Prepared remarks
Good morning, and welcome to JBS Second Quarter of 2026 Results Conference Call. As a reminder, this conference is being recorded. Any statements eventually made during this conference call in connection with the company's business outlook, projections, operating and financial targets and potential growth should be understood as merely forecasts based on the company's management expectations in relation to the future of JBS. Such expectations are highly dependent on the industry and market conditions, and therefore, are subject to change. Our presenters with us today are Gilberto Tomazoni, Global CEO of JBS; Guilherme Cavalcanti, Global CFO of JBS; Wesley Batista Filho, CEO of JBS USA; and Christiane Assis, Investor Relations Director. Now I'll turn the conference over to Gilberto Tomazoni. Mr. Tomazoni, you may begin your presentation.
I will remain leading the business and ensuring a smooth transition. We have been planning this succession carefully from a position of strength and nothing changed in our strategy, our priorities or the way we operate. This decision reflects the strength of the company we have built over the past several years. We have transformed JBS in many ways, building a more diversified, more global and more resilient business. Our dual listing was a defining milestone in that journey, positioning the company for its next phase of value creation. With a clear strategy and a strong leadership team in place, I believe this is the right moment for JBS to begin the next chapter under new leadership. Turning to our results. The second quarter once again demonstrated the resilience of our global operating model in an environment that remains complex and volatile. Supply and demand dynamics vary across geographies and proteins while currency movements and geopolitical events add further complexity. Against this backdrop, our priorities are clear: improving efficiency, protecting margin and stressing commercial performance, allocating production to the markets where we create the most value. Adjusted net income was USD 218 million. Adjusted EBITDA totaled USD 1.43 billion under IFRS with a margin of 6% and USD 1.3 billion under U.S. GAAP with a 5.3% margin. Compared to the first quarter, profitability already showed an improvement in the majority of our business units. Net income was significantly affected by non-recurring items; while important to understand, these items do not change how we assess the business. Our focus is on operating performance, cash generation and balance sheet discipline. Performance improved across several businesses during the quarter, although an important part of our portfolio still operates in a challenging environment. While U.S. beef continues to operate in a challenged environment, we have reorganized our operating footprint and are very confident in the results of those changes. I will leave the detailed discussion to the business team. We will provide more details on the quarter and our outlook for beef and pork in North America. In Australia, results improved further, supported by robust global demand for beef and attractive export opportunities. Before moving on, I would like to comment briefly on the strategic partnership we announced last Friday with an investment management firm. The transaction includes a USD 2.5 billion equity investment by the partner in exchange for a 25% stake in our Australia and New Zealand operations. Together, the additional funding capacity expected through the joint venture gives us access to up to USD 5 billion to fund acquisitions, greenfield projects and other growth opportunities across Indonesia and Southeast Asia. This creates a well-capitalized platform to accelerate our expansion in one of the fastest growing protein consumption regions in the world, while preserving the strength of JBS' balance sheet and reinforcing Australia as a strategic hub within our global operations. Importantly, this does not change how we manage the business. Our Australia and New Zealand operations remain fully consolidated under the same leadership and operating model. With that, let's turn to our operational performance. Global beef fundamentals remain constructive, although conditions vary considerably across markets. Supply is limited in several regions. Demand remained resilient across our global footprint, allowing us to direct products to the markets where returns are the strongest. JBS Brazil delivered a strong quarter driven by export demand and disciplined commercial execution. Under IFRS, adjusted EBITDA totaled USD 269 million with a margin of 5.9%. Even with elevated cattle prices, JBS Brazil reported its highest EBITDA for a second quarter. Cattle availability has improved in Brazil, and our focus has been on maximizing the value of every animal through our integrated commercial network. China remains an important destination and recent shifts in trade reinforced the importance of maintaining balanced exposure across export and domestic markets. By balancing volumes across China, other export markets and the domestic market, we protect margins and maximize value per animal. Our domestic business is another important competitive advantage. Through the Friboi brand and long-standing customer relationships, we work alongside retailers and category partners, helping them to grow value across categories. During the quarter, our barbecue portfolio performed particularly well, and we have expanded commercial initiatives with our major retailers across Brazil. In chicken, both operations delivered solid results, although market dynamics evolved differently across regions. At Pilgrim's Pride Corporation (PPC), demand remained healthy across retail and foodservice, although industry supply expanded faster than demand. Even so, results improved from the first quarter as operating conditions normalized. Integration phases were completed and expanding assets continued to mature. Margins remained strong despite a tougher year-over-year comparison and a less favorable currency environment and changing export market dynamics. The business grew volumes, reflecting improvements in operations, quality and commercial execution. We see further opportunities to improve mix, distribution and execution in the domestic market, while converting volume growth into sustainable profitability. Our priorities for the second half are clear: execution and cash generation. We expect average margins to increase during the quarter and reduce the remaining priorities. We are focused on strong cash generation, disciplined working capital management and prudent capital allocation. The environment remains dynamic but our priorities are unchanged. With a diversified portfolio, a strong market position and an experienced team around the world, we believe we are well positioned to create value through the cycle. Thank you, and I will turn now the call over to Christiane Assis.
Thank you, Gilberto, and thank you for everything you've done for JBS over the past 15 years. Congratulations on the leadership you have shown. You have lived our values every day, challenged our teams to keep raising the bar and helped us deliver stronger results. We've worked together for more than a decade, and I've learned a lot from working alongside you; I'm very grateful for the trust and partnership we've built over the past years, which will help ensure a smooth transition and continuity in our strategy and priorities. I'm incredibly proud and excited to have the opportunity to lead JBS starting in January 2027. This is a company where I've spent my entire professional life and it means a great deal to me. We are fortunate to have an exceptionally strong leadership team and an extraordinary group of 280,000 team members around the world. I'm very excited about what we can accomplish together. As we look forward, my focus remains the same: operational excellence, disciplined capital allocation, customer service and creating long-term value across our diversified global platform. We'll continue to live our values, strengthen our culture and build on the tremendous work we've done over the past eight years. We'll keep evolving, growing and making JBS an even stronger company for the future. With that, let me turn to our U.S. operations. The second quarter reflected resilient protein consumption in the United States despite a challenging environment for the beef industry, where tight cattle supplies and historically high cattle costs continue to pressure margins. Even so, U.S. Beef delivered a quarter of solid improvement. Our EBITDA margin improved from negative 3.9% in the second quarter of last year to negative 1.3% this year, reflecting an important step forward despite the ongoing challenges of the cattle cycle. Over the past several quarters, we have improved plant performance, optimized our operating footprint, strengthened our commercial capabilities and increased productivity across our plants. Many of the operational initiatives we've been working on are already translating into better results, and the announced capacity optimization will contribute progressively as they are fully implemented. At the same time, we are beginning to see early signs that industry fundamentals are moving in the right direction. The gradual reopening of the Mexican border and the first indications of herd rebuilding reinforce our confidence that supply and demand are heading towards a healthier balance over time. The reopening of the Mexican border is particularly important. The expected reopening of the three ports of entry should restore most of the historical flow of cattle from Mexico into the United States. Cattle from Mexico have represented about 5% of U.S. slaughter. So restoring that flow is very meaningful for the industry. We also expect many of the first cattle crossing the border to be heavier than what they used to be prior to the border closure. That should allow them to reach slaughter weight much sooner than normal. Assuming the ports reopen as expected, we believe we'll continue to see increasing cattle available for slaughter during the first quarter of 2027 with slaughter volumes returning to a more normal level by the second quarter. Turning to pork. Market fundamentals proved more challenging during this quarter. Even so, our pork business delivered another quarter of solid performance. EBITDA margin reached 8.9% compared to 6.5% a year ago. Our pork business once again demonstrated its ability to compete at the highest level. We'll continue focusing on operational excellence, customer service, disciplined capital allocation and continuous improvement. Those are the levers we control, and they position us to create greater value over the long term as cattle supplies recover. I will now turn the call over to Guilherme Cavalcanti.
Thank you, Tomazoni and Wesley. Before we move on to the quarter's operating results, I would like to highlight that starting in the second quarter we voluntarily began reporting results as a U.S. domestic company and therefore filing forms 20-F and 6-K under IFRS for the time being. We believe this initiative represents a significant step in our strategy of alignment with the U.S. capital markets and may expand our eligibility for inclusion in a broader set of stock indexes. In this regard, I would like to highlight JBS's inclusion in the Russell 1000 and Russell 3000 indexes in June. This inclusion as well as the potential for inclusion in additional indices going forward is key to expand our investor base, increasing liquidity, enhancing global visibility and unlocking value to shareholders. Let's now move on to the operational and financial highlights of the second quarter 2026. Net sales reached a record $24 billion for the second quarter. Adjusted EBITDA in IFRS totaled $1.4 billion, which represents a margin of 6% for the quarter. Adjusted EBITDA in U.S. GAAP totaled $1.3 billion, which represents a margin of 5.3% for the quarter. Adjusted operating income was $790 million with a margin of 3.3% in IFRS and $866 million in U.S. GAAP with a margin of 3.6%. The quarter's net loss was $102 million with a negative EPS of $0.10. In addition to the year-over-year decline in operating results, we also reported a $319 million increase in net financial expenses. The main drivers were $172 million in premiums and costs related to the tender offer for the bonds and certain Brazilian local debentures, of which $147 million had a cash impact. It's worth remembering that this reflects the liability management we carried out in the first quarter, in which we issued $2.5 billion in bonds at more attractive rates and longer tenors. Market-to-market derivatives and net exchange rate variation contributed $53 million. Monetary restatements and higher interest expenses related to increasing debt together amounted to approximately $120 million. Additionally, the net loss was also impacted by the final calculation of the bargain purchase gain of an acquisition with no cash impact, totaling $81 million, and antitrust settlements totaling $133 million. Excluding the nonrecurring items, adjusted net income was $218 million, and the earnings per share were $0.20 for the quarter. Free cash flow in the second quarter of 2026 improved by $125 million year-over-year, reaching a positive $130 million compared to a cash consumption of $55 million in the second quarter of 2025. This improvement was mainly driven by working capital, particularly the accounts receivable line, reflecting higher receivable discounts and larger advance payments from Chinese customers related to JBS Brazil's exports. Accounts payable also increased, mainly driven by higher cattle prices and increased slaughter volumes, particularly in Brazil. This improvement was partially offset by a decline in adjusted EBITDA of $324 million, higher net cash interest expenses of $129 million due to a higher concentration in the second quarter of interest related to the bonds issued in 2025, real appreciation that increased interest expenses in U.S. dollars on the Brazilian local debentures and increasing total debt. Moreover, total capital expenditures increased by $163 million, of which $159 million was expansion CapEx. Finally, we had lower tax payments year-over-year of $135 million. Not considering guidance but simply updating the cash flow breakeven EBITDA exercise for this year, we expect $5.1 billion in 2026, driven by capital expenditure of $2 billion in 2026, $400 million reduction versus the initial estimates; working capital expectation of negative $350 million in 2026, a $500 million improvement versus last year driven by higher receivable discounts as mentioned previously; legal settlements of $100 million already realized in 2026; biological assets of $850 million flat versus 2025; interest expenses of $1.3 billion, an increase of $150 million versus the initial estimates due to higher net debt; leasing expenses flat at $500 million in 2026; and an effective tax rate estimated at 25%. We continue to strengthen our liquidity position. In August, we announced an increase in our revolving credit line from $3.5 billion to $4.2 billion, while reducing the ongoing cost of this facility. Our cash liquidity, combined with the revolving credit facility, totaled approximately $7.7 billion. Our average debt term reached 15.3 years and an average cost of 5.7%. As we anticipated in our last conference call, due to the $1 billion dividend payment in June and the typical cash consumption of the first half of the year, our net leverage ended the quarter at 3.1x, slightly above our long-term target of keeping net debt to EBITDA between 2 and 3x. It's important to highlight that we have no significant debt maturities for the next five years until 2031, and up to 2032, all the coupons are below the current treasury rates and 35% of our gross debt is beyond 2050. With that in mind, I would like to open up for the question-and-answer session.
Questions and answers
Thank you. First, I want to say congratulations to Tomazoni on what has been a remarkable job, not just at JBS but also for the protein industry, and also wishing Wesley continued success in your extended responsibilities. We'll be looking forward to keeping up with the conversation. My question is on how you're seeing, Wesley, the state of U.S. demand. Throughout your press release, I see comments of sticky demand on beef and poultry. But then on the other hand, you also mentioned that inflation is weighing down on pork, you had negative chicken sales growth in foodservice and retail, and some of your peers like Tyson, Smithfield and even others are cutting their guidance. When I look at the beef cutout it seems it has reached somehow a ceiling, not necessarily following seasonality. This is the reason for my question: what gives you comfort that demand remains healthy and why should we think that spreads can't erode more prominently going forward?
So we still think that demand is very strong. What we have seen—and we can tell this by everything we look at on protein trends in general—there is plenty of data in the market about that, and we can see that when we talk to our customers and what we see in the marketplace. We had thought proteins had more of a substitution effect depending on prices. There was a big surprise in the inelasticity of protein demand; demand for beef, pork and chicken is not being strongly substituted among each other. We see pork demand a little weaker than chicken and beef. Beef demand is very strong and actually, a few years ago I would have thought achieving a cutout of about $300 would have been tough, yet we've reached way above that, almost into the $400s. So demand still looks pretty strong. What we are seeing is where the consumer is consuming that protein is changing—more retail, more eating at home than away from home and foodservice. But for the time being, as we see the marketplace right now, we think protein demand will continue to be strong.
Congrats to both of you, Tomazoni on the great tenure and Wesley on the CEO appointment, looking forward to continued interaction. I have another question on the U.S., specifically on the beef side. The spreads indicated a much tougher second quarter versus the first quarter, but your numbers showed a pretty significant improvement. I wanted to explore that. Wesley, during the JBS Day you spent quite some time talking about the in-house initiatives to improve beef margin. Can you provide more details on initiatives that have already kicked in and helped the quarter? Are you doing anything differently? Or were there a couple of issues in the first quarter that were not present in the second quarter that we can quantify to better model U.S. beef going forward? It seems there has been a significant derisking of a division that some people were really concerned about.
First, when we look at the year-over-year comparison, last year's same quarter had some extraordinary items; it was a quarter impacted by some other effects like hedging and mix that altered the numbers. The second quarter of 2026 did not have anything materially unusual. So keep that in mind. We run our business historically as two different business units after we acquired Swift and later Packerland. Packerland focused on a different type of cattle, different plant sizes and different procurement. Over time, that separation didn't make sense anymore given market changes, so we combined those two business units and now run the business as one. There are strengths on both sides and we believe there are substantial synergies, many of them in sales. We have done a lot of work over the past three to four years on yields, but most of the plan I presented in New York was about selling more ground beef and more value-added ground beef items; selling more value-added products. You may have seen we had announced the plant closure of a facility but then reversed and decided to operate it as a value-added facility. That decision shows the size of demand for value-added items and our ability to supply them. Much of the improvement is on the sales side. After integration, we're even more confident. Most of the capture from our 3% improvement plan has not been fully realized yet; we are just beginning. So while we delivered the results you see, the best is still ahead as we implement the plan fully.
Congrats on the move, Wesley. Sticking with that point, Wesley, just to understand it better: the Mexican border is open now. We expect a flow of cattle to arrive by the end of the month, at least through one port. You mentioned that you expect heavier cattle to come from Mexico. If we talk about the scale of imports and the impact on capacity utilization, would you say these openings are already relevant for changes in strategy? Would you expect historical levels of around 1.5 million head per year to happen by the end of this year, or is it more that the opening will cap cattle prices and help margins, but no immediate direct impact on slaughter volumes yet? How do you see the pace of impact from the Mexican border opening?
Yes, we are forecasting the market but there are many unknowns. The first port to open is Douglas, Arizona, on the 24th. That port by itself could probably handle around 300,000–400,000 head per year—just an estimate, it's difficult to predict. So Douglas alone could handle roughly one-third of what used to come from Mexico. The announcement indicated the authorities will analyze how the Douglas opening performs and then open two more ports in New Mexico—Santa Teresa and Columbus. With those three ports open, they have roughly the capacity to flow most of what historically flowed. These are all estimates based on historical numbers and public information. Only two Mexican states got approval to export to the U.S.—Chihuahua and Sonora. Those two states are the largest, representing over two-thirds of Mexican flow to the U.S. We also have information that cattle which previously were moved young to the U.S. were backgrounded in Mexico during the border closure. That means there is cattle in Mexico in stages of being backgrounded and finishing. Many of those cattle are heavier than historical levels and will reach slaughter sooner. So, we expect to see some flows by the end of this month and into the end of the year. We expect that starting in the first quarter you'll see cattle ready for slaughter born in Mexico, and if all goes well, slaughter volumes could normalize more by the second quarter next year.
Tomazoni, congrats on a successful tenure and Wesley, congrats on the new role—really looking forward to continuing to work together. I wanted to get your thoughts on U.S. beef retention and updated thoughts on the timeline for fed cattle supplies to be rebuilt. Was the report a surprise given drought concerns regarding retention in the U.S.?
We think cattle retention and U.S. herd rebuild are more timid than we expected—that's something we would like to see stronger. But the important part is the decline in cattle numbers seems to have topped and we're starting to see signals that they may rise. One highly relevant factor is the Mexican cattle flow: having Mexican cattle return changes the dynamic versus relying purely on a U.S. herd rebuild, which takes much longer to restore supply. If the Mexican ports reopen and normal flows resume, this brings more balance and gives the industry patience while the U.S. herd rebuilds. Weather remains a key variable and we'll see how that plays out. One part that is not always visible in U.S. reports is retention and herd rebuild activity in Canada, which looks promising. Canada is part of the supply chain—U.S. cattle go to Canada and Canadian cattle come to the U.S.—so that is relevant. Over the next two to three years, we should see stronger rebuild, but timing is uncertain. Also remember two components matter: retention (breeding and heifer retention) and the number of cows processed to slaughter. Cow slaughter has fallen fast, so that also affects supply. Overall, it's a multifaceted picture, but the Mexican flow helps materially in the near term.
Wesley, congratulations on the transition and wishing you both all the best. My question is on Seara. We see another strong quarter, but margins weakened relative to Q1. Could you qualify where the sequential margin drop came from—was it mostly export markets or the domestic market? What are the main trends you are seeing for both going into the second half of the year?
Thank you for the question. Seara delivered a healthy margin; even if it is a bit below the prior quarter, a 14%–15% margin is still very healthy for this business. Quarter-to-quarter there are differences: the main difference was that pork prices in the domestic market were below some of the seasonal expectations, and there were shifts across categories. In summary, the sequential weakness was mostly in the domestic market rather than exports. Export markets remain important and supportive for Seara. We continue to focus on execution, mix and commercial initiatives to sustain margins as we move forward.
I'll follow with good wishes to Tomazoni and Wesley. Coming back to the U.S., we haven't talked much about the pork business. You highlighted it improved, but you expected some replacement dynamics that haven't materialized. Could you explain a bit more what you're seeing for pork demand, differences across cutouts and what's been a headwind in terms of profitability as we look where it stands now, slightly below your usual target around the high single digits?
Pork has had weaker demand relative to chicken and beef. If you look at industry volumes, they have been relatively stable while the cutout is lower, which indicates weaker demand rather than supply growth. Part of that weakness comes from our prepared foods customers and categories where demand has been a little more pressured; consumers have cut back somewhat on those options. It's a quarter-to-quarter dynamic; I wouldn't call it a multi-year trend yet. We're monitoring customer channels and continuing to focus on operational excellence and customer service to mitigate those headwinds.
First of all, congrats Tomazoni on your tenure and Wesley on the new position. My question is on the U.S. poultry industry, which is suffering from lower spreads, especially on the commodity big-bird business. Where are we in the cycle? Do you already see capacity reduction or production cuts happening in the industry? When should we see that, especially on the commoditized part of the business?
In Q2, U.S. chicken supply grew about 4.5%, which was above expectations. Growth was driven by higher chick placements and improved survival rates compared to last year, when respiratory disease and other issues increased mortality. Those improved survival rates meant more birds in the system. We expect the industry to adjust; historically the industry has been disciplined in managing supply/demand. So we should see some moderation as the industry responds to margins and placement decisions. The timing will depend on how quickly placements and hatchery decisions are adjusted, but historically the sector does rebalance.
Congrats on the transition and good luck to you both. It's interesting to see how Pilgrim's has been suffering from the higher supply of chicken translating into lower chicken prices and lower margins, while Seara doesn't seem to be suffering from the same phenomenon. You mentioned strong export markets, the Middle East in particular, sustaining good profitability in chicken exports out of Brazil. How do you see those two moving parts unfolding in the coming months and quarters? Do you see chicken price pressure spilling over into Seara's export business, or do you expect Seara margins to improve before any erosion on Seara's business?
They are different businesses. Pilgrim's and Seara export different types of products and compete in very few common markets. Seara's export portfolio and product mix are distinct from the U.S. commodity big-bird segment. In the U.S. the weak component is the big-bird commodity category; approximately 25% of the business is commodity products, and that part of the business is under pressure. In Brazil, export demand has remained healthy even if prices are below prior peaks. The Brazilian industry association expects production growth of around 2.8% in 2027 and exports growth of roughly 2.7%, which suggests a balanced outlook. We do not expect material spillover from U.S. commodity pressure into Seara's export business given the different product mixes and market dynamics. We focus on controlling mix, price and diversification to manage margins.
Congratulations, Tomazoni, it's been a pleasure interacting with you. Wesley, congrats as well. My question is on Australia. We saw a notable top-line growth—can we assume the strength was related to Chinese demand shift, similar to Brazil? And how should we think about performance ahead, not only in revenues but the impact on profitability of this division?
Australia performed well and we are very excited about the business there. We are in the middle of a positive cycle and expect two to three years of favorable performance for Australia. Year-over-year comparison was affected by currency movements, but underlying sales performed well. We did have some constraints bringing cattle to plants so volumes were somewhat limited, but we see improved availability and better production in coming quarters. The joint venture creates a platform to grow in Southeast Asia and preserve our balance sheet while accelerating investment in the region. Australia is well positioned geographically close to Asia and will serve as a strategic hub. We are bullish on Australia.
Congrats Wesley and Tomazoni. My question relates to free cash flow going forward. At JBS Day you mentioned CapEx for 2026 would be near $2 billion. What should we expect for 2027? Does the Mexican border reopening enable a reacceleration of expansion CapEx next year? And does the Australian JV change your appetite to accelerate consolidated investment levels given the new variable added to the equation last week?
Regarding the joint venture, it allows us to pursue our growth agenda in that region—particularly Indonesia—without putting more pressure on the balance sheet. The partner contributes equity, so there will be no material pressure on JBS consolidated free cash flow from investments in that region given the capital structure designed. On consolidated free cash flow: last year we had a working capital consumption of $850 million due mainly to rising prices. In this second quarter we had record revenues of $24 billion, which also drags working capital, but we had advance payments from China and receivable discounts that helped. We forecast working capital consumption will be $500 million better this year versus last. For next year, absent renewed inflationary pressure, we could see a favorable working capital environment, but that depends on grain prices, cattle prices and net selling prices. With other lines in line, the free cash flow outlook depends on the EBITDA trajectory, so we'll update guidance as we see the second-half results.
My congratulations to Tomazoni and Wesley. In 2024, Douglas represented about 15% of imports from Mexico. Has there been any expansion there that would allow for greater flows to that port? If Mexico cattle flows return to approximately two-thirds of previous levels, is that alone enough to return JBS U.S. beef EBITDA to breakeven?
There were various options and port configurations under consideration, but Douglas alone is not as large as the full prior network. If only Douglas opens, it's less than if Douglas plus other ports open. Our volume estimates are based on historical high-volume days for each port and extrapolated annually. We're dealing with many assumptions but we'll know relatively soon how it plays out. If flows return to two-thirds of prior levels, and given the heavier cattle expected initially, we think it would materially improve U.S. beef economics. If we are currently between a 1% and 2% EBITDA negative, returning a meaningful portion of Mexican cattle flows could bring us close to breakeven. I'm confident it will be materially better than current levels, though whether it goes above breakeven immediately depends on several variables.
Also wish both Tomazoni and Wesley success. I know you touched on Seara, but I wanted to get a sense of the demand landscape in Brazil. Retailers are quite negative on the outlook for the second half; are you already seeing any impact on demand? Is there a shift between beef, pork and chicken? What's your perception around the risk to margins if consumers downgrade product consumption?
So far we are not seeing weak demand for our products in Brazil. Demand remains strong across products. Pork prices are somewhat depressed because supply is higher than demand in certain pockets, but chicken and value-added demand is holding up. We are not seeing a broad downgrade across proteins. Protein remains a priority for consumers globally and in Brazil. There are many drivers behind protein demand, including trends such as GLP-1 treatments in other markets that affect consumption dynamics, but domestically we see continued demand for value-added products. We also continue to improve efficiency and innovation, and we remain confident Seara will continue to deliver solid margins.
Wesley, Tomazoni, congratulations on your respective moves. Wesley, you've been across the organization and now you lead a U.S.-listed global company that in recent years shifted from an M&A-driven strategy to more organic, value-added growth. What lies ahead for the organization? What's the agenda you will pursue and how do you envision JBS evolving under your leadership?
The good thing about an internal transition is continuity. Tomazoni and I have worked together for a decade and we've been part of the evolution of JBS. There won't be a radical change in strategy; the leadership team is strong and aligned. We'll continue the agenda we've been executing: operational excellence, commercial execution, margin improvement and disciplined capital allocation. There are many new avenues opened in recent years to be further developed: the joint venture to expand in Southeast Asia and Indonesia in particular, projects in the Middle East, and continued brand and value-added growth in our traditional geographies. Australia is a platform to expand into Asia. There is also meaningful opportunity to continue to grow in areas we haven't spotlighted as much, like our U.K. operations. Overall, expect continuity, accelerated execution on the growth platforms we've identified, and continued focus on margins and cash generation.
Joining the compliments to Tomazoni and Wesley. My question continues on Australia: how big an opportunity could Australia be as a production platform, especially for chicken production? Logistically it seems competitive. How do you think about this in the scope of the partnership with the new investor?
The long-term strategic partnership is intended to expand our investment capacity in Southeast Asia while preserving our operating model and financial discipline. The priority in the first two years is investments in Indonesia. That is the main focus with this partnership. After that, we can invest further in Australia or other markets in South Asia. We have considered chicken production in Australia before but did not find the right conditions to make it accretive; it's still an open opportunity but not in a pipeline with immediate announcements. The partnership structure was designed so we can pursue the fast-growing Indonesian market—a region of roughly 640–750 million people—without stressing our balance sheet, which makes this an ideal strategic move.
Congrats Tomazoni, Wesley. Will we continue to expect that net leverage will end the year at or below 3x? And in support of this, how should we think about the potential for any debt repayment over the rest of the year?
Keep in mind that last year we benefited from unusually strong chicken U.S. EBITDA, so the statistical effect tends to pressure leverage year-over-year. However, the second half of the year is where we generate the bulk of our free cash flow, which will help balance the leverage. We're thinking we will finish the year at levels similar to the second quarter—slightly above 3x—and as we generate free cash flow and given there are no significant short-term maturities, we will evaluate repurchasing more expensive debt coupons if it makes sense. For example, there is ~$300 million outstanding in higher coupon bonds which could be candidates for repurchase, but we'll decide based on second-half performance and liquidity.
Before we close, I want to thank all of you for your kind words and congratulations today on behalf of Wesley and myself. Thank you for the attention, respect and support you have shown over the past eight years. Our interactions have always been very productive—your questions, perspectives and challenges have helped us improve how we communicate, sharpen our focus and become a better company. I have learned a great deal from all of you. I also want to thank our entire team and the board. Everything we have accomplished over these years has been a team effort, and I'm very proud of what we have built together. We still have a few important milestones ahead of us, and my focus remains to ensure JBS continues to deliver strong results and to work closely with the leadership team to ensure a smooth and successful transition. Thank you again for your trust, engagement and partnership over all these years. Thank you.
This is the end of the conference call held by JBS. Thank you very much for your participation, and have a nice day.