Q2 2020 Adecoagro SA Earnings Call
Good morning, ladies and gentlemen, thank you for waiting at this time, we would like to welcome everyone to.
Second quarter 2020, <unk> results conference call today with US we have Mr. Mariano Bosch CEO Mr., Charlie Boero Hughes, CFO and Mr., one Ignacio Galliano Investor Relations manager.
We'd like to inform you that this event is being recorded and all participants will be in listen only mode. During the company's presentation.
After the Companys remarks are completed there will be a question and answer section.
At that time further instructions will be given should any participant need assistance. During this call. Please press star zero to reach the operator.
<unk>, let me mention that forward looking statements are based in the beliefs and assumptions of Adecoagro management and on information currently available to the company. They involve risks uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future investors should understand that general economic.
Conditions industry conditions and other operating factors could also affect the future results of Adecoagro and could cause results to differ materially from those expressed in such forward looking statements now I'll turn the conference over to Mr. Mariano Bosch CEO Mr. Bosch you may begin your conference.
Good morning on thank you for joining <unk> second quarter, we such conference.
As we all know.
This quarter was mark by the spread all grown I like it was the season on the low what is economic slowdown.
Such difficult times, our main concern wants to continue running well that went up but age huh.
While ensuring the safety or what a beep.
Bite in both Q3, but also going to rely on I didn't think unsecured working environment.
I think it wasn't mistaken.
We were able to continue operating well know where business is on a regular databases inspite of the pandemic.
We willingness Sony well see some to go through these challenging macroeconomic gone there.
Two.
Having had the legacy play well before heal.
There what do you feel how what assets.
Dyslexia, we'd be glad that to changing scenarios.
And I would have gone instant book I'm being low cost producer.
All these.
No that's two month they profitability even on the currency it that's it.
It has not been easy.
But what do they have water.
<unk> Bioware didn't seem to eat every day.
They though.
You know what you were.
Let energy business.
The impact on <unk>.
They do a significant they're all ended he must embrace T cells.
Energy.
Presenting it very challenging scenario for the industry.
We rapidly yes, it's a west that did you do adjust to.
Do they knew context.
Nothing by switching our product mix, so what must be making sure.
Which crazy I think we know do the yet.
Indeed.
We they 30, 54% of the Irish to show up relaxed.
Well yeah we.
25.
During the second one there are plenty 19.
In addition to lease would we deal.
Oh, what crushing based so I don't know our operations team done them with a lower volume.
Implemented cost reduction in each of these unbelievable uncommitted expenses.
I would rapid response.
They shelly under such a sudden change the market conditions I know that's to continue saving our broker we they how you might see not continues.
And make it more efficient use of out what does he stuff.
In addition, these based reaction.
Improved their condition. So how much luck implantations do we mean during the second semester on the here.
To give you I mean, we received a what meeting space.
Reached.
Rick or higher leaving packing capacity in July.
Now, what bottoming I'm, not going up or make some leases.
Yeah, but at the regarding Argentina, the mandatory no no reason to many challenges from I know G Dick and operational Blink deal.
However.
We weren't exactly we shouldn't be complete harvesting activities, what I were right on most of our crops.
And that's both our production I gross then different drilling.
This was Sunday basi, but that's still the commitment if I wouldn't be.
Many of which what putting words in order to Garen di na safety and that's that facilities.
They were performing their desks.
I would also like to point out there really communication, we maintain and they would work we need alongside.
Oh Bernard May yours.
I'm, probably get D. D to successfully we know where Brazil ligands human in every corner of the country.
Well I see next what market.
Neither have there been Danny.
Another great accomplishment.
We achieved during the quarter.
What they say not that farm in Argentina.
We realized that additionally, we.
Our final shot that they see.
Today, any how what that well see some was another be there to successfully same throughout different living.
We entered an example, we entered into an eight year alone.
100 million, though that's we've yet to see.
Which the weather would that was that something company.
That's funny they liquid position.
To conclude.
I'd like to express how browse I, yeah, Oh, they work that we I say company had been doing to overcome the effect until they've been Danny.
This work did not start a couple of months ago, but yes.
And I'm very grateful to it we seem to remember also that the glide at all.
For their ongoing commitment to the company.
For their willingness to come to work every day.
For that continues Galumphy that's on support.
I know that we didn't have challenges I handle flat.
I am come beans.
We have the right people and that we have following their rights strategy.
Good day would be done some value what I would exceed the shekel in there.
No more than ever.
We need to remain bullish I'm being low cost producer.
And I wonder efficiencies and taking care of our beep.
So no Charlie can walk you through the number Celtic water.
Thank you Marty I know.
Good morning, everyone.
Please turn to page school.
I would first like to take a moment to comment on how the dynamics of the Brazilian sugar and ethanol and energy business.
Being impacted during the second quarter of 2020.
She will be instrumental to understand the decisions we've made along the corridor.
During this period Brazilian ethanol business experienced a decrease in prices and demand.
Mainly explained by.
Before in international prices as can be seen in the Dopeless chart.
Caused by the oversupply oil generated by the geopolitical conflicts between Russia, and the Kingdom of Saudi Arabia.
These translated into a decrease in their price of ethanol due to the correlation they maintain.
Can be seen in adult right chart.
And by the reduction of People's you're placing in Brazil.
So predictive measure in response to they'll be 19.
Which need to a natural decline the demand for fuels in Biofuels. So I'd just ask them as can be seen in their bottomed out a chart.
The impact of these factors caused the industry to experience a challenging second quarter of the here.
April was defined by uncertainty regarding the extent of Kobi 19 impact Indeed estimates pointed to a 50% year over year decrease in demand for ethanol.
I, Turkey goes well no less negative Steve painted a challenging scenario.
Oh, no year over year comparison at the on demand in Brazil declined 28.6%.
And on prices experienced a 25% decrease and internationally prices experienced a sharp decline as well.
In addition, ethanol stuff matters, where high due to carry over from 2019.
Music was Brazil switched that makes to maximise true up which presented higher relative prices.
Yes.
Limiting the supply you bet.
You may internationally gasoline prices experienced a recovery.
There was like 21.87 month over month increase in demand for Ethernet who lives in.
Do you do a less restrictive knockdown than originally thought.
Although year over year demand was 27.9% though.
By June there were signs of recovery.
For instance, the year over year drop in ethanol demand stood at only 10.5%.
Ethanol prices denominated in Brazilian currency, we are 1.6% higher year over year on the account or favorable FX rate.
Hi, good gasoline prices and lower supply you too many diverting their production just szuba, which surprised in Brazil currency Wars, you started equal pay downs.
During July Aethlons fundamentals pointed to our recovery.
Seen in an 11% month over month, increasing demand and only a 9% year over year decrease according to your only got laid just report.
Towards year end analyst estimate I typed supply and demand scenario for ethanol.
Linking to our price recovery.
This is sold because did he greason demand is expected to amounted to 4.9 million cubic meters when did decreasing supply cost by the generalize shift towards sugar production.
He is expected to stand up 5.5 million cubic meters.
A side note I would like to briefly mentioned that in June 2020, we officially became the first company to commercialize carbon credits under that read Orbio program, marking a milestone in Brazil biofuel policy.
We are proud to be suggests men, which shows our commitment to sustainable operations.
We are confident in the positive impact I don't know lovey yield we have in the industry.
Now, let's move to page five with a brief analysis on the raised in Mato Grosso will soon.
I've seen on the dock charts range now a classroom I don't know so soon during the second quarter of 2020 were 12.5% below the 10 year average, but double compared to the second quarter or 2019, which registered buried right wet.
The distribution of rainfalls, however was not even all the border.
Grains, mostly concentrated in the month of me.
Improving the outlook for the following corners.
Let's continue with slide six where I would like to discuss our she working crashing.
As mentioned above we.
We have been following gloats media bullish on factors impacting Brazilian sugar and ethanol on energy business and rapidly reassessing, our strategy to adjust to the changing scenario.
This quiet the beginning of the corridor, we decided to slow down over crushing base and reduce our level of operations in time, then with the lower volume.
In addition, we implemented a cost reduction plan, which included among others. The temporary suspension of employees under provisional measure 936 gosh training.
Allowing us to maintain the workforce sites to our operational needs.
However in light of the signs of partially to recovery in June.
Favored by the right, whether we're just Jordan the cluster region, we began the process revamping our operations and accelerating our crushing base again.
On a quarterly basis, we crossed 2.9 million times.
28% or 1.1 million tons lower compared to the same peers of last year.
Our strategy to slow down crushing was evidenced in our 10.1% year over year decrease effective meeting base and 19.9% decrease meeting date as can be seen in the Dublin chart.
On a six month basis, a total of 4.2 million tons of Shorkey where crust.
When you, 1.6% or 1.2 million load times, lower and the first six months from 2019.
40 explained by the second quarters dynamic.
We expect to recall that this lower crushing volume during the second semester.
Indeed during July we reached a record high of 1.7 million concepts working crush.
We took a year to date based is it uses the got versus last year due only 700000 times.
This improvement you know where operations coupled with a positive outlook in terms of productivity.
Now, let's take advantage of the recovery Netherlands fundamentals.
These jump to page seven where I would like to walk you through our agricultural productivity.
Looking yields during the second quarter reached 81 tons per hectare.
1.5% lower than the second quarter of 2019.
Intensive to a content.
Yeah, Chris during the quarter reached 126 grams per tonne inline with the same peters of last year.
The combination of these two effects, we saw did in Trs production per hectare or 10.3 times, 2.2% lower year over year.
Year to date yields reached 75 tons per hectare onto your rest canton 117, Keeter was baton.
11.4% and 4% lower year over year, respectively.
Since explained by the fact that during the first quarter idea.
To profit from very attractive ethylene prices I mean in order to secure kw that'd be need to put 2020, we maximized the harvests have helped us with no productive potential.
You strategy allowed the sugarcane with highest potential to continue growing on recover from the impact of the 2019th adverse weather conditions, resulting in a negative impacting both Ian I'm Trs content, which resulted in lower Drs production per Hector.
Let's move ahead to slide eight where we'd like to discuss our production mix.
As you can see the top this chart during the second quarter of 2020 ethanol prices experienced a sharp decline.
Hi, listen hydrous ethanol Smartdose will soon traded at an average price up 10.39, 0.5 cents per pound sure equivalent marking up 4.7% and 11.7% discount to shorter respectively.
This context.
No were airports were focused on maximizing sugar.
The product with the highest margin contribution to which we diverted 54% of the Drs.
During the first semester 2020 as can be seen on the Dol right chart, we diverted 41% of the Trs production to sugar.
Be out with 20% during 2019.
I would like to insist that this.
Hi degree inflexibility constitutes one of our most important competitive advantages.
Since you don't allow us to make a more efficient use of our fixed assets and send abroad I would the highest margin contribution.
Hi, restart of this strategy during the first semester of the year sure accounted for 36.6% October Libbey D.A. generation in the short ethanol and energy business considering other operating income.
Ethanol accounted for 55 cents.
Let's please turn to slide nine where I would like to this cost quarterly sales.
As you can see on the top left chart.
During the second quarter of 2020 ethanol states volumes decreased by 52.3% year over year.
This is explained by the note on measures adopted by some states in Brazil, which negatively affected demand for future.
Indeed, hydrous ethanol sales, whether most impacted dropping by 67.3% compared to second quarter of Tony 19.
Dick we need to for the product remain limited and there was Nokia market price reference.
On hydrous ethanol sales were 29.8% lower compared to the same period the best year.
Driven by lower gasoline consumption.
Average selling prices breath, unaware lower both measured in reality as well as you as daughters standing at 10.3 cents per pound, representing a 32.8% year over year, the reduction marquee not significant discounts to sugar.
Only known now that don't sales during the quarter amounted to 23.2 million, 70% lower year over year.
The case of NRG sitting volumes reached 259000 megawatt hour.
Martina, 17.9% decrease year over year explained by over commercial strategy to postpone energy sales in the sport market in light of the low prices observed during the quarter.
Average selling prices were lower both metric in reality as well as you as dollars standing at $35 per megawatt hour, marking that 28.6% decrease compared to the same periods of last year.
Overall net sales were 41.9% lower compared to second quarter up Tony 19, reaching 9.1 million.
We were since volumes during the quarter reached 134000 tons.
48.6% higher year over year on the account of the maximization of sugar production.
This was partially offset by average net selling prices measured in us dollars, which dropped by 11.4%.
10.9 cents per bomb, although prices, you realize where I'd historical Maximums explained quite Brazilian producers continued maximizing sugar.
As I resell minshew assays reached 31.9 million during the quarter.
At 20% increase year over year.
Finally to conclude with the sugar ethanol and energy business. Please turn to slide 10, where I would like to discuss financial performance.
Adjusted EBITDA during the second quarter 2020 was 45.4 million.
Already broken focus and lower compared to the same period of last year.
These was mostly explained by lower net sales partially offset by.
Cost of dilution following the depreciation of the resilient Riyadh.
Lower selling expenses as we renegotiated schuler freight costs unpaid nesbett scoping stacks lined with the lower ethanol and sales.
And lower general and administrative expenses.
On the account of currency depreciation as well as Jinyan savings as part of our cost reduction initiatives.
I would now like to move on to a farming business.
Please direct your attention to slide 12.
Also the date of these report 92.7% of our total planted area was successfully harvested and presented good years.
The remaining hectares I expected to be harvested.
Early August.
Let's move to page 13, where I would like to walk you through the financial performance, our farming and land proclamation businesses.
Adjusted EBITDA in the farming electroporation businesses during the first semester of 2020 was 64.8 million.
52.9% or 22.4 million higher year over year.
This increase is fully explained by the dynamics of the second quarter, which generated an adjusted PBT of 40.2 million.
At times higher year over year.
Now, we'll enter permission segment.
The second quarter of 2020, we generate a gain of 10.1 million from the sale of 811 Heck does have a farm in Argentina.
Representing our first farm team in Argentina in five years.
On a year to date basis. This gain marks a 7.6% increase compared with a 9.4 million results registered during 2019 from the same I don't need Refarming, Brazil.
Adjusted EBITDA in our farming business amounted to 54.7 million during the first semester of 2020.
30.1 medium during the second quarter.
Three times higher year over year.
The impact of copied 19, generating an increasing the demand for rice, Amir, which we were able to capitalize.
During the second quarter of 2020.
The crop business generating an adjusted EBITDA of 17 million.
14 million higher compared to the same period of last year.
This increase is mainly explained by higher.
Higher average prices driven by a greater participation of higher value crops, such as bina than some fellow.
And year over year, increasing hogs today area, you, but equally aren't in the case of corn, which increased by 22000 hectares generating a 4 million gain in changes in fair value.
And increasing the mark to market of our commodity hedge position.
And cost dilution following the depreciation of the Argentine peso.
The rice business generating on adjusted EBITDA of 8.3 million during the second quarter of the year.
5.2 million higher year over year.
This was relieving by an increase in sales generated by a higher demand both domestic and export market.
Driven by countries rebuilding desktops and increasing consumption.
Coupled with higher average prices as expert prices increased and we pushed the state of higher margin products in the domestic market.
The increasing adjusted EBITDA was also due to an increase in the mark to market of biological assets and lower costs in dollar terms.
You did business generated an adjusted EBITDA of 5 million due the second quarter of the year.
Mainly driven by.
Hi, you're setting volumes on the account of an increased demand in the domestic market and achieved deficiencies in our vertical integrated operations, including high productivity or the farm level on the flexibility, our industrial assets, which allowed us to benefit from the spike in demand.
Let's now turn to page 15, which shows the evolution of by the Glottis consolidated operational financial performance.
Net sales during the second quarter of 2020 reached 181 million.
There are deemed 0.7% lower year over year.
This is fully explained by the performance of the short ethanol and energy business, which received the greatest impact from the Corona virus pandemic, which translated into lower prices of sugar ethanol and energy measured in U.S dollars and lower setting volumes were back on and NRG.
Adjusted EBITDA totaled 81.2 million, marking a 6.6% decrease compared to the same peters of last year.
On on year to date basis, net sales reached 332 million, an adjusted PBT 842 million, 8.5% and 2.1% lower year over year.
Please turn to slide 16 to take a look at our debt amortization schedule.
I would like to highlight.
It's not only from an operational and financial point of view that we adapted our strategy in response to the pandemic.
We also worked on T. real risk management program to improve our liquidity position in light of such an uncertain scenario.
As you know we started 2020 with a cash position of 290 million.
Throughout the year, we reassessed our cost structure wouldn't hold some uncommitted capital expenditures and raised created down to strengthen our cash position and make front to our financial obligations to working capital needs.
Indeed during the second quarter, we increased our short term debt position by 23% quarter over quarter by racing short in working capital lines.
She is worth mentioning that much of these dead was raised a sub freight cost synergy measure due to the uncertainty in the macroeconomic scenario and that you to the seasonality to our business our sales have been being collected yet.
As can be seen in the bottom graph, our pro forma debt amortization schedule improved considerably compared with March 31st of 2020.
This is mostly on the account of the $100 million loan agreement, we entered with I see this time or Argentinean operations, which almost doubled the average life of our debt to six years.
We are proud of these major achievement, especially given the garden global economy situation as you decide reflection of our hard work solid reputation.
On the stable outlook of our business.
Being received these green loan also validates our strong commitment to environmental sustainability.
To conclude please turn to slide 17 to take a look at our net debt position.
You may see the bottom left chart, our net debt as of June Thirtyth of 2020 reached 742 million.
30.2 million or 4.2% higher than the previous quarter, driven by a 31 million increasing gross debt, which amounted to 970 admitted to 3.3% higher than the previous quarter and cash and equivalents flat at 236 million.
We are over a year basis net debt was 4.3% lower compared to the second quarter joining team on the account of higher cash and equivalents, mostly driven by a positive free cash flow during the last month, which fully offset the higher gross debt, we believed that our balance sheet leasing health.
The position not only based on the adequate over debt levels, but also on the term of our indebtedness with approximately 75%, having a long term tanner.
Our net debt ratio reached two point 45 times, 6.2% higher than during the first quarter of 2020, but 17.4% lower year over year.
At the same time, our liquidity ratio shows the full capacity of the company to Rebase short term debt with cash balance without racing extended capital.
Our self June 2020, the ratio, which is calculated as cash and equivalents loss marketable inventories divided by shorten dead reached one point 22 times.
Numbers significantly higher once we included the I see no.
Thank you very much for your time, we're now open to questions.
Thank you the floors now open for questions. If you have a question. Please press star one on your Touchtone phone at this time where anytime.
If at any point. Your question has answered you may remove yourself from the Q by pressing star two questions will be taken in the order. They are received we do asset when you pose your question that you pick up your handset to provide ultimate sound quality. Please hold while we pull for questions.
The first question comes from Pedro source from BTG Pactual. Please go ahead.
Yes, good morning, good morning trailing.
I have two questions here on my side.
The first one on one sugar and ask them all.
To provide a bit more color.
Sure you're hedging strategy going forward, we saw hedges for the current crop ramping up this quarter right.
It was still a little bit below than what we imagined it would be so it will be nice to hear how has been involved in already in July August and also and maybe even more importantly will be interesting to hear about had just next crop the to Tom twin once when to harvest as well.
We've been seeing a lot of discussions enrollment all Brazilian Miller's have been accelerating had just for the next year as well.
But the thing about back why Hasnt started yet so.
Should we take from that that you guys are confident that theres too.
For sugar prices to go.
Much beyond where we are today are current sugar price levels.
Color would be great there and the second one on your capital allocation.
Thanks resolved the Dol year to date guided to do all the initiatives taken as you guys said, but by the company to address the can then they can see backs but.
Also there is a part of this reduction which is probably related should affect you guys were already entering the final phase of your five year expansion plan right. So.
How much of this reduction should we assume as a recurring base in say needed to nice to have a sense of what.
It should be the cruising speed for Capex for the next waters for the group.
Hey.
That's it thank you guys.
Okay. Thank you paid it off or euro questions and I am one wants have fast Drs second the second part of your question and then they will buy or not but to do on said they.
First question.
So a big adding the same capital allocation on day lets capex that you are seeing that spot at the five large structure and Latin us we'd been helping scenes.
Before fights fiber to the four years ago.
What a five year plan in 2020 with what they year, where we were finishing I want to five yet so most of the growth.
Investment that we need be say five year plan, he say, finishing in plenty plenty so be it the east structural.
We gotta being I wonder whether they focus on what we've been doing and what we are focusing today, so and that's something that they we should continue to see.
Then.
No. They do your first question regarding nature, one ethanol lending hate GSM, one last but not that too.
You more colo them dispute.
Yeah, Hi through.
Our positive for sugar prices and it is because there are some some countries that are important suppliers of schubert that our stations importance. So you have dry weather in violent whatever the yellow vials in European Union and you have jolt in Brazil that can be thanks bye.
At least dumping suit that by the high Trs, but not fully compensated thing.
And we have.
Increased demand from China faster and Indonesia.
No one wants was expecting.
And if you consider that debt that demand for tomorrow, we will recover and next year.
This is going through true true reduce markup dependent redemptions of should there that the Brazil ABS and this year. So we have been progressively increasing our our hedging accord introduced their terms that we had as we head into true.
Last weeks.
So far.
Early to edge, 80% of the two any friendly.
She's them at the 12.3 cents per fault and 16% off the two anything anyone.
That's a 12.7 cents per call.
Next question comes from Lucas Ferreira from JP Morgan. Please go ahead.
Hi, gentlemen, good morning, My first question on and.
Methanol.
Your strategy of focusing server as lower crushing in the in the first quarter of the season.
I think was very different from what we saw in general for the center cell.
Which actually had a very.
Very strong start of the season. So wondering what was the the strategy there and I.
I suppose I suppose that obviously the crushing is accelerating a lot so wondering.
The changes anything for the full year.
Yes, we can comment on this.
In the second question was about the land. So you in Argentina, if you can.
Quickly discuss with us devaluation of Atlanta relative relative to the typical assessments and the appraisal you guys do every year.
Any issue, which do you expect to sell more land. This year how is the liquidity open market do you see though there was going to just a one off a thing or are you fuel that the market is improving and that could open opportunities for you to do more land sale.
The next few quarters. Thank you.
Thank you look I saw your question Im.
Not that we give you more color, though we view that color on the effect question on why the too that the strategy. So they're not unusual going deep there and then I will take the land sites again.
Okay. Thank you Lucas.
As a consequence of less than years dry weather whatever reduce the crushing vision to second quarter and consider the public looked at 19 and ethanol demand and price. We're fortunate to was an appropriate time to do it even more time to the sugarcane developing and to reduce our harvesting cost adopting the entity.
Nine pursuits restricted to order book decision I was just on low price and sugarcane yields improved and delivered those measures, reaching an all time largely quotient in sugar production record in July as already mentioned.
Sugarcane using has also in quarter two levels much higher than the same beautiful messenger and I think they started just you control most.
All their meals.
But as you default multiple wasn't as soon as its all.
Other dynamics.
The reason, we have different channels harvest model.
So we have not been affected by the job that squeaky pouring in other regions right now where that's why we had a dry weather too much of those assume lessen your which also affect the first in mass or sugarcane yields.
However, the normal ranks we have zero, we will have a better second semester, there's certainly better yields and assumed during the first tier.
Shipments will lessen your we will have as low first semester and an eight days second semester in terms of Flushing as we have already seen.
In July.
Thank you are going up though.
And look that I'm not so regarding your question of they land paid a as we mentioned the land save you a how should we not the right that these 23% Bob they push from valuation buddies, a independent valuation buddies being done every every year.
And but more relevant though them already one thing is that we are seeing that they might have capacity gotten much more active.
We are receiving beseech slow what farms from different detected bodies.
And we believe that this trend we continue using been XML there. So we will continue seeking for executing more say.
Again, if you have a question. Please press Star then one.
The next question comes from.
Fernanda Qunar from Citigroup. Please go ahead.
Hi, Thank you for taking my question well.
Hi.
Your strategy to accelerate the crushing rates in the second half.
I'm just wondering here trying to.
Backup.
But.
What kind of.
What level of.
Thanks.
In the second half in order for good strategy to be successful.
And then secondly.
You see the fact that a lot at the central South.
Neil.
Right.
Yeah.
Yes.
Any upside risk.
Yes right.
And secondly, I'm sorry, the second question.
Right.
No you only sold.
Very small part of that far right.
[music].
Yes, if you.
You weren't not using or are you.
Great.
Leave that are there.
Or even do I I think they'll be back.
In that area, but.
I'm just wondering the rationale to sell them.
No that's all part of that.
And third one if I mean.
Right.
That well located said.
It seems.
Given the current scenario that day here.
It it'll be a difficult year for you to think.
Oh.
Is there any.
Any any view when could sorry.
Shareholder declared.
A dividend paid out well could we expect that to happen.
Thanks.
Okay.
I will start them.
Setting your last question and then with what we do for their Fest.
Today.
The other two questions.
Adding your last question off the capital letter based on where not only going on thinking about this.
Hey.
We we be next blaming a now what a last yes, I would say today.
[laughter] that.
Yeah, we are focusing on we then copy that to check on that that's how we be not belching be say five Glenn that 2020 blending. So this year that we are going through west one will be the yet where we started in c. diff free cash flow nantel on input.
Depending when we became really positive so we've been all like talking about 2020, onest. They yet aware, we become free cash flow positive.
Today, we de sand Hill, they pandemic on would be an ideal that we are sailing beat the way left out of the explained in detail.
And if we had a focusing on.
Today I medically deal today, so that east today's focus but of course, you can see our projections on a blended wouldn't be one should be a bagel, yes, I need that moment, we should start to be discussing deeper how we see that we have on the weekend copy that dollar shareholders.
Ladies and I want to view today.
Now what do we approaching needs.
Then.
Regarding the second question on the on the land say.
Yes, EDSS model, but that was a sold that they are very attractive price.
When we see that that that I keep right east, where we think going forward what of that return of at the Copytele that London, and so yeah, yet out of that we all day long.
For one month, they need that pharma that price was not enough attractive and that's why we allocate that capital to something else something SMB sales that they'd be self lab.
A 10 detect that seem that they'd yet we are leasing model then that'd be felt a heck thats. So that lease not really really want to intensify what sort of actual me on on they dropped production system that we have there so that he someone willing to light that specific piece of that.
Of the farm on a he will save the Bay area right that was interesting enough for us to make that decision until Saturday. So that's how we approach and that's a light today, we are seeing be say market. That's I will saying before that is much more active than what it was in the last thing for you.
So that eats a regarding the bottom sake, and then I, we laughed yeah theyre not thought to two to explain more on DC acceleration of the or now what have you on on our that they feel they meeting this working.
Well on that they've never enough ethanol price expected that tipping.
Thank you for now the.
So regarding the that ethanol price that we think the ultimate for it on all have substantially improved through the quarter reflow prices bouncing back through $40 per.
Fair better levels, better prospects for demands and lower production, but the center salt mediums home to speak off the restrictions uniquely domestic prices have increased by almost 30%, while demob improved 4% in July.
Our alliance this rich extort sugar production will be responsible to reduce the localization by almost.
6 million cubic meters and inquiries triggered in denim doors.
This is a high watermark on and off to access the laws and demanded that we are expecting we expect them wasn't demoted between 10, and 12%, which is a positive before and mutant group to meters.
The reason, we expect a fight it on all this into situation into off season.
But I mean does have even moving from the current 64% to 7%, which should provide an upside in prices between 10 and 15%.
And the fact that we haven't rolled all the crushing base and have had normal ranks in the second quarter has improved the sugarcane yields and rushing out to look for the second semester just as an example, the district in district Crescent July at more than 20%.
Increasing yields compared to the same Judith lesson here.
Therefore, we are confident we're going to take advantage of those would price by the end of the or.
Next question comes from San Fashion show Sandri from HSBC. Please go ahead.
Hi, Good morning. This until she had on behalf of annex Conkle. Thanks for taking up my questions.
I'm not sure if my questions have already been answered.
I have a couple of young.
First can you walk us through your outlook for the second half that Youre, specifically cardio farming and land land transformation business and I'm just looking for some color in terms of.
How the seasonality and up 10 different fields I don't if any would shape up no torstar first or second enough had been done split and I know, it's a bit some color on your.
He seems are possibly your order book as possible.
And my second question as on the cost side, Yes, then a very good job on the cost performance can you give us some color on how much of the cost reduction in the should that business was sort of sold off cut UNFI and how much was due to your negotiation and other cost saving initiatives.
Thank you.
Okay.
Thank you for your question.
Regarding the funding I love the formation.
And for the second semester.
In other to understand this psyche of their bottoming Atlanta I'll make some decent indecent message. We are finishing all they had investing activities. So I can be explained in detail a we are.
And at the end of all these say how do anything at BBB, that's what a very challenging because of the pandemic, but they instead, we'll pay none b. I really didn't they cost reductions on be efficiencies that we are they all along they take low to the domestic market all of the export market.
I know one so that flexibility that we have a non lease bottoming music, including meeting, including a been that some flatware right that flexibility that we have rolled through the domestic market and to the export market.
It gave us a great plus you eat in these pandemic because at the beginning their domestic market was very strong we took advantage of that Ben the export markets improved then we took advantage of the export markets. So that is part of the that they see that we the finding a couple of years old that east a lead me.
Paying mall it today, we expect that they tickets I mean, we continue more or less on the same lines, where we think on all they say so this means that we are out of a theme and that we had a finishing the how do we think so the gosh in at H. on we've continued to be like what we've been seeing the.
First half of the here, but then we are starting they knew how do they died so the second cemeteries, where we are planting where we are preparing for our next the site and that is such a willing baby when everything is very well be a that work on factor.
Randy out what people really say they are starting to the blend. So if we are very positive on how it's working on flowing if you get off they hold flat I mean, I lined up and make them business is that the asking a.
In.
A very important the improvement on and we expect the continued to see nice.
And then the I think they cost reduction on the initial Anatel, Lisa I would say that in general Ben We continue to focus embody our lives to reduce costs and that's something that he see happening they love reducing costs in the they actually eat.
And I didn't mean small eventual percentages, but why do we are reducing costs in the outlet all they all the depreciation of the reality is that I'm form into coffee knowing that so when we look out there. They do they maybe centene embarrass him east how to be more efficiently than what it.
But in reality that then all that it sounds like you need to well that's on the translation A. I probably.
Okay, and I know, they're not if you want to lot something on the.
Okay.
No just wrapped.
Our cost to him he is a we're projecting across the United visitor growth too far.
Thanks, often awfully ice for fall.
This concludes the question and answer section at this time I would like to turn the floor back to Mr. Bush for any closing remarks.
Oh.
Thank you in a and.
Before we end the call I'd like to basically thank all our stakeholders.
Hey, I'm really space has bank for the people that east working on now what feeds.
Especially in this difficult times and they are doing and taking jobs.
Now I.
I would also like to we might that be pandemic east theme there.
We need to continue focusing on Monday evening.
Every line of business fully operational.
And that we are constantly.
Being.
And.
Genady, Neil preventing measures and regime I want to safety, but of course, but she is to keep everyone intensity conditions.
So called.
Well stay safe and healthy I look forward to talk to you in our next meetings.
Thank you. Thank you. This concludes today's presentation you may disconnect. Your line at this time, having nice day.
[music].