that in compliance with law 11,638/07, the financial statements reflect the adoption of the international accounting standards, IFRS and have been reviewed by independent external auditors. The audio for this conference is being broadcast simultaneously through the internet in the website, marfrig.com.br/ir. In that address, you can also find the slideshow presentation available for download. We inform that all participants will be able to listen to the conference call during the company’s presentation. After the company’s remarks are over, there will be a Q&A period. At that time, further instructions will be given. [Operator Instructions] Before proceeding let me mention that forward-looking statements are being made under the Safe Harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the beliefs and assumptions of Marfrig’s management, and on information currently available to the company. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties, and assumptions, because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Marfrig, and could cause results to differ materially from those expressed in such forward-looking statements. Now, I’ll turn the conference over to Mr. Marcos Molina, Chairman of Marfrig.

Marcos will make some opening comments and I will translate for him.

Thank you, Frank. [Foreign Language] Good morning, everyone. It’s with great satisfaction that we’re announcing the results of the third quarter. [Foreign Language] To start, I’d like to congratulate all of the team across Marfrig. [Foreign Language] For the good performance and the solid results. [Foreign Language] An important quarter to reinforce the progress on the strategy and on the focus to win. [Foreign Language] I’d like to also reinforce my personal commitment and that of the board. [Foreign Language] So the continuous improvement in financial position, in the financial discipline, to lower the interest rate and improve the yield curve and to continue with the organic growth. [Foreign Language] I’d like to pass the word now to Martin Secco, Global CEO.

Thank you, Marcos. Thank you, Frank. Good morning, ladies and gentlemen. I would like to start by thanking everyone to participate in another Marfrig conference call. Today, we will comment on results for the third quarter or the first nine months of 2016. On slide 3, Marfrig today has a simple and more focused operation with two business units, Keystone and Marfrig Beef, each one representing today approximately 50% of our total revenue. Marfrig remains highly globalized with operational presence in 11 countries and stand as one of the most diversified and largest company in the global protein market. The group strategy is to continue to growing globally in value added protein products, increasing its focus on food service segments and taking advantage of the highly competitive and geographically diversified business to supply beef from South America. I believe Marfrig is very well positioned to capture the existing opportunities in the global market, given our diversified position both geographically and in term of protein type. On slide 4, we summarize the pillar of our strategic plan focus to win. The first purpose is to maximize value of all our shareholders. We will remain very focused on implementing operational improvement on Marfrig Beef and obtaining profitable organic growth at Keystone. The action adapted on Marfrig Beef such a productivity agenda, the optimization of the production facility and the better sales mix with a focus on profitability continued to show very good results. The performance achieved in the third quarter reflect this focus on profitability and firm commitment to cost discipline and ongoing effort to optimize operation at our existing assets. As part of the strategy to improve our capital structure, after the closing of the sale of Moy Park on the last September 28, Marfrig began the first phase of this liability management process which in total should reduce gross debt by US$1.2 billion over the next 12 months. We will comment in more detail on the next slide. Marfrig presented again another quarter of strong growth in consolidated net revenue and adjusted EBITDA. Net revenue advanced 30% year-over-year and EBITDA grew 40%. All our operations performed very well with consolidated EBITDA margin expanding 70 basis points to 9.6%. Cash flow in the quarter from only continued operations was positive BRL116 million. Keystone continued to post strong growth benefitting with the promised strategy to expand sales volume in Asia and key accounts globally. Keystone EBITDA amounted to US$53 million growing 41% year-over-year. This result reflect Keystone’s strategy and operational discipline as well as low as volatility on its business model. Marfrig Beef posted EBITDA of BRL284 million with EBITDA margin of 11.6%. The solid performance reflect the effort to capture operational efficiencies gained and the focus on profitability and cash generation at the expenses of volume. The action adopted in the recent quarters continued to appear in the results. The solid operational performance combined with the proceeds from the Moy Park sales lead the company to post net income of BRL186 million in the quarter, reducing in net loss year-to-date. Regarding the liability management process recently announced in the first phase which was concluded during October 2015 and will affect the result of the fourth quarter 2015, the company successfully and opportunistically repurchased US$406million in senior notes. On the slide 6, considering both the combined operations and continued operations, the results achieved are in line to reach our guidance for the year. Free cash flow from this operation in the first nine months of the year was BRL186 million, achieving ahead our full year target in the first nine months of the year. Considering only the continuing operation and excluding the effect of the discontinued operation from Moy Park, free cash flow in the first months of the year was BRL70 million. The result is very strong given it does not include the benefit from the lower interest expenses resulting from the Moy Park divestment. These results also demonstrate the strong cash generation at Marfrig Beef and Keystone. Adjusted EBITDA margin from the first nine months of 2015 was 9.2%, which is about the upper limit to the guidance range of 8% to 9% of the year. Combined Capex in the year to date was BRL538 million, despite the sharp depreciation in the Brazilian real, we are working to keep the total amount of Capex for the year within our guidance range. The guidance for net revenue considered in the combined operation should also be delivered. I will pass now to Marcelo di Lorenzo our Strategic Planning and Investment Relation Officer, will comment on the consolidated financial performance of the Marfrig group.

Thank you Martin, good morning everyone. I am on slide seven. This is why it shows the third quarter results which as we mentioned was very strong, very solid. Net revenue once again posted strong growth and reached BRL4.9 billion in the quarter, an increase of 30% year-over-year. The lower sales volume which was affected by our decision to optimize operations and improve the profitability of our assets in Brazil was offset by positive effect on the Brazilian real depreciation on exports from Brazil by the ongoing efforts to reduce cost and expenses and by the continued good performance at Keystone. Year-to-date, the continued operations posted net revenue of approximately BRL14 billion. I’d like to highlight that even after the divestment process, Marfrig remains a global company. Our international operations accounted for 61% of the group’s revenue and around 80% of the group revenue is linked to currencies other than the Brazilian real. It’s also noteworthy that in this quarter; Keystone revenue represented more than 50% of the group’s total revenue. Consolidated adjusted EBITDA in the third quarter was BRL475 million presenting strong growth of 40% compared to the same quarter last year. Adjusted EBITDA margin stood at 9.6% driven by marketing expansion at both Marfrig Beef and Keystone business units. The main factors contributing to this performance were the firm commitment to cost discipline, the weaker Brazilian real and the margin expansion driven by a better sales mix and production facility optimization in Brazil. It’s important to highlight our ongoing efforts to capture operational efficiency gains under the strategic focus to win. This effort led to a reduction in SG&A expenses of BRL60 million in the first months of the year compared to the same period of last year, despite higher equation in Brazil and a very large depreciation of the Brazilian real. In the first nine months of the year, Marfrig posted adjusted EBITDA of BRL1.3 million -- BRL1.3 billion, an increase of 33% with a margin of 9.2%, up 50 basis points from 8.7% in the same period of last year. In the next slide, I would discuss net income for the quarter and for the first nine months. The operational improvement and the positive impact of around BRL1 billion positive impact of the gain in the sale of Moy Park of around BRL1 billion net of taxes led Marfrig to post net income of BRL186 million in the quarter even after the strong devaluation of the Brazilian real. Year-to-date, Marfrig posted a net loss of BRL391 million, which is affected by the net financial expenses arising from the impact of the currency depreciation. The amount however is 14% lower than the same period of last year. Before moving to the next slide, I would like to pass the call over to Frank Ravndal, Keystone Foods CEO, who will comment on the results for the division.

Thanks, Marcelo. Good morning everyone. The third quarter was another strong quarter for Keystone. We grew adjusted EBITDA 41% in US dollar terms and improved adjusted EBITDA margin by 160 basis points over last year. Similar to the second quarter, significant improvements in commodity input costs in the US, continued volume growth in Asia and strong double-digit global Key Account growth were all key drivers for our success this quarter. In US dollars, net revenue increased 12% over last year’s quarter, increasing to $697 million. We continue to have positive momentum in our APMEA business with 31% volume growth for the quarter. Our businesses in China, Malaysia and Thailand, all posted solid double-digit growth and led our gains in the region. In the US, solid poultry volume performance in the QSR channel and continued strong expansion in the retail channel also contributed to the results. Gross profit for the quarter was $53 million, a 42% increase, netting 160 basis point increase in gross margin to 7.6%. Four key drivers to the improvement in margin. First, lower commodity input costs in the US bolstered the results. Outside meat costs was lower by 20% per pound and feed cost declined by 16% per ton. Second, we experienced improved mix in our Key Account business in the US. Third, we had an unrealized mark-to-market loss on grain hedge contracts of $2.4 million during last year’s quarter resulting in a positive $2.4 million variance year-over-year. And finally, the 31% volume growth in our APMEA business rounded out the improvement in gross margin. Keystone managed significant gross profit and margin gains during the third quarter and an overall market in the US where Chicken prices were significantly lower than last year. The closure of export markets and higher inventories in cold storage across the industry have resulted in lower market prices not only on dark meat, but also on breast pricing during the third quarter. Lower raw material and feed cost for our further processing operations mitigated the impact of lower pricing during the quarter. Turning to SG&A, SG&A as a percent of net revenue came in at 2.4%, which is in our normal range. Last year’s result of 3% of net revenue included a set of cost that have since been reclassified to cost of goods sold. All of the aforementioned factors drove the 41% increase over last year’s adjusted EBITDA, which increased to $53 million. Our adjusted EBITDA margin also rose 160 basis points to 7.7%. Overall, we are pleased with the third quarter performance and still it was a strong quarter. Our production base in Asia and our strategy to focus on Key Account growth are paying off. Additionally, through the first nine months of the year, lower commodity costs in the US have driven gains in our profitability. As we look to the end of 2015, we expect the magnitude of some of those benefits in the US to abate some, while we continue to outperform in Asia. The net result should be solid performance for 2015 as a whole. Before moving to the next slide, I’ll pass the call over to Andrew Murchie, CEO of Marfrig Beef Brazil, who will comment on the results of that business unit.

Thank you, Frank. Good morning, everyone. In this quarter, Marfrig Beef presented net revenue of BRL2.4 billion, up 3% from the third quarter of last year. In the first nine months of 2015, the division’s net revenue came to BRL7.2 billion, up 8% over the same period of last year. The lower sales volume due to the company’s decision to optimize its production facilities in Brazil, which is inline with the current availability of capital supply in the country was offset by an increase in average prices. The higher price is explained by the Brazilian real depreciation and the company’s strategy to focus on more profitable channels such as food service, small retail and exports. Our slaughter operation in Brazil reached 93% utilization rate based on the effective capacity available in this quarter. Note that full 39% [ph] of the business unit revenue is related to the Brazilian domestic market which reflects the diversification of our sales portfolio and strategy to maximize profitability. Marfrig Beef posted adjusted EBITDA of BRL284 million in the third quarter of ’15, increasing 13% versus third quarter of ’14. The lower gross income affected by the lower margin at the international units was offset by the reduction in sales in SG&A expenses reflecting the ongoing process to better manage cost and expenses base on implementing a series of actions at the units in Brazil launched in the middle of the second quarter of 2014. In this quarter, we obtained around BRL21 million in savings, additionally to the BRL27 million in savings obtained in the first half of the year. In the first nine months of the year, EBITDA was BRL762 million, advancing 19% year-over-year. Adjusted EBITDA margin stood at 10.6% which reflects the good movement in the cycle and the discipline adopted to maximize the business profitability. Let’s turn to slide 11 where I will comment on the performance of Marfrig Beef Brazil which is responsible for around 80% of its unit’s revenue. Net revenue from Brazil domestic market came to BRL965 million in the third quarter of 2015, down 12% versus the same period last year. The lower sales volume which followed the slowdown in the Brazilian market and reflects the measurements adopted to optimize production capacity, giving the lower capital supply in the country was partially offset by the high average price resulting from the strategy to improve the sales mix. In food service, small retail and export channels which are the focus of Marfrig Beef growth accounted for around 80% of sales revenue in the segment of fresh meet, reflecting the company’s effort on prioritizing profitability. Sales in the food service channel accounted for 42% of the domestic market revenue, an increase of around 10 percentage points versus the same quarter last year. Meanwhile, revenue from export accounted for 49% of the unit’s revenue which reflects our strategy to capture opportunities with good profitability in the international markets. Sales volumes, however, declined due to the optimization in production facilities as previously explained. Before moving to the next slide, I will pass the call over to Ricardo Florence, CFO of Marfrig Group.

Thank you, Andrew. Going out to the slide number 12, our free cash flow from continued operations in the quarter amounted BRL116 million. Of the BRL569 million of operational cash flow finance in the CapEx of BRL107 million and financial interest of BRL349 million. Adding the proceeds from the asset sales, total free cash flow amounted BRL4.9 billion in the third quarter of ’15. With this result and despite of the exchange variation of BRL2.65 billion with low cash effect, net debt was reduced from BRL9.37 billion in the second quarter to BRL7.17 billion in the third quarter or if you take the same figures in US dollars, it would be a reduction of 40% from $3 billion that we had in net debt at the end of the second quarter to $1.8 billion at the end of the third quarter. In the accumulated figures, in the nine months year-to-date, we had a free cash flow of BRL378 million adjusted to BRL70 million in the continued operations, excluding the transactions of 308 million that we had on the discontinued operations. Moving now to the slide number 13, after receiving the net proceeds of the asset sales of $1.121 billion in last September 28, in the last days of the quarter, cash and equivalents amounted BRL7.9 billion and this amount is enough to cover the maturities to 2018, which means 3.3 years of coverage. The capital structure continues to present improvement every quarter and at the end of the third quarter, the current liquidity was 2.32 times, an improvement of 0.53 times as compared to the second quarter and also the average cost of our debt was reduced by 30 basis points to 7.9% in the same period. Our net leverage measured by the net debt divided by the annualized EBITDA of the continued operations was 3.77 times. I’d like to stress that the difference between the average exchange rate and the period end exchange rate was 11.8%. We had BRL3.54 per dollar for average and 3.97 for the final exchange rate. Adjusting to the same basis, our net leverage is 3.37 times in the -- at the end of the third quarter that we believe that’s the best way to measure the leverage of the company. The proportion of the maturities in the short term is 15.6% and this fully aligns with our goal to have between 15% and 20% of the total debt in the short-term. Right after the receivable of the net proceeds of the asset sale, we started a tender offer opportunistic to buyback our bonds of 2018, 19, 20 and 21. I will give you more details in the next slide. Now, moving to the slide number 14, the bonds repurchased in the tender offer, they amounted $406 million at a cost 7.6% below face value, which means $30.7 million of savings. This will be figures in the fourth quarter, leading to annual interest savings of $33.7 million only related to this offer. It’s very important to stress that the net present value of the bonds standard in this offer was $110 million or positive 27%. Besides this success, we were very pleased with the support provided by our holders to the immediate execution of the tender offer after the receivable of the proceeds. And the phase value of all our senior notes after the closing have increased by up to 700 basis points compared to the beginning of the offer. I will now pass over to Martin, the CEO of Marfrig Global Foods.

Thank you Ricardo, on the last slide, I will comment on Marfrig differentiations and priorities. In terms of differentiations even we are with a strong focus on productivity, on base, on reducing our cost, Marfrig continue with a high commitment on sustainability and animal welfare. One of the example of that is in the last fair of Anuga in October; we opened to the market a line of frozen hamburgers making our customer in Germany under the name of the brand The Frozen Butcher, our line of hamburgers with Rainforest Alliance Certified beef. Marfrig is a pioneer of companies in Brazil to make this project and is another example of our commitment on this type of products. This is just one of the examples of our efforts to be in value fronts which reflects Marfrig’s commitment to prioritize [indiscernible]. Regarding the global economy, despite the still challenging scenario, the outlook for the animal protein industry remain positive. Growing the meat income level in emerging market particularly in Asia through continued to contribute to this scenario. It is important to highlight that that in the last week another branch of Marfrig Beef in Brazil, our third plant was certified to export fresh beef to China. In international beef market, we expect a favorable scenario. The lower capital supply in Australia and the future opening for the United States market for Brazilian beef as well as the growing demand from China are positive factors for the industry in Brazil. American market balance between supply and demand associated with the Brazilian real differentiation and the opportunity arising from the international market should benefit the players with higher exposure to it. In the grower poultry market, the perspective is for normalization of margin after three consecutive years of expansion. At Keystone, we expect profitable enough to be strongly like the last two years. Our faster reach remain related to the impact on late quarter prices, one extra market has been closed due to the outbreak of avian flu in the US, which occurred in the first half of the year. In this context, we remain committed to restrain Marfrig Global Foods by focusing on profitability to the ongoing capture of operational efficiency and productivity gains. At Marfrig Beef, by prioritizing growth in the food service challenge by capturing opportunity in the international market, supported by the future opening in the US market and the expansion of export to China. Expanding Keystone food service in both the United States and Asia, and maintain a strong focus on financial discipline, cost optimization, deliverance and pretax localization. In this scenario, our expectation is that Marfrig presented a solid result in 2015 and also a good result into 2016. I will like to thank you for the share with us the presentation and now, we’ll start the questions that you requested. Thank you very much.

Thank you. [Operator Instructions] The first question comes from Lauren Torres, UBS.

Yes. Hi, everyone. If I could just ask first about the current structure of your business, you’ve mentioned before that with Marfrig Beef and Keystone, you’ve got it to where you need it to be, but we’re hearing now about the sale of your operations in Argentina and bar food in US, so just curious if you have buyers of those assets, if there are assets that you’re looking to sell, just a little bit of a heads-up I guess on kind of what’s left that may need to change at Marfrig with respect to what businesses you have. And then if I could just ask a question on Marfrig with respect to the operational efficiencies, it seems like you’ve got an excellent job realizing the deficiencies, just curious to get an update of where we are in that process and if we should expect more to come or the changes you’ve made will just continue to flow through and help the results, just to get that perspective would be great. Thank you.

Hi, Lauren. This is Marcelo. How are you? On your first question, I think there are no more assets to be sold. I think what the decision to really put both the Argentine assets and this asset in the US up for sale are related to our strategy of focusing on profitability and increasing return on assets. Those are relatively small assets, if you look at Argentina, we’re talking about 3% to 4% of the global revenue. And even smaller in terms of contributing to EBITDA in fact, those two businesses combined, they had a negative EBITDA. We are in conversations with two interested parties to buy the businesses and the conversations are ongoing, but we believe that, yes, we can sell these two businesses. Okay. And again, I just want to reinforce that these are small assets that we consider them as non-core and all their assets that we will sell. Okay. In terms of operational efficiencies, I think this process has started over a year ago, I think a lot has been achieved in terms of cost reduction and efficiencies and I think obviously going forward, this is harder to really get more. The company though is highly focused on improving efficiencies and we continue to look for opportunities where they greet and they do exist. I think now the magnitude of those improvements going forward should be smaller. Okay.

That’s great. If I could ask just one housekeeping question, you mentioned that you’re not changing in your expected delivery, your previously announced guidance, so does that mean we look at your nine months combined or actual event to get to your full year target range?

We’re talking about guidance for the year, we’re not changing that guidance. We didn’t feel that that was necessary. If you look at the combined number, they point to us to achieve the guidance and in terms of free cash flow, we are already -- we’re seeing the range that we promised. If you look at the margins, we’re slightly above and revenues -- with the revenues of the continued operations in the fourth quarter, we should be at the top of the range or even slightly above the range, so due to the need really we do those and obviously we will assess the needs to provide new guidance to the market more long term guidance and if that’s the case, we will do it at the beginning of next year.

Okay. Very good. Thank you.

The next question comes from Alex Robarts, Citi.

Thank you. And, hi, everybody, I also have two questions. And I was hoping really to start on Brazil. The gains that we are getting from the [indiscernible] program and such and the efficiencies clearly have been helping the domestic beef business. And the question relates to kind of the short term outlook for that Brazilian beef margin. I guess, it was interesting on the Brazil, Portuguese call earlier, you mentioned that the fresh beef volumes had been falling about 30% year-on-year. I mean, clearly the export shift is part of that, but I think there is another situation with the cattle cost. I mean, I guess it was still at the peak level of BRL150 per arroba. We are coming into the rainy season and our sense is that the cattle costs can get higher. And then, as you just kind of mentioned, the fourth quarter is – the first quarter where you cycle these. I mean, how should we think about the short term margin evolution in Brazil domestic beef thinking about these factors. So that’s the first question. And then I have one on Keystone USA. Thank you.

In terms of the domestic margin I think we had a very strong third quarter in Brazil despite of the higher cattle prices. I think it was seasonally we are seeing a slight increase, but you also have the benefit of the higher average exchange rate. Don’t forget the exchange rate for the third quarter was 3.55 and we are not talking probably something, at least quarter-to-date we are above 3.80, so that has positive impact on the numbers. On top of that, I think most of the – not most, but all of the restructuring that went through on July third quarter obviously has always some impact on operations. And I think this is going to be clean quarter in that regard. So we are positive about the prospects of the beef Brazil business in the fourth and next year as well.

Do you have feeling that we could get higher on the cattle cost?

Alex, sorry, but we are not going to give guidance on a quarterly basis and it’s something that we don’t do, but we are feeling very positive about the quarter.

Fair enough. Okay, thank you.

Also I think what is important to management is that, the Uruguayan business in the third quarter hurts us, the margin and the results and we are seeing a recovery. We saw it already in October, not at the levels that we like, but we expect, but, though, that November and December will be strong months in Uruguay as well helping overall the margin for the beef division.

Okay. Fair enough. Thanks for that. The Keystone USA question, I mean the first driver you talked about lower commodity cost, I guess the grains down 16%, outside meat cost down 20%, how are you looking at kind of 6 to 12 months period for those grain costs and I guess it’s obviously to this future prices and such, but I guess I am wondering this year we are going to have El Niño and it has various impacts in various countries, but I mean how are you thinking about just generally your cost structure from these raw materials in Keystone over the kind of shorter term and kind of combining the answer with the pricing pressures from the weak dollar as you mentioned, the supplies increasing, there is some flow back from the export market. I mean, just kind of trying to understand kind of the pricing cost dynamic with these two trends that you talked about in the short-term. Thanks very much.

You bet, thanks for the question. This is Frank Ravndal. So let me start with the grants, I mean, our outlook over the next six to nine months and where the markets have been trading. It feels pretty good in terms of what that input is likely to mean in terms of cost structure. So I think a favorable weather, South America, very good supply levels coming off of the harbor [ph]. So all of the indicators and the way the market has been trading feels like that’s a fairly benign type of input and risk. And relative to the US situation in terms of supply, and therefore the overall – at least within the US, let’s say the component of raw material costs outside of the commodity grains, that is looking again I think the – in general, the industry is looking at a lower increase to supply in 2016 versus what we saw in 2015, so that should help take a little bit of – pressure off of the current situation that we’re seeing. So we are expecting that to stay in general where we have our exposure, which is really on the late quarter, things that we don’t have sort of the complete protection in terms of the ability to pass all of those costs on to our further process type of product, which is clearly the focus of our business model. Now we are seeing likelihood over the next couple of months of continued weak pricing on what we get for the sale of those late quarters. And then I think that lower supply relative to 2015 heading into 2016 should help little bit and also I think you mentioned kind of the weak dollar impact, but then there is also the avian influenza impact of the – some of the export markets being closed. We see a couple of positive signals recently, South Korea making an announcement about starting a process to open. So then depending on whether – as the migration starts to pick up speed, whether there is any other incidence or not, certainly reopening of some of those export markets will help take some pressure off the US market as well. So we are anticipating a continued sort of low price environment over the next couple of months here and then depending on the reopening of some of those export markets, maybe a little bit of that pressure coming off.

Very helpful. Thanks a lot. Thank you.

Thanks for the question.

Next question comes from Antonio Barreto, Itau BBA.

Good morning, everyone and thanks for taking my question. And I am sorry if you have addressed this before on the Portuguese call, I was not able to connect. My first question is about the optimal level of your cash holding versus liability management. We know that this first part of the liability management in the fourth quarter, but you still have a considerable amount of cash holding. And I would say that that’s a good thing in this current scenario with some credits restriction, not for only Marfrig, but for the entire market outside. But how do you guys see the optimal level between those cash holdings and more liability management in 2016?

Hi, Antonio, this is Ricardo speaking. We gave to the market our intention to buyback between $1 billion and $1.2 billion of our debt. We are barely on half of those at this point. This means that we also have a significant amount to buy back to the end of the next year. Excluding the amount, we would remain with about the same coverage that we have compared to the short-term debt. But it’s very important to stress that we have unused those revolving line of credit in a significant extent on Keystone Foods, which amounted to $630 [ph] million, of which only half of this is used at this point. This is a reserve that the company has and that’s why we understand that we are very comfortable in this area as well, given the intentional buyback of our debt that we provided to the market. This is something that we have discussed internally in our financial committees and with the Board of Directors as well.

Okay, thank you very much. That’s very clear. And my second question is, have you guys done any kind of calculation or estimate regarding the potential effect of the Trans-Pacific Partnership over your assets, because we know that you have the assets in Keystone in the US and you have several countries in Asia as well that could be inside the Trans-Pacific. So have you guys done any estimate on that at all?

We’ve been doing specific [indiscernible] because it is really hard to estimate precisely, but what we can tell you Antonio is that we expect no effect on the beef business. And for Keystone, given the Keystone is in US and Australia, it could even potentially be benefited by that.

Okay, thank you very much. Just one last quick question. I have seen that you guys have still on the balance sheet some net assets held for sale. If I am not mistaken, the net value would be around BRL170 million, is that still part of the Moy Park sale that is still --?

No. This is for Argentina – Argentinian assets and the beef jerky assets.

Oh, okay. The two business that you commented before, okay.

Those two areas.

Okay, thank you.

Then next question comes from Andrew De Luca, Credit Suisse.

Hi, thank you for taking my questions. Actually most of mine have been answered. But I was wondering, if you could just give us a little bit of the short color on what’s happening on the gross margin side of the business. So we saw the 130 basis point contraction. And I think you mentioned that there was a more adverse seasonality effect in Uruguay, so I was wondering if you could just tell us exactly what happened in that market and some of the headwinds that you are seeing there? Thank you.

Yeah, Andrew, exactly what you mentioned is essentially in the Uruguayan market you have a very -- a drop that was stronger than expected. And with that you have issues with the availability of cattle, because of the pressure combined with a domestic market that had some pricing pressure, especially because of the government is trying to contain inflation there. So the combination of higher cost with contained prices, resulted effectively in significantly lower gross margins, which affected the overall beef margin. If you look at Brazil, Brazil has very healthy margins, it’s very healthy EBITDA, which was – when you combine with Uruguay result in the 11.7% results.

Okay. And just to follow-up, how much of the 130 basis point contraction is attributable specifically to Uruguay?

Entirely.

Okay, that’s helpful. Thank you.

Then next question comes from Pedro Leduc, ‎J.P. Morgan.

Hi, thank you very much. Best of the results. Quick follow-up on the Brazil beef business, some massive reduction in volumes there, of course related to your capacity adjustment and profitability. I am wondering if the capacity that you have finished 3Q, is this the one that you would like to carry on forward or is there more shutdowns to be made. Thank you.

Well, Pedro, as we mentioned in the call, the restructuring, in terms of plant optimization has been completed and that was achieved during the third quarter to have some movements there, but going forward, we believe that we have the right capacity, given what the market allow us to buy in terms of availability. If overtime availability improves, we expect to happen at the end of next year, maybe ‘17, we may consider reopening one or two plants.

Okay. And just a couple of follow-up on the Keystone, nice strong volumes both in Asia and in United States, tell us if there is anything non-recurring in there and if your current installed capacity accommodates more quarters of this and how you’re actually coping with 30% higher volumes in Asia if you're relying maybe on third-party partners there? Thank you.

Pedro, could you repeat the first part of your question?

Yes. It was regarding volume growth in Keystone, both United States and Asia. First part of the question would be, if there is anything non-recurring to this hike in volumes, the acceleration that we saw this third quarter and number two of the same question is your current installed capacity does accommodate further quarters of such growth, and you’re probably relying on partners for Asia? Thank you.

Okay. First of all, I wouldn't say anything non-recurring in the results for the third quarter. What you have is really if you recall back to last year, that is of a particularly weak quarter in terms of what started to drive that significant volume growth across, but really a big change in that particular period was China and there had been a big event in the third quarter of last year that really brought demand down and there was sort of the need and an opportunity for Keystone to step into some significantly higher volumes with several key customers and we were able to do that and we've been able to continue to maintain that higher volume. So even with it being about a 31% increase in Asia from the quarter-to-quarter comparison, if you stretch that out over the nine-month comparison, it is still about 30%. So it is not really just the one quarter type of comparison. So I would say that we continue to focus on what we can do to keep the volume growth that we've had, and see what we can do, but I wouldn't call anything sort of non-recurring, just as you grow that much, you have increasing challenges in the future of how you are going to keep adding to that volume and do it profitably. And the second part, sorry. The second part of your question was around the capacity constraints to do that. So within what we look at is our projections over the next year, we have ongoing CapEx needs and requirements that we look at to be able to be in a position to have a shared supply for the marketing efforts that we are making with customers. So don't see anything out of the normal amount of growth and reinvestment that we need to do around capacity.

Thank you very much and congrats again.

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

Thank you. I would like to thank you again all of you to share this time with us and we keep in touch through the normal channels for next days, if you have any further questions or different comments for our results of the third quarter of 2015. Thank you very much.

Thank you. That does conclude our Marfrig’s conference call. Thank you very much for your participation and have a nice day.