Brasilagro Cia Brasileira De Propriedades Agricolas Q4 2025 Earnings Call Transcript

Quartr
Provided by Quartr
September 4, 2025

Key Takeaways

  • Positive Sentiment: The company reinforced that selling farms is part of its DNA, having generated roughly BRL 1.9 billion in real estate sales over the last four years and holding a BRL 3.5 billion valuation from Deloitte on its land portfolio.
  • Positive Sentiment: Management highlighted its commercial agility in soy by carrying stock into harvest and capturing an average basis improvement of +80–90 points versus a historical −20 to −30 points.
  • Negative Sentiment: Cotton volumes fell by 38% due to excessive rain and drought impacts in Paraguay, prompting a shift to plant 80% of cotton on irrigated areas to reduce volatility.
  • Negative Sentiment: Net profit declined to BRL 180 million from BRL 288 million year-over-year and adjusted EBITDA slipped 4%, while financial costs saw an BRL 80 million hit from higher interest rates.
  • Positive Sentiment: The firm is setting up a real-time monitoring center in Palmas with telemetry and AI readiness, targeting up to a 20% reduction in diesel use and less machinery downtime.
AI Generated. May Contain Errors.
Earnings Conference Call
Brasilagro Cia Brasileira De Propriedades Agricolas Q4 2025
00:00 / 00:00

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Moderator

Oh, for operational and for real estate. I sometimes you might be surprised with the news that Brazil Agro is selling farms. Of course, we are going to sell farms. That is our business. And for those who do not understand this business shouldn't even be making these kind of comments.

Moderator

It's important that everyone realizes that selling farms is part of our DNA, and we will be doing it when the market is good, when it is bad. We will always be selling farms. That is our intrinsic characteristic of how we renumerate our shareholders is how we sell our assets. And this is the top numbers of how we've been selling properties, 40,000,000 with revenue from sales of farms. 120,000,000 was something that we had done previously.

Moderator

You know very well. We mark transactions only when we deliver the title. We sold an Alto Del Claguari 1,700 hectares, which in which remain 140 hectares, which we delivered at the end of this exercise after we finalized all of the sugarcane area, and then that's when we finalized that transaction. This was a year that I think we need to celebrate from the real estate point of view. Everybody has been seeing the difficulties that there has been more loss of liquidity in the sector, but there is a ponderation here when we always talk about diversification of cultures and regions.

Moderator

It's not only true for mitigation of operational and commercial risks. It's also true for the mitigation of our real estate risks. And what I am bringing from the sales that we did from the we saw a sector of grains with more repressed margins than other sectors with bigger margins, and we saw a recovery of cattle raising over the year. And once it recovered, we brought liquidity for an asset of cattle raising that we had in Bahia, and it was very assertive in recovering that liquidity. It was an asset that we required in the past for BRL 10,000,000, and we sold it now at the nominal value of BRL 140,000,000.

Moderator

We invested in it at the present moment of the transaction. It was accounted in our audit of 30,000,000 reais with all of the investments that we had made and the investments that had been amortized. So what I want to highlight here is that selling the farms are part of our DNA. We will always be doing this. That is important.

Moderator

And here, I just wanted to make that very clear of how efficient we are in capturing other activities that are standing out and still carrying out the sales with other activities. The square on the next side, reinforcing once again our DNA is where we bring the challenge when we would talk to the analysts with everyone that would accompany us, how difficult it was for us to calculate the EBITDA of me and Gustavo were able to do it, but the difficulty is forcing the sales. So I think better than forecasting is the history. It's the history that we have is the best forecast. So productive budgeting, we will add productivity.

Moderator

So we look at the history of productivity for the last five years, and we brought this methodology so we could share with you. We bring the history of the sale of the company in the last four years. We sold 1,900,000,000.0 reais in companies, an average sale of 380,000,000 reais per year. That's what the company knows how to do, and it will continue to do that. And then over the years, showing below the transactions and the nominal values of each one with a tier of every de investment.

Moderator

Next slide, please. So continuing in this chapter, this real estate chapter, which is fundamental to the company for all of the investors that are following us. It's one of the important things for them. We, this year, do not recurrently evaluate the farms. We do it with the third parties, and we are bringing to you firsthand the evaluation that was made by Deloitte, which is our evaluator for many years already, year over year.

Moderator

So here in this graph, we have an evaluation that is very important. And on the square below, it shows the evaluation of the plans of the company and what is the evaluation of Deloitte reached 3,500,000,000.0 reais in our assets. The square above, we set up these two squares on the right and on top to show the capacity that the company has of adding add value in the transformation of areas. When we look at the valuation of the portfolio in the past, it was $3,500. So then people ask me, oh, Andre, if it was $3.03 500, then in the middle, we sold 550,000,000 in farms.

Moderator

So that is the real capacity that we have to bring returns to the shareholders. So you might ask me, but, under, how does this portfolio appreciate year over year or every two years? Well, it's because of our intrinsic activity, which is to add value, mature the land, bring in new operations where the EBITDA has changed in that area. And so the important points in the last few years, there was an important maturing of our areas. There were massive investments that we are accompanying irrigation, an area that we had in Berea without any irrigation that was representing 150 sacks.

Moderator

When we add irrigation, it has us an important leap in value, and we are finalizing this in Hoja Gingyo Plantation. So part of this important gain is a reflection of this investment of this added value, and most of this comes from our capacity of maturing the portfolio. So I think what's this this is showing, and we always like to draw attention to this. I always play around and say that we want to be drivers and not the passengers of the vector of motivation. So we are just going to bet on the value that will value more than inflate inflation.

Moderator

What we like to do, we put management. We put resources to not only have the basal appreciation, the appreciation that we see that is the fruit of the work of the entire transformation team of the company. Next slide, please. Now a little bit more about the results, and I think this cooperates with the numbers that Gustavo will present to you. I would say that it was a year of stability.

Moderator

We are seeing the peak of soy now in the next few months, much more connected not to Chicago, but in function of what we are seeing in terms of recovery of the internal bases. You know this much better than me, what's happening in terms of the warrant, the nonimports of China, this production having its origin in Brazil has strengthened a lot of the bases in the last few months. And that just cooperates with our strategy when Gustavo showed the indebtedness when we collected the harvest in the month of February, March, and April. We started the harvest and accelerated it as much as possible because over the harvest, it was very negative. It went to 20 points negative, but we made a decision once again that was very assertive.

Moderator

We said we're gonna hold for all of the stability, the geopolitical stability that we had. We had a good part of the harvest stuck in Chicago. Also, the exchange rate was stuck, so we also had the basis. So we did it in a financial account to carry the stock to the second semester. And we had to do an account of how much the base would be to pay for the financial cost.

Moderator

We did that, and it was worthwhile. And I think we'll have bigger upsides. And in fact, the reality of the market today showed that this strategy was assertive. The base kept on going up. We were able to sell.

Moderator

We didn't sell everything. It's important to highlight that, but we started to sell when we understood that it was favorable. But we ended up selling base of up to 600 positive points. It used to be less 20 in February and March. So in average, we were able to have a better basis of what we had at the moment of the harvest.

Moderator

We will be operating in at 80 points, 90 points in average. When in the past, we had a basis of minus 20, minus 30. So once again, the company is very agile in this commercial business of soy. For corn, it's an average. We'll show you how things are going and content as well.

Moderator

We will see how the company behaved with had the recovery of livestock. There was a punctual drop when the tariff came in. When the the recovery of ethanol that was very connected, basically, I think there are two important factors here. There is a harvest of sugarcane that is lower. We see in all of the expectations, there was this harvest where everybody was talking about 660,000,000.

Moderator

Today, they're talking about 680 tons. And besides that, the increase of the mixture of ethanol and gasoline leaving 26 to 30, which will generate an additional demand of 1.6, 1.5 in the market that makes ethanol, heat up, and we will show you how we were positioned in that as well. Sugar is walking a little bit on the side. And now the next slide. Anna's always mad at me when we run up because we need to talk about how much the input put came in because I'm sure somebody will ask me this question soon in the sequence.

Moderator

But I need to show you how in this business of ours, the chart the challenge is working with a margin of contribution, and this is what we're bringing here. So the first thing is math. That's the phosphated cost. We were monitoring this and these balls that are here within the line. I asked for these balls to be here, but they look smaller with next time, we'll have a larger ball.

Moderator

But the balls that were within the line is the moment where the company made the decision of making an acquisition. So on the first graph, we can show that we're there was phosphated fertilizer costing a lot more, $560, and we bought about 80% to 660 percent. So at the end of the year, the end of the harvest, we started to take a position. The next one is chloride of potassium chloride. We also made a decision there.

Moderator

We even bought it a little bit before the phosphated. We thought it was almost we were almost at the end of the well, but no one has a ball a crystal ball. We do have a lot of knowledge on this business, and we accompany it with a lot of business knowledge. And the margin of contribution made a lot of sense at that time. So the company as well was able to buy chloride potassium at $560.

Moderator

That was a real that was very assertive and nitronate of I mean, I always say to my commercial team, the best way to get hydrogen nitrogen right is to buy it many times of the year because other otherwise, we'll never get it right. But we have been showing how these purchases have been doing, and an important part is that we bought it, the Neutrogenate, in the past, and it was assertive. The rest, we are waiting for it to accommodate. The graph on the side shows the percentage of things that we started clothing closing. And on the bottom, I think it shows the main question that you will ask that makes sense, Ripostavo.

Moderator

How do you wait for margins in the next harvest? This shows us the margin of exchange and how they evolve. The relationship of exchange is basically what accelerates and what decelerates. When we look at the number, everybody can see that the commercialization of soy is a bit more delayed. But, basically, we see in our reading that this is because of the relationship of exchange.

Moderator

When the relationship is in favor, it weakens the base. So corroborating with the positive base because China is not buying from The United States, but it also corroborates to the market that's a bit more delayed from the present harvest and of the future harvest. So the farmers are looking a lot about the relationship of exchange before they decide to buy inputs or sale grains. They're really connected to the inputs of exchange. So now we're gonna talk about some good things and some bad things.

Moderator

The good things is increase of the total volume of commercialized. The bad part is cotton, 38% less than we had projected besides the fact that we do not plant a lot of cotton, but we do have some cotton in Chaco, Paraguay, and we had a very severe drought in cotton in Paraguay that impacted us a lot, which gave us an expressive lowering in that in cotton. So what are we doing now? Basically, the company already reduced the cotton for the next exercise. And just with cotton for irrigated areas, we know that the percentage of irrigated area has gone down a lot.

Moderator

So for '25 or '26, a good amount of it will be over irrigated areas. And the irrigated areas is a very good margin with a god of good, stable profitability. So we are going to keep caught cotton culture. It's an important value for cash generation for us, but we need to mitigate the volatility with this culture that is so expensive. So we will be planting 80% of cotton, and it will be over irrigated areas, which mitigates the volatility for next year.

Moderator

We won't be here showing such a large variation in productivity. Next slide. And I think here for sugar cane, you know that everything that's happening, we talked about opportunities in the market, and so nothing is different. There are two important effects. We had a summer, I would say, in a certain way in the productive sugarcane regions, especially in Sao Paulo and Maranhao.

Moderator

We had a January and a February that was very below average, although we had a lot of rain during the year that was favorable, but the months of June, January, and February are also the months which we have the highest, possibility of gabina, which is a pesto that forms for sugarcane. So it was very rainy. And this year, we mainly had a reduction in the temperatures, which was quite expressive in the months of April and May. So even if there was humidity in the soil, this development went down a lot. And part of the sugarcane, which is reflected that we saw last year, part of it came in in June in our results.

Moderator

So sugarcane for the beginning of the harvest was affected by that. So I think that the livestock in the company will be diminished in these next few years because of the sale of the asset that we commented on initially. But the company has been doing a good work with with the livestock, and so we start having to deinvest in this unit of the business. Undoubtedly, we will bring, favorable results. Or in other words, the gain for the price of meat will definitely be transformed into results.

Moderator

So I think all of this is very positive, showing the ability of the company both of investment and deinvestment and its assets. GMD is along the lines of what we budgeted was already to around 2% of deviation because of what I commented January and February with rains under the average. Paraguay is doing very well. What we were missing in rain is helping our rev our revenues in Paraguay. So next slide.

Moderator

And I think the last the previous to the last slide that I wanted to comment on basically is the evolution of the planted area. This shows the capacity of the company of readequating itself and reinventing itself. As I had been showing you previously, We were selling 1.9 in farms of the last few years, and I think it's important. And as I always say, the we balance the results. We can't only sell farms because that was a company of the past and not have any operational results.

Moderator

So this is what we've been trying to maintain here, a balance of generation of EBITDA on the operational side of the area. So more and more, you can see this graph that is more colorful with the bases that are more colorful, which is how we are mitigating operational cases. So whoever looks at this graph a few years ago in production, you would see cane and soy. Today, we see other cultures gaining a lot of relevance. And the graph on the right is how we've been gaining well, we do not have a magical area, but we believe in the fifty fifty.

Moderator

And it seems like it's a capacity for us to stabilize operational capacity. So I think that's a bit of that. Let's talk about new things and the things that we are working on. Undoubtedly, we see in the world agriculture. We'll go through moments that if we do not have any increase in production, we will be going through tighter margins in the next few years.

Moderator

And at this moment of tighter margins are when we have to look for the most efficiency possible. Now that the company is only doing this now, the company had already been doing this. You know that for two years ago, we already started to announce investments in telemetry and brands in real time, and now we are bringing to you what we are building an operational center. We rented a small office. As we always said, we like small offices, 150 square meters.

Moderator

We rented an office of a 100 square meters in Palmas, which is where we understand we can have a hub in our area of production is there, and our curve will be there. So the operation will be centralized for monitoring all of the equipments. They will start to be monitoring through Palmas, whoever would like to get to know it. We have a split on the screen, but the management of that will be in Palmas so that we can more and more look for efficiencies in our agricultural, assertiveness. Yesterday, I was discussing this with our people, and we saw updates in our own, operations of almost 20% in diesel oil.

Moderator

That's quite relevant. So that has assertiveness, less time of the machines on off time. This is just to collaborate with you and share with you that we are setting up Alcoa in a physical way, which was focused on the units, and this will be centralized in Palmas that will give us an important leap in monitoring the operations and help us to be more effective in monitoring all the costs. This just prepares the land for artificial intelligence. This data lake that we are developing is where we will be able to add artificial intelligence.

Moderator

So it can be another disruptive point in Brazilian agribusiness as it was in the past, the Norman Buhler, which was the hybridization of the first, transgenic adventures. I think artificial intelligence and the management of things in real time undoubtedly will give us important gains in agriculture. So just finalize the final head. We ended up with Chicago 10/20. And here, it's important to mention that we started the exercise with May.

Moderator

In the middle of the path, we had six forty, a lot of stuff sold, an increase in margin that left everybody concerned in the beginning, but we adjusted our positions, and we were able to finalize it this way. The graph of soy on the right shows how we are taking positions for the next harvest. That is because the margins of contribution, which I commented to, with you. We were buying the fertilizer at that so we also had to sell soy. And that was very assertive.

Moderator

We're able to sell soy at around $10.70, and there was still some instability, some economic instability, but it was make more sense for us to do $6.90 with the sold graph. So this is what we did in terms of price, $35.65 with the current current harvest. These are the numbers we're sharing with you and an exchange of $5.44, the graph on the right in in cotton, we already have this cotton with less volatility irrigated being sold. So we are already more sold because of decision making of reduction the dry area. So since we rediminished diminished the dry area, we have a better percentage of the amount sold at six sixty five.

Moderator

That was also very assertive, and that will give us a margin of contribution in the next campaign that's very positive. At an all 50%, we started this in the past. Now we look at the screen of November at the area of $2,900. We are also being able to carry this out in a very important line that I would like to draw your attention to are the receivables for '26. Everybody knows that the company basically has 880 reais of receivables and farms.

Moderator

This is marking us at the every moment. So we have 80% of soy already sold, very similar to the p and l of the year in coproduction, and the exchange rate is also very similar, 06/26. So 80% of the receivables already sold with 60%. So now I pass the floor to Gustavo, and these numbers will be reflected in what the in the numbers that he will be presenting. Thank you so much, Andrea.

Moderator

Thank you so much. I would also like to thank the presence of everybody. As Anna mentioned, when we began the conference, thank you for also a highlight of the exercise, the net total profit in 2025. We are talking about BRL 180,000,000, as Andres started to mention in the presentation. During the same period of the same year, the net profit was BRL 288,000,000.

Moderator

The main variation as is of cost custom for us to put in the graph on the higher part of the screen, we see how the result of the previous year until 830,000,000 reais, and what were the main variations when we compare the two periods. One highlight, as Andre also showed, was the evaluation of the different commodities and especially for corn and sugarcane, which was 80,000,000 reais. And positive, there is also a higher number of volume of volume sold in sugarcane, which was positive of BRL 800,000,000. The real estate had certain changes of BRL 80,000,000. In the past, we had not sold 20,000,000 of the farmer of the farm Choparad.

Moderator

But in this exercise, we started the sale in Taquari in the first quarter and from the sale of preference that Andre also commented on here gave us a combined result of 180,000,000 reais. And this price and volume also provoked when we sold the highlights of the exercise. We saw that this combination of price and volume gave us 14%, an increase of BRL 17,000,000 in 2025 and BRL 700 in 2024. When we observe the adjusted EBITDA from the total of the period, we're talking about BRL 167,000,000. So that gives us 4% less compared to the previous period.

Moderator

Very similar because afterwards, we will see that what's impacting the final results are the financial impacts. The financial final results, I think it's important to go to the right side, the lower right side, because the main effects of the increase of interest rates and also the market volatility that Andre mentioned generated an impact, which the number tended to zero in impact. And today, we're talking about 80,000,000 reais in negative results. So the revenue of financial applications are mainly the revenue of the cash applications of the company. Even if we could have, let's say, even if we were have been able because of the interest rates increase, we could work with a cash flow that was a bit lower.

Moderator

This would generate an impact when we look at one year over year in millions of. So the passive interest rates, which would give us an influence that was we would have started in '24 in 5.5%, and now we started to work with a of 15% even though the interest or CDI rates or the cost of the debt of the company is very low compared to what is practiced in the market. But even then, the impact and the pressure that it's generating in the margins of the company are very relevant. So the two lines that continue, which is the update of the income to receive are, for the first time, all of the contracts that are for a long term, we need to register them for the pat the liabilities and the right to use, and all of that impacts a difference that transits for the results. And over this year, we had the increase in interest rates over leases in sugarcane and remeasuring or renegotiation of a few contracts, and so that generated 400,000,000 reais negative.

Moderator

So the update of the receivables, as Andre already mentioned, we have 700 in sell of in sales of companies. So this index to the story, we have to update it so it can be the present number. And in the previous year, we had a very strong volatility in the kind of exchange rate to this year even though Andre mentioned that we started with the dollar real of $5.40 or $5.60. It didn't reach $6.70. It went back to $5.40, which in the past was the variation that was presented and and that it was neutral.

Moderator

But a summary here as everything on this line was compensated, what we can see is that last year, the cost of the debt was compensated especially by the demarcation of the market. And this year, these demarcations were practically neutral, which shows how the passive interest rates start to present a very significant material impact. Another highlight is in 2025. We had a gain in the cost of 53,000,000 reais that were compensated mainly by a swap that we did in terms of the long term debt with the inflation plus $6.25 and other amounts that were carried out with the cash prefix max of two seventy. And part of that, we had done a swap in CDI.

Moderator

CDI was 9% for that period. And this year, the swap generated a loss for the debt of 20,000,000 reais. In 2020 for the result of grains was practically neutral, but the result was negative in, content of around 5,000,000 reais, and then the swap had also generated, negative results. Well, going back to the highlights of the exercise, we have the margins of adjusted EBITDA that were 65%, and we can see in the part that's in the middle, the operational points was much better than it had been in the same period of '24, especially with sugarcane, corn, and soy. And with the sale of the farm which we had commented, it generated 68,000,000 reais less than we had originally expected in the last year.

Moderator

On the next page, here, we see as we had always commented, soy and sugarcane added up to 60% of the total gross revenue. And going back to soy, the gross result in BRL 76,000,000, the margin of 86%. The price was 7% less than was commercialized in the year of '24, maintaining a margin of opportunity very close to the previous year. Of course, better because of the cost of inputs that were around 140 reais lower, 8% corn, which is another activity, which, in fact, we had reduced the amount commercialized, and we started producing in some tons. 167 to 67,000 tons was the consequence of the decision that we had made of not planting in the area because the margins the previous margins were very negative.

Moderator

So even though we had an area of recovery of 772 reais per ton in '24, but we had to confirm the cost with us the lower price of inputs compared to the previous harvest, but we had difficulties with the production that generated this, higher cost per production. Going to sugarcane, the gross result of 86,000,000 reais, I think that had come back to margins that were more historical closer to 30%. An increment of margin, as we said, was especially in the increase of the price of land and also in the production with a higher level of sugar, but the impact of that price generated this very positive results. And the increase of the cost is also connected to, as I commented, the leases in tons. And when you increase the price of land, it also impacts the cost of sugarcane.

Moderator

For beans, I think there's small volume. It's a culture that we are trying to diversify a bit with, let's say, during the small harvest, the safrinha in regions where we believe there is the potential to be explored. And for cotton, I think it's a point, as Andre mentioned, that the in the case of Paraguay, it's very important that part of the decision of the company previously was to reduce the super the surface, as Andres said, with better productivity of production. But it is still a culture that we are trying to consolidate with our technical knowledge through areas of less volatility, which is the idea, but we still believe that we have the potential or opportunity to bring it in as a culture that can diversify our productive areas more. The next thing that we see here is the cash flow of the company, $870,000,000.

Moderator

Looks like a debt of BRL $886,000,000, a cost of 91.22% of CDI with a net debt of 785,000,000 reais. Now we have the sale of the contract, 567 in the past in the committee in the financial committee. We added this to and some follow-up, especially with the debt adjusted adjusted debt. And we just considered the $850, and that's how we understand that we are always working with a level of indebtedness that is very low, the net adjusted debt, and its net value is like the is in that percentage. Usually, we work with an index of 80%, and now we consider that we are quite reasonable in this sense.

Moderator

On the right side, we have the program of amortization of the debt, 57,000,000,000 reais of the short term. For soy, which we defined as a strategy to capture better the premiums, 486,000,000 from two to five years, 45,000,000 reais every five years. And as I commented, it's also important to highlight what we still have for 100,000,044 million in soy bags that we will receive in the next few years. So what we have verified in the debt that has been very high, and it's impacting our high interest rates is the high interest rate, which is increasing the cost of credit. We see that in our company is not leveraged enough.

Moderator

We had an initial 500,000,000 to 807,000,000. And a large part of that is due to the recognition of the interest rates of 100,000,000 highs, which is adding a lot of pressure to the company, especially if we have that effector of leveraging. So we see that it is affecting the health of the sector. It is increasing the price of the debt and the sector. We also saw there's a lot of, judicial recovery.

Moderator

So just for the definition of our, cost, we've been considering this a lot because the it's a completely different scenario with a interest rate of 9% and the level of that that's very hard to conduct any kind of decision or forecast. So a decision that we made was to reduce the surface of cotton and diversify that because we have seen with such high interest rates, it doesn't make sense to have some, cauliflower come back. On the next slide, we see the results of the company. We are bringing a proposal in of dividends of 5,000,000 hands that will be approved by the assembly. This represents a dividend for 65¢.

Moderator

This is the historic history from the last five years of 1,300,000,000.0 reais of distributed dividends with a return of around 6%. We understand that we will consider some of what I considered and the cost of interest rates. We have a few commodities in this sense, and it would be a good decision to try to preserve this a bit, which is the decision of the company to pay this amount. Next slide. Well, here, for the investors where we which are accompanying us, we will have a Brazil agro day on the twenty sixth so you can get in contact with us from the relations investor relations to coordinate your presence.

Moderator

Thank you so much. And now we can go into questions and answers. Thank you, Gustavo. Thank you, Andre. Thank you for talking about our Brazil Agro Day.

Moderator

All of the we are open now for all of the those who want to participate. Remember that you should make your participation as soon as possible because we have limited vacancies. Well, now we have our first question. Thank you so much for getting our questions. I have two points, Andrea, to explore.

Moderator

I think the first would be, well, you already talked about it in the beginning, but I could not let this pass. So you advanced well in the con in buying a few inputs and a few commodities, and it seems like you are in a better position in relation to the market. I wanted to hear from you what your margin expectations are in which what you already have visibility and in what you already know, what you already have directions, and then try to make it relative with what you see for the industry. You already talked about how you expect the margins to be compressed in the next few years. So how are you seeing that in your expectations?

Moderator

And then the second question, focusing more on the appraisal the internal appraisal that you do with lands and on the external, it seems like you are more conservative in in relation to the other valuations in price per hectare. Is there any more specific discrepancy that you could highlight? Is there any region or if it's some kind of land in connection or not, which divert with your external numbers. Maybe it would be interesting for us to understand that divergence better. Thank you so much, everyone.

Moderator

Well, let's start with the second, and then we'll talk about the margins because then will get you to a ping pong with me appraisal. First of all, Gustavo, thank you for your participation. As always, your questions are very intelligent. What I would say is the following. What is good to talk about, we we currently sell farms over the evaluation of Deloitte.

Moderator

That's one point. Everybody here I mean, nobody here has any bonification or any incentive exchange for appraisal. So we are very conservative. What I would say, Andrea, because why is there so much difference? If you look at the last year, the difference was lower and this year was higher.

Moderator

I'm going to stay stick to the point. The first is a good news. Delight is get better than us. Great. The investor is very happy because we're always gonna sell higher than Delight.

Moderator

So what could be happening, Gustavo? This is very clear. It's the moment when there's an increase of of interest rates. So what is our methodology? It's the knowledge that we have on the market.

Moderator

We do not have a methodology like Deloitte has to say, oh, it's an AB and T that has its comparisons. It gets the transactions. They have their own methodology. Now our our methodology is those who are in the market all the time buying and selling farms. We have familiarity with the price.

Moderator

What do I see that changes a lot in these moments is so what what do we do? In a certain way, the sales of the company have a larger deadline than the market sales, and that makes a lot of sense. If you have a cost of capital that is more efficient than your buyer, I want the deadline to be here. So I do not want to sell farms in, cash and then for him to sell to to be paying the interest rates to the bank. So that's part of our strategy to sometimes have a longer term sale because the cost of efficiency of capital is better major for the majority of our buyers.

Moderator

So that's usually what happens. Now when you look at Deloitte against Brazil agro in a certain way, we have a larger duration of sale and then complementing to what I just told you. When you have a higher tax discount, you generate a larger gap of difference. So I think that's it. In a certain way, the evaluations are very much in line.

Moderator

We have very specific points. This is usually recurrent. So since you have a region where you have more current transactions, let's just say the case of Bahia, you have more appreciation at Deloitte than we do. When you go to Maranhao or PLA where you have less current transactions and larger transactions happening, you have an average price of the region that's lower. So when you get the average price of the region that's lower and you put it on a higher asset, it generates a difference as well.

Moderator

But nothing can jump you as a forty two thirty difference from one evaluation to the next. What I said is that the methodology, the way you bring the discounts, the way we prefer to have a larger deadline. And the third point is how the methodology of the sample methodology of Deloitte is comes from transactions just as we have in by an average price of the average size lower than our pros properties. You have another price. And then in another area when you have less concurrent transactions, the price is a little bit better than July, but there are small differences.

Moderator

So when you look at the details, which you definitely looked at the details, see that some are worth more and some are worth less. And that's exactly what I'm trying to saying to you. The next one, the margin visibility. I mean, it's what is the concern? I'm going to take the Brazil agro hat off and talk more about the sector right now.

Moderator

What are we seeing? We've been taking positions. We I think this is the year of discipline where the farmers need to be very disciplined, but just like the reason you are now. So what happened in the harvests in the last harvest because of a happy coincidence, we saw the dislocation of the exchange rates, right, when the farmers were looking for revenue. The last harvest, they planted with a dollar $4.74 80, Then all of the stability came, and he sold at the average of $1.

Moderator

That was a bit more expensive. That really tightened the financial situation because he bought with a cheaper dollar and sold with a more expensive dollar. Oh, he already had some a part of the production was still open, and in majority, he sold it with a more expensive dollar than he had decided to when he had in his cost. What are the concerns for the future? We are entering a time of formation of the harvest.

Moderator

It doesn't matter who bought earlier or later, but let's say he bought it with a dollar $5.60, not the dollar of today because today farmers already have their inputs at home. We they already have their applied fertilizer. So they the farmer comes in with a harvest with a higher dollar, more expensive dollar. And last year is a political year. It's the year of volatility.

Moderator

No one is is going to it's not about being right for or left, but we want Brazil with more stable fiscal stability. If there are trends or which show that we will have fiscal adjustments that are more balanced, there is a trend to once again add pressure for the reduction of the exchange rate. And then what happens is that the opposite of what happened this year, you planted with a cheaper dollar, and next year, the trend, if that continues happening, which we expect for the country, is that the trend is that we will close the year because of the exchange rates. So that is a visibility, especially when we look at exchange. When we look at the offer, well, what regulates, it's the offer and the demand and the offer.

Moderator

And then we have China, which is at a lower amount. And then you have Brazil again coming with the relevant production of The United States confirming its production. So we have a stock of passage, although there are uncertainties in the market that SGA seems very high. But all that mess in my thirty four years, working in the farms, I was saying, oh, people are migrating more for corn. Well, in my knowledge, everything goes back and forth.

Moderator

So it's nothing if you look at all of the migrations in the last thirty to forty years of American agriculture. That's what we're talking about. Three and a four half more or less because of migration of corn to soy or the inverse. So in summary, we're gonna reach a market that's going to have high offers, higher offerings of stock, which will be able to keep these levels the level the current levels. So we are talking about climate.

Moderator

We're talking about biology, about if in the middle of the way there's any climatic event that will affect this relation of supply and demand, everything that I'm saying is not going to be true. But in the structural aspects of right now, we have the concern for reduction of margin in the next few years until these stocks regulate. And how will they regulate? They always regulate the cost of production that is high, lower margins. You remove your foot from the daily transformation, the offer and the demand on the other hand is something that is constant.

Moderator

So we also do not have a disruptive event at the side of in but we have been needing for years with margins very similar to they are now. It's not like it's a disaster or any of that, but it's very similar. And the farmers need to be very prepared to work with these different costs of revenue and income and sales. Thank you so much, Andre. A little bit about numbers.

Moderator

The previous year, we started with a cost per hectare for soy, and now it's a different number. And especially for fertilizers that Andrea was showing us. And the fertilizers, that has happened for almost everything around $6.07 percent when we go into corn, a 3,000 to 4,000. When we go to cotton, that was the one that when we looked at the cost, it's 13,000. It went to 14,700.

Moderator

That's something that we also saw that took a step back when we talk about margin. It was very similar to this year, especially when we talk about the case of source for pots. And in our case with the premise, Well, it was dropping at 4,000 reais per hectare and now at 500,000 per hectare. And what was being confirmed is that now we are going to have to work with the impacts of productivity of sugarcane, but we are also talking about 4,000 thousand reais in the per margin. So we were foreseeing an EBITDA an operational EBITDA very similar to 02/2425 was in this harvest.

Moderator

Thank you, everyone. That was very clear. Next question from Thiago Duarte. Please go ahead. Open your microphone.

Moderator

Hello, everyone. Can you hear me? Yes. We can hear you. Thank you, Anna.

Moderator

Good morning, Gustavo. It's a great moment to speak to you. I actually have three points. And the first one is about the proposal of dividends. So it's the lowest in the last few five years.

Moderator

I imagine that that is associated to this more careful panorama that Sandra talked about when he was talking to Gustavo and his initial considerations, but also it draws my attention considering the balance of the company. The company is very healthy as you well demonstrated when we look at the indebtedness of the company and we deduce the receivables. The company has no debt. So I would like to understand better from the point of view of capital allocation if we should be careful or if the company sees other uses of capital in this scenario of low margins. Maybe there will be more opportunities to grow under, like, the cycle of growth, which we talked about in.

Moderator

I don't know if that has something to do with that. And that would be the first question. The second question would be the transformed area. The last year, you transformed a little bit more than 3,000 acres, but you have an average of 10,000 acres in the last previous years. I also would like to understand why this deacceleration happened.

Moderator

I imagine that the conditions today, let's say, thinking about the tier of daily areas, the cost of developed air went up. Maybe you could talk a little bit more about that as well. And finally, it's more like a follow-up when you mentioned the difficulties. You talked about the management of cotton in, Uruguay. I remember when you entered into Paraguay, I believe that that was an area with a lot of aptitude for soy.

Moderator

And then, you just wanted to understand this venture that you have on top of content and understand. Well, you talked a lot about learning. I think, of course, that's very natural for a company that's always trying to diversify that pie where you see more colors. But I wanted to understand if the expectation is to maintain that area of continent, Paraguay with everything that we saw this year. Those are the three questions.

Moderator

Thank you. Well, Chuck, good morning. As always, this is the analyst. As Gustavo, these are very intelligent questions here coming up. So first of all, I'll go backwards to forwards.

Moderator

I'll go down. Accountant. In Charcoal Paraguay, it's a very high cost of production. It's a very relevant factor. For charcoal, there is a lot of instability because of the climate.

Moderator

The radicular cotton comes gaining body at charcoal not only in Brazil agro, but not only with our company there. Three years ago when we planted cotton in charcoal, we were planting in our first area 800 hectares. And at that time, Chaco Paraguay was producing 16,000 acres of cotton. Us was 800. The whole region was planting sixteen, seventeen, especially with the Mennonites cooperatives, and we went to 2,010 now.

Moderator

And in Chaco Paraguay, in the last harvest, Chaco produced 45,000 hectares of cotton. Just for you to have an idea, and I'm sure you have these numbers very fresh in your mind, if we consider Chaco Paraguay a Brazilian state today, it would be the third state in the level of cocha cotton production. It would be Mato Grosso and then Bahia, and then the third Brazilian state would be Chaco Paraguay with 45,000 hectares. There are a lot of other states in Brazil producing with 35,000, and then thus the numbers start falling. But there was an important increase of this in in Paraguay.

Moderator

This is what I commented. The culture is more resistant, to extracts. And later, I can tell you how we saw this empirically. We had this discovery there. And, undoubtedly, what happened this year was a sum of factors.

Moderator

So as incredible as it may sound, the great reduction of our production in Chaco Paraguay this year was not because of a lack of water It was because of too much rain. We planted cotton in December, especially. Cotton suffered because of the drought that soy suffered in February and March. But until then, Cotton was very strong.

Moderator

We had all of the numbers as we had decided upon as we had budgeted. So everything was going right. Then what happened, very strong rain came in March and April, especially April and May when cotton had already opened. We had more than 500 millimeters of rain. So that shows that the drought well, the drought was an the problem that we saw was an excess of rain in a few months.

Moderator

So this makes us be very careful. I think we are going to continue to plant cotton. We're going to have a daily reduction, but I believe cotton is a vector of transformation for the real estate cost. We will just be readequating it in two or three years with lower margins there. We'll might have a readequation because there is a very important efficiency there.

Moderator

It's a paradise to come in, and nobody leaves when you get in. So our main concern is to balance this out. So we are working there to balance the entrance and excess of flows because of the volatility. The transformation area, which was your second question. What happened in the area of exploitation?

Moderator

I think you remembered you worked with us in the past on the follow on of the company. When we issued the follow on, we issued the, we had a very important concern, which was to accelerate the development as much as possible. So we were racing at that time, basically, basically, Brazil Brazil with with the the exception exception of, of, which was a farm that we bought a few years ago. We are finishing the transformational chapel house, has no more areas to open. We are finalizing a few things with that we were still missing.

Moderator

So the reduction of the transformation was because the purpose in the past was reached, have a, have the capital in the company, and accelerate the transformation because we saw this entire discussion of commercial restriction of a few tradings in '24. So we worked very hard to have that done, and we had to reach levels that were even lower. And this number is very similar because in Chaco Paraguay, that was the number that we understand accommodates the need for cash flow. It accommodates the operation because it's a heavier opening area than it is in the of Brazil. So that is the number that we should expect.

Moderator

There is a need for transformation in Brazil. So just to explain, part of the reduction was because of this main objective that we had. Now your third question and my third answer. Think you used the right word I would add. Care being careful on opportunities.

Moderator

Those are the two things. First, care, being careful because we do not know how the interest rates will go up no matter how much the company will run with operational numbers. We do not want to pay extra for capital cost. The challenge here is that my current debt has interest, and my receivables from the farm do not have any corrections. They are corrected by soy.

Moderator

But if soy walks hand in hand and that's our expectation, we'll have a debt and a receivable walking hand in hand, and that's where we need to be careful, which you very well mentioned, to bring this level of indebtedness, which is very healthy. And then today, our net debt is zero, and it will be positive. And that's part of our business. And so when we look at the recurrence of dividends paid in the last few years, I have no doubt, you know, that we've been one of the best dividend payers companies. And in '75, we see it at 3.5% of yield, maintaining an average of yield at the house of nine.

Moderator

So I believe that the market will manage the company. So there's a point of attention. There's a debt that I don't know when the descendant CDI curve will happen. There's a part that's not connected to my debt because it's stuck in soy. Soy is more stable on the future, and there's also the generation of business opportunities because of all this that will generate opportunities.

Moderator

So I don't think there's one word that we can use to say bingo, but I think it's a sum of different factors. And I had to complement as well. I believe that in the last three years, I think it was 450,000,000 reais invested in the farms, not in the irrigation or area, but I think we also have for this year CapEx of around 130,000,000 reais. So at some moment, we thought, well, a little bit of both. One is to preserve the company for an eventual purchase or acquisition.

Moderator

And since we have a large volume of investments in irrigation, more than 36,000 million reais, we want to renovate, not diminish, the average age of our sugarcane plantations. So there is a large CapEx in plantations with sugarcane. So I think there are several projects that we are understanding that make a lot of sense. And with the interest rates and this level, of course, are a bit difficult even to approve them. Next question from Pedro Conseca from XP.

Moderator

Please turn on your microphone, Pedro. Good morning, Andrea, Gustavo. Thank you for getting our questions. The first question I wanted to explore is a change of mix with the more more so is there any data that the content is a culture where we need a few years of investment with more CapEx? And then the second point on that, you already commented that the company will focus more on content.

Moderator

I wanted to hear more on what's behind the strategy in changing the mix. If maybe it's more connected to optimism and related to corn or if it's more conjunctural because of the mix of the company and for the next years. So I think these are the last questions that I would like to explore. And the second point is in relation to the strategy of acquisition of the hydrogen When we look at the level of acquisition of the company, it's much more delayed in relation to last year. So at this time, the company would have purchased a higher amount of So why is there this longer delay with Urea?

Moderator

Does the company think that the exchange rate, which is very terrible today, can improve, or do you think we will eventually see the company using less nitrogen aids in the next harvest using the stock that's available in the soil. That is my those are my questions. Thank you, everyone. Okay. Now you ask questions to the agronomer.

Moderator

Let's start with your last question. I'm always starting with the last question not to make a mess, but that's how So nitrogenates agronomically is the only nutrient that you cannot use stocks in the soil. You can use potassium, phosphates, nitrogenate, unfortunately, not if it's an if it's available in the soil. It's nitrogenate that's always available in the soy.

Moderator

You'll is compressed from the material, and it will be made available for the system. So the economy of nitrogen aid, if anybody says they're going to do that for you, take note. It's a reduction of productivity. So that's the first point. You cannot do that with nitrogen aid.

Moderator

And then some of it comes from the discussion of certification. Basically, our nitrogen aid has two main motives. It has cotton and, the corn of the smaller harvest. Harvest, and nitrogen aid, which we are using today is for the fertilizer of Kona. Yes.

Moderator

We are of sugarcane. So we are a bit later, but, the two things we're not betting on, but we have a challenge to work with more just in time, not carrying stock at a moment in which you have high cost of capital. So the other years, as we saw, the price of nitrogenized was very higher within the numbers we went and started using that in the sugarcane harvest. And now we are more prudent because of the cost of capital. Of course, we're phosphated.

Moderator

You said there's the cost of capital. Let's just do it. So we did it. Nitrogenate, as we said, we didn't do it. And if you ask us what are you seeing for the future, I think it will accommodate the price.

Moderator

Discussions of things that may affect the price. Russia, Ukraine, all of that will affect the price of petroleum, and, of course, it will affect the price of nitrogen. I so it's not like we are betting on peace there. Of course, we are as citizens, but, of course, that may bring the issue of the year having a higher cost of capital few usage over the whole year. The decision of nitrogen aid was a little bit about what I mentioned.

Moderator

We're going to buy nitrogen from hand to mouth. When you need it, you you buy it. So it could be at the end of the harvest, you'll say, well, we got the average price wrong, but the strategy of buying nitrogenide from hand to mouth has always been very assertive. Well, content versus corn. There is a weight in this, and, we started to see stability, more stability of formation or the a better market of corn derivatives.

Moderator

So we start to have more predictability. It's important to you know us. So we have been we were one of the first companies to work with corn, the largest producers of corn. So we were not the largest producers, but we understood that that coal made sense, and we had a large problem of liquidity. So if you ask me what changed in corn from them to now, I think the liquidity of the derivatives of BMF change, and that's when you start having more predictability.

Moderator

Gustavo will also remember. Every time we're discussing, the budget in h January, it doesn't it didn't make sense to plant corn, so it would generate margin. Corn was always bad. We always make the decision to make it. What's changing in the next few years is that we start to see the market of corn derivatives that allow us to start work some.

Moderator

So that's one point. The second point is that we to see with the corn. It's a low added value product, just not like Oh, yeah. That's, well, times two worth times two corn. So that's a situation that you accompany much better.

Moderator

The ethanol plants are getting you to capture part of the price of corn in this premium, which I'm going to call less economy and less logistical cost to transfer the corn in long distance. So that is also something that has made us be audacious. So that's a combination of both in the cost of capital, which is more capital for cotton, corn, a less a bit more repredictability with the market of ethanol, which is much more liquidity in your pocket because of the vehicles and also ethanol, making sure you have the logistical redistribution and the list distribution of corn. So these three things I mean, I'm very optimistic for the growth of corn in Brazil. And in Brazil, agro is going to grow because of this as well.

Moderator

That was very clear. Thank you so much. If I could just make a quick follow-up. When we talk about very strong growth of the harvest corn in the projections of the company, it would be in which state? Basically, POE and Maranhao.

Moderator

Basically, POE and Maranhao. Thank you so much once again, Andrea. Oh, thank you so much for everyone's presence, Andrea and Gustavo, for your availability at this call. We went over time today, so I'd like to thank everyone who remained until the end with us. And we will be closing this call for now. Thank you. Goodbye.

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